Here are some thoughts on MP3 and the music biz, which I sent to Nua's Trendmuncher list a while back, which may be of interest.
I saw a strategy report about the "information superhighway" and its impact on the major labels which fell off the back of an ad agency a friend worked for. It basically discussed disintermediation and the opportunity for artists to go direct once they'd gained exposure via the labels. Labels have very little brand equity - the consumer doesn't care whether their favourite band is on Sony or PolyGram. The report recommended that labels take ownership of the musical brand, and to increase creation of "talent-independent brands", which I thought was pretty amusing.
What happens to talent in this scenario? Niche markets are getting bigger, sure. These niche, virtual markets have always existed in some sense. The various forms of dance music take this to a new level, relying on home-recording and word-of-mouth marketing, and they're building new musical economies which operate outside the record industry distribution systems.
But I don't think the labels are shaking in their boots around MP3. Sure, a large part of their business model is based on controlling distribution, and MP3 doesn't allow that. But neither does audio cassette tape. There's a lot of music in the world, and the labels have a powerful, vertically-integrated infrastructure (label-publishing-magazine-TV-Radio-retail-games-e tc.) for defining a consensus musical reality around a small part of that world of music. Working in music retail taught me that most music consumers do not want to filter through everything that's there to work out what they like, any more than they want to configure their computer operating systems or customise their car. Another factor is that music consumption is often a social experience - you want to be able to talk to your friends about the music you like, especially if you're a young person using music as one of your forms of subcultural differentiation. That requires consensus reality.
Labels don't "discover talent" and release it. They supply well-defined and segmented markets with a measured stream of product. Sometimes talent exists with that product half-there, requiring only a bit of tidying up. Other times it's easier to sit some pretty girls down with a songwriter, a producer and a video-maker and generate it that way. Sure, not everything makes money, and occasionally something crashes into another market segment (like Gorecki). But generally the labels have a well worked out procedure for getting people to like and buy stuff, which isn't very "talent-dependent".
I see popular music and MP3 as kind of analagous to cinema and video. The video revolution allowed wider distribution for a lot of new forms of "film-making", and even the opportunity for distribution of pirated home-taped versions of big name movies. But people spend more than ever on the experience of seeing a piece of Hollywood cinema when it comes out.
The major labels and other big media companies understand that experience. They may not understand the Internet very well, but then neither does your average music consumer. Even if the labels take a year to get SDMI (or something like it) working, they've got enough mass properties locked up in tight contracts to make consumers want to pay for the experience of their product.
My dad's fond of the expression "there's little in the world which can't be overcome by brute force and ignorance." The labels still have the brute force (global brand creation). They're starting to lose their ignorance.
Slashdot Mirror
Here are some thoughts on MP3 and the music biz, which I sent to Nua's Trendmuncher list a while back, which may be of interest.
I saw a strategy report about the "information superhighway" and its impact on the major labels which fell off the back of an ad agency a friend worked for. It basically discussed disintermediation and the opportunity for artists to go direct once they'd gained exposure via the labels. Labels have very little brand equity - the consumer doesn't care whether their favourite band is on Sony or PolyGram. The report recommended that labels take ownership of the musical brand, and to increase creation of "talent-independent brands", which I thought was pretty amusing.
What happens to talent in this scenario? Niche markets are getting bigger, sure. These niche, virtual markets have always existed in some sense. The various forms of dance music take this to a new level, relying on home-recording and word-of-mouth marketing, and they're building new musical economies which operate outside the record industry distribution systems.
But I don't think the labels are shaking in their boots around MP3. Sure, a large part of their business model is based on controlling distribution, and MP3 doesn't allow that. But neither does audio cassette tape. There's a lot of music in the world, and the labels have a powerful, vertically-integrated infrastructure (label-publishing-magazine-TV-Radio-retail-games-e tc.) for defining a consensus musical reality around a small part of that world of music. Working in music retail taught me that most music consumers do not want to filter through everything that's there to work out what they like, any more than they want to configure their computer operating systems or customise their car. Another factor is that music consumption is often a social experience - you want to be able to talk to your friends about the music you like, especially if you're a young person using music as one of your forms of subcultural differentiation. That requires consensus reality.
Labels don't "discover talent" and release it. They supply well-defined and segmented markets with a measured stream of product. Sometimes talent exists with that product half-there, requiring only a bit of tidying up. Other times it's easier to sit some pretty girls down with a songwriter, a producer and a video-maker and generate it that way. Sure, not everything makes money, and occasionally something crashes into another market segment (like Gorecki). But generally the labels have a well worked out procedure for getting people to like and buy stuff, which isn't very "talent-dependent".
I see popular music and MP3 as kind of analagous to cinema and video. The video revolution allowed wider distribution for a lot of new forms of "film-making", and even the opportunity for distribution of pirated home-taped versions of big name movies. But people spend more than ever on the experience of seeing a piece of Hollywood cinema when it comes out.
The major labels and other big media companies understand that experience. They may not understand the Internet very well, but then neither does your average music consumer. Even if the labels take a year to get SDMI (or something like it) working, they've got enough mass properties locked up in tight contracts to make consumers want to pay for the experience of their product.
My dad's fond of the expression "there's little in the world which can't be overcome by brute force and ignorance." The labels still have the brute force (global brand creation). They're starting to lose their ignorance.
Danny
Internet Commerce -- http://aerial.icvp.com