Ah, remember the good old days of music? The days when you’d eagerly await the release of your favorite band’s album, so that you can go back home and listen to the tape 10 times over? The days when you tuned in to your local radio station to hear the latest singles and then argue with your friends on which one’s the best? The days when record shops were veritable gold mines where you had to restrain yourself from buying as many albums as you really wanted.
Welcome to the 21st century, where the world of music has dramatically changed, and suffered for it. What we have now is an industry in a tailspin. Radio stations are playing the same old, tired popular genres so that they can try to sell the most ads. Labels are terrified of dwindling CD sales, and are striking deals with the likes of iTunes, who sell songs with restrictions. The RIAA is going on the offensive to try to stop music downloading by ironically prosecuting some of the industry’s most fervent customers. In a phrase, it’s all about how to protect the status quo, and Mr. Consumer, you better come along for the ride, because that’s the way it is.
I’ve never seen an industry hold fast to their old, tired ways with such irrational devotion as I have the major labels along with their associations like the RIAA. With every passing month, we hear of more artists going it alone, exploring ways to deliver and sell their music independently, because they’re tired of the status quo. I wonder why the music industry hasn’t at least started the process of reinventing itself in earnest, exploring new ways to deliver and monetize its product, and ultimately please its customers: people who like music and really, really want to listen to it.
So, how can the music industry save itself? Everyone has a hypothesis; here’s mine.
Distribution
Let’s face it, people are getting more and more adept at using their PCs, laptops and the Internet to get music. Downloading and sharing music without paying for it is becoming a more and more popular way of consuming music, especially in the teen-to-college age group, where demand is high and, well, cash isn’t. How do you compete with free downloads? Let’s start with a better distribution model. With downloads on the ‘Net, you have to seek out what you want and it takes a while. Popular music is pretty easy to find, but non-mainstream stuff is tougher. Even if you’re willing to pay, iTunes or Amazon still don’t have the enormous back catalogs that major labels have. And the problem grows if you’re talking minor labels. And, once you have the music, you own putting it where you need it. Forgot your iPod? Sorry. Don’t know how to setup your PC as a server so you can listen to your music at work? Oh well.
Instead, imagine a distribution system that was a virtual clearinghouse of music. Yes, we’re talking an integration among major and minor labels, domestic and international. Now, imagine a distribution scheme that leveraged the Internet, mobile phones, set-top devices, car radios, and other “direct-to-consumer” avenues. Finally, imagine an interface and model where you could, literally, ask for music from a particular artist or genre, or a particular song, or what your friends are listening to. And you get it. And you get it instantly.
And forget technology-laden prerequisites like knowing how to subscribe to podcasts or join a social network or know what Bittorrent is. The entry-level version of this technology has to be brain-dead simple. As simple as hooking in a TV in your living room, or turning on your satellite radio in your car. Mom, dad, and even grandma need to be able to use this service. Sure, offer more tweaks and experiences for people who want to geek out on the ‘Net, or download some special app on their mobile phone. But the super-simple approach needs to offer a rich experience without hardly any prior knowledge. Just like the CD, or the tape, or the record before it.
And, the device network has to work together, seamlessly, without setup. No more “I bought a CD but now I can’t listen to it on my phone because I forgot to rip it to my iTunes and then transfer it” business. Each device needs to be aware of others, and of the service in the “cloud”, and needs to be able to offer the same level of service and experience once people start using them. You listen to the Eagles on your phone? You can do the same in your house, or in your car, or on your computer. You paid money for the same Eagles tunes? Then the experience had better work flawlessly the first time, and every time thereafter.
Cost
OK, so we have a fancy distribution system. What do we charge for it, or for the devices? The answer is: zero to very little. For starters, to convince people to start using this stuff, you need to open up some back catalogs of music plus some parts of new releases and distribute them through this system for free. That’s right – zero, nada. You need to convince people this is a better way to get music, and the way to tear them off of their computers and into your system is to entice them with golden oldies and new hits for dirt cheap rates. Add some social networking and targeting for those inclined, and you start to attract people who would otherwise not be interested. Give away some devices, and sell some other ones at cost. Do some advertising. Most importantly, get people to try the system out.
When the system catches on, sell some devices or some services for additional fees. But those are add-ons: the basic experience needs to have a very low barrier to entry, and needs to have an immediate payback. What you’re looking for here is a “wow” as soon as someone plugs in. You get that when you realize what you can download from the ‘Net. You need even more of that when you plug in to this system. Lots more.
