How digital elitism could be hurting your business.
Yesterday, I highlighted the modular by design approach and what modules are. Today, we delve in, looking at the first industry to get impacted: the music industry. When Napster introduced the concept of sharing songs, it was not so much the idea of sharing that was wreaking havoc on the music industry; it was the fact that albums were now being sliced and diced. Traditionally, the music industry has been organizing around the concept of album sales. When developing a new music album (which is only a compilation of several music tracks,) the music industry decided to bundle some good songs, along with some so-so and sometimes some bad ones. The idea is that they would promote a few songs in the media and use those as a way to sell albums. Where the economic breakdown happens is that not all songs have the same value. As a result, the idea that a hit song is worth the same amount as a B-side falls apart. So if you take the current album-related economics model, you end up with a product of 10-15 tracks, which retails for somewhere between 15 and 20 dollars. Based on that concept, one can argue that…Read More
Two entries popped up in my RSS reader today that made me think about the ever-changing musical landscape: On the shifted librarian, Jenny talks about changing behaviors when it comes to music. A 9-year-old thinking of music as something you burn, not a piece of plastic, represents one of the biggest challenges to date to the music industry. While peer-to-peer networks represented the beginning of a battle, that shift in behavior among kids represents a potentially disturbing trend: if this behavior doesn’t change, 5-6 years from now (when those kids are teenager) the music industry will see steep declines in the sales of music CDs. In other words, the medium no longer matters as an entity. Recurring revenues based on changes in format (as was the case with the move from LPs to tapes, and then from tapes to CDs) will no longer exist. In a somewhat related story, Martin Tobias talks about bands selling concert videos through iTunes. This represents threat number two to the music industry in that no record label was involved in this transaction. It could be because they didn’t want to be but that’s a source of revenue that is no longer available to a…Read More
A new survey just highlighted that three quarters of teens feel that file sharing should be legal. This pretty much caps any chance for the music industry to survive under their current model. The issue here is that if kids are perceiving file sharing as something that should be legal, they will probably not grow out of it. Half of the teens that were polled had downloaded free music and gave an interesting set of reasons: Those who download music but have never paid for a download say they download because: They only like one or two songs on a CD (59%); They want to get music quickly (48%); They believe that music is too expensive to buy (46%); They want to get music for free (44%); They want songs that are not available for sale (40%); And they believe that music should be shared (38%). There is hope though. If you look at those stats, stores like the Apple iTunes Music Store or the new Napster can satisfy over 50 percent of the public. The third point, however, shows issues relating to pricing. Obviously, the Internet has had an impact here as kids are probably more aware than their…Read More
George Hotelling is attempting an interesting experiment for the digital age: reselling a song bought on the iTunes music store. The reason it is interesting is that he has checked the license agreement and it seems perfectly OK for him to transfer a file to someone else. This will be an interesting test of whether Apple actually means what it says when it mentions that songs in the iTunes Music Store are bought and not rented. They made a big deal about this when they first introduced the store so it will be fascinating to see how they react to this sale. Extending beyond Apple, this definitely falls into the “Pushing the Envelope” category as it is one of the first case of reselling a legally purchased digital good and reselling it. It will be fascinating to see what the reaction is going to be.Read More
It’s official: it’s curtain for Napster for now. The judge in a lawsuit filed the Recording Industry Association of America ordered the service to shut its doors by midnight this Friday. The genie is out of the bottle Yet, I can’t help but believe that the shutdown of Napster will not do much in terms of limiting distribution of online music. People will now move to alternative services like Gnutella and Freenet. In other words, it’s time for the recording industry to face the music. Shawn Fawning and his crew did, in the words of the judge, create a monster but I seriously believe that if the goal of the RIAA is to stop widespread distribution of digital music, this lawsuit is a moot point. Back in March, I talked about Gnutella, a Napster-like client/server applications that escaped from AOL‘s vaults. Since then, Gnutella use has increased, largely due to the fact that Napster was being sued and that Gnutella has no controlling authority. Since no one is officially in charge of Gnutella, no one can be sued. And since the service can’t be sued, it’s a much tougher one to deal with as far as the recording industry is…Read More