The recorded music business must switch to subscription, it’s its only hope of economic survival.
The iTunes Store is killing the music business.
Sure, it provides a legal alternative to theft/copyright infringement, but the economics make no sense. Because instead of spending $10-$20 for an album, people are now purchasing $1.29 tracks. And it takes many $1.29 tracks to reach the equivalent of an album.
Essentially ten.
So, you’re asking the public to make ten purchases instead of one. Get it? Can you imagine someone saying yes ten times in a row? Imagine buying the White Album a la carte. How many people do you think would have purchased “Revolution 9″? But we did, as part of an album, there were no singles from the White Album, and therefore we know “Revolution 9″, because oftentimes we were just too lazy to jump up and lift the needle past it, and we ended up hearing it, it’s in our DNA, like the rest of those album tracks.
But it makes no sense to complain that people should buy albums instead of singles, you’re pissing in the wind, the Internet has unbundled the album. That doesn’t mean you can’t try to get people to buy as many of your tracks as possible, it just means that the concept of paying once for ten tracks is something that no one has to do, and almost no one wants to do.
So, inherently, we’re selling less music, and making less money.
Who do we want to blame? Apple, the customer? That makes no sense, as stated previously Apple is providing an alternative, and without customers you’ve got no business. The key is to get more cash from each individual consumer, so in the aggregate, we end up with a lot of money.
The classic example is cable bundling. You cannot buy your cable channels a la carte. You must buy them in tiers. Which drives you nuts. Why am I paying for something I’m never going to watch? But economically, it makes sense. For if the channels were unbundled, the cable system wouldn’t be able to make enough money, so it would have to raise the price of each individual channel substantially, to the point where you’d be paying just as much. According to this article in the “New Yorker”, at most you’d be saving thirty five cents. And you’d give up the ability to surf all those extra channels, and possibly find something interesting.
That’s what we want people to do. Surf the music and find something interesting. That was the old album paradigm. Since you paid four or six or ten bucks for the LP (the price went up with inflation), you listened to it, and found out you liked cuts other than the hits, to the point you wanted to see the act live, to hear it perform all these songs, and bought the next album not worrying about a hit, because you were a fan of the band.
I hope these days can return. But we’ve got to switch the game in the interim.
We’ve got to make people fans of music!
Yes, instead of paying ten bucks for an album, you pay ten bucks for music. And technology allows everybody access, so instead of charging our good customers more, we charge everybody one low flat fee, kind of like cable television, the provider doesn’t care if you watch all day long or not at all, it’s the same price.
And speaking of price, we can argue whether ten bucks is appropriate, we can argue price all day long, but we can’t argue paradigm. The key to survival is charging everybody something. Not breaking it down by track, but providing the whole smorgasbord for a single price.
Now the Spotify trick is to get you hooked for free, then upsell you. That’s a good concept, works in sampling across all wares. Don’t think it’s about giving music away for free, it’s ultimately about getting a chance to convert many people. It’s just like a retail store. The first key is getting traffic, then, once people are in the store, you do your best to close them. Hell, sometimes you do giveaways just to get them in!
Not that Spotify is the only solution. But the labels must see they need to drive subscriptions, or lose the bundling war. That site allowing you to get tracks for experiencing ads? That’s economic death. As is Apple’s concept of letting you stream the tracks you own via the cloud. If either of these take hold, the odds of subscription winning go down, and you want them to go up, because the pool is so much larger.
Don’t see this as a music problem. Don’t see this as a value problem. See this as an economic problem. How do we get the most money? Certainly not by selling tracks. Definitely by selling low-priced subscriptions.
Furthermore, if the music is streamed (with thousands of tracks on your hand-held in case you’re out of range, Spotify provides this today), there’s no issue of someone stealing everything and then disconnecting. What’s there to steal? People believe YouTube clips will live in the cloud forever, very few people save them to disk. We have to migrate music to this same sphere.
