The music business has had particular trouble adjusting to the realities of the digital age, so I set out to develop a model that fully integrates all of these realities in order to help out artists and labels. Not only is it valuable for the music business, but for many other fields, especially those touched by new opportunities and difficulties arising from the web.
Click any of the links throughout this summary to jump right into the related section of my thesis. The designer, Ryan Van Etten, did an awesome job at creating a great platform for the thesis’ content.
The research revealed that convenience is one of the most important factors for music consumption. Due to the fact that the music industry has lost control over the distribution of their content, this desire for convenience has resulted in piracy. Meanwhile, consumers are replacing traditional media with new media with the percentage of respondents who have never bought a physical CD increasing per generation. People have different expectations as to what price is reasonable for different products. An important trend being that people enjoy consumption that feels like free, which has made that which is easily copied cheaper and that which can’t be copied more expensive. Although consumers like ‘free’, even consumers that frequently pirate music often regularly spend money on music.
As a solution to these challenges, the author recommends that artists and labels starts integrating the concept of the ecosysteminto their communication strategy. The ecosystem is an active fanbase which is interconnected through non-linear communication. This means producing a ‘story worth telling’ to turn the internet’s non-linear communication and loss of control over distribution into an opportunity to get discovered. The second step is retaining the attention by connecting with listeners and connecting them to each other like the host of a party would with guests. Turning the ecosystem into a fun party helps energize the fanbase and amplifies the aforementioned ‘story worth telling’. Marketing opportunities come from listening to the ecosystem and releasing the products they want, as opposed to the classic approach of pushing the product that you want them to buy. Internet-enabled concepts such as pre-ordering and digital releases allow labels and artists to offer the ecosystem abundant choice to play into all the different expectations regarding price and product characteristics. This most likely will involve a mix of (feels like) free and publishing products or services that are better than free.
Now here’s a smart way to direct attention to an album release. It appears NPR has entered in a deal to let people listen to Moby’s new album via their website. They’re also asking people to tweet their review of the album with the hashtag #waitforme - the name of the album.
Way to go, Moby! What’s more, Moby has anounced that the most creative review will get exclusive artwork made by Moby himself.
The album is set to release at the end of June, but has already generated tons of reviews! These testimonials are sure to spread the news of Moby’s album release (great free music always goes viral) and the more listeners he gets; the more people are likely to buy his new album when it releases.
From the page: "The authors were one of the first to challenge the early claims about the effects of file sharing. Years later, many other economists have followed suit (including the study funded by Industry Canada). This latest paper does a nice job of expanding the discussion, by using the data to examine incentives for creativity and the effects on aggregate creator and industry income.”
Looking for artists to sponsor my future of music thesis survey with a song/track to reward the participants!
I’m a 23 year old International Communication Management student currently writing my thesis about the Future of Music Distribution. For this thesis I’m going to be doing a survey to add more authority to the findings of my thesis so far. As an incentive for people to fill out the survey, I figured it would be appropriate to offer them FREE MUSIC! :-)
The idea is as follows:
After filling out the survey, the users will be shown the end page.
I’ll get some cover art, plus 10 tracks. I’ll put the cover art at the top, then tracklist:
1. Artist - Song (Download) 2. You - Your song (Download) 3. Artist - Song (Download) etc.
The word download will link directly to the song, whereas I’ll make the artist name link directly to the profile page / website of the artists. It should be a good deal for everyone involved I believe :-)
I’ll also offer the whole thing in one ZIP file, and will include an information file with all the websites etc. I’ll also edit the artist websites into the ID3 info of the MP3’s.
Will do my best to make this a good promotion opportunity for all those involved!
Please get in touch with me asap, because I want to launch the survey within the next 36 hours!
"Google says it cannot operate YouTube if it has to pay a royalty — however small — every time a video containing music is played. In 2007 the UK’s independent Copyright Tribunal established that a minimum royalty per play was an essential requirement in the licensing of online services. Google fails to recognize this and ascribes little value to music — in spite of a huge increase in music usage on YouTube’s UK service. Royalties are a vital income source for all professional creators and must be preserved to ensure a continued vibrant music industry. We trust that Google will reinstate music on YouTube and pay a fair price for it."
