Im a regular reader of Billboard and some other music related publications. Its not a fun read these days as total sales continue to fall and music companies alter their models to include every revenue source they can find.
A smart move of course, but what really needs to happen for the music industry to prosper ?
The first thing that dawned on me as I thought about this was simple, yet scary. I cant remember the last time I bought a CD Player of any kind, nor can i think of a reason why I would. Sure, my PCs have one, but its rare I use it for music. If the music industry is going to rebound, rather than trying to find ways to sell more CDs, they have to either find a reason for people to start buying CD players again, and I cant think of a single reason why anyone would, or the industry has to quickly as possible find a way to get rid of music CDs. Their ongoing dependency is creating an imbalance that drags them further away from turning their business around.
Thats not to say that selling digital downloads, or even worrying about the format of digital downloads ( DRM free, or not) is going to lead to a solution.
One of two things has got to happen. There has to be a new financial model that excites music consumers into spending more money on music, or there has to be a technological advance that creates a new experience with music.
I've always been a big believer in the DRM free music subscription model. Charge people an extra 5 dollars on their cable bill for DRM free, unlimited use music and the total money spent on music will grow and exceed net margin dollars currently earned by the music labels. There is no reason why each label cant be a "network" comparable to Turner, NBC Universal, HDNet, etc that gets paid by the subscriber by a distributor who then marks the cost up to consumers. Consumers get a simplified delivery of music, Labels and hopefully artists get more dollars put directly in their pockets. Its not good for the retail side of the business, but as long as CD players are dying, so will retail.
The 2nd option is to use technology to develop something out of left field. Im a big believer that music is not just entertainment, but a tool for people to describe themselves to those around them. We use music in our ringtones, on myspace pages, blasting through the windows of cars to let people know something about who we are. Technology is now in aposition to allow people to broadcast their personalities and positions about themselves as well as enhance music consumption.
We have evolved from boomboxes to walkmans to portable CD players to Ipods. Only the shoulder carried boombox made a statement. Today the one constant we all have and really the only place i have increased my spending on music playback is headphones. Some are wireless, some are fancy, some are earbuds. Maybe we need a range of new, completely differentiated devices that we just plug our earphones into
Im guessing and pulling things out of left field here, and these arent devices that I would ever invest in, but maybe we need simple, inexpensive playback devices that project what we are listening to ? Rather than updating our IPod hard drives, we just insert a simple flashdrive into any number of playback devices that are more an accesory to life than a dedicated music/video/phone device. These devices might mashup a skin that plays back on the exteriors of our MP3 players or phones or even blutooths animations to belt buckles or hats or a car hood ornament or any device or clothing we can integrate. WHy not have devices that are programmable or preprogammed to do any number of fun things that define who we are ,w ith the music being the perfect plug in complement ?
Maybe the way to change music isnt by changing the music formats, but by enabling new ways for us to say new things about ourselves using music as the foundation or catalyst ?
I dont know for sure. . However, I do know this: Trying to figure out new ways to sell music on CDs... That ain't it.
The CD is dead. Long live music
Some Quick Thoughts on the Music Business
Reader Comments
(Page 1)2. Finally, someone said it. "CD's are dead." I hope I'm the first to say, "DVD's are dead." And I just don't mean DVD's as we know them today. I mean Blue Ray and HD DVD, as well. With the rapid rate of growth in data storage and transfer industryies, I don't see why there is any future in big box players of any sort. iTV seems so redundant to me already. My ZEN works like an iTV, yet I can carry it with me and watch or listen to anything I want, anytime I want, anywhere I want. Who needs these big boxes, CDs or DVD's? I'm now watching movies from every major studio (not just Disney and some of Paramount's content)by downloading from Wal-mart, Unbox and tons of other sites, in this way. As a filmmaker and now a distributor, of sorts, I'm helping other filmmakers grasp the concept that they can finally have some level of control over the content they create and that distribution is being turned up on its head. The DVD is dead. Long live movies.
Posted at 1:47PM on Apr 1st 2007 by Linda Nelson
3. check out this nypost article about video game companies signing musicians
http://www.nypost.com/seven/04012007/business/groovy_attack_business_damon_brown.htm
4. The problem with the subscription model is not the labels, it's the writers and artists. If I pay $5/month for unlimited SonyBMG music and I can download any tracks DRM free, how does the copyright holder get compensated?
I'm sure there's a simple fee/download system but it'll be less than what they earn currently per unit.
