I’m not excited about this.\u00c2\u00a0 I’m quite happy with OS X.\u00c2\u00a0 I’m not one of the minions tearing their hair out, bitching about Vista.\u00c2\u00a0 But as a business story, this is fascinating.<\/p>\n
You see Microsoft is married to an old business model.\u00c2\u00a0 They make their money selling Windows and Office.\u00c2\u00a0 What if these are suddenly free?<\/p>\n
This is exactly what happened to the record companies.\u00c2\u00a0 They were humming along, making beaucoup bucks in the nineties selling overpriced CDs with one good track, and Napster came along and ruined the business model.<\/p>\n
How did the labels respond?\u00c2\u00a0 By trying to keep the future from happening, then suing those desirous of living in the future, then blaming the artists and insisting they hand over 360 degrees of rights for almost nothing in return.\u00c2\u00a0 Their only hope of survival with any power was to jump ahead of the curve, retool their business for what didn’t yet exist.\u00c2\u00a0 But there are no visionaries at major labels.<\/p>\n
Microsoft has got money.\u00c2\u00a0 But they’ve got no innovation.\u00c2\u00a0 It’s kind of like Detroit.\u00c2\u00a0 Mercedes-Benz came up with all kinds of safety initiatives, Honda met fuel standards way in advance and Detroit said both were impossible and booked the profits, only changing when forced to by the government and consumers.\u00c2\u00a0 But it was too late.\u00c2\u00a0 After decades of extracting cash but failing to reinvest it, the Detroit companies failed themselves.\u00c2\u00a0 Microsoft has beaten back challengers in the past, but can they beat back a company as rich as Google?<\/p>\n
Don’t talk to me about Windows Mobile.\u00c2\u00a0 That’s in a death spiral.\u00c2\u00a0 Don’t talk to me about Bing, that’s like debating the merits of Subaru.\u00c2\u00a0 All the cash is coming from Windows and Office.\u00c2\u00a0 If Google makes them free…<\/p>\n
And they’re probably going to be free.\u00c2\u00a0 When connections are fast enough and you can do everything you want online.\u00c2\u00a0 Look at it this way.\u00c2\u00a0 Road warriors oftentimes don’t even travel with a laptop anymore, an iPhone or a BlackBerry is enough.\u00c2\u00a0 Do you really need all those apps, all that crapware on a large, overpriced piece of junk?\u00c2\u00a0 Or should you be able to just pay for what you want?\u00c2\u00a0 Kind of like in the music business.\u00c2\u00a0 On iTunes, you can buy just what you want, and the labels hate this!\u00c2\u00a0 Look at this from a consumer viewpoint.\u00c2\u00a0 Do you want all those apps that come on your Windows computer?\u00c2\u00a0 Wouldn’t you like to be able to buy just what you need?\u00c2\u00a0 Why not?<\/p>\n
The labels are still focused on selling more than you need.\u00c2\u00a0 Instead of creating products so desirable you want more.<\/p>\n
The music business has been turned on its head.\u00c2\u00a0 And everybody who had any power before is bitching.\u00c2\u00a0 Music is free!\u00c2\u00a0 Damn those pirates!\u00c2\u00a0 Let’s go back to the twentieth century!<\/p>\n
That’s a worthless discussion.\u00c2\u00a0 Equivalent to telling people to go back to typewriters and the horse and buggy.\u00c2\u00a0 Not only do you need to accept the present, you’ve got to view the future!<\/p>\n
The primary issue facing the purveyors of music today is attention.\u00c2\u00a0 How do you get people to pay attention, and keep paying attention?\u00c2\u00a0 One way is the major label way, spend a fortune to get radio airplay and TV exposure.\u00c2\u00a0 But both of those are declining markets.\u00c2\u00a0 And you’re still competing against a plethora of interests, and not only music.\u00c2\u00a0 Whatever it takes to get people hooked, you should consider.\u00c2\u00a0 Free music is a great strategy because people only bond to acts if they hear the tunes.\u00c2\u00a0 Making it feel like free is also a good strategy.\u00c2\u00a0 Spotify works because it’s convenient!\u00c2\u00a0 All the tunes in one place!\u00c2\u00a0 I’m not saying you can’t charge for music, but charging comes last!\u00c2\u00a0 Getting people hooked comes first.<\/p>\n
And that’s extremely difficult these days.<\/p>\n
Used to be you had three TV networks and just a few local radio stations.\u00c2\u00a0 Now you’ve got 500 TV channels and Internet radio and iPods.\u00c2\u00a0 Doesn’t a new world require a new strategy?<\/p>\n
If a company as large and powerful as Microsoft, a veritable monopoly, can be challenged by what’s coming, its very existence called into question because it is not prepared for the future, is it any wonder that the zit on the ass of the economy known as the music business can be decimated?<\/p>\n
The good news is it will be reincarnated.\u00c2\u00a0 Just with a different business model.\u00c2\u00a0 That’s what’s going on now.\u00c2\u00a0 Don’t bitch and moan, try and get ahead of the customer and entice him when he finally reaches you.\u00c2\u00a0 Providing more, not less.\u00c2\u00a0 He doesn’t want to rip you off, he wants to give you all his money.\u00c2\u00a0 But only if he wants what you’re purveying, and exactly what you’re purveying.\u00c2\u00a0 Does anybody salivate over the new edition of Windows or Office?\u00c2\u00a0 Only if they’re frustrated with the crappy old one that is making them tear their hair out.\u00c2\u00a0 Once you start protecting what you’ve got, trying to deny the future, keeping people locked into old ways, you’re on the way to decline.\u00c2\u00a0 Remember this.<\/p>\n
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