People will have to understand how unreasonable the royalty demands for streaming are. Sites are being made to pay $0.01 per play - which is A LOT. These sites don’t get 1 cent every time someone sees an ad; they get 10 cents every time someone clicks an add - and that’s not one out of ten times someone listens to a song… It’s much, much less.
"Consumers ages 13 to 17 spent 13 percent less on music downloads last year, while compact disc purchases tumbled 26 percent, according to a survey by the Port Washington, New York- based researcher."
"Downloads from peer-to-peer networks fell 6 percent in 2008, NPD said. Meanwhile, 52 percent of teens said they listened to online radio in 2008, up from 34 percent from 2007. Almost half of teens, 46 percent, used social-networking sites to download or stream music, an increase from 26 percent in 2007, NPD said."
“Streaming music startups don’t want more people using their service, because they lose money from every one of them, and the perceived success from having more users makes it harder for them to plead with the labels to give them better deals.”—Michael Arrington, The Sorry State of Music Startups
Not sure this is the right way to go about it. People are not used to paying for this service, nor are they used to paying for radio.
I expect they’ll lose a lot of users who will then illegally download the music they’re looking for, instead of playing it via a trackable system so royalties can be paid out and data handed over to artists.
"While overall music sales were up 10 percent in 2008, the year saw a drop not only in CD sales, but also in the number of customers actually purchasing music. But according to a new report, the act of listening to music is actually on the rise. … NPD’s annual Digital Music Study found that there were 17 million fewer CD customers in 2008 than in past years. CD sales have been dropping for quite some time, and while 1.5 billion songs were sold digitally last year, the number of Internet users paying for digital music only increased by 8 million in 2008."
This says something about the direction the music industry should take regarding music distribution. Less people are buying music, but the people that are buying music are actually buying more. More people are listening to music; so find a way to make money from that - or via that. Reach them while they’re listening.
"The main topic of the book (as far as I have read it, at the time of this blog post) is how drastically things have changed because WE ‘the people formerly known as consumers’ are becoming more empowered by the minute, i.e. it’s increasingly more about MEMedia than about THEIRMedia; about conversation and engagement not (you guessed it) about Control.”
They’re asking for 6 months in prison for the guy who was the first uploader of a Guns N’ Roses album before the release date. It’s always very tragic when something gets leaked, but there are good ways to deal with it and bad ways. Prison sentence goes a bit far, a fine would be more appropriate. Also, they’re charging him for every single download made - with estimates based on the statistics of 30 out of over 1300 websites offering the album for download.
Cogill’s attorney, David Kaloyanides, told the court that no jail time was warranted. (.pdf) He added that, “There is no way to determine how many downloads were made.”
In the end it’s only moving us closer to a better system. If we can measure more exactly how many downloads there are made, we can start taxing internet users for their downloads, based on a flat fee - as suggested by media futurist Gerd Leonhard and others.
By the way, the RIAA said it would be willing to accept $30,000, instead of $2.2 million in restitution, if Cogill “was willing to participate in a public service announcement designed to educate the public that music piracy is illegal.”
I’d take that deal. Although that $2.2 million is quite a steep estimate.
Former full-time musician and CDBaby founder, Derek Sivers, speaks out about the future of the music industry and musicians. Says some fascinating stuff, like the following about spreading the word about a band/artist:
"I’d make sure that I was always in a real three-way conversation with my fans. Encourage them to talk with me and with eachother. Make my success their success, like Obama."
"The music business might be like the poetry business some day. Which means: almost no profit, and people do it because they want to, never for the money. I’m sure there are some companies making money off of poetry, but not many. Not making millions."
Interesting person, interesting interview. He’s one to listen to. Check it out.
"Reports had claimed that Eminem wanted over £800,000 from Universal and that he argued money from iTunes and other download services should fall under "licensing" agreements in his contract not "distribution".
If the court case did, in fact, go ahead, it would set a precedent for other artists as it is exploring the definition of digital royalties.
