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may 28, 2007:
the plunge of the major music labels: is the end of music 1.0 near?

Here is some good reporting from the New York Times, as usual: “Despite costly efforts to build buzz around new talent and thwart piracy, CD sales have plunged more than 20 percent this year, far outweighing any gains made by digital sales at iTunes and similar services. Aram Sinnreich, a media industry consultant at Radar Research in Los Angeles, said the CD format, introduced in the United States 24 years ago, is in its death throes. “Everyone in the industry thinks of this Christmas as the last big holiday season for CD sales,” Mr. Sinnreich said, “and then everything goes kaput.”
My comment: I guess there is hope, after all: Once the pain is big enough, changing seems like a real option, all of a sudden – that is what we are seeing now. Maybe this ship really has to be steered into the cliffs first, after all? Call me an optimist, but I used to think there were other options.
My two cents: If you have the guts to change now, you can still own a good chunk of the market, and prosper. But: bandaids are over – it’s time for real, hard-core changes. Drop copyprotection (at least for now – until something can be used that is of super value to the user!); tell the users, fans and artists that you screwed up; go for flexible pricing and bundles; package music into other media; offer agency-type deals to artists; become completely transparent and drop the “secret sauce” antics; and start using syndication as the prime vehicle of pro- motion, marketing and distribution. It’s not the copy – it’s the access. It’s not prevention – it’s participation.

The New York Times continues: “For the companies that choose to plow ahead, the question is how to weather the worsen- ing storm. One answer: diversify into businesses that do not rely directly on CD sales or downloads. The biggest one is music puplishing, which represents songwriters (who may or may not also be performers) and earns money when their songs are used in TV commercials, video games, or other media.”
My comment: I have talked about this until the cows came home, but here is again: Switch to music as a service. Again: Never mind the copies – the next big thing is offering access. Brands. Experiences. Added Values. Stuff that only you can provide – together with the artists. Values and experiences can’t just be downloaded.
More from the NYT: “But very few albums have gained traction. And that is compounded by the industry’s core structural problem: Its main product is widely available free. More than half of all music acquired by fans last year came from unpaid sources including Internet file sharing and CD burning, according to the market research company NPD Group. The “social” ripping and burning of CDs among friends – which takes place offline and almost entirely out of reach of industry policing efforts – accounted for 37 percent of all music consumption, more than file-sharing, NPD said.”
My comment: Sounds like an obvious problem – it’s all out there for free so they stopped buying. But the thing is that this is not the real problem. “Free distribution” is a blessing, not a curse, and P2P/super-distribution will emerge as the main mechanism for digital distribution in the next three years (and not just for music). Rather, it is – still seriously counter-assumptive, and beyond grasp of most of the incumbents of Music 1.0 – the unfailing desire to, at any cost (including self-destruction), want to control the ecosystem that the large music companies must keep in check. And then we can understand and monetize what people actually do with technology. They are doing this because they like the music and the artists, not because they want to do as much damage as they can – you simply have not given them good enough options to act differently. If the model of über-control of music distribution isn’t working any longer, wouldn’t it make sense to try to come up with a new model? Lesser control does not mean zero revenues. There is life after selling expensive copies of plastic, or indeed copies of 0’s and 1’s. Trust me ;-)