New business models

When music was distributed physically, artists were encouraged to record an “album”–a collection of songs that the record company could distribute as a package. This made financial sense: certain costs, such as manufacturing a disc and bribing retailers for shelf space are fixed. So your margins are much higher if you can charge $17 instead of $5, and the only way you can do that is if it’s got a reasonable number of songs on it–hence, the “album.”

The marketing model grew up around this distribution model: companies geared all their budget toward a release date, spent a bunch of money pushing one song which would sucker kids into buying the rest of the songs, and perhaps sent the act out on tour to push the album. These marketing pushes are so expensive that music (like movies and, now, video games) became a hit-driven business, in which one grand slam was necessary to pay for all the failures. And if you’re not the grand slam, sayonara.

But what happens when physical product is replaced by bits? Well, how about an all-electronic label that releases clusters of three songs every couple months, rather than an album every three years? That’s exactly what Warner Music is planning to do.

This could be great for serious musicians (as opposed to plastic packaged performers of the Britney variety). Imagine not having to have a smash hit to justify your existence. Imagine lower marketing budgets, making it easier to recoup. Imagine switching producers, studios, engineers every six months. Imagine experimenting with different sounds, shifting line-ups, side projects. Imagine touring and gigging all the time, cross-pollinating with other musicians and staying in touch with fans instead of holing up for months in isolation with an engineer.

Meanwhile, one exec at Sony BMG Music is starting to embrace the file-swapping networks rather than fight them. OK, maybe this is doomed. I can’t see many people using a client like Mashboxx unless they get some obvious benefit out of it…and being “allowed” to pay $0.99 instead of getting music for free isn’t a benefit. But still, at least the labels are starting to wake up and think about how to benefit from technology, instead of keeping their heads buried.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: