More bad news for music


How does one make money from music anymore?

1. The traditional model of selling an album around one or two great songs doesn’t work anymore.  People can legally download a copy of the single from itunes.  So, instead of $ 14.99 for an album, you have to be content with $ 0.99 for a song – although its likely that you’ll sell a lot more singles.  Still, the gains are hardly likely to make up for the loss.

2.  Sales cycles are incredibly short.  I did a post on the New Product Life Cycle sometime back – music is a classic representative of this cycle.  True block-buster albums are rare.  Most music has to be be sold within a few months of launch and then milked from compilations.

3. Piracy is rampant.  And there is precious little one can do about it – though that doesn’t stop the industry from trying!

I can go on.

But along the way, a few good internet models started emerging – like itunes, Rhapsody and Spotify.   This was good.  There was hope for the industry.  As long as an economic engine finds its place, one could keep the consumers and the labels happy.

Now it turns out that some of these models aren’t so good for the artistes.  Apparently, Poker Face played a million times on Spotify in the last 5 months – and all Lady Gaga got was the princely sum of – hold your breath – $ 167.  (You’d spend more money than that on coffee at Heathrow waiting for your flight to take off!).  This is a problem.  As the Guardian puts it:

“Spotify is the cool company that keeps the Kids happy, but also signs contracts with the Man…And if this is the best Good Cop can do, God help us all”

Is Spotify ripping off the labets?  The labels ripping off the artiste?  Or, a business model that doesn’t work?  That music will survive is a given.  The question is – with what business model?

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3 Responses to More bad news for music

  1. I love Pandora which is an internet radio service, with some very cool music discovery technology. I believe its service is limited to the US only. Pandora went through a bit of a crisis itself because the RIAA convinced the Copyright Royalty Board that they should pay higher fees. In 2009 the matter was resolved, though Pandora is not entirely happy, but it will survive.

    The matter of how revenues will be shared on digital music between channel (Pandora, iTunes, Spotify) label and artistes is truly complex. But the bigger problem is that piracy is still rampant. The price of digital music is still too high on the downloads.

  2. Basab, Amit, I use Lala.com, which is a similar internet radio. With all the online connected devices, there is no real need to buy music now. The artists and music companies have to find out other ways to make money- perhaps from roadshows and “experiences”, rather than burning CDs.

  3. amtgrg says:

    Actually – mobile is a pretty solid revenue platform for music companies these days. Will do a couple of posts on that.

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