Posted at 4:54PM on Apr 1st 2007 by Adam Cains
5. The record labels should get over the fact that a lot of people, especially in the younger age group, are not willing to pay for music anymore. If the labels want to survive, they will have to do it through ad-supported free download sites such as SpiralFrog. Suing fans does not help the labels' case with consumers.
As for the artists, they should concentrate on concert sales, as well as merchandise. Overall, concert sales have gone up recently.
One more thing to note:
It has been shown that artists do not need the major record companies anymore. Many independent bands have used the internet to become famous.
6. how about making music/media purchases time sensitive... ultimately are we not still operating within the basic principles of supply and demand? if i download that hot new release on day1 maybe i can save on purchase price...
unfortunately this relies on drm?
how about delayed drm... if i buy that hot new release on day1 it comes with no drm attached but four days/weeks later my rights are restricted.
Posted at 5:46PM on Apr 1st 2007 by smudley
7. Hard copy format will be dead in 3 years. About the same time that digital 3D movies will be the theatre savior and most movies will be shot with 75% CGI. Not simply because it will be a much more awesome experience (it will be), but because it will be so much cheaper than location filming. It stuns me that so many people were surprised with the success of 300. Its a hint of whats to come. Want to read more about the tech thats coming? I talk much more about these coming techs in my blog (linked to my name below). Think digital, 3D, non-optical movie cameras (eg. infrared), 'performance capture', audience generated 'levels' or 'backgrounds' ala video level editing, integration of movies with MMORPGs. Think I am kidding? Think again. James Cameron has a $200,000,000 budget for Avatar to make you think again.
So while the rapid advances in theatre/format tech sometimes sounds pessimistic, in my world I am truly excited by whats coming. Summer of 2009 to be precise...
Getting back to CDs, oh yes they are long gone. The retail music industry will be shifting (or have shifted) to predominantly movies and videos.
8. I already have enough CDs. I don't need to pay $5 a month for a service that I don't need to use. And if I want to listen to the "radio," I'll tune into Luxuriamusic. Just remember that the piano roll industry also died. It's just a matter of how the beast mutates. Are you going to invest in a company that makes those old floppy discs?
Another thing that killed the CD industry is that people can now buy DVDs. They're rather spend less money and get more entertainment value. Drop by a college dorm room. What's piled up on the dressers - DVDs. Kids would rather use Scarface as background music instead of Public Enemy.
Also music industry is now nostalgia driven. What is the hot tour this summer? The Police. The teenage kid no longer needs to run down to the record store and buy even a greatest hits collection because they can easily take mom's old Police CDs, rip 'em and put them on their iPod. And mom gets to keep her CDs.
9. It's a simple issue for me - music propogated through viral marketing. It's social content. When it became clear in the 90s that the publishers of content were interested in the money and not the social impact or quality of their content, I stopped giving them my money and never will again. I don't care how cheap it gets. While the industries act as a vehicle for distilling quality that level of quality has dropped dramatically chasing dollars with sensationalism. Creativity is subjective and thanks to the Internet there is plenty of content to sort through that I don't have to pay for, that I don't have to line the pockets of an amoral narcissist looking to exploit consumers any way they can.
What should the labels do? Isn't it obvious? Their value is in distilling quality - specifically working with untrained artists to help them polish their skills. Labels should be seen as clearing houses for quality. How can they make money off that? The masses. The masses will contniue to use services like iTunes and will look to labels as channels for for style or quality. Publishers are branded channels, loyalty to them will come in the form that fans have towards producers and content creators such as Robert Rodriguez and Tarantino. That's user generated content coming from users that succeeded comercially. George Lucas is another example, but he's exploitive even of his employees. Robert Rodriguez is the new Lucas.
It's about the content, not the market, as soon as Publishers realize the market is just a wave they are riding and can't control in age of free media they can be more adept at seeing where it's taking them, not where they think they can take it. They need to follow the consumers, not corral them like cattle and feed them garbage because it's cheaper and makes them more money.
What the labels need to understand is how to profit from maintaining a dialog with the consumers rather than a monolgue. The fact that Amercian Idol sells any music is a testament to that - and it's all garbage. My best idea follow suit with the buy once idea being played with. The idea is if I pay for a movie I get the DVD too. Why not extend that to music. Pay for a film, get the DVD/download and the soundtrack too. That would sure encourage me to spend money I'm not spending now. Musicians would make money as a form of film marketing and licensing, which is all their music does for a film anyway. Soundtracks and collections are also a great way to distill quality. Otherwise I can't think of a music artist or label whose pockets I would want to line - they do not have my interests in mind, all I want is their content, not to sustain their culture exploiting existence so some marketing exec who created Brittany Spears can live in a 20 Million dollar house in Bel Air while I struggle just so I can listen to a track that I have heard so many times I have to own it because I can't get it out of my head.
