The recorded music business must switch to subscription, it’s its only hope of economic survival.<\/p>\n
The iTunes Store is killing the music business.\u00c2\u00a0 Sure, it provides a legal alternative to theft\/copyright infringement, but the economics make no sense.\u00c2\u00a0 Because instead of spending $10-$20 for an album, people are now purchasing $1.29 tracks.\u00c2\u00a0 And it takes many $1.29 tracks to reach the equivalent of an album.\u00c2\u00a0 Essentially ten.\u00c2\u00a0 So, you’re asking the public to make ten purchases instead of one.\u00c2\u00a0 Get it?\u00c2\u00a0 Can you imagine someone saying yes ten times in a row?\u00c2\u00a0 Imagine buying the White Album a la carte.\u00c2\u00a0 How many people do you think would have purchased "Revolution 9"? But we did, as part of an album, there were no singles from the White Album, and therefore we know "Revolution 9", because oftentimes we were just too lazy to jump up and lift the needle past it, and we ended up hearing it, it’s in our DNA, like the rest of those album tracks.<\/p>\n
But it makes no sense to complain that people should buy albums instead of singles, you’re pissing in the wind, the Internet has unbundled the album.\u00c2\u00a0 That doesn’t mean you can’t try to get people to buy as many of your tracks as possible, it just means that the concept of paying once for ten tracks is something that no one has to do, and almost no one wants to do.<\/p>\n
So, inherently, we’re selling less music, and making less money.<\/p>\n
Who do we want to blame?\u00c2\u00a0 Apple, the customer?\u00c2\u00a0 That makes no sense, as stated previously Apple is providing an alternative, and without customers you’ve got no business.\u00c2\u00a0 The key is to get more cash from each individual consumer, so in the aggregate, we end up with a lot of money.<\/p>\n
The classic example is cable bundling.\u00c2\u00a0 You cannot buy your cable channels a la carte.\u00c2\u00a0 You must buy them in tiers.\u00c2\u00a0 Which drives you nuts.\u00c2\u00a0 Why am I paying for something I’m never going to watch?\u00c2\u00a0 But economically, it makes sense.\u00c2\u00a0 For if the channels were unbundled, the cable system wouldn’t be able to make enough money, so it would have to raise the price of each individual channel substantially, to the point where you’d be paying just as much.\u00c2\u00a0 According to this article in the "New Yorker", at most you’d be saving thirty five cents.\u00c2\u00a0 And you’d give up the ability to surf all those extra channels, and possibly find something interesting.<\/p>\n
That’s what we want people to do.\u00c2\u00a0 Surf the music and find something interesting.\u00c2\u00a0 That was the old album paradigm.\u00c2\u00a0 Since you paid four or six or ten bucks for the LP (the price went up with inflation), you listened to it, and found out you liked cuts other than the hits, to the point you wanted to see the act live, to hear it perform all these songs, and bought the next album not worrying about a hit, because you were a fan of the band.<\/p>\n
I hope these days can return.\u00c2\u00a0 But we’ve got to switch the game in the interim.\u00c2\u00a0 We’ve got to make people fans of music!<\/p>\n
Yes, instead of paying ten bucks for an album, you pay ten bucks for music.\u00c2\u00a0 And technology allows everybody access, so instead of charging our good customers more, we charge everybody one low flat fee, kind of like cable television, the provider doesn’t care if you watch all day long or not at all, it’s the same price.<\/p>\n
And speaking of price, we can argue whether ten bucks is appropriate, we can argue price all day long, but we can’t argue paradigm.\u00c2\u00a0 The key to survival is charging everybody something.\u00c2\u00a0 Not breaking it down by track, but providing the whole smorgasbord for a single price.<\/p>\n
Now the Spotify trick is to get you hooked for free, then upsell you.\u00c2\u00a0 That’s a good concept, works in sampling across all wares.\u00c2\u00a0 Don’t think it’s about giving music away for free, it’s ultimately about getting a chance to convert many people.\u00c2\u00a0 It’s just like a retail store.\u00c2\u00a0 The first key is getting traffic, then, once people are in the store, you do your best to close them.\u00c2\u00a0 Hell, sometimes you do giveaways just to get them in!<\/p>\n
Not that Spotify is the only solution.\u00c2\u00a0 But the labels must see they need to drive subscriptions, or lose the bundling war.\u00c2\u00a0 That site allowing you to get tracks for experiencing ads?\u00c2\u00a0 That’s economic death.\u00c2\u00a0 As is Apple’s concept of letting you stream the tracks you own via the cloud.\u00c2\u00a0 If either of these take hold, the odds of subscription winning go down, and you want them to go up, because the pool is so much larger.<\/p>\n
Don’t see this as a music problem.\u00c2\u00a0 Don’t see this as a value problem.\u00c2\u00a0 See this as an economic problem.\u00c2\u00a0 How do we get the most money? Certainly not by selling tracks.\u00c2\u00a0 Definitely by selling low-priced subscriptions.<\/p>\n
Furthermore, if the music is streamed (with thousands of tracks on your hand-held in case you’re out of range, Spotify provides this today), there’s no issue of someone stealing everything and then disconnecting.\u00c2\u00a0 What’s there to steal?\u00c2\u00a0 People believe YouTube clips will live in the cloud forever, very few people save them to disk.\u00c2\u00a0 We have to migrate music to this same sphere.<\/p>\n
Please read this article about bundling.\u00c2\u00a0 It will make the concept clear to you.\u00c2\u00a0 The cable companies and content providers are tempting unbundling by fighting their silly wars in public.\u00c2\u00a0 We have the reverse problem in music.\u00c2\u00a0 Our content has been unbundled.\u00c2\u00a0 Only by bundling it again can the industry regain health.<\/p>\n
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