Betting On Mobile Phones Won't Save The Recording Industry

from the grasping-at-straws dept

The recording industry hasn’t had much of a strategy for dealing with the changing marketplace over the past decade (and, no, I don’t consider lashing out and suing music fans as a “strategy”), so far be it for them to start now. That’s why it’s amusing to see articles about how the recording industry honchos are now betting on a new generation of mobile phones to save them. Funny how that works. This is the same group of executives who will claim that the phones themselves have no value without the music — and yet here they are hoping and praying that the devices will save their industry.

But the real problem is that this isn’t a strategy. It’s wishful thinking. It doesn’t involve any actual insight into what’s happening in the market. It doesn’t involve any proactive movement towards accepting new business models and changing the way business is done. It’s merely the old way of thinking, trying to figure out what the “next” platform will be on which to sell music. It went from vinyl to cassette tape (we’ll skip 8-track) to CD to computer… and now they want it to go to mobile. But they’re missing the fact that the more popular mobile devices get, the sooner it is that we’ll see file sharing apps for mobile devices pop up. Rather than waiting and praying that some new platform will be the savior, isn’t it time that the industry started taking lessons from the past 10 years, and worked towards adapting to the age of digital content?

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Comments on “Betting On Mobile Phones Won't Save The Recording Industry”

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Dubber (profile) says:

Technological determinism

There have been two major threads throughout the discussion of online music – both within the record labels themselves, and within the major news organisations who merely cut and paste their press releases.

1) Digital technology kills music industry.
This is usually around a discussion of piracy, downturn of CD sales, etc. Sometimes the story is about how iPods make us antisocial.

2) Digital technology saves music industry
This one has to do with the Next Big Thing that will come to the rescue, though sometimes it’s about MySpace causing the Arctic Monkeys, or the idea that web streaming is responsible for Sandi Thom. Podcasting is the saviour of radio too, apparently.

Both positions are, of course, nonsense. Technologies are tools and opportunities. They shift the media environment, but of course we get to decide how we use them and what we use them for.

Iron Chef says:

Blanket Thoughts, Ideas, Ramblings

When I wrote this, I wrote in an conversational, almost apathetic tone. Enjoy.

The problem as I see it, is that the media and content companies feel they need to not only own the content, but the delivery channel, all the way down to the delivery mechanism itself. This in itself is not a bad idea, if they were a security analysis firm. However, does it need a level of compliance on par with, say HIPAA or PCI-DSS? No. It’s a $1 asset and lacks any type of PII.

Some may say that piracy is a big issue. But has anyone actually sat down and created a Ishikawa diagram (Fishbone) that looks specifically at “Piracy Causes”?

Of course, we could formalize the entire process, and with a few actuaries, dig into root causes and provide detailed risk analysis on market, technological, credit, operational, finding risk, possibly research some competitors 10Ks, make some offsite presentations, and possibly get a few frequent flier miles in the process. If you decide to go down this path, I recommend starting with Dr. Marjorie Rosenberg at UW. However, by the time this is complete, your competitors are already executing on their go-to-market strategy. I’ll show a little candor and help you save some money in the process.

I imagine if someone could afford a $500 music box, and also had an ability to charge it every evening, they probably also have means to afford content for it too, so risk aside, the question becomes more an issue of availability of content. Instead of focusing on a lump theoretical 15-20% of risk, which could be packaged as “piracy”, one needs to dig a little deeper to understand some root causes of piracy. So here’s your Ishikawa diagram: Is the content available? If not, that may be a cause for piracy. Is the content easily accessible? If not, that may be a cause for piracy. What is the product’s ease-of-use? If it’s not easy, product lock-in may be a cause of piracy. In the end, there’s risk in everything. If you decide to wake up in the morning and not brush my teeth, you may get a cavity. If you talk on the phone while driving, you may get in an accident. If someone records a song off of the radio, you may get sued. These are risks that occur in day-to-day life, but they are not the answer.

When we look back at attempts of limitation (IMHO, first was Circuit City DIVX- I reccomend reading up on it’s history. It’s a real gem.) It quickly becomes apparent that the goal should be based on a relentless focus on making the customer experience and process so easy for the customer, that it’s actually more difficult to go around the system. While this may have an endpoint in fancy limitation technologies, one major failure point remained- ambiguous availability of content.

What I really like is that this attemp, which I believe is being led by individual labels, may be the first positive step towards understanding and collaborating with what may be somewhat untraditional delivery channel. It’s incredibly more cost-effective for their content. But at the same time, if it’s done under the guise of selling “licenses”, the powers-that-be need to know that the customer expectation is backward and forward platform availability.

As for wishlists, the best solution would be ambiguous. This is where I personally am disappointed with having to double or triple pay for my content. Consider my Nokia doesn’t recognize my iTunes license as being valid, or my Rhapsody license. Then there’s the question of CDs. I can’t hold my CD up an iPod and have it recognize it as legit, and say “Oh yes, you did buy that. Here’s your song.”

But again, at the end of the day, adding an additional delivery method (cellular networks) is a start, but if they truly are selling licenses, I just don’t see it at 100% yet.

SteveD says:

Re: Blanket Thoughts, Ideas, Ramblings

I agree with you Iron Chef, that this appears to be a step in the right direction. But the problem may be that the majors don’t just see mobile devices as a new way of creating new revenue streams, but also as a new way of implimenting DRM technology in partnership with the manufacturers (such as the iPod Fairplay).

And then as you point out, we get into these sutiations where customers can’t transfer their legally purchased music between devices. Its touted as a form of protecting the artist, but its really about generating extra revenue from those who still pay for music. And then just like Apple, maufacturers will be more then happy to oblige as it creates a form of consumer-brand lock in.

