The dilemma about how to make money selling music on the Internet provokes anything but civil conversation from record label representatives at the SXSW Festival, the New York Times reports. Illustration by Alex Eben Meyer.
Quick update to my post last week about the music companies’ continuing missteps:
New Business Model?
The New York Times reported on a provocative panel at the SXSW Festival in Austin, Texas, last week that proposed a new business model: distributing music for free on Web sites supported by advertising, with the sites sharing ad revenue with artists.
The suggestion inspired invective from panel member Ted Mico, the head of digital strategy at Interscope/Geffen/A&M records, who replied, “I need more marketing and promotion on the Internet like I need a root canal without anesthetic.”
Despite all evidence to the contrary, Mico continues to hold out for the economic viability of music subscription services, like Rhapsody. Such a service “allows people to discover music without having to pay extra for it.”
Right.
He forgot to mention that it also allows customers to pay for music they don’t get to own. And that it keeps the music industry in command of how music is distributed. Any wonder subscription services aren’t catching on?
Record Labels’ Biggest Screw Ups
The Times piece also points to a Blender.com list of the record labels’ 20 biggest screw-ups. Among the worst:
- The industry kills the single, forcing customers to have to shell out for more expensive albums. That decision backfired on the labels thanks to iTunes, which returned to customers the power to buy only what they want.
- The Sony rootkit debacle. So desperate to keep customers from copying their own music, Sony CDs invade users’ hard drives, planting spyware.
- The RIAA sues a poor single mother for music piracy, winning the case in court but losing big in the court of public opinion. The mom was fined $222,000 but is planning an appeal.
And in the same pyrrhic vein, the No. 1 screw up is …
- Killing Napster. Record execs no doubt slapped each other on the back when they shut down the peer-to-peer music service, not realizing that nature abhors a vacuum: “Instead of trying to find a way to capitalize on music-sharing, the [industry] rejected Napster’s billion-dollar settlement offer and sued it out of existence in 2001. Napster’s users didn’t just disappear. They scattered to hundreds of alternative systems—and new technology has stayed three steps ahead of the music business ever since.”
My Take On…
Free music. Giving away music by selling ads? Ask broadcast TV networks how well that model’s working for them. Adherents of the free music movement forget that people are willing to pay for music as long as the terms are right. Plus, the current economic downturn shows that pegging profits to ad revenues is no panacea. Ad spending is one of the first things to decrease in a recession.
Subscription music services. Give it up already. People want to own their own music, not enslave themselves to these services for all time. Instead follow Last.fm’s example — let people explore for free, based on their established tastes, then make it easy for them to buy what they want.
