Free Songs With Built In Ads Is Not The Answer

from the thank-you,-try-again dept

An idea that's been discussed for years and apparently is now a hot one for various startups is to try to create a legitimate file sharing system, where before you can listen to the music, you have to first pay attention to an advertisement. It's simple for recording industry execs to understand, so they like it -- but they seem to be missing the key point: it's not what music listeners want. Just look at how many people were willing to jump to satellite radio claiming the lack of ads on many satellite music stations was a key driver. Also, these file sharing systems need to recognize that they're still competing with the ad-free versions (also known as unauthorized file sharing programs). The trick to making money in these spaces isn't to saddle the content with some annoyance no one wants -- but to make it more valuable in a way that people are willing to pay.


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  1.  
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    SailorRipley, Apr 23rd, 2007 @ 10:28am

    Hopefully one day "the industry" will get it right....

    on second thought, never mind, "the industry" doesn't really contribute anything anyway, so hopefully they won't

     

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  2.  
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    Buzz, Apr 23rd, 2007 @ 11:00am

    DRM FTL

    I skip ads whenever possible. If for whatever reason I cannot (such as on TV) then I walk away and make myself a sandwich. "The Industry" has held a dominate position in TV advertising for years because the Internet had no real compelling presence. Now, the Internet is the modern rage, yet "The Industry" tries to adapt by using TV-type advertising on the Internet.

    My latest example comes from these ads that speak out loud: "Congratulations! You've been selected to win an XBox 360!" Correct me if I'm wrong, but isn't the Internet supposed to be a quiet experience? The exceptions are obvious such as when I go to a site like YouTube or a music streaming site. However, when I'm researching a topic IN THE PUBLIC LIBRARY, those loud ads remind me to push my mute button, and I look around hoping no one heard it.

    OK, I admit that I should have muted my laptop beforehand because the Internet has plenty of noise, but the point is advertisers still have the shove-it-in-your-face mentality because it has worked (to a degree) for so many years on TV. They need to get with the program and start doing targeted advertising.

     

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  3.  
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    Paul, Apr 23rd, 2007 @ 11:25am

    Ads

    Ads aren't inherently bad, companies just use "eye catching" mechanisms that make them bad. Flashing bright colors, annoying sounds, celebrities, interactivity.. Ads serve there purpose as long as they are not intrusive and annoying.

    I recently visited IMDB on my work laptop, which has a limited resolution of 1280x800, and I was bombarded with a "full screen" flash overlay that scrolled down the page with me instead of staying at an absolute position. Aside from being extremely annoying, I couldn't even see half of the ad because it extended beyond the 600 pixels of height or so that are available to render html in firefox on my laptop.


    Perhaps rappers, err, "hip hop artists" should use product placement in their songs just as movies and television have. It is not as if they sing about anything worthwhile as it is, and most of them have other people write their lyrics anyways.

    Perhaps they could get some tie-ins with coke and make some playah coke

     

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  4.  
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    Safety_in_Advertising, Apr 23rd, 2007 @ 11:28am

    Do Like the

    Not that I would know...

    Many Music Files and Software titles that are available via P2P, Torrent, etc have advertising built into the file name, title, and/or IDtag. Those guys love to tell you who brought you the "For testing/preview only, please support the maker if you like it" freebie copies...

    Why don't the "industries" jump all over that???
    For example: "My Humps" brought to you by Bob's Latex Condoms, Hump Safely!... could be scrolling across iThingies and Zubes and mp3 phones all around the world. Talk about marketing!!!

    Works on billboards and in print all over the world!! And if you don't want to see the ads, rename or retag as necessary...

     

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  5.  
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    TheDock22, Apr 23rd, 2007 @ 11:33am

    Whiners

    First you say you want DRM-free music so you can share songs with your friends, then you say you want music you can download DRM-free without paying more money, now you are saying you want free songs WITHOUT advertising?

    Basically, you think the record companies should roll over and give away free songs because you are too cheap to pay and too annoyed to listen to the advertisements.

    Nothing in this world is free. I would like some DRM-free music, but I would gladly pay double for those songs. I wouldn't mind listening to an ad if it meant I could listen to a song for free. Quit complaining.

     

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  6.  
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    Overcast, Apr 23rd, 2007 @ 11:42am

    "you have to first pay attention to an advertisement.

    Just because a commercial or ad is presented, will not ever mean I pay attention... :)

    I'm ok with normal commercials, but some actually annoy me to the point that I'll be sure I never buy the product - as buying the product would give them more revenue to annoy me with more commercials..

     

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  7.  
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    fed up with idiots, Apr 23rd, 2007 @ 11:46am

    shut up you stupid idiot

    Who are you (TheDock22), the record company. Of course we want free music without DRM. But, hell no, I'm not going to pay more for it. Its so easy just to circumvent DRM; all you need is audacity (free download). So why should I pay more? Better yet, I'll just limewire it.