Please read this article about bundling. It will make the concept clear to you. The cable companies and content providers are tempting unbundling by fighting their silly wars in public. We have the reverse problem in music. Our content has been unbundled. Only by bundling it again can the industry regain health.
http://www.newyorker.com/talk/financial/2010/01/25/100125ta_talk_surowiecki
Bob Lefsetz – The Lefsetz Letter
January 27th, 2010 at 9:46 am
This is absolutely one of the WORST ideas I’ve ever seen here. He wants to make music like cable!? Are you fucking kidding me!!! I understand he’s speaking from an industry perspective, but seriously this is about as anti consumer as it gets. So according to Lefsez, you pay your money for the equiv of 10 songs, three are ads, three are in Spanish, one is a public service announcement and then you have three songs left you may actually want to hear. I know he and others think streaming will make piracy go away, but if anything like this ever comes to fruition piracy will become 10 times more popular than it is now. Streaming is popular on the net because people CAN cherry pick, IE HULU.
January 27th, 2010 at 10:34 am
You’re holding on to the “control is the only way we’ll survive” mentality!
Why again do people “steal” cable or satellite TV? Right, because the bundles are NOT what they want!
Why again do people purchase just the tracks they want on iTunes et al? Because the people who’s spent money, you know the source of the industry’s revenue, should be spent on what they want, not what they are told to spend it on!
To use analogies, as some here love to do, if you walk into a grocery store in need of milk, how would you feel if instead of paying $3.49 for a 2L of skim (0%) milk, you have to pay $22.17 for a 2L of 2% milk, bananas, bread, cereal, two cans of soup, a bag of apples, two broccoli crowns, and 8 baby bok choy?
That’s the problem, consumers want CHOICE and the choice should be based upon what they WANT not what those in the business of maximizing revenue want them to want.
Cable companies piss of consumers with their bundles. Albums have been, for the last two decades or more, declining in quality (on average) where you only have 1-3 good songs and the rest is filler.
This is the reason people support iTunes. The only thing iTunes does is give the consumer what they want, choice!
And clearly some people still want control and money over all else, even though they know that no matter what they do to control, the consumers will find a way to get what they want, even if that means taking it for free.
So, you want more money? Give consumers a choice based upon what they actually want, not what you want them to want.
If no one buys your art, maybe you’re not appealing to the right people and if you’ve tried every demographic, then try another line of work for income, do art for yourself.
January 27th, 2010 at 11:10 am
Bob, you’re bumping right up against the edge of the current paradigm. If only you could punch through to the other side.
The first thing to do is to ditch the term ‘charge’. As far as recorded music goes you are no longer in a position to charge anyone anything. ‘Charge’ relies on being able to sue people if they make their own copies, i.e. via copyright.
All you can do today and tomorrow is SELL. That means proposing a good bargain, an exchange of a music recording at a price that both the artist and their fans find agreeable.
So, you can sell recordings, but you can’t sell copies or listens (the market for them is running on the inertia of tradition). So, you can’t sell streaming services either. You can sell selection/recommendation services on top of streaming, but that’s value added, you’re not selling the streaming.
What people will pay for is to be provided with what they like, i.e. good recommendations, and new music from their favourite artists. A copy is worthless because a computer can make it in a millisecond for 0$. A listen is actually a burden upon the listener – it’s an audition and appraisal.
So, what you’re left with is introduction/selection/recommendation services (new artists) and new music (aka live and recorded performances). Once music has been paid for, that’s it. Finito. No more money. It’s been released, published, sold – or given away as promotion.
If you revert to the pre-copyright meaning of ’subscription’, then your first sentence is correct. Artists must invite their fans to subscribe to a commission of their production of music recordings. Just as they invite them to purchase a ticket to a live performance.
QuidMusic is a prototype of such a site I made a few years ago.
January 28th, 2010 at 3:11 am
@ Robert #2
I see control as the more motivating factor (over choice) as a primary resistance to such schemes. In a time when folks feel (with justifyable reason) that they have so little control over their own lives, I doubt seriously if control over their music collection (music is a human need after all) will be given up nilly willy. I’d love to see a figure on how many music fans stream from archive.org as opposed to how many download. (I download from it – I happen to be a big fan of live performance.) There is some security in knowing that if the rules change (and they always change)that you will still have access to music that you cherish. No matter if the IP owner decides to withdraw it. No matter how poor you might become. No matter what restrictions and punishments your government might enact. And if you have a mind to, share it with as many friends as you want to. Even after an IP owner has decided that it will no longer be available. I think one of the most powerful statements that p2p has made is this: “You’ve stolen so much conrol from my life, but you’re not controlling this.” That’s why the “theft” propoganda has been so ineffetive. It’s coming from a culture of thieves (corprations) and it goes far beyond the music industry.