At present, when a song or ringtone is bought online, the artist receives a royalty. The amount of this royalty is initially decided following a contract between labels and artists. For many artists, however, that digital royalty is not clearly defined, and, added to that, many of the contracts predate the upturn of digital music sales.”
A 2007 study comissioned by the Canadian federal government points out ‘piracy’ increases music CD sales.
"It found “a strong positive relationship between P2P file-sharing and CD purchasing” among the subgroup of P2P file-sharers. Specifically, “among Canadians actually engaged in it, P2P file-sharing increases CD purchasing.”"
Statistics on the growth of the digital music business
"In 2008 the digital music business internationally grew by around 25 per cent to US$3.7 billion. Digital platforms now account for around 20 per cent of recorded music sales, up from 15 per cent in 2007."
"The recorded music industry generates a greater proportion of its revenues through digital sales than the film, magazine and newspaper industries combined."
"Consumer demand for music is higher than ever. NPD research found that total music consumption in the US rose by one third between 2003 and 2007. Nielsen Soundscan reported overall sales at an all-time high in the US in 2008."
"Single track downloads, up 24 per cent in 2008 to 1.4 billion units globally, continue to drive the online market, but digital albums are also growing steadily (up 37%)."
The bottom of the article talks about EMI’s losses and their borrowings. I guess they’re panicking and trying to control a medium which they can’t.
Article found via Media Futurist @gleonhard who adds:
"Ouch - will they EVER learn? License the ISPs - don’t unplug the users!!!"
He has a good point. If this were the 80’s, it would be like scrambling somebody’s radio for taping songs. Except the internet has far more functions and is essential for most connected people, unlike the radio has ever been.
This fact COULD be a big advantage to the music industry. The internet is essential for 90% of its users (or more?), radio was never essential for more than 1% of its users. Besides that the internet is an interactive medium and people are a lot more approachable. People are online more and more time per day, people are actively using it (as opposed to radio), but they’re cutting off potential customers - and, more likely, existing customers.
Why are they having so much trouble understanding the amount of money there is to be made? *sigh*
Internet Users and TV Audiences: Differences on Genres, Motives, and Perceptions
Some selected quotes from an academic paper titled as above, by Searle Huh (second from above), who has a B.A. and M.A. in Mass Communication at Yonsei University in Seoul and an M.A. in Communication at Michigan State University.
“The fact that Internet exists with TV simultaneously even after over ten years of invention implies that Internet is not a perfect functional substitute for TV.” (p. 1)
In the light of the future of music distribution, this means that we’re not even close to YouTube (for instance) as a replacement for MTV or other music channels.
“Whenever a new medium appears, old media usually has been a target to be reconsidered for their fates, that is, survival and death. This question is not different from whether a new medium substitutes old media completely or partially, or has no impact on them.” (p. 3)
"Second, a new medium must have one of the following advantages: “superior content, technical benefits, and cost efficiency” (Lin, 2001)." (p. 3)
"Internet is more preferable for rational or cognitive uses while TV is more preferable for emotional or ritual uses." (p. 23)
“Heavy use of a medium does not change whole factors related to the use of the given medium. Although people spend more time on a medium, the high frequency of use does not necessarily lead so called ‘all or nothing’ strategy to be adapted to changed media environment.” (p. 23)
These findings must be considered in targeting fans, listeners or potential fans and listeners. High volume consumers of TV or of Internet, don’t necessarily spend less time on the other medium because of that. It’s very possible they can be reached through both media.
Now here’s an interesting story. The Australian government apparently owns a certain percentage of a particular ISP (click the link for the details). This ISP has made a huge profit last year and this made the Australian government some money also. ISPs make money by selling bandwith and of course a considerable chunk of that bandwith was used for illegal peer-to-peer filesharing. From this chunk alone, the linked article argues, Australia made $2 billion last year.
They’re doing a good job on keeping everybody happy… The lobbyists, themselves and errr… oh no, not the ISPs and consumers (aka citizens) that risk getting prosecuted.
Interesting thought, but how about including a free album with a concert ticket? How about offering fans to download an MP3 of the night’s show to their iPod or USB stick for a few bucks after the show?
We’re still thinking in old ways here, believing that album sales are what matters.