     

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  8.  
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    Mike (profile), Apr 23rd, 2007 @ 12:00pm

    Re: Whiners

    TheDock22,

    First you say you want DRM-free music so you can share songs with your friends, then you say you want music you can download DRM-free without paying more money, now you are saying you want free songs WITHOUT advertising?

    Is it so wrong for customers to want content without being annoyed by it? Do you normally say that customers are wrong?

    Basically, you think the record companies should roll over and give away free songs because you are too cheap to pay and too annoyed to listen to the advertisements.

    No. This is false. We are saying that there are business models that work that make customers and musicians happy without pissing anyone off. Pissing people off isn't a good business model. It just opens up opportunities for others to wipe out your business model by not pissing people off.

    Nothing in this world is free. I would like some DRM-free music, but I would gladly pay double for those songs. I wouldn't mind listening to an ad if it meant I could listen to a song for free. Quit complaining.

    It's not complaining. It's pointing out where the market is going. If your business model is unsustainable it's unsustainable. That's not complaining, it's just pointing out how others will eventually destroy your business model.

    No, nothing in this world is "free" but that doesn't mean you can't give people what they want. You just need to find the right business model where they're happy to "pay." That means adding value, not taking it away. Both DRM and advertisements take away value.

     

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  9.  
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    sam, Apr 23rd, 2007 @ 12:07pm

    ok...

    here we go again!! wouldn't be monday without a rant against the music industry, and the fact that they don't "get it"!!

    look,

    as a musician/artist, you have the right to make your song. you also have the right to put it into digital format. an artist/owner also has the right to attempt to sell the song to make cash from it.

    now here's where it gets tricky for some of you guys.

    some of you want to tell the artist, "make your song", produce your song, but i want to take it for myself, and pay you only what i think i should, if anything at all!!

    now this makes sense, as most of the people clamoring for this, haven't spent hundreds of 1000s of dollars to create digital music/software/content, only to have someone rip it off. (oh, i'm sorry, make a digital copy of it!) this is critical to some of you, because there are some of you who claim that if you make a copy of the music/software/movie/etc... then you haven't harmed the owner of the content.

    here's a deal for you:

    if an artist makes digital content, and has no drm on it, you agree that you will buy it at the price the owner sets, or you won't buy it at all. but you agree that you won't make a copy of it.

    instead of the drm, i'm all in favor of an owner coming up with a way of essentially creating a unique copy of the digital content for each user. i'm also in favor of the owner having a license that essentially states the user who purchases this legally, can pretty much use the content whereever they need to use it, short of giving it/selling it to someone else, at which time the person who "legally" purchased the content is going to owe a great deal of cash.

    i'm pretty sure you guys won't go for this approach!

    as far as the ads go, the guy with the song is trying to figure out how to make a buck with the music. that's his right.

    if you have a better solution as to how a guy can generate cash from hi music, i'm sure the artists would be more than receptive. keep in mind, the solution isn't to tell the artist, make your music, release the songs for free, and then go try to make your money by selling t-shirts!

    peace


    and has a license that states that if you

    gotta

     

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  10.  
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    Wolfger, Apr 23rd, 2007 @ 12:11pm

    I have to pay attention?

    How will they enforce that? Asking me to answer an essay question about the ad before the music plays?

     

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  11.  
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    comboman, Apr 23rd, 2007 @ 12:17pm

    Re: Ads

    Perhaps rappers, err, "hip hop artists" should use product placement in their songs just as movies and television have. It is not as if they sing about anything worthwhile as it is, and most of them have other people write their lyrics anyways.

    You think they don't already do that? Nike, Adidas, Nokia, GM, Mountain Dew, etc. all pay big bucks to get their products in rap videos. MTV & VH1 refused to play Nelly's "Air Force Ones" video which was essentially nothing but a 2-minute ad for Nike.

     

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  12.  
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    Sanguine Dream, Apr 23rd, 2007 @ 1:09pm

    Yeah right...

    I didn't want to listen tormented rock artist whining about the girlfriend that left him for another woman (let's face facts nearly every genre of music these days is written by ghost writers) while he drinks himself almost into a coma then goes either speeding down the wrong lane of the highway, standing on top of a tall building, or into some other heart-wretching suicial situation when it was free. There is no way in hell I'll pay for it and the Bacardi ad that plays before it and Mustang ad that plays after it.

    Yes part of the reason people don't want to pay out the butt for music that they are cheap but there are lots of people that have (wisely) concluded most mainstream music is not worth the effort to download it illegally much less legally.

     

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  13.  
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    Lord Jesus Christ, Apr 23rd, 2007 @ 1:10pm

    Re: DRM FTL

    FlashBlock

    For the man who had complaints about the annoyances of ads.

