Posts tagged music industry
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music, startups, design and other random stuff
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Why Kids Feel Stupid Paying For Music...
Good opinion piece by Paul Resnikoff of Digital Music News. I think he’s right about the industry needing to get comfortable with getting smaller…subscription services (like rdio) offer a way to do this…they feel like they’re free, and it’s a much better user experience…
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Live Nation getting in on the daily deal thing via @earlybird. Pretty terrible execution if you ask me. They couldn’t add a location filter (on their promo page) so I can see only the shows near me? So I have to manually go through the list and find shows that I can actually go to? That’s pretty awful.
And how do I actually get the deal? Tried it twice, and it didn’t work for me.
This is borderline pathetic. Live Nation constantly disappoints.
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Survey: Music Streaming Decreases Filesharing, Increases Music Discovery
This is why subscription streaming services make A TON of sense. This has been my experience exactly, except for the fact that I now buy less music instead of stealing less music (I haven’t used filed-sharing services since college).
But do you think there are more people out there who steal music or more people who buy music?
No brainer. More people steal by far. This is why subscription streaming services could be a big deal for the music industry (if they fully embrace the model). They may sell less music (in the form of downloads), but they’ll also convert users of file-sharing networks (who aren’t paying for music today) to paying customers. My hunch is that they’ll make more money net-net. The gross revenue will never come close to what they were making when CDs were the standard, but that’s okay - it’s a lot cheaper to deliver digital so profits can still be made.
Here are my other posts on this topic:
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The 10 Most Disastrous Music Industry Deals...
This is a fun list… Well done by Digital Music News for putting this together. What a mess the music space has been…
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Michael Robertson: Surveying Crowded Music Subscription Sector
Great survey of the subscription music sector and some key insights as to how Apple is uniquely positioned to offer a differentiated service. Specifically, the ability to integrate the service with a user’s personal collection of music, which is something that I would personally put a lot of value on (because no music service is ever going to have all the music that I have on my computer).
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Where it’s been going recently, it’s subscription models again, but it’s streaming from the cloud. The technology has advanced where we can do that now, and the price points have come down.
Elizabeth Moody in an interview with Billboard. Background on Moody (from a recent TechCrunch article):
Google recently hired Moody to assist them with negotiations with music labels and other rights holders for their upcoming Google Music service. Moody was previously with Davis Shapiro Lewit & Hayes and specialized in digital music. The firm’s current and past clients include Spotify, MySpace Music, iMeem, MOG, iLike, Bebo and playlist, among others.
Read the full Billboard Q&A here.
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Pandora: Not Long Tail. But Very Long on Subscribers...
I think Pandora’s filtering strategy is very smart and is an important part of its success. Given how much choice there is out there, music fans, especially casual ones, need someone to tell them which bands are the good ones (and there are A LOT of them, but there are also a lot of bands that aren’t as good).
Pandora’s strategy is just one approach. Another is to give users access to a greater variety of bands and then let their friends and the service’s community provide the filters. This is what rdio does, and it’s very effective as well. After all, most people still rely on their friends for music discovery.
The point is, given how much noise is out there to today, people need filters. And Pandora has provided this in a very smart / cost-efficient (for them) way.
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Subscription streaming services as the future of the music industry
Great article by The Telegraph from the other day:
Record labels should make MP3s free, and freely shareable
I strongly agree with a lot of the points this article makes, but I don’t totally agree with the article’s main point - that giving away music for free is the answer. Yes, record labels should stop suing their customers, that’s a given, and giving away some music for free is good business, but I think subscription streaming services are the answer that the industry has been looking for all these years.
Record labels should be licensing ALL of the music in their catalogues to these services. Like today. Now. Yesterday. It’s not that this will instantly eradicate file sharing networks (those are never going away), but I think subscription services will get a lot of people to start spending money on music again, and some money is better than no money. As the Telegraph says:
Piracy cannot be eradicated. It doesn’t matter if every BitTorrent tracker is shut down, every server hosting every torrent directory seized. Determined pirates will just switch to a new type of technology – such as streaming via sites like RapidShare – and the mainstream will eventually follow. (It’s already happening in France, where streaming is the new file-sharing.)
You can’t stop the activity of free file sharing itself so there’s no point in suing people to try to discourage that behavior. Instead, you need to give people a better option - a “free” file sharing product that’s drastically more convenient that consumers are actually willing to pay for.