Posted at 8:10PM on Apr 1st 2007 by Jake Lockley
10. Could not agree more, except to say I think that I think there will always be a small niche market of audiophiles who will invest in hard media formats.
Posted at 8:11PM on Apr 1st 2007 by superdave
11. The CD is first and foremost a bundling format, just like the LP before it and convenience formats like cassette and 8-track. If there were 2 good songs on a $10 CD, then the implicit price of each of those songs is $5 each, not $.99 like in the iTunes Store. One reason the industry is pushing this tale of woe with CD sales is to gain some leverage for negotiating with Apple and other online music retailers over pricing. I see the music industries' point and suspect that unbundling is the big revenue culprit. However, I disagree with a solution where they set prices of individual tracks. I would prefer that they set percentages and give the resellers the right to set prices and compete. Especially with competing DRM systems, it should be totally possible for store A to sell track A at $5 while store B sells it at $1 and both do just fine. Store B then realizes it's leaving money on the table and prices closer to $5. Follow soda prices in grocery stores to see how price insensitive many consumers are at these low price points. Call it the Desani model or the Starbucks model... The music industry needs to take something that can be had basically for free and figure out that they can put a premium price on it, make it cool, and people will buy it.
Also, there's got to be money in mixes. For example, my favorite road trip music right now is the Nike + iPod mix from The Crystal Method. Followed closely by some of dj steveboy's podrunner podcasts. Yet the music I follow and know about is alternative and rock rather than techno and dance. But I'd easily drop $10-$15 on a long format mix for the gym or the highway. Go figure.
Posted at 8:30PM on Apr 1st 2007 by Brad Hutchings
12. Well, the problem with music distribution is actually more complex than simply adding a fee to a cable subscription or to hope for something out of left-field. The music business still derives over 92% of its revenue from CD sales. The rest of the revenue comes from various licensing agreements and for-fee downloads. In a multi-billion dollar business, it is not easy to simply walk into one's shareholder's meeting and declare "I'm cutting the legs out from under our revenue stream".
Furthermore, music piracy is a problem that cable bills or for-fee subscriptions simply cannot resolve. Piracy comes in two primary forms, from the predominantly young (without access to cable bills or interest in for-fee subscriptions, regardless of how tempting that may be) and from systematic piracy in foreign countries.
The DRM model is good, only until you burn a song to CD, then you are free to copy it as many times as you wish.
I think the model that seems to offer the most benefit to existing distribution channels (including the thousands of independent retailers) is direct to device distribution via retail outlets, over-the-air receivers with e-commerce capabilities and networked distribution via statellite radio, cable TV, etc.
The first step in making music distribution more profitable is to recognize the changing format of music ownership, and take advantage of the reduction in physical distribution (and return) costs.
13. Hey Mark, I gotta say give me a break. I mean pirating to a certain extent should be illegal enforced but at the same time when I read : what really needs to happen for the music industry to prosper ?
Does this mean that record companie CEO's are going to be on the skids and such? I dont think so. I think it just means they dont make as much as they used to . Its hard for a glutton of any kind to cut back until you realize, Hey Im ok. Greed is part of corporate america,granted but to say that these guys are taking it rough is like feeling sorry for Ford Motor Company after they ve been putting it to people for years with over pricing and legal ripoffs. Thank god for competition, I love to see greed it self. Thanks for the thoughts.
Posted at 9:02PM on Apr 1st 2007 by Frankie from Lawnside
14. Mark, fear is holding big time record industry execs from taking the leap into the 'cable subscription' model you suggested. Music industry profits are suffering, but as long as this affects every label then each of the execs has an excuse to offer their shareholders. The first one to take a huge leap into a subscription model will either be a huge success or a huge failure. If the first does succeed, the others will be able to jump right in and follow suit without anywhere near the risk of the first. Who will be the brave maverick that puts it all on the line?
Posted at 10:44PM on Apr 1st 2007 by Spencer Ferguson
15. When was the last time you put in a cd or album (or loaded a one album playlist in your ipod) and listened to it from beginning to end... even better... that you listened to over and over and over.