    Install that and you will hear no ads, my son. I died for your sins, so all of mankind could live their lives in peace throughout the heavenly Father's Earthly kingdom, but when I hear these ads I must admit do have my regrets. Blocks Flash unless YOU click to play the Flash. Be blessed, my son.

     

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  14.  
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    TheDock22, Apr 23rd, 2007 @ 1:37pm

    Re: Re: Whiners

    Is it so wrong for customers to want content without being annoyed by it? Do you normally say that customers are wrong?

    Why would you be annoyed by free content? You did not pay for it, so what does it matter is there are ads? You want the ad-free version, buy it.

    We are saying that there are business models that work that make customers and musicians happy without pissing anyone off. Pissing people off isn't a good business model.

    I keep hearing about this grand "business model", you bring it up all the time. What is this model? What exactly does it entail? If you can not figure it out, do not expect companies to either. Give me one solid business model and I will change my position. Just one, but I bet it is impossible to come up with such a model to make EVERYONE happy.

    It's pointing out where the market is going. If your business model is unsustainable it's unsustainable. That's not complaining, it's just pointing out how others will eventually destroy your business model.

    Again with the business model. Quit complaining and start thinking.

     

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  15.  
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    Sanguine Dream, Apr 23rd, 2007 @ 1:38pm

    Re:

    I hear you. I agree with the fact that song writers, artists, and bands should get paid for the music they make and/or perform.

    The problem that people have isn't with the artist that wants to get paid for her/his creations, it's that corporate executive that sits in a boardroom all the time but decides that he/she should keep 85% of all the revenue an artist generates. Those execs are taking it to the extreme by claiming to be dealing all these "significant blows" against piracy for the artists on their labels but from the looks of things the artists they are protecting aren't faring to well.

    The labels really don't get it. They act as if music itself would cease to exist if they weren't around to sell it at out the butt prices. And that was pretty true up until about 10 years ago or so with the birth of digital sharing.

    That's why more and more artists are trying to start their own labels instead of busting their butts for their entire career just to have nothing to show for it but a 10 minute segment on VH1's "Where are They Now?" series.

    And what kind of industry thinks it can get away with selling things at a higher price but with less value? What's next:

    Dodge taking 100hp off the next Viper adding $100k to the price?

    MS not adding backwards compatability, media functions, and Live to the next XBox and then charging double the price of the current XBox 360?

    Bizzard release the next World of Warcraft expansion that costs $59.99 but cuts the level cap back to 60?

    Yes an artist should be paid for their work but it looks like the money is not going to the artists. And that reminds me. If piracy is so bad and evil why is it that only the record label execs are complaining. Other than Metallica I've yet to hear of any other musical act actually speak out against piracy. If the labels want to fight piracy then why not have the artists speak out about it?

     

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  16.  
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    Anonymous Coward, Apr 23rd, 2007 @ 2:28pm

    I don't think you guys understand just how much funding for "free" content comes from advertising. Offering content free of any advertising can get extremely expensive. Content without ads will have to cost a large premium over traditional content, or else the company will go out of business. It's just not as simple as "oh, the customer doesn't want ads, so let's not put ads in there."

    I am not saying that the advertising isn't getting out of hand. Or rather, it got out of hand a long time ago, and now it's moving quickly from ridiculous to ludicrous, Spaceballs style. All I'm saying is that you can't expect to sign up for non-stop music without ads via satellite and expect to pay only $20 a month, while expecting the company to stay alive. Just remember that content is expensive, and somebody is always paying for the content, whether it's you or the advertisers. There ain't no free lunch in this world.

     

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  17.  
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    zaneZEROZERO, Apr 23rd, 2007 @ 3:06pm

    Re: Yeah right...

    I don't know what kind of sub-genre of rock you listen to, but that sounds to me like mainstream rock. Hinder would be an example. Hinder is a terrible band.


    There are plenty of non-"Ghost-riders"

    Then again, there's good rap too. In my opinion, Mos Def is an example. Gangster rap is what you always hear today, and that stuff is trashhhhhh.

     

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  18.  
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    zaneZEROZERO, Apr 23rd, 2007 @ 3:09pm

    Re: Re: Yeah right...

    And I (wisely) concluded that I should've reread your comment.



    I fully agree with you, mainstream is terrible. :]

     

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  19.  
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    i might be wrong but, Apr 23rd, 2007 @ 4:14pm

    to #9

    Artists like to complain about how they get a raw deal. I thought that the main-stream record companies pay the artist an advance to produce the record (as well as a stipend to live off of during production) then after that they take all the money from the record sales ( the only way they have to really make anything from what they INVEST in you) until the production advance is recouped (which it probably never is, blame p2p if you must I blame a greedy outdated business model that makes more by selling less) . If this is even remotely the case then the artist isn't owed anything by the record company for the record sales because he or she still has to pay back the advance. So while they blame pirates for stealing your music Ill play the bad guy and blame both them and you.

