Well seeing as how my last post on innovation in music distribution has worked out so well for people like Last.fm & Pandora, I thought I’d post up another good idea here in the hopes that somebody will take care of the hard bits for me.
Here’s the thing… Music distribution has traditionally been a slave to the medium (45s, LPs, cassettes, CDs, etc.) and the “Big Music” business has put a lot of time & effort into optimizing their revenue model for whatever the current mode of distribution is. They love/hate changing formats, because it gives them the opportunity to re-sell music in their catalog to the same listeners over and over and over again, while at the same time making it easier and easier for those same listeners to re-distribute music themselves, as well as for new distributors (indie labels, etc.) to erode the “big” guys’ market share.
One thing that’s been relatively consistent since the days of the LP however, is the “bundling” of individual tracks into “albums” or whatever. Doing this allows distributors to multiply their profits considerably, since the marginal increase in cost between producing a 45 record or (CD Single) and a full-length album is minimal but the difference in retail cost is quite a bit larger (I don’t have any statistics to prove this, but I’d be pretty fucking amazed if it wasn’t true). Even in cases where music isn’t listened to in an “album” format, there is usually some other type of bundling context (concert, radio station, mixtape) and it’s this tendency towards placing individual songs in some larger context that is at the heart of what I’m going to propose.
So anyway, with the rise of MP3 compression and online distribution, there has been a pretty sharp downward correction in the market for full-length albums. Listeners are now able to acquire the “hit songs” they want as single-track downloads, via legitimate channels (iTunes/Amazon) and otherwise (Napster/AudioGalaxy/SoulSeek/BitTorrent). Record companies are understandably pissed, since this puts a pretty big hole in the middle of their profit-multiplication scheme, but it seems to me like they’re concentrating much too hard on the finger and consequently missing out on all the heavenly glory.
Here’s what they should do:
- Quit re-selling the same music to people over and over and over again. This may have been great while it lasted, but it’s *over* now and it’s not coming back.
- Instead, sell unlimited licenses for individual songs which can be applied to as many formats as the listener wants
- Make it trivially easy to build multiple contexts around these individual songs
- Give away the contexts for free
So for instance, let’s say I want to purchase the album Led Zeppelin III. The “context” is obviously free in this case, since it’s just a tracklist, and so what I’m really purchasing would be an unlimited license for each of the 10 songs on the record. If each one costs $0.50 then I’m out $5.00 for the whole thing.
Later, I’m watching School of Rock and I decide I really like the soundtrack. I’m ready to drop another $5.00 to make this purchase except… What’s this?! I already *own* an unlimited license for “Immigrant Song” and so the soundtrack only costs $4.50. Nice!
Now if you only think things through this far, it sounds like a pretty raw deal for the record company. Whereas they would have previously made $10 they’ve now only made $9.50 and the more of these unlimited song licenses they sell, the worse it’s going to get!
However, consider another type of context, the mixtape. Now, let’s say I am a guy who listens to a lot of weird indie-rock and it occurs to me that I know a lot of great bands and songs that might be really appealing to the type of person who likes The Shins or The Coldplays or whatever. But what am I supposed to do with this knowledge? Go work in a record store and chat about it with my fellow record store clerks? Well maybe that used to be viable, but I forget… what the fuck is a record store? I haven’t seen too many of them around lately. Instead, let’s say I post a really sweet mixtape on the internet. It starts off with Vampire Weekend and goes on a crazy musical journey (perhaps including Journey?) that ends up with 3 tracks in a row by The Stranglers because, fuck it, The Stranglers are fuckin’ awesome!
Now if, as it turns out, you already happen to own unlimited licenses for 75% of the tracks in my mix, then maybe you’ll be willing to throw down $3.00 to “complete the context” even though you’ve never even heard of The Stranglers before. Maybe you’ll be willing to make a *lot* of contextually-driven purchases. Maybe, every time you listen to any individual song, you could be presented with a list of additional contexts (i.e. “You seem to be enjoying this Bob Dylan song, perhaps you’d like to hear it in the context of a live concert, as a cover version on another band’s album, as part of a soundtrack, mixtape, etc.”) and depending on how your existing song/license collection happens to intersect with each of these contexts, your cost to complete them could be anywhere between “full-price-minus-fifty-cents” and zero.
Maybe our (natural?) preference towards experienceing music as part of a larger context would actually drive a significant number of people to purchase even *more* music than they would have via traditional album sales. Maybe users would just set up a daily music “budget” of $5 or $6 that could be used to automatically acquire licenses for songs presented in passive contexts (i.e. online radio) and when this budget ran out their music software could just revert to playing songs already in their library.
Or maybe not…
Anyway, that’s all I’ve got for now. Readers are encouraged to point out that I’ve basically just re-hashed the concepts presented in The Long Tail, or that a subscription-based model is really much more progressive, or that things are just fine the way they are and I should keep my theories on “the music business” to myself and let the all the highly-paid ecommerce consultants with Master’s degrees in iSynergy and eMonetization take care of things. All I know is that broadband gets faster every year and any day now it’s going to be fucking *trivial* to move big chunks of compressed audio (and video) around. And I’m not talking “post-it-on-yousendit-and-mail-a-link” or “break-it-up-into-chunks-and-post-it-on-YouTube” trivial, I mean like IMing-your-friend-a-URL trivial.
So, I’m just saying… if *I* was sitting on top of a mountain of soft assets, the value of which was asymptotically approaching zero… I’d be worried.
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