‘iTunes is killing the music business’
p2pnet view Music:- 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
..… and identi.ca
First they ignore you, then they laugh at you, then they fight you, then you win ~ Mahatma Gandhi
January, 2010
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January 27th, 2010 at 11:56 am
I disagree! Bundling is a problem because it means less control for consumers, where the internet is providing us with the opportunity for control.
We don’t care what generates the most amount of money for the labels or cable companies. No consumer enjoys being forced to pay for things they don’t want! There are no options, where there should be options. There is only “do what we want or piss off.”
Consumers have had enough and want their OWN choice! That’s the problem that cable companies, movie industry members and the music industry just doesn’t get. We want our OWN CHOICE, NOT YOURS!
It’s very frustrating that no one understands that very simple concept. They don’t want to as it would mean less cash grab, which clearly proves all the companies care about is the cash, nothing else.
As long as you try to control and take money, in return TELLING us what WE want, there will be networks (sneakernet, Internet, whatever) where people will do what they want for free!
You have a choice, make some money the iTunes way, or force people into subscriptions and make even less! Why is it the US (and in 2011 Canada) removed analog broadcasting? Could it be lobbying by cable companies so they can have their bundles?
You want to bundle? Give us a damn option! Let the consumer CHOOSE what they want. Let me choose which stations I want to watch, not your pre-planned package!
Again, the only thing killing the music/movie business is greed! The desire for more and more money with more and more control! Get rid of that and given consumers choice and you’ll see more money. Don’t give it up, and you’ll see more “killing” of the business.
January 27th, 2010 at 12:54 pm
” Imagine buying the White Album a la carte. How many people do you think would have purchased “Revolution 9″? ”
The same ones that have every single different release of the White Album. You know, the ones that bought the Vinyl, then bought the Cassette, then the CD ..et al .. because they LOVED THE BAND. There are still fans like that.
Conversely, How many labels would be willing to risk such an experimental album like the White Album today ?
That one was apparently worth the risk, wasn’t it ? It still boils down to the labels generic offerings and fear of risk.
Everyone is tired of hearing the same fucking song done by the ‘celebrity of the week’ time and time again.
January 27th, 2010 at 1:08 pm
“People believe YouTube clips will live in the cloud forever, very few people save them to disk. ”
I wonder what cloud this guy is on, ever hear of YouTube downloader?? Go look it up, you MIGHT be surprised!!
January 27th, 2010 at 3:30 pm
‘iTunes is killing the music business’
It’s turn out to be a happy coincidence since iTune is currently the only digital source of income for the parasites we want to kill iTune in our war against the corporate terrorists.
These corporates terrorists and parasites will not prevail!
January 27th, 2010 at 3:57 pm
“So, inherently, we’re selling less music, and making less money.”
These parasites are right. This is not acceptable. They should be selling no music and making no money!
BOYCOTT THE PARASITES! NO CD, NO DVD, NO MOVIE THEATER!
I just shut down my cable subscription to increase my boycott.
January 27th, 2010 at 4:40 pm
It seems like any time you get an article decrying digital music, it’s always from some aging Baby Boomer who laments the bands from 40 years ago and his own connections to and memories of the music, like they’re somehow more relevant than those of music fans today.
There are bands and musicians every bit as good and better than the Beatles, the Rolling Stones, Bob Dylan, and whoever else you want to dredge up from “the golden age.” Hell, there were likely better bands even during that time. The only difference now is that we’re free to find those artists on our own, rather than relying on someone in an office deciding what’s good for us to hear.
January 27th, 2010 at 4:48 pm
What that guy says is just awesome… he just said that the music industry became so wealthy in the 2nd part of the 20th century because it could sell stuff you didn’t even want to buy. In other words, that if one had only to pay for what he/she wants, their industry has no future…
I always tought that industries – whatever their activities – who gets so rich in such little time or overprices it’s products, or sells bundled stuff one does not want (or actually both)…
…this proves it again !
January 28th, 2010 at 1:46 pm
Anyone ever bought an album and kicked themselves afterwards when they heard two good songs and eight tracks of filler? Sorry, but the Music business did it to themselves.
The world moves on: letters->e-mail->texting. We used to pay for long-distance phone service. No longer. But these Bozos are still stuck in 1973. No wonder they are crying so hard. Change or die.
“So, inherently, we’re selling less music, and making less money.”
Bollocks. I recently purchased Dark Side of the Moon and 100 Brahms MP3s for $2 each from Amazon. That’s $4 that they would not have made if they were still insisting on full price… and I will continue to buy if the price is right. There’s a ton of money to be mad here – emusic proved that halving the price means sixfold sales… but had to discontinue cos the RIAA wants their pound of flesh and not a penny less.
The Bad news: Your old plastic-disk business model no longer works.
The Good news: Digital goods are almost pure profit.
I like it!
January 29th, 2010 at 2:31 am
Couldn’t disagree more with this article.
Just because thing happened a certain way in the past and you got used to it doesn’t mean it’s right for today. Piracy, no matter how legal or illegal has changed the rules, and fight as they may, we are headed to a future where music online is free. Instead of crying over the good old days, you need to adapt to the new rules and learn how to profit off of them. Resistance is futile!