    Maybe the answer is to not get fucked by the record companies during contract negotiations by not giving up your rights to your music ( assuming you actually write your own music ) and be smart about how you spend money that isn't yours. Maybe if that happened you wouldn't owe so much and they wouldn't "have" to charge us so much so we would buy more and you would make more. And as for them, maybe if they got all their heads out of their asses long enough to stop smelling the shit they say to us about the "cost" of releasing an album they could come up with a way to sell us music that doesn't turn us all into criminals the moment we put that music on our MP3 players.

    But you got in the music business for the music not the business....right. You are nothing more than a product for the record company to sell. If they didn't think they could market you and sell you they wouldn't have have anything to so with you.

    ( I know that everyone needs to make a living. And it really sucks that alot of artists just can not get out of the hole they did themselves in to. I'm just saying that every part of the record industry need to be modernized. Both so you can live as an artist and so the industry can survive. If they sell more music then more of what you owe them goes away. If they add value to the product they will sell more. I would gladly pay for quality or some other thing that makes it worth buying and a 16+ dollars a pop there had better be real value. )

     

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  20.  
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    mkam, Apr 23rd, 2007 @ 4:26pm

    Re: DRM FTL

    If you have a problem with annoying internet adverts you should use adblock. Please excuse if you already do.
    start with
    *atwola.com*
    *ads.*.com*
    *adgardener.com*
    *doubleclick.net*
    *clickhype.com*
    *adster.com*
    *ad.*.com*
    *adrevolver*
    *adserving*
    *adbrite.com*
    *trafficmp.com*
    *revsci.net*
    *valencemedia. com*
    *fmpub.net*
    *mediaplex.com*
    *tribalfusion.com*
    *fastclick.net*
    *adserver.yahoo.com*
    */ads /*
    *adframe.php*

    You will be much happier when you surf

     

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  21.  
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    Sanguine Dream, Apr 23rd, 2007 @ 5:08pm

    Re: Re: Re: Yeah right...

    It's all good. At least we're on the same page.

     

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  22.  
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    Anonymous Coward, Apr 23rd, 2007 @ 5:10pm

    Re:

    I hear you. I agree with the fact that song writers, artists, and bands should get paid for the music they make and/or perform.

    The problem that people have isn't with the artist that wants to get paid for her/his creations, it's that corporate executive that sits in a boardroom all the time but decides that he/she should keep 85% of all the revenue an artist generates. Those execs are taking it to the extreme by claiming to be dealing all these "significant blows" against piracy for the artists on their labels but from the looks of things the artists they are protecting aren't faring to well.

    The labels really don't get it. They act as if music itself would cease to exist if they weren't around to sell it at out the butt prices. And that was pretty true up until about 10 years ago or so with the birth of digital sharing.

    That's why more and more artists are trying to start their own labels instead of busting their butts for their entire career just to have nothing to show for it but a 10 minute segment on VH1's "Where are They Now?" series.

    And what kind of industry thinks it can get away with selling things at a higher price but with less value? What's next:

    Dodge taking 100hp off the next Viper adding $100k to the price?

    MS not adding backwards compatability, media functions, and Live to the next XBox and then charging double the price of the current XBox 360?

    Bizzard release the next World of Warcraft expansion that costs $59.99 but cuts the level cap back to 60?

    Yes an artist should be paid for their work but it looks like the money is not going to the artists. And that reminds me. If piracy is so bad and evil why is it that only the record label execs are complaining. Other than Metallica I've yet to hear of any other musical act actually speak out against piracy. If the labels want to fight piracy then why not have the artists speak out about it?

     

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  23.  
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    Mike (profile), Apr 23rd, 2007 @ 7:53pm

    Re: Re: Re: Whiners

    Why would you be annoyed by free content? You did not pay for it, so what does it matter is there are ads? You want the ad-free version, buy it.

    You really think ads don't annoy people? The free part has nothing to do with it. If there are alternatives (and there are), annoying users isn't going to make them come in your direction. It's that simple. You look at the competitive market, and if what your offering is WORSE then why would anyone go to you?


    I keep hearing about this grand "business model", you bring it up all the time. What is this model? What exactly does it entail?


    I've explained it repeatedly. I didn't think I needed to go over it again, but okay...

    You use the infinite goods (anything that is non-scarce) and use it to promote any related ancillary goods that are scarce. That way, you turn the liability (the fact that the infinite good can be copied forever) into a huge promotional benefit. It becomes a resource.

    So what does that mean for music? Easy. Take a look at what the industry produces and figure out what's scarce and what's non-scarce. The music itself is non-scarce. However, the artists themselves are scarce. Access to the artists is scarce. The creation of new songs is scarce. All of these things can be charged for.