Wes says:

But why even save the music?

To go a bit further on what Iron Chef is saying, What is the dream of every Pirate on the planet?

To me its obvious, instant Access to any musuic in the world. If we use this as the basis for our business model, it seems clear to me that a subscription model where a user can listen to many different artists, create playlists and experience new music with peers similar to is the obvious answer.

Add to this the mulitude of USB DAC’s that are coming on the market and we have a whole new industry (to be clear I would want this service in a lossless format). I’m sure if you figure out what the average CD buyer out there spends on Cd’s i’m sure it would not be too far off from what a monthly subscription would cost.

And this is just one way of selling the music. I’m sure many other models can be created in other directions simultaneously.

Porn Connoisseur says:

Looking at DRM in the Porn Industry

You see a very similar trend in the porn industry, where the big names i.e. Playboy, Penthouse, Hustler etc are now basically non-existent because they want to control their content and DRM the hell out of it.

There are so many porn sites that understand that pornos are hoarders and making it easy for them to save the content and letting them freely distribute it (with the accent on the free), that they can have a very succesful business model.

I will not name names, but there are porn companies with 3 times the traffic that Playboy (By far the biggest of the old school) gets, puts out 8 times more NEW content and only asks of it members to please include the complete set when they want to forward an image to their friends.

Most importantly, in the net environment, they also have a 4.5 month retention rate compared to Playboy’s 1.2 month retention rate. Hustler and Penthouse are even smaller.

These big guys are drowning because they did not embrace the new age and sees technology as evil because it suddenly makes their content free. I agree with what has been said on this site before. Free is not a bad business model as long as you understand that you use the ‘free’ to sell something else.

The Record Industry is in the same boat. Their cash cow is now suddenly free. The sooner they realise that, the sooner they can embrace it and start to use it to sell other goods and services.

Iron Chef says:

Re: Looking at DRM in the Porn Industry

I’m sure that’s correct, Mr. Connoisseur.

However, considering that you actually spelled Connisseur correctly, and posted it at 6:15am, I imagine that you live in Van Nuys or relatively close to Van Nuys. Maybe you own a business jet of some sort.

Oh well. Thank you for your attempt to degrade the value of my post.

You get 3 points of fantastic!

Anonymous Coward says:

The music industry isn’t dying I value music. The digital revolution just enabled me to focus my purchasing power to the exact product (song) I want without having to get a bundle (album) of songs I don’t care for.

Sure there are some albums I want in their entirety but lets be honest from cassettes to cd’s I wasted a ton of money on their bundles just to get a song or two over the past 20 years.

I wish I could have all that money back and have a much richer library of the precise songs I wanted all along. I spent about $500 bucks on itunes and maybe another $100 on cd’s that I truly wanted in their entirety in the past 3 years.

Overcast says:

I have zero music on my phone, I downright hate musical ringtones – at least on my phone – no; they don’t bother me on other phones, I just don’t like it on mine, it’s annoying.

Of course, that being said – I agree with many of the car stereo manufacturers and when I recently bought a New Clarion – it supports USB flash drives.

I have no CD’s in my car now. Just a couple thumb drives on a keychain.

CD’s are old-technology and passe now.

My cell phone is just that – a cell phone – it gets calls, email, SMS… but it’s not where I keep my music.

Seth (profile) says:

No evidence record industry is betting on mobile

Where in the linked Reuters article does it actually show the record industry is betting on mobile?

Not a single mention of record indsutry comments to support the article’s title. Anthony Bruno is not a very good reporter. I couldn’t find his email anywhere to ask him what lead him to the conclusion that the record industry is betting on mobile.

Mike – You should really read through the linked articles a little better.

Melvillain says:

The key words are "recording industry"

The problem with the recording industry is that it is the recording industry. How do you make money when the price of copies is zero? The answer is you don’t. Suing your customers will only stave off the inevitable. Garage Band, Myspace and Guitar Hero are as responsible for the decline in sales as “piracy” is. The record companies are a thing of the past and they know it. They aren’t trying to hang on to a dying business model, they are trying to hang on to a dying industry.

Spike says:

This won't happen

I work in the mobile industry. I even work with music on mobile phones.

Music on mobile phones is a dying business. For a long time it was ringtones, but anyone can make their own ringtones now using an application like Tone This. The response of the music business, and the people who sell content on phones, has been pushing full song downloads. The problem with this is that in the countries where people can afford full song downloads on the phone (typically far more than on the computer) people have iPods. And even if they have a decent phone, and battery life is an issue as pointed out above, most people know how to sideload using bluetooth or the memory card.

It just isn’t going to work, but we are talking about an industry, which I once worked for in a peripheral way, that doesn’t seem to get anything from technology to A&R. Their pricing is controlled by Apple now and their physical product sales are plunging. Speaking as a music lover who has over 1500 CDs, I have purchased exactly one new CD in the last year. Otherwise, it’s used (great inventory out there), and digital music from emusic, myspace pages and Amazon. This is what the music companies have brought on themselves, and betting on mobile phones is obviously an incredibly stupid way to try to fix things.

Rory Swenson says:

Isnt it about fucking time that we are able to talk in a streaming platform that has video to video ???? I mean seriousely a phone is a term that sucks !!! If we cant switch over to hydrogen as a fuel then at least I should fucking be able to video chat with my freind about the billion dollar space programs agenda of getting me into space before I die because you know its tax money thats well used in this honest country full of honest people….mmmmmm yea …..

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