Ponderings on the future of music

Universal is offering a new free music download service. The service will provide free commercial music downloads and will make money through advertisements.

Congratulations, Universal. You are about to make a shitload of cash... Too bad it took years of lawsuits, accusations, and nasty RIAA litigation for a major company to realize that instead of bitching that they were losing money, they could just innovate to capitalize on the new economy.

What I like about this is that it shifts the conversation away from the rights of the recording companies back to the rights of musicians. How does a website that offers free music downloads fairly distribute the money generated from advertisements back to the musicians?

If there is a way to track the number of downloads or page visits, perhaps the money could be directly split proportionally by popularity. For every visitor that clicks on an advertisement on the band's page, the distributor receives 3 cents and the band receives 2 cents. Something like that.

Alternatively, much like television, musicians could strike up deals with the distributors. The distributors, who distribute the free music downloads, agree to pay the artist a sum of money in exchange for the rights to distribute that artist's music. This contract could be non-exclusive, which would mean musicians could also sign contracts with other distributors. If they sign an exclusive contract, the sole distributor could redistribute to make even more profit down the pipeline. Of course this means the artist loses more rights.

My guess is that for smaller artists, the first option makes more sense. For bigger name artists and distributors, the second option provides more "control" by both parties, at least in terms of traditional contract negotiation.

"What about file sharing? Won't that mean people won't visit those sites as much?" No. Think about it. Sharing and word-to-mouth advertising is one of the best ways to advertise to niche audiences. There is money to be made even if the media is free. If you don't believe me, ask any popular television actor how they pay the bills.

So let this be a lesson to the recording industry: innovate or die. As enablers of media distribution, recording companies need to realize their physical media market is dying. They need to shift to become more like distribution and production companies if they want to survive.

The really exciting part of this is that since the internet is a low-cost high-volume medium, the possibilities for smaller distributors and musicians to compete with majors is greater.

2 + 1 = 3 (not verified) says:

how does a popular television actor pay the bills?

zirafa says:

Usually with a pen and their large checkbook.

b (not verified) says:

I guess one question is, how can you incentivize visits to distributor-run sites?
The only way i can watch '24' is on like, whatever network runs it. So I'm a captive audience for all their ads. But I have many choices at my fingertips, for digital media. And personally, I prefer clean websites.

Which is a problem.

I will probably buy the Luis Vitton wallet that I just oh so desire not from that guy on the corner in Georgetown but from the Luis Vitton store itself. Why? Even though the two wallets may look/feel identical, I have some kind of inexplicable preference for the 'authentic' item. One aspect of digital media as opposed to physical is that it seems like it does away with brand loyalty. The digital copy is fungible (new fave word). Actually owning the 'White Album' as opposed to a taped copy goes from being a symbol of status to a sign of eccentricity. I mean, I DO have to have that new Rihanna single complete with factory packaging, lyrics and pictures, but honestly, does anyone else?

What can distributors offer that peer-to-peer cannot?

Idea: I guess it's a feature of all markets, but it seems like in popular music in particular the trendiness of the product is a major factor in its marketing, consumption, etc. (mmm, yummy song!) Ya gotta know what's hip, and be one of the first listening to it.

Classical Economics = the distribution of scarce resources.
Late Capitalism = no more scarce resources. Instead, the need to manufacture desire, sell 'trendiness' to create the perception of scarcity and thus a false sense of urgency. Above all to create demand.

So, maybe distributors could use this sense of trendy urgency (like ohmigod, what if i die before my ipod is full? Or run out of water or something?). Distributors could release the hot new albums in pieces. A song at a time, and instead of releasing on a specific day, they could be like 'oh...on and off throughout this week...' and people would hit the distributor sites constantly because it would be the ONLY way to get to the newest stuff first.

but it's a real big problem it seems...

zirafa says:

I think it just means the distributors will have to be creative and compete on different terms. There are many different cereal companies, and it always seems that the ones with the best brand always beat the generics. Even though, c'mon, frosted flakes is frosted flakes.

For free music sites, I think this translates to

a) the style and branding of the site. what type of audience/demographic do they cater to?

b) building a community. does this distributor care about the visitors? how does it connect with them?

c) going offline. providing old school concerts, events, in the real world.

d) special offers and promotions. Special online interviews, performances, etc. that you can only get through certain sites or things that have decreased value (live performances) after the fact. Tapping into an interactive sphere on the net that hasn't really been marketed yet.