As they return to their frenzied courtship yet again, these two smallish giants of the old recorded music industry are so obviously unable to change their steps or dance to a different drum.
The first time they engaged in their courtship dance it cost EMI £45 million in legal fees – apparently. This time the cost could be more.
And yet, what is the aim of this dance? Merely to get bigger again, to regain market share, to reduce costs and operate more efficiently. All this would be fine if they were still dancing in the same ballroom and the band was still playing the same tune.
What is so tragic here is that these two giants continue to deny the extent to which it’s not just their noble business which is in tatters, but the very foundations upon which their business is built. Of course the old model is one that precludes any other. That’s the thing about models.
The old recorded music industry was based upon a concept of total control: control of distribution, control of copyright, control of consumer behaviour. But digital technology, the internet and widescale broadband penetration have made a nonsense of all of those forms of control. The definition of a major label in the 90s was a company that owned its own manufacturing and controlled its own distribution. That was how you knew that you were talking to a major. It was simple. Now all that’s over and done with – they sold off their CD plants years ago.
Today, all of those levers of control have gone soft. Digital technology has disrupted those areas completely and DRM is clearly not the solution.
Of course CD sales continue to represent more than 80% of the sales – but those sales figures are taking a nose dive. Walk into a high street music store today and it’s like walking into a going-out-of-business sale. And many retailers have gone from the malls. Tower, Musicland, Ourprice, etc. RIP
Arguably the retail disaster is not entirely linked to the disruptive effects of technology. It’s “cos the music’s so bad or they all buy video games now” It is certainly the result of massive other demands on the pocket of the consumer: such as video games, mobile phones, online time. The key consumers ( 16-25 year olds) have turned their attention and their pocketmoney away to other things – actually other channels where they spend their cash. But when you look more closely you find that they still acquire access to much of the music they used to buy on CD – in fact quite possibly more people are listening to more music than in ever before – but it’s on other formats and on other platforms – many of them effectively free to the user.
So the majors and the industry as a whole, are in urgent need of a new architecture, a new business model that fits the reality of the technology environment and can capture the value to be derived from the unquestionable excitement that there is for music out there.
What kind of model? Well there are lots of debates raging in the tavernas, supper clubs and drinking holes of the industry right now.
It’s probably one that no longer tries to charge for a unit of music at all, but starts to extract value from offering access to music. Most of the new music releases these days are first accessed online via a mobile operator or an internet service provider. So the fact is that the consumer does pay for access – they pay their ISP – it’s just that access provider doesn’t pay to provide that access.
These days once a single has been released into the public domain – it pretty much automatically becomes available for anyone who wants to listen to it or download it. The option is often not even there to pay for it – even if you wanted to. That automatic accessibility needs to be licensed. The industry needs a new automatic license for music. Anyone who makes music available should pay the license fee.
That would have a dramatic and transforming effect on the industry’s revenues – turning free “pirate” services into real revenue streams. By legitimising P2P and other forms of making music available, consumers would be massively motivated to go and use those services thus raising the revenues to the labels and musicians proportionately.
If the older generation of music industry executives were to get out of the way and try to start rebuilding their industry – instead of simply reconfiguring the old market share figures – then perhaps disaster could be avoided. We don’t want to see them dancing the Dance of the Dead – it’s just right now those seem to be the only real steps they know.