    So, you charge for concerts. You charge for access to the band. In fact, maybe you even add more incentives to get people to buy the CD... such as if you buy the CD you get backstage passes. Or if you buy into a fan club, you get access to special concerts.

    Then, the fact that you're giving away the music increases the value of all those other things. Since the music is free and you're encouraging people to pass it around, more people hear your music and there's more demand to see you in concert, or to have access to special private concerts.

    Lots of bands are making this work today, so it's hardly theoretical. In fact there's one band that's taken it so far that they actually are making money from a travel agency they set up to help people attend more of their concerts. The more popular their music, the more popular their travel agency is.

    You see, there are always ancillary scarce products that are attached to the infinite products you have. The trick is use the non-scarce goods to make the scarce goods much, much more valuable. Then you actually make more money because you've greatly expanded the size of your market.

    If you can not figure it out, do not expect companies to either. Give me one solid business model and I will change my position. Just one, but I bet it is impossible to come up with such a model to make EVERYONE happy.

    I just gave you one above (which I've written about at least 50 times over the past few years). And that's only one example. And, yes, it makes everyone happy. Consumers get free music and more of it. Bands make more money. And there's even room for some form of "record label" in the form of promotions tied to all of this. It really is a model that works for everyone by adding value rather than taking it away.

    However, if that's not good enough for you, I can start listing out other related business models, all of which are likely to work better than the crap that they're trying today.

    Again with the business model. Quit complaining and start thinking.

    Beg your pardon?

     

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  24.  
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    kweeket, Apr 23rd, 2007 @ 8:03pm

    Re: Re: Re: Whiners

    You keep ignoring what Mike is saying: free music is already readily available via P2P networks, without DRM or annoying advertisments. This is the RIAA's real competitor, and one they have to acknowledge.

    If I want a copy of the new hit single, my options will be:
    1. Buy a DRM-laden track from iTunes for $.99
    2. Download the song from Rhapsody, knowing it will disappear the second I stop paying my monthly fee
    3. Buy the CD for an exorbitant price, along with a number of worthless filler songs
    4. Download the song for free using P2P with no restrictions whatsoever.

    What if the RIAA acknowledged that - no matter how hard they try to stop it - the fourth option of "piracy" is a real and compelling one? Then they have to realize that any options they come up with have to be at least as desirable as filesharing. People will pay for legality, convenience, speed, and the knowledge that they are supporting the artists they care about - if the price isn't artificially high. This is proved by iTunes, who makes a profit despite all the music they sell being widely available for free elsewhere. Reduce the price and remove the crippling DRM from iTunes and I think their sales would soar.

    Instead the RIAA have come up with another "solution" that removes value instead of adding it. Compared to paying $.99 per DRM'd track, or buying a $21 CD containing mostly songs I don't want, I can see why the executives would think I might like a free download supported with several seconds of advertising. Compared to being able to download the song for free, with no advertising or DRM....not so much.

    Unless the RIAA succeed in their goal of erradicating filesharing, they're going to have to make paying for music more desirable than illegal downloading, and they're not going to do that by adding annoying advertising or crippling DRM.

     

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  25.  
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    TheDock22, Apr 23rd, 2007 @ 8:50pm

    Re: Re: Re: Re: Whiners

    So, you charge for concerts. You charge for access to the band. In fact, maybe you even add more incentives to get people to buy the CD... such as if you buy the CD you get backstage passes. Or if you buy into a fan club, you get access to special concerts.

    Then, the fact that you're giving away the music increases the value of all those other things. Since the music is free and you're encouraging people to pass it around, more people hear your music and there's more demand to see you in concert, or to have access to special private concerts.


    That is a nice idea, but I'm do not think that the revenue built from tickets sales, fan clubs, and merchandise can compete with the amount of money gained from song sales. Besides there is an entire generation of music lovers that will not be able to attend any concerts, mainly people under the age of 16. Also individuals who have families and/or are retired will find it difficult to go to concerts. That is millions of people we are talking about who would not intend to contribute any money and would get free access to your content. This business model would really only appeal to some of the music listening population and the rest would just be moochers. At least with the ads in songs, the industry is making some money and listeners get free music.

    It really is a model that works for everyone by adding value rather than taking it away.

    I just do not see how you could make up the money lost from all those people could possibly be made up in ticket sales and promotional goods. The bands that do so well on tour and encourage people to come to their shows have a pretty limited fan base of 18-35, or the "free" money age as many people call it.

    Beg your pardon?

    I do apologize for being so short-sighted, but I thought the ads in the music was pretty clever. Then again, I do not mind ads that much if they are good ads. Maybe we could encourage internet or music based ads to cut it down to 5 seconds of content.

    Thanks for the explanation Mike, but I'm not sure that business model quite fits with the music industry.

