There has been quite a big of discussion about the music business lately. In particular the ongoing decline in CD sales. So i decided to revisit a blog post from April of 2005 entitled "The Countdown for the extinction of CDs is about to begin"
I don't think i said anything groundbreaking. I made the point that I no longer listened to music on CDs. That I had them on an Ipod when I listened. That it was difficult to deal with CDs in order to get to the music I wanted, when I wanted.
So here we are 2 years later and the media is full of articles about the seemingly never ending decline in CD sales and the inability of digital sales to close the gap. Can anyone be surprised ?
When was the last time you saw anyone listening to music on a CD Player ? At the gym ? No. At the Mall, maybe only some of the senior walkers at 9am. On downtown streets at lunch ? No.
Does anyone even know what percent of music is listened to via CD any longer ?
I would say the music industry has put itself in the position of being incredibly stupid. They are dependent on a format, the CD, that few people listen to. Although this is a guess, my guess is that the majority of CD purchases are then put in a PC and imported into an MP3 or other format for consumption on a mobile device. Few people buy a CD and just listen to it. Which means you can say goodbye to impulse buying of CDs.
We are in a market where, whether we like it or not, the music industry has tethered us to our PCs. The easiest way to buy, the easiest way to get the greatest utillity of their products is via the PC. Thats a HUGE, HUGE, HUGE mistake. Did i say that it was a huge mistake to make the PC an inevitable part of the music buying process.
Our ability to consume music has gotten incredibly easy over the past 25 years. From the walkman to the CD Walkman to the IPod, we have ditched the album (to the chagrin of milk crate manufacturers everywhere) and evolved to the point where an 80gb IPod has the capacity to carry every song we might imagine listening to over the course of our lifetime. So easy that it revived Apple and catapulted the company from an innovative niche PC marketer to a technology leader. So easy that we consume more music than ever before, yet total sales are in a tailspin.
Can the music industry be saved ? Yep. It would be so easy its scary. Make music available anywhere and everywhere.
How much music can be stored on 1TB of hard drive space ? All of it. How many people does it take to carry a 1TB drive ? My 3 year old daughter can do it.
I would find a manufacturer of cash machines, the ones you see in every bar, restaurant, mini-mart and retail outlet and work with them to reconfigure the machines so that they can hold a hard drive that can be updated with new songs via wired or wireless internet access and whose screen can offer a simple interface for people to select music. The consumer plugs in their SD card from their phone, or plugs the USB cable attached to the machine into their IPod or similar device and the music selected, downloaded and debited to the customers credit or debit card. Pay the machine host a commission, or a per transaction and everyone goes home happy.
Why wouldnt the music industry do this ? I understand the difficulty of getting an entire industry to do anything, particularly the music industry where the fault is always someone elses'. But this is a matter of survival and the solution is simple.
Not that there aren't other issues, Its certainly not a simple process to connect your IPod to a random device and buy music. The future of the music industry depends on the negotation of a software update with Apple. It would be a simple, simple enhancement to ITunes software on every IPod. The software, when connected to one of these music dispensers would look for a unique ID and a number with a check digit. If it found a valid number, it would allow the one way transfer of music from the dispenser. Simple and easy...if Apple goes along. Which they should, because it wouldnt be a stretch to put an ITMS like interface on the dispenser, let people login with their Apple ID, and buy music that could be charged to the credit card on file with Apple.
None of this is rocket science. In fact, its easy. Music Kiosks have been proposed for years and years. Kiosks have been developed time and again. They haven't worked because they have been over engineered and music labels haven't made enough content available.
I hope the music industry has reached the point of desperation where now is the time.
Its time to recognize that its never been easier to listen to music and more people are doing just that than ever before.
The only difficult part of the music equation is buying it. Sitting in front of your PC works sometimes, but it isn't optimal all the time. Where ever you see people listening to music, they should be able to buy and immediately listen to their new music. Why can't the music industry get that we should be able to buy music when we want, where we want, in the format in which we consume it, on our IPods and comparable devices. Until that happens, total music sales will continue to decline and quckly.
