Warner/Amazon Deal

What we’ve learned in this decade is the major labels are becoming ever more irrelevant. Not only do they not create what so many are listening to, they’ve lost their power to dictate the future, progress in the marketplace has been wrested from them.

DRM is a red herring. As is sale by track. Most people with hand-held music players are listening to vast quantities of music sans copy protection. The fact that it’s taken this long for the major labels to come to grips with this reality is evidence of their sideshow nature. They just don’t get it, and seemingly never will.

Now that the DRM war is finally over, the labels have got to fight the value war. Yes, people today think music has no value, they need to be sued into submission, they need to be taught that CDs are worth every dollar of their inflated price, that digital tracks should cost the aliquot share price of a CD. This is utterly hysterical, because it too goes against reality.

People own a lot of tracks. It’s not relevant whether they actually listen to them, they want to own them. And they’re easily acquired. Not only via Net P2P, but hard drive swapping, CD ripping…techniques that cannot be quashed. Where is the major labels’ answer to this? Nonexistent.

The future is already here. The old CD paradigm, the old scarcity construct, is gone. If people want to hear music, they’re not forced to sit by their stereos, listening to the radio for an aural glimpse, they just go online and take what they want. This behavior must be monetized, but the labels won’t even make a reasonable streaming deal. Their numbers are so heinous that iMeem can’t make money. Is this a way to guarantee your future?

I’m not sure the major labels have much of a future. They’ve squandered it. And although they’ve got deep pockets compared to indie musicians, they’ve got no one working at their labels anymore, they don’t have the manpower to dominate in the coming years. Winners will develop and market acts. Whether they be by 360 or conventional deals. Where is the major label infrastructure that’s going to get people to sign with them?

It’s not like the TV and radio airplay majors may deliver has the impact it used to. It’s almost impossible to gain a large share of the public’s attention. Never mind get them to pay for music.

You could say the system is broken, I’d say it broke a long time ago and we’re now in the healing process. It looks like chaos from afar, kind of like a forest after a fire. But fires are necessary, to reinvigorate the land, seedlings develop, which grow into new trees. We’re in this phase now.

You can’t see the acts of the future. And you can’t see those who are building them. And when they grow, there might not be a hundred dominant trees, but thousands. A veritable forest of acts. This is a game the majors are not prepared for. In order to dominate the new music sphere majors must sign and develop a PLETHORA of acts at a very cheap price, making pennies at a time. This, of course, does not support the incredible overhead of today’s companies. Where the worker bees have been laid off and those left are making a fortune. You need a zillion worker bees and chiefs with only upside. But those in power at the majors don’t want to give up their salaries, their old Tommy Mottola lifestyles. But did you notice that Tommy Mottola has never come back?

This is not complicated. It’s about facing reality and monetizing it. Selling buckets of tracks cheaply and trying to hook people on credible acts, not evanescent crap. Lower the price and sell more. And rental ain’t in the immediate future, this dropping of DRM proves it. People want freedom, if you’re putting on locks, you’re driving people away.

Sale by track is economic death. Whether they be wrapped in DRM or not. You can’t have everybody making a 99 cent decision. You’ve got to get ten bucks from everyone. Just like the cable systems won’t sell their channels a la carte. The science is not new, it’s just that those in the record business have been so busying bullying and paying people off that they’ve neglected to study economics in general.

Mobile phones blew up when the price came down. Everyone over the age of twelve has now got a device. Everybody should own music. The way this happens is to forge reasonable plans, which are cheap, incentivizing people to partake. Ripping off the DRM is a nice start, but it’s a small part of the equation. Allow people to hear whatever they want when they want. Instead of putting up walls, send out invitations. Get in bed with the customer. You can’t sell music to people who are not friends. The war must end, music must be monetized. So far the majors have only succeeded in making music free. Their efforts are needed in order to get everyone to pay. But this requires a reasonable business proposition. But as seen in the last eight years, this business proposition is not needed for music to survive, just the major labels. Music’s doing just fine, healthier than ever. People are writing and playing and the audience is listening. Meanwhile, the majors are cutting staff and reporting horrific numbers. This disconnect won’t go on forever. At some point, the business will be run by people who understand the new world. Based on how long it’s taken three of the four majors to realize DRM is not the answer, I doubt these companies will be in charge of the game in the future.

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  1. Pingback by The RIAA just doesn’t get it « Consequence of Sound | 2007/12/30 at 16:52:05

    […] Though I’m not telling you anything you don’t already know… Bob Lefsetz recently expressed a similar sentiment. As did Resonator and The Sh […]

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  1. Pingback by The RIAA just doesn’t get it « Consequence of Sound | 2007/12/30 at 16:52:05

    […] Though I’m not telling you anything you don’t already know… Bob Lefsetz recently expressed a similar sentiment. As did Resonator and The Sh […]

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