Jumping Jack Flash was a gas and you probably bought that same song 5 or 6 times now in the past 20 years. That’s the music industry formula. Only now it doesn’t work as music industry sales are dropping faster than Britney Spears left-shoulder tattoo. Hey, sag happens.
Bottom line: the music industry could make more money by inventing business models that synched with today’s environment rather than battle the past.
In 1995 I foresaw the rise of downloaded music. At the time, as an analyst for a leading research firm, everyone at the firm thought I was crazy. Bill Gates had made a big bet on CDs (read his book The Road Ahead from that era) and most PCs didn’t even have a CD player yet. This was the era of the 3 1/2″ floppy, 9600k baud modems, and computers that didn’t even come bundled with a modem yet.
In 1995 the CD was the new platform of choice, delivering unheard of digital sounds to ears used to scratchy vinyl and twisted cassette tapes.
Fast forward: as 2008 draws near we are past the free-love Napster era, somewhat used to the buck a pop iTunes notion, but are not standardized on a platform for music. Or, should I say, the music industry isn’t standardized.
That’s because the music industry has been more about platform control than music. Think about it. If you’ve been on the planet here for more than a couple of decades you’ve probably bought a lot of songs in a lot of different formats. Oldtimers probably bought The Beatles, Stones, Springsteen and others on 8 Track, Vinyl, 45, cassette, and CD (at least) in the past 20 years.
Translation: the recording industry has sold you the SAME SONG probably 4 or 5 times already. The reason? They were marketing a platform, a “better listening experience.” When the CD was new, who didn’t want to get all their favorites AGAIN in this newfangled format?
And so, music sales rose and fell on platform control by the consumer electronics manufacturers AND the music companies. Every 5 years it was predictable, a new platform format would emerge and the re-buying of your collection would ensue.
And that’s the heart of the challenge for record companies and why sales are dropping 20% per year now. They no longer have a “new and improved” listening experience. Before, the platform itself was the rights management. Copying CDs was tiresome, cassette tapes was a joke. Who wanted a room full of copiers cranking out plastic disks all day?
Now that the platform is the web it is not as constrainable as hardware-based systems of yore: CD players, cassette players, etc. The shift from hard to soft changed the rules and the recording industry hasn’t yet figured out how to make a business around the new rules because they don’t understand the new rules. Yes, DRM and controls over digital songs have been tried. But that trend is reversing as even the largest labels now want to distribute in MP3 to ensure maximum playability.
Artists today have grown up in the “instant distribution era” we are now in and want better ways to reach audiences. To date, no record label has offered that. In many ways they are reminiscent of horse and buggy sellers trying to figure out the auto craze. “Won’t a bigger horsewhip do?” Or, they’re like Lindsay Lohan realizing she has no talent and isn’t all that attractive after all in a 3am DUI mugshot.
For the past 75 years the recording industry has been in the hardware control business. Until it understands the software industry and universal distribution then the current legendary labels may fade into oblivion as control and constrict business models are replaced by embrace and expand models that ironically would make the labels and artists much more money if applied.
Helter Skelter indeed. There are entire new business models for music that are untapped, models and services that could yield $10 for every 10 cents now generated. Now’s the time to embrace and expand.