Music will (eventually) be free
Friday, October 5, 2007 at 7:37 PM
Tags: In the Media, Music, Music Industry, Satellite Radio, Sirius, XM
...or as an alternate headline, the "Service Model vs. Product Model" (far less exciting).
The music industry is at an important paradigm shift right now, and there's a heated debate within the blogosphere about the economics behind the distribution of music. Mind you, this is far different than the value of music, but easily confused. In the end though - it's inevitable in my opinion - music will eventually turn away from its current product model, and into a service model.
In short, music will be "free."
It's not that people will stop paying for music, but it's how they pay for music that is the key.
DRM is falling apart, and we all knew it was going to happen. iTunes is selling DRM-free music. Amazon has opened up a DRM-free MP3 music store. Even Microsoft and its new Zune 2 is using DRM-free as a differentiator. The technical restrictions on owning and using music are disappearing.
And the reproduction costs (separate from the creative costs) are disappearing, if not already gone. As Mike Arrington from TechCrunch puts it:
"...like software, it doesn’t cost anything to produce another digital copy [of music] that is just as good as the original as soon as the first copy exists, and anyone can create those copies (meaning there is perfect competition and zero barriers to entry)."
Breaking it down even further, TechDirt (one of my favorite blogs) brings in the analogy of the software, and the film entertainment industry:
"For software and filmed entertainment, the inevitable shift is to a service model rather than a product model (which is the same as music). A services model recognizes that the creation (not the distribution) of content is where the marginal costs are. In reality, they've always been services models -- just disguised as product models."
What will happen, regardless of the moral implications, is that music will eventually become free. And the reality is, for many people, it already is... and has been for years.
At the root of the debate over music business models is Radiohead. If you're in the industry, or follow it, you've likely heard about Radiohead's "museum model" move. The quick take is that Radiohead, free of a record label, has decided to release their newest album at any price you want to pay. No really, any price (see the picture above). Watch the video below for the breakdown from Reuters:
Now sure, this isn't something that every band can pull off (just like every band can't pull off the Grateful Dead/Phish model of touring non-stop)... yet. But asking fans to pay whatever they want allows the hardcore fans to help support the group, and the less-than-hardcore fans to be exposed to the music at a minimal cost. "Performance" and "distribution" all wrapped up in one pretty little package.
This shift from a product model to a service model hasn't escaped the music industry. Please, don't discount these guys as fools... when it comes to making money, they're pros. And that's what SoundExchange is all about. They're making sure that all forms of distribution are going to be adding to the revenue stream. They're shifting from product to service. The nice thing is that at least the artists get paid for the airplay.
But even with the commodization of music, there's still another need for any artist/label to make money: Getting heard.
Having your music heard (or "discovery" - whatever you want to call it) is still at the essence of any revenue model for the artists. Terrestrial radio, when they lose their "performance tax" case (and they will), will no longer rest on the laurels of being contributors to the antiquated Product Model. And with future CD sales predicted to drop at an accelerated rate, there's little terrestrial can do to prove its effectiveness (especially at moving product). Terrestrial radio will move to a pure Talk Radio format before you know it.
That's right, radio is going to drop music from its airwaves eventually... and probably in the not-so-distant future. They're already talking about it, and once SoundExchange wins, that consensus will spread like wildfire.
What will be left for music discovery will be Internet Radio, Mobile Audio (which includes cellphones and digital audio players) and Satellite Radio. All of which do a phenomenal job at helping their listeners discover music.
The value that XM and Sirius bring to the table though - the single differentiating factor - isn't the just the songs, or the "depth" of the playlist. It's the brilliance behind the programmers. Many of the programmers who adorn the halls of The Eck, or the 1221, are former terrestrial radio programmers. They possess the intangible creative ability to be in-tune with the audience. To anticipate future "hits" and to paint an aural mood. Where terrestrial has ignored them, they've flourished on satellite.
So yes, music will be free, which will open up many doors. Many different and more creative streams of revenue, and among those will be commercial-free "pay radio" leading the way.
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Comments
very very nice post Ryan. lots to think about here and i believe your correct on many points
Posted by: seven | October 5, 2007 8:49 PM
So are you telling me that I should hold off on getting that HD Radio?
Posted by: nhoJ | October 5, 2007 10:10 PM
"depth" of the playlist huh? Perhaps people should read Lee Abrams' blog. This is the ONE reason that I have XM. I want to hear shit I have never heard before. That is why I do not have Sirius. By the way the Rhyme rules. If you don''t know who Schooly D is.... you are gay.
Posted by: NorCalMurph | October 5, 2007 11:02 PM
Radiohead isn't the first to do this. The Grateful Dead have always welcomed pirated recordings. In the late 70's, Bob Dylan released "Slow Train Coming" with pay-as-you-want distribution.
Posted by: steve | October 5, 2007 11:55 PM
You might be a little too optimistic with that "artists getting paid for the airplay" through SoundExchange stuff. If the labels are allowed to strike direct deals with terrestrial broadcasters like they are with the Internet streamers, the money goes to the labels. You tell me how much you think will get passed along to the artist under that arrangement. The "service" model is just another scam if the servants don't get paid.