     

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  26.  
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    Mike (profile), Apr 23rd, 2007 @ 11:53pm

    Re: Re: Re: Re: Re: Whiners

    That is a nice idea, but I'm do not think that the revenue built from tickets sales, fan clubs, and merchandise can compete with the amount of money gained from song sales.

    Three points. First, you make the false assumption that the music from song sales is sustainable. It's not.

    Second, it might help if you looked at the economics of how the music industry actually works. Most bands make *zero* off of their album sales and make all their money already from the areas I listed above.

    Third... why do you assume that it won't make up the music sales. You offer no compelling explanation for it. I only listed a few small areas, but you can keep on listing them out. If not concerts, then how about access to a private group online of the biggest fans. How about a chance to get a private concert in your backyard. How about the chance to have your name in a song written by your favorite musician. It can go on and on and on, and all of those things keep adding up. There will be plenty of business models.

    The best part is that these business models will make it much easier for the very large segment of musicians who, today, are unable to make a living, to make much more of a living. Okay, the Britney Spears of the world might make a little less money, but these models enable the starving artists who have to give up their musical pursuits a much better path to make a decent living playing music. The aggregate money that would go into the music industry would almost definitely increase.

    Besides there is an entire generation of music lovers that will not be able to attend any concerts, mainly people under the age of 16. Also individuals who have families and/or are retired will find it difficult to go to concerts. That is millions of people we are talking about who would not intend to contribute any money and would get free access to your content. This business model would really only appeal to some of the music listening population and the rest would just be moochers. At least with the ads in songs, the industry is making some money and listeners get free music.

    Again, you're making a very wrong assumption: you don't need to make money off of everyone.

    Think of it this way. Does everyone who sees a TV commercial buy that product? Nope. Do you consider those who don't "moochers?"


    I just do not see how you could make up the money lost from all those people could possibly be made up in ticket sales and promotional goods. The bands that do so well on tour and encourage people to come to their shows have a pretty limited fan base of 18-35, or the "free" money age as many people call it.


    Again, stop thinking of it as just concerts (and I'd argue that there are acts that appeal to much older fan bases as well -- and they can sell tickets at much higher prices. Look how much Streisand tickets cost. Those aren't 18 to 35 year olds).

    But, it's not just concerts. It can be all sorts of things, including a chance to sit down and meet a musician you like. There are a ton of things that can be sold around the music.

    The point is the non-scarce goods always enlarge the total pie (that's just basic economics). There will be some externalities or "leakage" where some of that content won't be directly paid for, but the overall ability to profit goes way, way up.

    Maybe we could encourage internet or music based ads to cut it down to 5 seconds of content.

    Again, not when you're competing with no ads. That's the problem. If this were the only game in town, then sure. But it's not. That's why it will fail.

    Thanks for the explanation Mike, but I'm not sure that business model quite fits with the music industry.

    But it already does... Again, most musicians already make their money touring. As more come to understand the overall business model, even more will do so. So, why doesn't it "fit" the industry?

     

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  27.  
    identicon
    John, Apr 24th, 2007 @ 1:58am

    another option

    Here's another option: file-sharing with no ads! Our company makes a great, encrypted file-sharing app (GigaTribe: http://www.gigatribe.com ) that only allows people who know each other to trade files (and entire folders). This means you don't have access to millions of random files, but just the files that your friends and family have, no ads, no adware. I doubt their model will work...although I still listen and enjoy the free version of Launch...it will probably satisfy a small niche of users.

     

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  28.  
    identicon
    TheDock22, Apr 24th, 2007 @ 7:35am

    Re: Re: Re: Re: Re: Re: Whiners


    Second, it might help if you looked at the economics of how the music industry actually works. Most bands make *zero* off of their album sales and make all their money already from the areas I listed above.


    True, but the music industry is not only made up of musicians.


    Third... why do you assume that it won't make up the music sales. You offer no compelling explanation for it. I only listed a few small areas, but you can keep on listing them out. If not concerts, then how about access to a private group online of the biggest fans. How about a chance to get a private concert in your backyard. How about the chance to have your name in a song written by your favorite musician. It can go on and on and on, and all of those things keep adding up. There will be plenty of business models.


    Again, your model is tuned towards getting the musicians more money, which I am not opposed to. There are many other individuals who contribute to an artists success, including album graphics designers, photographers, directors and staff for music videos, wardrobe, make-up, and so forth up to Record executives who have all made their livelihood off of the success of an individual artist.

    My favorite band who I go to concerts sells out shows constantly. The concert I am going to this year will net about $1 million for a three-night show, but that is off of tickets sales which I'm sure the band will only see a fraction of it. The venue will get a cut of that money, then there will be the wages of hundreds of employees they staff on tour who handle their equipment and such. Plus the cost of gas and drivers for their tour vehicle. Wages for the agency that booked the show, so on and so forth. I am sure each band member would make $10k - $15k of the show, but since they are a seasoned band ticket prices are up there.