In my view, giving music away for free is only part of the answer. It’s not that the music itself is worthless as that implies. What really needs to happen is for the price of music to be adjusted, and that’s exactly what subscription streaming services do (since you’re paying what you used to pay for a single album - about $10 - for monthly all you can eat access). The Telegraph acknowledges this, but I think the point deserves greater emphasis.
I personally believe that subscription services are the future now that technology has advanced to such a point as to make these services very user-friendly and convenient (the iPhone, iOS4, Android, apps that play in the background, and downloads for offline listening). Using rdio for the last month has convinced me of this, and the popularity of Spotify overseas further supports this idea. Subscription services are just a lot more convenient than file sharing networks in a lot of ways. And the good ones, like rdio, have discovery and social features that make them very engaging, which gets even casual music fans listening to more music (and a greater variety of music). So people will pay for these services because they’re more convenient than file sharing networks, and some revenue is better than zero revenue for record labels. Also, if these services don’t have to worry as much about licensing, they’ll be free to innovate and make their services even more engaging over time, further discouraging the use of file sharing networks.
I don’t think it’s wrong to ask people to pay for the music itself - the music itself has tremendous value - it’s just that the pricing is currently way too high. Subscription services offer a way to adjust the price of music to be more inline with market forces, to turn previously chunky expenditures on music into recurring revenue streams, and to get people engaged with artists so they’ll spend their music dollars on other products (such as vinyl, DVDs / videos, merch, and concert tickets).
I’m not saying that record labels shouldn’t also give away a lot of music for free. They totally should - bands should tweet free MP3 downloads to get people to come to their websites, record labels should put out free music samplers, etc. But they should also make all this music available on subscription services - like as soon as the record’s released. People consume music in a lot of different ways (and this isn’t going to change anytime soon) so the music should be in as many places as possible so it’s being discovered by more people. Record labels should be licensing their music to just about every subscription service there is, or at least the good ones, like rdio, MOG, Spotify, Google Music when it launches, and whatever Apple’s been working on since it acquired Lala. Now that the industry has established price points that everyone more or less agrees on ($5 / month for all you can eat browser-based streaming, and $10 / month for mobile access), I think we’re going to see subscription services start to take off.
In fact, in my experience, subscription services almost feel free. If you’re used to buying multiple $8-10 albums in a given month, than $10 a month is nothing - you’re saving a ton of money by subscribing (I already have). And even if you don’t spend a lot of money on music, the $10 gets charged to your credit card each month automatically so you don’t even think about it. $10 is nothing in the context of your monthly spending - that’s like two drinks at the bar on Thursday (if you’re lucky / don’t live in New York).
So there’s just no point in fighting it anymore. It’s going to happen. Not quickly, but over time. The point is, record labels and bands should be both giving away their music for free (for promotional purposes) AND licensing it to subscription services (where they’ll get paid something). Together, these two strategies will go a long way towards reducing “illegal” file sharing and allow record labels to once again benefit from pure music consumption, either promotionally or monetarily.
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Why It's Really Hard To Create A Profitable / Sustainable Music Business
In short, the music industry insists on taking way too much of your revenue! Yes, their content makes your service possible so they should be rewarded for this, but they’re asking for WAY too much. They can’t think of these new services as replacing the revenue they’re losing from the decline in CD sales - those days are over and they need to move on. If startups were given better deals, how many more of them would become sustainable / profitable businesses that would provide new, consistent revenue streams for labels, publishers, and bands?
I know this has been said countless times by countless people, but this analysis (not that it’s new) makes it abundantly clear that the music industry needs to be more open-minded about the revenue sharing deals they’re cutting with innovative services. If these are the economics of what’s viewed as a highly successful music busines that has made the jump to mainstream use, how many good entrepreneurs are going to start companies in the music space? It’s just not worth all the time and effort. Entrepreneurs are better off pursuing models where they don’t have to pay (significant) royalties to the music industry or avoiding the music industry altogether. And what happens in these cases? The music industry makes less money than they otherwise would (don’t even try to tell me that they’d make more money because traditional revenue streams would hold up longer - no way, those are going away regardless).
If the industry could improve the deals for startups, they’d encourage more of them to get out there and start making money for them, and the total revenue they earn from these new services would grow over time. Startups don’t cost the industry anything - they’re independent ventures paying their own bills. The only “cost” of doing this is that traditional revenue streams might go away a little faster, but, like I said above, those revenue streams are going away regardless, and it’s hard to fathom that the incremental negative impact could be more than marginal at this point.
Man, now I really sound like a broken record. This has been said so many times before. Oh well…feel better now that I’ve said it, too. Anyway, check out this post. Good, informative read.