Upsell
OK, so you have a fancy distribution system and you’ve convinced people to jump on it. Maybe they’ve hooked their phones up to it. Or maybe they’ve paid a bit to get a set-top device for their TVs or stereos. They’re jamming to some tunes and they really like it. What’s next? Upsell them.
People dig music. But the audio itself is not the end-all of your industry, or at least shouldn’t be. Imagine giving away some tracks from an artist, but then selling an entire album and offering some sweet artwork or videos or preview songs to go along with it. Again, instantly available, high quality, and works right out of the box. Or, imagine selling a new box set of a popular artist, and offering one free concert ticket to the next local showing of that artist along with it. What about offering subscriptions to artists’ “portions” of this service (or web sites, if you’re thinking conventionally) where they can interact with artists and have conversations with fellow fans, if they pay a bit up-front (or monthly) along with their free music? How about selling some new tunes from an artist well before they hit the mainstream, at a small price? How about holding a remix contest where people download the mix components and the winner of the popular vote gets some free goods from the artist? And, finally, how about some ad-supported music for those who truly want to spend nothing and are willing to listen to some jingles to get that?
Music is so much more than just audio. Clothing, videos, concerts, communities, remixes, collectors’ items. I could go on. The point is: get people hooked on the music for next to nothing, and then charge them for stuff they really want on top.
In other words, give them what they want, and sell them what they don’t know yet they need.
Know your customer
There are many different types of music buyers and listeners out there. You have everything from the poor college student who’s tech-savvy and wants to listen to some new music on his or her portable music device. You have the serious collector who enjoys amassing and showing off a library and pays for high quality recordings. You have people who are casual listeners of music and want something “in the background” when they workout or when they have people over. You have kids who want entertainment and education (or at least that’s what their parents want).
The music industry needs to appeal to each of these types of consumers, and needs to mold their service and their upsells to each user. Yes, that means for some customers you continue to sell hardcopy albums with beautiful artwork and display cases. And yes, that also means you offer high quality digital-only downloads and digitized album art for others. The point is, a common service that is unified, cross-device, targeted, and wonderfully easy to use should be the common thread across all of these types of music listeners. You just tweak the offering and the experience for the specific type of customer.
But, but…
I know, I can hear you saying this already. Let me anticipate a few arguments off the bat. We can have more in the comments section of this post.
But people will take the music they buy and share it with others.
Well, yes, they could. The system could prevent this by using DRM. But that would be suicide. Instead, why not make the service so brain-dead compelling that people don’t want to go to the hassle of copying content out of a device or the service and sharing it with their friends? “Wow, I just listened to (or bought) some music and it’s available everywhere I am, instantly!” Why would you go back to downloading after that? And, keep in mind, the upsell is where the money is, and the upsell shouldn’t be on the audio itself (which is the easiest to copy).
But this network of devices and this service you’re describing sounds expensive and hard to setup.
It could be, yes. I think the reality is the music industry has to setup some new infrastructure to drive this experience. That said, there are existing networks (cable, mobile, Internet) that could be tapped to offset some of the upfront costs. But, I agree, what I’m describing below isn’t cheap. But you can’t go cheap if you’re trying to reinvent yourself.
But you can’t make up the money in lost CD sales by upselling people to stuff alone.
Yes and no. If all you do is sell them a t-shirt along with some tracks, then yes, I agree. But the point here is that you have to reinvent the pricing as well as the products. There are so many dimensions to sell people on, including quality of music (super high quality, better than CD, surround), availability and timing (early releases, re-releases of “lost” stuff), scarcity (limited number of audio or products), interactivity (remixes, community, chats and forums), and so on. Each of these dimensions can be exercised, and I believe each can generate revenue that isn’t being generated today, simply because the distribution and the service haven’t been there to help people find, spend, and consume.
But people are stealing music!
This is the mindset that the music industry has to break free from. Imagine, your customers are so into your product that they’re willing to manually scour web sites and networks, wait lots of time to download, transfer the music to devices, just so they can listen to them. Now imagine if you built a great service that had all the music they could ever want and was light-years easier to use, and had a low-to-zero entry fee. Why wouldn’t they start using it?
Conclusion
I’m envious of the music industry. They have a product that I believe most of the human beings on this planet desire, and that is music. I’m also envious of their opportunity to build and deliver on a truly great service to let people consume what they want, where they want it. I’m also quite sad that this hasn’t happened yet, and it doesn’t look like the industry is interested in making it happen.
Admittedly the above is one view of how the industry could save itself. You may disagree on its viability or value. But I think most of us would agree with this: the industry has to make some changes now, or else artists and consumers will continue to be left to their own devices.
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