I miss "great" music and artists, ones that made me want to play the whole album over and over and over... What I get now are 30 bands and I like one song by each. No need to buy CDs. I agree CDs are done. Yes I know they are still a huge part of profits for bigger labels, but I've been able to attract great artists, give them control and actually let them make money by doing what they love. It's not rocket science. Great music translate into sales.. some over time, some right away.
In short, the crap music that is being thrown out has a major factor on slumping CD sales, too.
16. The problem that the music industry is having isn't just one thing... but I think Jason is onto the critical factor. Its not a technology issue. The music industry should be about producing great music.
Have you seen this PBS Frontline report about the music business. http://www.pbs.org/wgbh/pages/frontline/shows/music/
Posted at 2:14AM on Apr 2nd 2007 by Loren
17. The CD is dead, and the DVD isn't long-lived either. Streaming, or on-demand, or downloadable is where most of this stuff is going. Who wants to buy a physical tape or disc when they want it stored on their computer, iPod, or on their car stereo. The car part is the only think keeping a lot of people buying music CDs.
Posted at 2:17AM on Apr 2nd 2007 by basketball
18. "The CD is dead." It may be, it may not be. I thought over the past few years that the record companies would market music on SD, Memory Sticks, Compact Flash or even thumb drives. They have yet to do so. Why? Beats me.
One of the things I remember my father saying about CD's when they first came out is that cover art sucks, it was going to be too small for the bands to express themselves artistically compared to records. Try looking at Sjt Peppers album cover on a CD. Its kinda like the tiny cell phones, at some point small products become un-useable and easily misplaced.
I believe the jewel case will be about as small as it gets when it comes to packaging. I miss going into Bills Records (moved away from Dallas) and looking at all the awesome album covers (ok, some not so awesome). But part of the deal with getting a record was the cover art as well as the music. Not so much any more.
Another reason I believe the CD will remain is for concerts and live shows. How are you going to ask Roger Creager or Jason Boland or any band to sign a digital mp3 or a SD Card. Live shows are about the only time I buy a CD any more and that is just because I want to get the band to sign it and keep it as a memory.
CD's & DVD's & Blurays, etc will remain because we are materialistic and want to show people that visit our homes our "collections" of stuff. It is not the same to show it on a computer screen, or HDTV linked to a computer because it is not as easy to quantify disc space as it is wall space. Maybe the media will change but at least I believe the jewel case is here to stay (I hope, for as much as I hate the bulky things).
As for a new way for the record companies to sell players... look toward Apple and Archos.
19. CDs are not dead just yet. I have an ipod but i still collect classic albums, you know the artists you'd love to listen to over and over again, not the commercial albums being released nowadays.
When I have guests over at my place they'd love to see my collection, what i listen to, not how many Gigs of digital music i have downloaded.
Creative album art also counts for alot - Common: Like water for chocolate, The Roots: Things Fall Apart, Talib Kweli: The beautiful Struggle etc
Posted at 3:28AM on Apr 2nd 2007 by shook_1
20. Not only is the CD dying, but the iPod and other purely portable music players are dying along with them. I think Apple has figured this out with iPhone and will actually accelerate the death of these devices. Why is this? Well, as soon as my phone has a slot for a 4 GB flash drive and then eventually has a 60 GB hard drive I no longer need my iPod - my music and videos are now on my phone.
I recently added a 2 GB flash drive to phone, which holds 480 songs, roughly 24 hours of music if I fill that up. Sure, it's not every song in my library, but it's all the songs I'm into at the moment. And most of my music is listened to on flights and I'm rarely on a flight that lasts longer than 5 or 6 hours. The only thing I use my iPod for is the gym, and that's because I like the small size of the shuffle and I don't have an arm band for my phone.
As for the music companies making money on music - make it DRM free. I don't know what revenue model they should use, but just do it. The only three places I buy my music are eMusic (DRM Free), AmieStreet (DRM Free), and iTunes (I have a crack for the DRM) because with these services I can move my music to my phone, computer, iPod, and mp3 disc player in my car.
The second it becomes difficult for me to put the songs I want on these three devices, the second I don't buy the songs.
1. Very good points Mark. Flash harddrives with more storage and security with be the de facto standard for AV in the next few years.
When the inevitable death of the CD (Music, Software and eveything else)_ comes along, how will hight street retailer cope with it?
In my eyes its simple - the CD style cases with contain a 1 time unlock and download key along with artist/product booklet.
The benefits: lowered production costs, increased customer purchasing data and less returns. :)
Posted at 1:40PM on Apr 1st 2007 by Shaun