New Business Models For The Music Industry?

from the maybe-possibly dept

NPR is running a three-part series looking at potential new business models for the music industry in the face of the ongoing changes brought about by digital technologies for the creation and distribution of music. The three business models are all interesting, and some are already being tried, but it seems unlikely that any will get all that far. The first goes back to times past and looks at the idea of "patronage." The idea is to get a wealthy individual (or, more likely, company) to pay for musical output. The NPR piece suggests that this could be modified as a way for hardcore fans to repay a band, but another interesting concept could be corporate sponsorship. The second idea is bringing back the always popular, but often discredited, idea of micropayments. Without rehashing all the old arguments, micropayments only work in some very specific circumstances, and do more to shrink a musicians potential market than to grow it. The final idea is some sort of general tax on ISPs, which has strong proponents but raises all sorts of problems concerning why some users are subsidizing others and who gets how much money. Of course, there are other business models that could work today, don't require a huge change in the way things are done, and gives people real value for their money: recognize that the music is a promotional tool for other stuff (professional liner notes, fan clubs, concert tickets, clothing, access to the band, backstage passes, you name it) and suddenly the state of the recording industry doesn't seem so dire.
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  • identicon
    Mark, 15 Sep 2004 @ 5:36am

    Or how about the obvious

    Start producing a quality product again at a reasonable price. (gasp)

    Still not buying new.

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

  • identicon
    Magnatune Addict, 15 Sep 2004 @ 6:54am

    What about try before you buy?

    I have over 150 CD's, but the last time I bought a new CD was over 5 years ago. I just got so sick and tired of the same old drivel being churned out that I did not want to gamble $20 on a new CD.



    Then I discovered magnatunes.com !




    I purchased 2 CD's from them, after listening to them over and over and really falling in love with the music. I try all sorts of music that I never would dream of buying.




    I just wish they would really catch on.

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

  • identicon
    Greg, 15 Sep 2004 @ 8:52am

    Tax

    I personally strongly support a general tax on broadband ISP's. I realize this has a down side, if a person doesn't get music via their ISP - but I would point out, if the tax was in place, and it covered ANY kind of music sharing, and made it legal to do so, most people WOULD get their music via the internet.

    The problem with any other idea is there will always be a technology to get around, hide, or make to tough to track music downloads.

    I'd think a fair per-year-price would really be a great benefit to consumers, and could increase the music industries profit.

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

    • identicon
      RJD, 15 Sep 2004 @ 11:14am

      Re: Tax

      I already pay enough 'taxes' on things I don't use. I do not find this tax idea compelling. I've always felt a tax was basically some one (politician, business, etc) saying 'I don't have a solution so f*(&ck um all!'

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

    • identicon
      DV Henkel-Wallace, 16 Sep 2004 @ 1:25pm

      Re: Tax

      I also don't like the idea of a bandwidth tax, but not for RJD's reason. My problem is: who gets the money? If it's like the radio play royalties etc then the "big guys" get the money -- even if your station (or in this case: listener) only plays obscure stuff. That's unjust.

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

  • identicon
    Tony Gentile, 15 Sep 2004 @ 9:01pm

    How would you classify iTunes?

    (HTML formated version at: http://www.buzzhit.com/2004/09/techdirtnew-business-models-for-music.html )

    TechDirt starts a discussion on business models for IP (specifically, music), based on an NPR story.

    Part of TechDirt's perspective is on micropayments:

    "The second idea is bringing back the always popular, but often discredited, idea of micropayments. Without rehashing all the old arguments, micropayments only work in some very specific circumstances, and do more to shrink a musicians potential market than to grow it."

    It may just be me, but if iTunes isn't "micropayments" ($0.99, $0.49 via Buy.com), I'm not sure what is. Perhaps we need to coin a new term, "nanopayments", for sub $0.10 content buys? Or does aggregation/total purchase size determine micropayments?

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

    • icon
      Mike (profile), 15 Sep 2004 @ 10:11pm

      Re: How would you classify iTunes?

      First, I think $1 is fairly large for a micropayment, but I stand by my assertion. I think it *shrinks* the market, rather than enlarges it. Compare the numbers of songs downloaded via these stores to those still using file sharing. It's miniscule. Second, no one is making money off of these sales. Finally, there are too many gatekeepers involved. Yeah, there are people who are buying, but it's hard to call it a success when even Apple admits they don't make money from it.