    So the band makes money off the show, but what about the people and company that originally produced the album, the artwork, the promotion material, etc. They do not get a cut of the concert sales, so they are hoping to sell the albums to make up the money.


    Again, stop thinking of it as just concerts


    Okay, but I doubt many artists are not going to jump for joy about throwing a birthday bash in the back of some fanboy's yard. And fan clubs already exist for most bands which offer advance tickets sales, specialty merchandise, and contests for backstage passes.

    Again, not when you're competing with no ads. That's the problem. If this were the only game in town, then sure. But it's not. That's why it will fail.

    I do see your point. People want music for free without ads or restrictions to use how they see fit. I agree that is what the majority of people want, but I just do not see the music industry suits giving up a loss of profit for them (not the artist necessarily) to please their customers.

     

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  29.  
    identicon
    sam, Apr 24th, 2007 @ 8:00am

    mike....

    your whole argument with regards to scarce goods/non-scarce goods as it applies to digital music, is to tell the artists that they should change their business model.

    you (and others) appear to be telling the artists that if the customers of the artists are screaming, then the artist should change...

    to begin with, i'm not sure that all (or a mojority) of customers who want the music are screaming. furthermore, if a majority is screaming, they may not be the customers thartist really wants.

    if i'm selling diamonds, i might have customers who are screaming for me to lower my prices.. these might be guys i say 'later' to..

    as a business owner, i don't want to satisfy all customers. in fact, i really only want to focus on the ones who i determine are important. this could be due to the revenue they provide, their influence, or whatever.

    when it comes to digital items, for some reason, a group of people have started to think that because you can easily copy the item, that the rules of the game are different. the rules aren't different. it's imply easier to steal/copy the items. and let's be brutal here. if someone is selling somthing that he/she made/created/has a right to sell/etc... and you copy it without their consent (actual/implied) then we all know when we're stealing.

    to resolve this issue, rather than deal with the theft issue, guys are screaming that the artist should change his 'model'.

    maybe i don't want to change my model. if i make music, i want to be paid for it. if you don't want to buy my music, don't buy it. ignore it. but if you're copying the music, then you do like it, you just don't want to pay for it. furthermore, you want to assume some kind of "rightous" mindset, that implies that if we follow your model, thinks work out ok.

    mike. people who make music, want to sell music have a right to attempt to make a living at it. similarly, you have a right to not buy their music. you don't have a right to copy it, and give it to 50,000 of your closest friends.

    the argument that it's easy to get songs from the p2p networks for free is something the artists have to deal with, and so therefore the artists should essentially compete with the zero pricing of the music from these networks is laughable! there are plnty of guys selling tvs at seriously discounted prices, along with drugs, cars, or whatever.... but i somehow don't see anyone coming up with the argument to the car dealer that he needs to compete with the guy selling the 'car' for the drastically reduced price!

    and the reason that we don't have these kinds of arguments is the realization that the guy selling the car at the discounted rate is a theif, and that the car isn't legal/legitimate... the fact is, if you're copying the music, and giving it to 50,000 of your closest friends, you're stealing the music. the fact also, is that if you do this, nothing will probably ever happen to you!

    peace...

     

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  30.  
    identicon
    2 cents, Apr 24th, 2007 @ 11:22am

    Re:

    The problem with your car analogy is that the guy selling his car can only really expect to sell for LESS than what he paid for it. The dealer is selling a new car which subsequently losses value the moment the contract is signed.The thing is that people don't feel the same way about music anymore. It has LOST VALUE compared to buying a new car and the record companies and artists are not being realists.
    So while I may really like your music; if I (big I) feel that I shouldn't have to pay 17.99 for the whole disc for the 1 song that is actually worth my time and cash then guess what...I won't pay it. Ill go and grab the song from the easiest place to get it. The record companies NEED to figure out how to be that easiest place. If you don't care about quality ( or in the case of your car analogy;a NEW car, then I will pay less for the used one ( or .99 cents on itunes ) If I want the new car with all the options ( the whole cd ) ill pay for that. The problem is that there is no in between, in other words I want to buy the really nice dashboard ( high quality music single ) But don't want the whole car. If I know a guy who can get me that for less than the whole car ( and lets be realistic. there HAS to be a way to do that) then I would pay the price, for me that should not be more then $1.25. Ill say it again , however much I love music it does not hold 17 or more dollars worth of value to me. It never has and never will. I will buy used cds, out of print or really rare records or simply grab the music I LIKE from p2p because until I am given a REAL option to buy the way I and many of the people here want to...I won't.

     

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  31.  
    identicon
    Andrew, Apr 24th, 2007 @ 12:24pm

    what don't they get?