The future of the music business...again
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(Page 1)2. I have to agree with you. Remember when HMV music came here to Canada? (okay so maybe you're not from around these parts) Previously, A&B Sound was the big kahuna of CD sales here in Vancouver. Well, the big thing then was to go to HMV. HMV had these new listening stations (remote buttons and earphones plugged into a cd player). My friends and I would all head to HMV and listen to cds that interested us. If we liked the music, we'd pretty much buy it right then and there. It didn't matter if HMV was more expensive than A&B Sound. It was purely the convenience and the "hipness" of buying from HMV.
The next obvious step is the Mp3 format. Everyone uses it (except my old skool dad, he still has a tape player believe it or not). They should be selling the format at listening stations. The stations could me in the middle of the mall, at a music / cd / dvd store. Heck, it could be at a gas station if it were busy enough. Just the convenience of the format would make it an easy buy. A sales guru once told me that price is really 10% of the purchasing equation. What we invest into the purchase emotionally, equates for the rest.
Since then, A&B Sound has go into bankruptcy and HMV has diversified into some other media (namely DVDs). A&B Sound was bought out by some big computer company. They are now fighting tooth and nail with some other box stores here (namely Best Buys, and Future Shop).
3. There were 6 billion discs manufactured in North America in 2006. 48% DVD-video, 27% CD-audio, 18% CD-rom and the other 7% were either different DVD media or Blue Ray or HD. Believe it or not but my company still duplicates audio cassettes. There's still a market for the CD but we're probably done seeing the large run which may or may not cause the big boys to down size thus making my company a major player. That is what were banking on!
Posted at 11:37AM on May 29th 2007 by scott machen
4. I actually see a lot of people on the subway here in Boston using CD players.
(not as many as I see using iPods, but easily 2-3 per day)
of course, I also buy and listen to vinyl records when I am lucky enough to find something I like has come out on vinyl.
5. What a great idea! I can't tell you how often I have been sitting at Starbucks (or some other locally-owned coffee house) or standing in line somewhere listening to the music being piped in to entertain me and hopefully make me forget how long I've been standing in line when I heard a great song (gone are the days of muzac (sp?), thank goodness). There is no way I will remember that song when I get home (getting older is sucking). I would LOVE to be able to plug in my iPod and download that tune right there while it is fresh on my mind.
Chris's wifi idea (above) is a great one as well. I want it all.
Posted at 11:49AM on May 29th 2007 by Jo Beth
6.
I buy CD's for 1 reason:
I HATE HATE HATE HATE HATE dealing with DRM. I go through devices/computers like . It can be a pain to authorize/re-authorize/de-authorize my devices. I bought the freaking music, let me do what I want with it for personal consumptioin. I have tried MSN Music, Urge, etc. While the interface is simple, I dont have full access to all the music that I want. I needed a Beetles album (I think) and MSN Music did not have it. I assume this is a record label thing, licensing, etc. I ended up going to Best Buy and finding it there.
I dont see a time that I would not by a CD given the opportunity.
Peter
Posted at 12:24PM on May 29th 2007 by peter
7. I used to work in the music industry back in the early to mid nineties and around 1995 the company I worked for started an ill-fated venture called 1-800-musicnow. Their slogan was 'you dial, you listen, you like, you buy'.
You called the above number and used push-button phone tones to listen through music selections and if you liked something you could order it (a CD) on the phone and it was shipped to you for 20 bucks. The company failed.
I remember talking to my co-workers and all of us agreeing that the business model was doomed. Even though it was only the mid-nineties the writing was on the wall. The future was digital distribution of music and I thought for sure the music industry would re-tool and head that direction in a year or two. Boy was I wrong!
12 years later they still don't get it.
8. I have a slight modifcation to our idea
You walk into the music store, find an album yo uwant, write down or take the piece of paper that has the bar code for the song or album. Walk to the counter with the code, and they either put it on your ipod or sell you a flash drive with the music on it. a 128 MB flash card will fit a full CD encoded at 192 Kbps and you can now get a flash drive that size for like 10 bucks.