      The truth is that Apple realizes what I'm saying. They're losing money on the songs to sell more iPods... Which goes right back to what I spoke about in the post: music is a promotion for something else. For Apple, it's a promotion for iPods.

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

      • identicon
        RJD, 16 Sep 2004 @ 11:14am

        Re: How would you classify iTunes?

        Only problem with using your 'music as a promotion' is that the majority of musicians having nothing else to offer of value other than the music. You're idea will work for hot or notable musicians but not for artists off the beat'n path or those trying to break in.

        The giving music away will work for apple, Sony, Microsoft, etc because they use it as a hook for their other products. What are the Flock of Seagulls, Adam Ants, Devo's, of the world suppose to survive on ? Live performances and other forms of income generally aren't viable for lesser none entities.

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

        • icon
          Mike (profile), 16 Sep 2004 @ 11:44am

          Re: How would you classify iTunes?

          That's funny... because "lesser known entities" don't sell many albums at all. I know plenty of people in "lesser known bands" and they all admit that their money comes from touring. They sell so few albums, and the ones they sell don't make them very much money at all. A few have been lucky to get endorsement deals (their music goes in a commercial), but otherwise, it's touring, touring touring.

          So, actually, I think my idea works *BETTER* for lesser known acts. Giving away their music, if they're good, gets them more attention, and lets them get more people to come out and see them.

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

          • identicon
            RJD, 16 Sep 2004 @ 1:48pm

            Re: How would you classify iTunes?

            I agree that it helps bands who actually have something worth offering (musically). The sad part is that several musical 'acts' don't and if it wasn't for the company promoting and selling their music, they would not work under your plan.

            How popular (assuming they'd actually still be in the business) would Madonna or Britney Spears or New Kids on the block be/been if it hadn't been for the for the musical companies pushing the 'image' with all of the money behind it ? MUSIC ALONE WOULD NOT HAVE GOT THESE 'artists' NOTICED.

            I honestly like the idea of bands giving away their music assuming it's good enough to listen to and make me want to see them live or for some strange reason buy other act related material (I don't see myself buying used drum sticks). I'm just not sure there are that many bands/acts out their that can make it this way. The ones that can are nuts not to ... why give their money to a company when you can stand on your own. It's the other 90% that can't work under this model.

            It's kinda like the union. The 10% who have no use for it are forced to join and the other 90% are the ones who really reap the benefits.

            One other consideration/question. Wouldn't this model limit the consumer in it's choice of supporting groups (assuming live shows are the primary money maker) ? Live shows are very costly these days. Going to 10 to 20 shows a year could easily run between 400 and 2000. Seems to me, and maybe I'm just not keeping up with inflation and what people are willing to spend on music, that your going to severely limit the money available to live acts.

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

            • icon
              Mike (profile), 16 Sep 2004 @ 2:17pm

              Re: How would you classify iTunes?

              Actually, I disagree with your math... Honestly, right now probably over 99% of musicians are don't make very much money the way the current system works. There are plenty of great musicians who still need day jobs.

              The model I'm talking about wouldn't necessarily make the biggest stars as big, but would make it possible so many more musicians could make a decent living.

              I still think there would be plenty of room for big stars, though, much more of their money would end up coming from endorsements.

              Also, I'm not talking about $70/ticket stadium shows, but smaller club shows, for the most part.

              Again, the world starts to change when this is how people make money. You're also forgeting that it's not *just* live shows I'm talking about, but other things, like access to the band. Some bands have talked about ideas like playing a special concert for fans in their fan clubs, or letting them backstage or giving them better tickets. One artist is giving away music lessons to some fans who join his club.

              The possibilities grow...

              Besides, if you're not spending so much money on CDs, doesn't that mean you'd have more money to spend on other aspects of the band?

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

  • identicon
    Dan Z., 16 Sep 2004 @ 7:46am

    iTunes and micropayments

    Perhaps we need to coin a new term, "nanopayments", for sub $0.10 content buys?

    Micropayments is a terrible moniker to begin with. More terms just confuse the issue. Today we have people debating how much it takes to make a micropayment a minipayment and other such silliness. Properly, micropayments ought to refer to sub-1 cent transactions, while anything about that is simply a payment.

    They're losing money on the songs to sell more iPods...

    Actually, no, they're not. In the June 2004 conference call, Apple announced that the iTunes Music Store had earned a "small profit" but didn't quantify how much. It's worth remembering that Amazon.com took 8 years before its first profitable quarter. I think you're kidding yourself if you don't think most music will be sold online in coming years.

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


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