    This whole notion about free is so ridiculous -- all of these startups deal with the notion that you can't compete with free, and that is just plain bullsh!t.

    Time and time again people have paid for things that previously, were free because the new product provided value.

    All of these "new" startups like Spiralfrog, Ruckus, etc. don't know what they're doing whatsoever. These 40+ year old heads of the companies know nothing about illegal downloads besides the headlines they read in the news.

    To truly deliver a product that breaks through to this "mis-guided" generation, you have to relate to them on a peer-2-peer level (get it?), and actually give them something worthwhile, not some ad-infused trash.

    Check us out ...grooveshark.com

     

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  32.  
    identicon
    Broke Musician, Apr 24th, 2007 @ 2:33pm

    I am a musician and let me state up front that I hate corporate music, the RIAA, and all they stand for. I think they're largely responsible for ruining modern music as we know it. I am really looking forward to the major labels collapsing, Soviet Union style. So I follow this news with interest.

    BUT - I've gotta call bullshit on all the posters whose constant refrain is "musicians will just make it up in touring and t-shirt sales". Only someone who has never been a musician, never been friends with a musician, or who only goes to see live music once every five years could actually believe this.

    Nobody makes money touring until they reach a certain level of hugeness. The examples that get thrown out of bands raking it in from touring are always hippie jam bands who have a young audience with rich parents that can foot the bill while they follow them around for a year. For smaller bands, touring is a money-losing proposition. Selling t-shirts and records at gigs is a way to pay for the gas to get to the next town, NOT to finance the whole expedition. Trust me, gas prices have tripled in the past few years but the cover at clubs that have live music has not risen at all. Bands also get screwed over by sleazy club owners at every turn, I might add.

    I can (or could) sell a few thousand records worldwide whenever I put out a release. Enough of a fanbase to warrent releasing a record, but not enough to justify constant touring. I may have a couple fans in every big city. Some areas more than others, of course, but you get the idea. As you can imagine, it's one thing to sell enough records to make back your money (plus a small amount on top, if you're lucky) to these scattered people. However, it's just not economically possible to reach them on tour.

    I am on a small independant label run by ONE GUY who makes no money, doing it because he loves the music, and he has complained repeatedly about how his sales have slid in recent years. Meanwhile, albums by bands on his label keep showing up on file-sharing sites. I myself meet people constantly at my shows who tell me they heard my album on Soulseek or whatever (who don't go on to buy a cd or t-shirt from me, by the way!). I might add that my label does primarily collector-y LPs with nice artwork (that "added value" that's supposed to save us).

    So please, just say that you like getting music for free and that even though it is indeed stealing it's the way things are going and the business is going to have to adjust. But save me the "new business model" tripe. Downloading and file sharing does indeed hurt smaller labels and musicians, not just Metallica and Britney Spears. What this is going to mean, in the short term, is FEWER bands touring and the ones that do making even LESS money. (Hell, with cds removed from the merch tabel, that's ONE LESS thing I've got to sell on tour now! I better hope everybody likes that t-shirt design!)

     

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  33.  
    identicon
    TheDock22, Apr 24th, 2007 @ 3:27pm

    Re:

    But save me the "new business model" tripe. Downloading and file sharing does indeed hurt smaller labels and musicians, not just Metallica and Britney Spears.

    I'm inclined to believe the new business model would kill more musicians who haven't made it big yet then open a door for them. Metallica and Britney Spears probably lose thousands of dollars compared to the millions they made.

    Beside, someone can own multiple cds from band they enjoy and give money back to the artist, but can only attend so many concerts a year. Or afford to buy the merchandise and join the fan clubs of a small amount of bands.

    Oh and the person that said they wouldn't pay $17, or even $.99 on iTunes and would rather get songs for free. Just admit your a thief and move on. You probably think stealing cable isn't a crime either.

     

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  34.  
    icon
    Mike (profile), Apr 24th, 2007 @ 3:47pm

    Re:

    your whole argument with regards to scarce goods/non-scarce goods as it applies to digital music, is to tell the artists that they should change their business model.

    Sam, you misunderstand. My whole argument is that if they don't change their business model, they won't have a business model.

    you (and others) appear to be telling the artists that if the customers of the artists are screaming, then the artist should change...

    Sam, you misunderstand. I'm saying that if your customers are screaming, then others will serve them if they can. In this case, they can... and then you'll be out of luck.

    as a business owner, i don't want to satisfy all customers. in fact, i really only want to focus on the ones who i determine are important. this could be due to the revenue they provide, their influence, or whatever.

    Right. And I presented a business model where you can serve a lot more people a lot more effectively while making a lot more money... while still giving away the content free. Where's the problem in that?

     

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  35.  
    identicon
    Meggie, May 16th, 2007 @ 4:36pm

    yeah

     

    reply to this | link to this | view in thread ]


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