Posted at 12:31PM on May 29th 2007 by superdave
9. that our was a typo and was supposed to be "your". Not trying to claim rights to the idea Mark
Posted at 12:32PM on May 29th 2007 by superdave
10. Top four ways the music industry will ruin your idea, even if they try to implement it:
1) Low-quality MP3s, the the hope of selling it all over again to you at better quality compression
2) No provision for re-downloading files that get lost
3) DRM on the audio files that make it unattractive to purchase
4) Lack of selection - only a portion of recordings will become available, so anyone not in the mainstream market will not find their music
Only after they lose the battle will they regret the approach of holding tightly to the past instead of being a visionary as you suggest. I don't think that the music industry cares about meeting customer needs in order to increase revenues. They are much more interested in increasing their control of how and where content is used, so they can perpetually license it to people. As a result, both content owners and the public all lose.
Posted at 12:48PM on May 29th 2007 by Bob Russell
11. Good thoughts Mark... today's ATMs are all high-speed IP connectivity and Windows interfaces, so what you propose is technically feasible. The challenge is the cost... ATMs are a loss-leader for banks, but banks must have them or they are conspicuous in their abscence. ISO ATMs make money in massive scale and through ridiculously high convenience charges. The song model will not accommodate this kind of pricing.
Wireless and Wifi (and a wireless Ipod) is the answer here, but whatever the deployment method, everything you suggest is the direction it's going.
Honestly, I will miss CDs. I happen to like the liner notes, stickers, etc. I think the declining business model for CDs is predicated on two things... more than just the advent of digital music.
First, I think its the lack of quality content, both in the music and in the packaging. Put more content there (for a great example, look at what Beck has done with 'The Information') and people will show more interest.
Second, the decline is also led by a misguided price point. Record companies are pricing CDs at margins to accommodate how much money they want to make, not charging what the market will bear for their product. If all CDs were $8.99 and had good liner content, alot of issues about digital theft would evaporate, because at the end of the day people are willing to pay for a good product at a fair price.
Posted at 12:50PM on May 29th 2007 by HJ Mann
12. The music industry won't change any time soon. It's like me trying to convince IBM to open source all their software under the GPL. Everyone's going to have to adjust to the effects of digitization and digital distribution, it's just a matter of when, and who will eat their lunch in the meantime.
Anyway, on to Mark's specific idea. It's not a bad one, and I'd like to see the industry go further and simply continuously broadcast (e.g., network coding) music for local device storage--phone, home--on any/every kind of network where they can get a little bandwidth. I can then shop locally.
I gather the major problem with this is DRM, i.e., how to lock the music until you purchase it? Are we always going to be stuck with central transaction servers?
Feel free to shoot all this down...I look forward to comment comments.
Best regards, Joe
Posted at 12:59PM on May 29th 2007 by Joe Latone
13. Good points Mark. The real future is not devices and temporary storage media but in smart databasing, remote instantly accessible storage options, and systems for monitoring and billing for fair use individually and commercially.
Soon the focus will be on personal agents that seek out music and use contemporary text, voice and sound search techniques to aggregate personal interests. Tell your robot you are having a Jetson's party and it programs the appropriate, cool stuff for atmosphere-ask the agent what song it is with the line" picture yourself in a boat on a river" and viola "Day in the Life" appears, etc.
"Record companies" are already dead-content providers will handle audio content dispassionately and artist management and promotion will assume new dimensions. Pieces of plastic and particular gizmos are largely irrelevant-new models to keep track of traffic and routing will be more relevant and those folks who figure out where to equitably set up the toll booths will succeed and make money.
Posted at 1:14PM on May 29th 2007 by Dick Deluxe
14. Hi Mark,
The answer lays in the infrastructure of the internet - (wimax and 3g) - will inevitably become standards. Hopefully sooner rather than later. The solution to your post will come from an 'untethered' version of itunes (or something similar), whereby users download songs directly to their mp3 players (from anywhere.) Hence, solving the... "I'm listening to this song at Starbucks... how can I download it now?".
Needless to say - bank machines offer a potential immediate solution - but they do not have the profitability architecture to maintain a competitive advantage.
Cheers,
Jesse
Posted at 1:28PM on May 29th 2007 by Jesse Sternberg
15. I agree with the article and all points above. As long as the music industry still refuses to "get with the times" and rely on CDs they will be forever lagging behind and find themselves continually lagging in sales.
Many other industries have figured out how to adapt to advancing technologies, yet the music industry continues to play stupid and lose sales while blaming music pirating and illegal downloads for the majority of their problems.