Posted by: Fred | October 6, 2007 12:56 AM
1) Anybody who has read one of my posts knows I think music should be free for a varitey of reasons (well only two: it's so easy to copy and Canada/Sweden/France doesn't consider it illegal, meanwhile the US position has been warped by lobbyists who even target the population with annoying messages) but onto new stuff...
2) GET RID OF THE LABELS! Sirius and XM are big companies, people can submit music, if fans who went to concerts request it, it can be pulled up from the system and played, if it's requested enough, people will get to liking them and go to more concerts. I've said I nver bought an album in my life, but I actually have bought home-pressed ones from concerts. There shouldn't be any money from the plays for labels, though a bit for the artists, but have good websites providing info and the DJs explaining who's performing, or maybe improve the radios to display album art along with concert info and web URLs.
Truly talented musicians PERFORM, let's get back to that. The idea that somebody gets paid for "Happy Birthday" is stupid, or that some dumb classic rock station is paying Zeppellin over and over and over for thirty friggin' years. (Honestly, musicians shouldn't be able to afford cocaine in the first place) The general populace can make better decisions than these stupid labels and their agents. SATRAD has the Bluegrass/Reggae custom stations, communities can build around those.
One random question: is their an OutQ-type station in San Fransisco? Believe me, I'm no listener, though I'm not homophobic, but it seems a gay station could make money in any market (they claim to be 10% of the population after all) and in a city with that large of a community, how could there not be one?
Posted by: Martin | October 6, 2007 8:41 AM
I welcome anythig that will kill DRM. This system wont work though because it will cut into the labels profit margin and after they have screwed the artists as much as they can on their share they will find another way to justify an increase in cost. This and too many people will treat it as a virus free Limewire substitute.
Posted by: GREYFURGANG | October 6, 2007 11:13 AM
I watched the video and at the end it said that more people bought the boxed set than the download version. That's interesting... but not surprising. To me, it says that all things being equal people do prefer to have a physical copy over a download. However, downloads are usually a little bit cheaper and we should all know that PRICE RULES.
Any back to the main point... Certainly music services will grow, but I don't see paying for an album going away. If a band I like puts out a new album I'm not going to sit around and wait for Sirius to play it. I want to go out and buy it (or download it).
I also don't see music on FM radio going away either. I'm certain that many people (maybe even most people) prefer the advertisement based model over subscription model. Actually the internet radio sometimes uses an advertisement based model (see Pandora).
So, I believe there is room for subscription music services, but I don't believe subscription music is going to take over the industry completely (I'm not even certain it's going to be the most popular method for people).
Posted by: Monmin | October 6, 2007 12:02 PM
Martin: 1) Anybody who has read one of my posts knows I think music should be free for a varitey of reasons (well only two: it's so easy to copy and Canada/Sweden/France doesn't consider it illegal, meanwhile the US position has been warped by lobbyists who even target the population with annoying messages) but onto new stuff...>>
People who have read your posts know you think musicians aren't worth getting paid ANYTHING. Your contempt for musicians is well known, so yours is the least opinion worth considering. Zeppelin is entitled to get paid for it's music for thirty years or more is because Robert Plant and Jimmy Page are the equivalent of the Valazquez and Brueghel of our times. It's played for 30 years because people frikkin' LIKE it no matter how many times they hear it, and advertisers see that.
What one thoughtful poster wrote in a New York Times blog is that a new compact on copyright law is desperately needed. Copyrights essentially began with Gutenberg's printing press, and since the Internet arrived, the old rules have been blown to bits, yet no one has the courage or the insight to make the changes needed to reflect this new world.
Copyrights are necessary. They have served Western Civilization well. Creative content does belong to it's authors, and they should be compensated for it. The new paradigm demands changes however, and with the game changing almost every six months, it is hard to come up with an answer. Eventually however, the markets and the law will decide.
And those who make those changes will not carry the utter disregard you have for those who dedicate themselves to their art.
Posted by: Anonymous Coward | October 6, 2007 8:33 PM
Anonymous Coward if you are right Zepplin is a great band but not a very good example when you could have used Jimi Hendrix. Although dead his estate should still be paid for his creative genius and not the Yard Birds rifts (and many others that they weren't associated with) that Page and Plant took for themselves. hahahah can you imagine Stairway to Heaven was not even their song.
If that posters opinion wins we will not have any artists anymore.
Posted by: another thought | October 7, 2007 9:20 AM
Another thought: Anonymous Coward if you are right Zepplin is a great band but not a very good example when you could have used Jimi Hendrix. Although dead his estate should still be paid for his creative genius and not the Yard Birds rifts (and many others that they weren't associated with) that Page and Plant took for themselves.>>
First, the Jimi Hendrix estate DOES make a LOT of money, and is on par with what the Elvis estate rakes in every year. Oddly, both of them did a lot better once they were dead.
It may interest you to know Jimmy Page was a member of the Yardbirds, so some of those, uh "rifts" were that of his own. As a former guitarist, I would say Page went a lot further with his work with Zep than a traditional blues band could ever get get.
And the lyrics were in fact written by Robert Plant. Stairway is among the most played record in history, played over 3,000,000 times. The sheet music is the world's Number one biggest seller in history.
Posted by: Max | October 7, 2007 10:41 AM