Following on from the Radiohead album release, a buddy sent me the link to this post that discusses some different models for the music industry.

The post comes up with the following models;

  • Free

    If music is becoming ubiquitous, through illegal file-sharing, supported by mass storage MP3 players, then why not just give it away? The “free” model doesn’t mean making not money from music. Instead, the tracks themselves are treated as a loss leader, designed to promote the artist and drive sales of other associated products, such as concert tickets and merchandise.

  • Pay what you want

    RadioheadSimilar to “free”, the “pay what you want” model came into the public eye most recently when Radiohead released their new album, In Rainbows, with a voluntary price tag. Fans can choose what to pay for the album, including nothing at all.

  • Pay by popularity

    AmieStreet logoAmieStreet, of which Amazon is a recent investor, is a social market place for artists to connect with fans and promote and sell their music. The site has pioneered a “pay by popularity” model, whereby transparent market forces dictate the price of music. All tracks on AmieStreet start off free, then the more the track gets downloaded, the more the price increases in increments, all the way up to the industry standard of 98c. This is in complete contrast to iTunes, whereby all tracks are priced the same, irrespective of how popular or obscure they are — something which the major labels are desperate to change.

  • Subscription

    Legendary music producer, Rick Rubin, recently told the New York Times that subscription services are the way forward.

    “You’d pay, say, $19.95 a month, and the music will come anywhere you’d like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You’ll say, ‘Today I want to listen to … Simon and Garfunkel,’ and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now.”

    However, despite what Rubin says, services such as Rhapsody haven’t reached mass adoption, as it’s not clear that people are ready to “rent” their music. Another reason might be that we haven’t yet reached ubiquitous Internet access. When all of our music can “live in the clouds”, accessible at any time, owning it outright may no longer be that important.

  • A music tax

    It’s an old idea and one that UMG was rumored to be pushing most recently: some sort of music tax, possibly collected via your Internet Service Provider. The idea is to charge the customers of ISPs and cellphone carriers a flat-rate fee as part of their data service plan, in exchange for the right to download and share the major record labels’ music over an ISP’s network. That way, filesharing is decriminalized and the recording industry is guaranteed revenue.

My pick is that the next generation will chose between pay by popularity and subscription. The paradigm would just have to change to much to enable free or pay what you want to gain ascendency and a music tax just won’t cut it with the empowered and  aware  consumer of today.

Thoughts anyone?

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

6 Comments
  • What about the media industry? Shift to greater regulation of content leading to less opportunities for aggregation by citizen journalists due to barriers in access?

  • Hmmmmm – Media is a little different. There will (for the foreseeable future) be a place for both “professional” and citizen journalism. There will also be more emergent locales for mashups of both pro and netizen journalism. I subscribe to dozens of RSS feeds but still like to read the traditional print products – both periodical and broadsheet – most of the people I know do similarly.

    Music however is much more polarised than media

  • I think the way the music industry is transforming is fascinating. Talk about disruptive technology.

    I think performers (and their sound engineers) should be rewarded for their efforts, but the cost to the consumer can now be reduced immensely by creating a more direct route to market and cutting out some of the middle-men.

    Resistance is futile!

  • The answer lies in disintermediation, the word has been around for ages but it’s so relevant in the music industry.

    There are two forces at play in todays music distribution channel, from the users perspective:

    1) distribution costs reducing to zero. Physical media duplication/distribution moving to digital downloads
    2) bands and musicians not getting what is perceived to be a fair deal.

    So as a consumer I want to pay a couple of US$ for a CD worth of music, but I want 90% of that to go directly to the band.

    As Radiohead are about to discover when you get the lions share of a small amount you are still going to make a lot of money.

    Then think how the bands can leverage, fairly, the closer relationship they have with their fans. Touring, Merchandising and packaging options become very lucrative. Look at the Rock world for innovation here, Rammstein and Iron Maiden for example have very lucrative clothing and merchandising opportunities going on, Metallica sell recordings live shows direct.

    You can compete with free, but you have to be realistic about it.

    Radio is going to be the next music market to start to seriously lose out soon, the ratio of music to adverts is getting terrible. It’s trivial to connect your iPod to your car/office/kitchen music system, why not become your own radio station?

  • I was about to post in my previous comment that I actually thought there were opportunities for bands to start signing with concert promoters instead of record companies, in a manner similar to Celine Dion’s Las Vegas residency or Cirque de Soleil’s Global events.

    And what do I spot this evening?

    This story on the bbc website about Madonna doing pretty much exactly that

    http://news.bbc.co.uk/1/hi/entertainment/7042341.stm

  • Great roundup of where artists can start make money going forward. I think Radiohead, Madonna, Nine Inch Nails, etc. are really leading the trend here. While music labels are still fighting piracy, etc, the artists will embrace this growing digital trend, not fight it, in a way that will leave them out on top.

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