Posted at 1:39PM on May 29th 2007 by MLS Jerseys
16. I totally agree with your points Mark. I have already seen kiosks in the mall where they sell iPods from a vending machine, and there is a touch screen where you can purchase other gear. I think all they need is the ability to program an update for iTunes and you'll have all the mall kiddies flocking to get the latest Brittney Spears single right on their overpriced vending machine iPod. Brilliant idea, but the cost of the iPod itself still needs to come down.
Posted at 1:46PM on May 29th 2007 by get a loan
18. I agree with the comment above, music isn't a grocery item and the appeal of the digital musical era hinges on the fact that the listener can control exactly what they're listening to. It's very personal and defies conventional marketing methods--much to the agony of the content providers.
Because of identity theft, the consumer is protective of their log-in information and would, most likely, not enter it into a public kiosk.
I'm not certain that the music industry can be "saved" by restoring traditional purchasing methods or by employing new fangled ways of getting the public to improve sales.
There is obviously an unprecedented level of interest in music--this is evident by the amount of people who vote for "American Idol" contestants each week and download mp3s of their performances.
I believe that the IPhone and all its subsequent imitators will ultimately change the way people purchase music "on the go". However, the fact remains that consumers prefer to shop online more than any other method and until the record companies invent attractive and affordable incentives to lure in customers (bonus tracks, pre-release material), traditional methods will prevail.
Posted at 2:01PM on May 29th 2007 by Angelo J. Guglielmo, Jr.
19. Hi Mark,
The music industry really needs to embrace technology, but not in the way that you suggest. Subscription based satellite and internet radio which automatically delivers content to the portable players is the future. The purpose of purchasing individual tracks allowed users to choose which tracks they want to hear. Subscription based players will pick up your listening preferences, automatically store the music tracks you're likely to download anyway and let the user skip tracks or allow users to return to them in the future. All for under $10/month.
Slacker Radio www.slacker.com has been generating a lot of hype about this exact business model. However Apple or any other competitor could quite easily muscle in (Microsoft's Zune player anybody?). It's time that the music industry cultivates these technologies instead of pursuing their current methods of protection.
Posted at 2:08PM on May 29th 2007 by Mike
20. Under the implosion of the "album" model for music sales there are some interesting developments.
First, quality and valued music will always be so valued - acts such as Prince and U2 and The Stones are making even more money than before shed of their labels and via the live concert tour. The one area where music cannot be pirated or have any interaction with a PC is the area that is thriving - the mega tour.
The channels of retail selling music has had an amazing but understandable upstart in Starbucks, with their "notions" selling of music at the point of purchase for your cafe latte. The problem is that the sheer brawn of 49,000 retail outlets can still only show 3 to 5 selections at a go.
Finally, classical, operatic, and even jazz resists the computer download (baud speed just isnt there yet)and stays profitable in CD album form and multi-media DVD form. These classical music forms also translate well to VOD and HDTV as they are not as ambituous as the "mega-tour" presentation (very hard to capture The Stones tour experience on a TV screen - no matter how large) and yet the classical, operatic, and jazz music forms fit very nicely into the niche demographics backing much of VOD technology. Given the ability of VOD and with HDTV, what were only a few thousand per community oif audiophile callsical, jazz, and operatic buyers can now be organzied into a national and even international market of more thna enough size to generate profits. Especially whent hey are the only ones still paying top dollars for CDs. Just check out the huge success of the NY Met Opera simulcast in national movie houses of the occasional Saturday afternoon "Live from the NY Metropolitan Opera"
Your local opera company may now have more worth than you think. What has been traditionally only philanthropic and local community service may now actually have very valuable content and form in libraries for the new international environment of music sales.
Posted at 2:09PM on May 29th 2007 by Mac Robertson
1. While the idea has merit, I think that most people take their music seriously enough that it requires some window-shopping time-- something that would be incredibly frustrating when there is more than one person involved. If I know exactly what I wanted it would be a no-brainer.. but those times are few and far between. This isn't gasoline or milk.
Wi-fi iPods would be a far easier approach. Enter your cc info in at home, find a hotspot by the pool and browse/buy all you want.
Record companies should also look to evolve from producing albums to artist management.
Posted at 11:17AM on May 29th 2007 by Chris