http://www.nytimes.com/2009/05/28/technology/start-ups/28music.html?_r=1&scp=1&sq=music%20lables%20cut%20friendlier%20deals&st=cse
I wanted to post about an interesting article that just came out in the New York Times. It describes how major music recording labels are forgiving music-hosting sites like Imeem the considerable amount of debt they are owed as a result of licensing fees. This is yet another interesting development in the continuing saga of the transformation of the music business as a result of the internet.
Coming from a music background and as an owner of a Brooklyn recording studio, I am fascinated by how music will eventually be distributed and/or sold over the internet. While legal downloading has helped bring in some revenue, it has not nearly closed the gap that the music labels are facing with 20% year over year declines in CD sales. I believe the idea of music being sold on physical media such as CDs is over. It appears that the labels are finally starting to accept the fact that they have no future without internet companies like Imeem and Pandora to help advertise and distribute their product.
However, I wonder if the subscription business model being used by sites like Imeem and Rhapsody will be sustainable in the long run. My feeling is that in the end people feel very personal about the msuci that they love and they want to OWN IT, whether it is stored on a physical medium or not. The idea of paying for a subscription to get access to a large quantity of music isn't quite the same because there is always a 'gatekeeper' like these sites who have to give you permission to access it.While this deal make allow sites like Rhapsody to sustain themselves, in the long run people will want to be able to access their music at any place and time. Having to log on to a site in order to do so will not be possible in a car, in a plane or other places where consumers might want to listen to their iPods. While I also disagree with DRM (digital rights management, where songs sold on sites like Itunes can only be played on the host computer and not shared), I still think a new business model will have to emerge for the music business to once again find a value proposition that customers are willing to pay for...
-Doug
2 comments:
I have to say I am definitely with Doug when it comes to content ownership and avoiding "the gatekeeper." Maybe it is time for record labels to explore a model similar to what Amazon is doing with print content via their Kindle content delivery mechanism.
Let me describe what I mean by using an example. You browse a content library using the Kindle and purchase an e-book (discounted of course because you're saving the publisher distribution and printing costs). Now you can access that book through the Kindle e-book device itself or through other Kindle-enabled devices such as your iPhone or PC.
Applying a similar model for music content, you would be able to purchase an album and be able to listen to it on your PC, iPod, cell phone, or any other device tied into the music library "cloud." I for one would definitely pay $10 for music content accessible on all the devices I own now and may purchase in the future.
Taking this one step further, why not do this with video or photo content too?
There you have it, "cloud" storage for your all your media.
Music on the Internet is certainly evolving quite rapidly. I think the idea of a subscription model seems tenuous however. We can purchase music via iTunes- this is then useable via ipod or PC. Note that iPod can be hooked in to your car fairly easily. Internet radio like Pandora can be accessed via smart phone like iPhone as well as a PC.
Question is how does Pandora or Last FM get paid? We consumers are so programmed not to pay for radio- It's always been funded by advertisers. Advertising on the web page is in my view is a near non starter- this is a listening experience not visual.
Seems like if technology can customize advertising with banners, and customize music selections it can customize occasional audio advertising. Maybe with promos of broadly favorite music groups.
New music groups may find it reasonable to use use iTunes and social Networks as a distribution - in a viral way. This is a strategy that my cousin a budding singer /song writer is considering.
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