Friday, May 19, 2006

Go With The Flow

When I work from home I often leave the TV on as background noise. Often I'm so busy that I wind up leaving things like The Weather Channel or CSPAN on all day. I don't recall which station it was, but one of the stations discussed the dangers of a riptide. According to the show (and Wikipedia,) a riptide is "a strong flow of water returning seawardfrom the shore."

Swimmers caught in the current often panic and react poorly. Instead of swimming parallel to the shoreline and using the current to help push them to safety, they fight against it. They expend all their energy fighting it and are then once their strength is exhausted, they're overwhelmed and drown.

You see where I'm going with this. The music biz at large is fighting something they cannot possibly overcome with legislation or DRM. Is this lawsuit against XM really going to plug the already gushing hole in the dam? For every software scheme, there's a workaround. For every hardware scheme, there's a hack. And for every one of these plans that works, there are exponentially more that simply fail (or backfire.) One step forward and two back.

So, I'm going to say it again. Music is no longer a "unit based" commodity. It's a liquid and as digitally ubiquitous as water. Have any doubts about this? Just look at the number of downloads from one P2P music piracy site in just one month! To control it, you need to do it from the source and principal distribution points. Here's how I'd do it:

1. Take Control Of The Flow
Instead of playing catch up, be proactive. Remember the days when the labels engineered the switch from LP to CD? The same could be true here. If one super high profile artist in the right demographic (like a Green Day or My Chemical Romance) released an album EXCLUSIVELY digital for the first 3 months, would have a profound influence on the marketplace and it's perception. Oh and forget about trying to half-ass it like Cordless- treat digital releases like "real" records and the shift will happen.

I understand that since retail is involved (and may react negatively to this strategy) this transition would need to happen over a much longer period (a decade.)

2. Lower The Price
I talked about this in two previous posts. No matter what posture the labels take, margins on digital are better than CD. I've always thought that selling 100 copies at .50 would be better than selling 10 at .99. So instead of raising the price to the point where people steal it, make it so cheap that people don't even see price as a barrier to purchase. Better still, remove the cost to the end user entirely by shifting the burden to ISP's in the form of a music surcharge coupled with a centralized server for (non DRM) files that can account back to artists.

2. Legitimize Digital Promos
Is it really necessary to use snail mail and plastic to promote music? CD promos not only invitations to "leaks" of material, but are wasteful and more often than not wind up in resale bins. With all the rich media out there, I'm sure some Flash developer could come up with a very compelling virtual promo package that goes beyond the average e-card.

3. Entice CD buyers to become Digital Buyers
I'm not going to discuss my idea for this right now, but there's a really simple way to help transition consumers to the digital model from hard goods.

4. Collectibles For The Fans
It's clear a person can get the music anywhere, but true believers will want something collectible to cuddle and display. It's happening already, with more shelf space being dedicated to lifestyle products & merch that's music related. Music sold at retail needs to have amazing packaging. A CD isn't just music, it's an event- like the new Tool album (or those Kiss records I talked about few posts ago.)

Over time, a strategy like this could do something we may not have thought possible: create ultra-cheap music for fans while compensating the content owners and artists.

Your feedback would be appreciated.


Jim Yates said...

I saw the same TV show and do not remember where it was either. However, more importantly, your comparison is correct. The difficulty is getting the owners of the copyrighted material to respond and participate in those solutions that will eventually create the future.
We have the beginnings of the eventual solution in development. It is a commercial method for handling transactions in copyrighted material where the conditions (payment amounts and media types) of the transaction are controlled by the copyright holder. I challenge any copyright holder (like yourself) to contact us to participate. That has been the problem that the copyright holders are timid and unwilling to change their habits like your swimmer example. Set an example. I look forward to hearing from you.

misterorange said...

I agree it's going to take a big artist to release something 'exclusively' online for a long time (and not just 24 hours or whatever) to truly make an impact. Until then it's just seen as a lesser avenue (but times they are a' changin).

Anyway, I would like to see collectable stuff. That makes me buy records. I'm still surprised by some albums I purchase that lack interesting packaging. Hell people, give me some lyrics at least!

Dave K. said...

Bill, you are a genius...I have had a lot of the same ideas for a while. Trying to convince even the smallest labels to send mp3s for promos is like pulling teeth even though it would help them the most by not having to waste all the money sending out promos that will be eventually sold. Wow...we need to talk sometime...Dave K.