Monday, May 03, 2010

Music and Business: The Audience Isn't Listening

4. The Audience Isn't Listening
Many record business executives point to the original, illegal Napster as the beginning of the end. And they blame Napster for mortally wounding the music business. But Napster didn't host files. It just allowed people to share them. It was the listeners and fans who did all the "illegal downloading".

Since the glory days of the music business (let's call it the late 1980s) the world has changed. The business stopped selling singles (or charged much more than they ever had) and focused on albums. The major labels changed how they develop artists (they stopped). They changed their definition of a "hit" or successful record. They focused on selling 2 million albums in a single year over selling many millions over a career.

Music fans grew up. The entertainment dollars they and their kids have can go to music...but they can also go to Internet subscriptions, World of Warcraft, XBox, mobile phones and data plans, iPhone apps, computers, Netflix, DVDs, and fancy coffee. The music business has responded...largely by offering the same product, but "remastered", with a "bonus disc" at a higher price. In other words, "please just go buy it again".

Digital music services came along. The traditional industry responded with piracy concerns and has only reluctantly allowed legitimate services to operate, dragging their feet the entire time.

Simultaneously, the record industry has sent mixed signals about piracy. Some users who upload are sued, some aren't. Some services which offer content illegally are shut down, others are allowed to "convert" to legitimate services...provided the labels get cash, an ownership stake, and a seat on the board. Some blogs which host mp3s get taken down, some don't. It's no wonder listeners are confused.

Music is a niche product. And there's a glut of it.

Listeners are overwhelmed. There's so much music out there, the value for listeners is practically zero, and their ability to wade through it all to find things they're interested in is minimal. In the aggregate, "music" has value to them. But any one piece of it? Probably not so much.

The average annual per capita expenditure on music in the USA is about $35 and it is declining. Most people don't care about music. They just don't. They won't pay. They'll steal or listen for free, and they don't much care to what. There's a ton of free music easily accessible.

Music has a strange, asymmetrical value proposition. One listener might be willing to pay $5 to hear the new Radiohead song. Another user might have to BE paid $5 to listen to it. Perception of value of individual music changes over time.

The labels have been somewhat unfairly charged with assuming that all music fans were pirates. But perhaps on one level, the labels were right: Maybe the problem is the audience. It's not listening and it's not buying.

It's not hard to see why - "so much music, so little time"...and so little worth paying for. That's not to say there isn't great music out there. There is. But it's extremely difficult for any individual user to find. CDs and physical media are dying out, but the digital services have largely been handicapped with Draconian restrictions and aren't able to produce an experience so much more compelling that everyone has to get on board.

To put it in context, the business community gets extremely excited about things like Facebook and Twitter. Regardless of what one may think of these services, they've been allowed to create something compelling enough to attract millions of users within a few years of launching...while the latest and greatest music services struggle.

Sure, it's possible that everyone (except Apple) really has gotten it all wrong. But there are millions of people downloading illegally and listening to music without paying for it. That's not Apple's fault. Or Rhapsody's.

Maybe it's the record business' fault. But it is also the fault of the people doing the illegal downloading.

Up Next: Part 5 - What The Internet Really Means/Conclusion
1. The Problem Nobody's Talking About
2. Too Much Music?
3. Now It's Everywhere
4. The Audience Isn't Listening
5. What The Internet Really Means

1 comment:

Robert Link said...

Anu, been meaning to drop by and say a couple of things. First, your blog title is nothing short of ├╝ber-hip. Second, your candid statements, such as:

"Music is a niche product. And there's a glut of it.

Listeners are overwhelmed. There's so much music out there, the value for listeners is practically zero, and their ability to wade through it all to find things they're interested in is minimal. In the aggregate, "music" has value to them. But any one piece of it? Probably not so much.


are a true breath of fresh air.