Friday, July 13, 2007

R.I.P. Recorded Music

This is a great story about the rock music artist Prince releasing his new album, "Planet Earth" for free in  a British newspaper this weekend. The recording industry, and especially his own label, are furious, as they are being robbed of their chance to debut the album in retail stores.

While I understand the recording and retail industries' outrage over losing the opportunity to cash in on these sales (especially since this could be a blockbuster album, as it has new songs and old hits from a very popular artist) I still fail to understand their surprise. The world of Media distribution has been going through significant changes for more than ten years now. And the changes are not some sophisticated system that people can't understand, it is simple economics and sales practices that retailers put into place in the first place. While Prince is using the model of "covermounts," putting a CD or DVD in a newspaper or magazine, I'm going to use examples from the more popular model of online distribution.

The first (and perhaps most important) principle is price. When Napster debuted in 1999, the online service allowed people to acquire the same music, at the same or better quality sound level, that they could buy at a store for FREE.  One of the most widely used tools in the Retailer's and Marketer's toolboxes is free stuff. "Buy one, get one free," "free with purchase," "free with a test drive," "free just for stopping in." We have all heard these slogans. The catch is that the free stuff is usually either crap or surplus stock, and everybody knows it. But when you condition the consumer to covet this concept, you shouldn't be surprised when they jump at the chance to acquire something for free that they actually want.

If "free" is our economic concept, then our important sales concepts are "availability" and "impulse." With Napster, (and similar services that still operate) people could "shop" for digital music in the comfort of their jammies in their own home. No weather, no traffic, no rude salespeople. Just put in a search term, find what you want, and download it. Simple, fast, easy.

Now most people would probably not think about impulse in relation to getting something that is free, but I bring it up for two reasons. First, many people have an impulse to accept something that is freely handed out, such as a handbill on the street or a sample at the mall. So when we see free our reaction is to automatically go for the deal. The second reason I bring it up is because the ease and accessibility of Napster and other services did not give a lot of people time to consider the moral applications of their actions, getting hooked on the service before they ever really considered what they were doing. By the time people started labeling the service as piracy (which it was) people were already hooked.

Now of course Napster was sued, deemed an illegal distribution method, and was forced to go legit in order to stay active (basically ending it's life, as far as I am concerned). The problem is the industry didn't learn from this valuable lesson.They could have taken the opportunity to launch their own site, making songs available for a reasonable fee and sending out the CD's as a backup. The retail stores could have brought in coffee, couches and listening stations, gotten rid of the aisles of merchandise, and emailed the people their music once it was purchased.

Instead they buried their heads in the sand and stuck with the status quo. Now companies like Apple and Wal-Mart sell songs legally for $.99 or the whole album for $10.00. I don't if this hurts the record labels' profits but it obviously does the retailers, as people are getting the same music at home for $10.00 that they would pay $15-25 in the store.

If that is not bad enough for these industries, independent artists are now starting to sell and distribute their music on their own websites and online services. So far these musicians are small, independent artists who aren't even on the Billboard Chart's radar. But I believe there will come a day, probably in the next 5-10 years, when one of these artists will sell enough music to make the charts, which will spell the beginning of the end of the labels and the music retailers. Now don't misunderstand, these people still need promoters to get their music in the public eye. But they will not need labels and retailers to do it. Online promoters, marketing companies, and web designers will do the job instead.

In summary, IF the recording industry does not change their practices, and IF it is not too late they will cease to exist as a viable business venture. The only people dumb enough to pay the extra money for a CD will be the recording industry execs. who make them. I hope they get an employee discount, although I'm doubtful they would have the presence of mind to actually use it.

Story - Free Prince CD Enrages Music Industry - AOL News

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