Music Execs Still Confused Over Music Business Models

from the getting-there,-though dept

Reader Chris Gruel writes in to point out that at a recent conference various music industry execs seemed to embrace the concepts of free music, but the details aren't as encouraging as they might be. While it is good that these folks recognize where music is headed, they seem a bit confused about how to make it work as a business model. First, as a group, they all seem to think that "ad supported music" is the business model that will work. We've seen absolutely no evidence to support that (and, in fact, most ad supported music ventures are struggling).

The second disturbing point is that, while the folks on the panel agreed that DRM is dead, they still claimed that "the industry needs to protect the rights of content owners by compensating them when music moves from one individual to another." The only way that happens is with DRM, and it misses the point. If they actually put in place business models that embraced the infinite nature of music to make scarce products more valuable, they would realize that they don't need to "protect" the content, and they would want to encourage the free movement of the music from one individual to another, because it drives up the value of those scarce resources.

As an example, if a musician is giving away their music to sell more concert tickets, then they shouldn't worry about annoying advertising that drives people away, or trying to cash in on every transfer of a song. Instead, they should want the songs to spread as widely as possible to build up a larger fan base. The larger the fan base, the more people who are interested in seeing the live show, the more tickets they can sell (and potentially at higher prices, too). And, before someone jumps up and down in the comments about musicians who don't want to perform live, this applies to other business models we've discussed as well -- such as getting fans to to pay for the creation of music or for selling exclusive limited editions. Oh well, the execs can keep arguing about what the world should be -- while others out there are actually making things work without them.
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Filed Under: business models, drm, economics, free, music industry


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  1. identicon
    Harry, 17 Nov 2008 @ 4:12pm

    Free Music

    Look the reality is the built their business on Free Music was called RADIO and then MTV. Yes, you can't easily keep Radio and MTV but then Radio and MTV doesn't personalize and doesn't get viral the way one person can influence 100's w/ a download.

    Not only was Radio FREE they paid for placement (Payola)... anyway they just need to wake up and get a clue.

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