I’m forever being asked what I think the new ‘model’ for music business will be. The trouble is… there isn’t one.
One of the most common questions (upon which there are many variations) asked by musicians and independent music companies concerns what the new business model will be.
I’ve been asked whether ‘the Radiohead model‘ is the way forward, whether ‘the advertising model‘ or the reverse auction is the right answer, or if there’s some new model just around the corner that we’re not seeing yet…
Music Industry’s next top model
Obviously things are changing… but where will it all end up? To quote Chris Griffin, where’s the chase and how can we cut to it?
Smart people are being paid big money by large corporations to anticipate what that model will be, and even smarter people are trying to create that model. But the idea that there will be one new model that we will eventually arrive at is errant nonsense.
I’m not going to tell you these things are wrong per se — just that they’re not the answer.
A quick Google search for a new music business model reveals in excess of 65 million possible contenders. Amie Street tops the list, which suggests that the best bet is one in which price increases with popularity. But ancillary revenues also feature, as does social streaming — along with something worryingly capitalised as ‘The New Century‘ business model (‘Brave New World’, anyone?).
But here’s the thing: it’s not as easy as staring into the crystal ball and predicting the next model… and there are a couple of reasons for that.
Music Ecology
The best way to think about the changes that are happening as a result of changing technologies is to think about those technologies as environments. We were in an ‘electric’ environment characterised by radios, televisions, records, and home stereo systems. We’ve moved into a ‘digital/online’ environment.
Once you have it in your head that we’re now in a different environment, lessons from the fields of ecology, anthropology and biology start to take hold. In an ecological system, certain larger organisms dominate, while smaller organisms tend to fill the little niches. The relationship between them is symbiotic.
But when the environment changes, the different organisms have to adapt to the new context. Some organisms that had been on the margins of existence flourish. Others, that had been dominant, start to lose their hold and have to take up smaller and more specialised positions. Other organisms come into the mix, either from the outside or springing up seemingly from nowhere.
New way of thinking
You can see how the analogy works. But the way in which an environment impacts upon its inhabitants depends very much on two factors:
1) The characteristics of that new environment
2) The creative adaptive response of those inhabitants
So, to my mind, asking what the new model will be misunderstands both the characteristics of the new ‘online/digital’ environment (hint: it encourages complexity), and the creative adaptive potential of the organisms within it.
I’ll say more about this in the next few days, but my central idea is this: the online environment is a space within which a far greater array of both large and small species can co-exist. We were once inhabitants of a stream, but that stream has now become a river, and we’ve just hit the ocean.
Here’s the important bit: abandoning the search for The New Model opens up the way for creative and potentially lucrative customised solutions and new music strategies.
There’s no new model. There are only creative ways to adapt. And in order to do that, we’re going to need a big piece of paper.
Download Andrew Dubber's new book Music in the Digital Age - or, if you already have and you've been enjoying it or finding it useful, please consider paying for it here.
4 Trackbacks
You can leave a trackback using this URL: http://newmusicstrategies.com/2007/11/20/this-years-model/trackback/
[...] This Year’s Model This one baffled me a bit. It started life as a fairly simple think-piece about how there really is [...]
[...] making up the new ones as we go along. According to Andrew Dubber, author of a blog called New Music Strategies, it’s time to “stop looking around for the new model for music industry. There just [...]
[...] The curse it is cast The slow one now Will later be fast As the present now Will later be past The order is Rapidly fadin’. And the first one now Will later be last For the times they are [...]
[...] If you’ve missed it so far, part of my whole thing is that you have to customise. You need to play to your own unique strengths and innovate, rather than looking for ‘The New Model‘. [...]
19 Comments
Ha. I can’t believe you “wiki-linked” the word “symbiotic”.
This post reminds me of the post on Bottom-end on blogspot. The author did a metophor comparing the current music situation to that of the evolution from dinosours to humans. You can see Peatniks post at http://bottom-end.blogspot.com/2007/09/revolution-vs-evolution.html
That post changed my thinking from the music revolution to the music evolution.
as you meant…the music industry hasn´t changed. it´s still changing and always vital. but i really believe that the major labels are crashing soon. or being taken over from other big companies like amazon or google or something else.
their problem is, they haven´t any idea and and aren´t able to know the trends before they become trends. and over all, their a&rs aren´t know anything about good new bands.
if they change these key things, they will survive..if not..it´s over. it wasn´t the MP3 thing wich killed them, it´s the fact that they have less artists with big backcatalouges. cause they only produce short-lifetime artists without any possibility to develop a big backcatalouge. thats their main fault.
There absolutely is a new model and it will help save the industry. It’s called the bulk compulsory licensing model.
I’m sure you’ve heard of it since the idea has been batted around for almost a decade now. Labels sell blanket licenses to network operators (like Verizon, BT etc.) who tack on a small fee onto all subscribers’ bills. Small like $2 per month per subscriber – or less. All subscribers pay. This is NOT a subscription fee – it’s a compulsory license fee. And it’s not a ‘tax’ either.
In exchange, all network customers get feels-like-free access to all the major’s catalogs – DRM free, multi-device friendly. This is neither purchase nor rental – it’s unfettered consumption. The money is pooled and payed out just like it is today via PRO’s like ASCAP, BMI and SESAC.
Do you have any idea how much money that would provide back to artists? BILLIONS. That’s billions of dollars being flushed down the toilet RIGHT NOW because the majors (and indies) are not willing to sell licenses to networks who’ve shown willingness to pass through to their subscribers.
We would still sell physical product in this model along side the bulk experience – special packages, exclusive content, fan clubs, first-look/first-listen offerings, DVDs, merch, etc. But the majority of the product we release would have a modicum of revenue flow and a lower friction pathway towards consumption. This model is also the best way for the little guys to get paid for their efforts too, which is why I’m so passionate about it.
This is the only viable end game. It’s totally reasonable and do-able. The sooner we all get on board with this, the sooner the recorded music economy will normalize and we can get back to what we all do best – foster creativity, leverage our relationships and get great music into the hands of the current wave of rabid consumers who can’t get enough.
just found that from Gang of Four Bassist Dave Allen´s Weblog:
“After spending the last 3 days with various friends and acquaintances from my past days in the music industry and having made friends with some new, young web pioneers, I came to some more thoughts about new G4 music and its distribution.
01. We need to make a cheap quick recording of no more than 6 songs. The days of spending forever in a studio are over.
02. It can’t be called an album, that format is over – case in point – after downloading the Radiohead In Rainbows album I found various remixes of songs from that album and so I deleted the originals as the new mixes were preferable to me. I then built my own running order. Goodbye to having an album formatted in advance.
03. As we write and record in rehearsal we should post the demos, as rough as they are, to our website and also to Amiestreet so that fans can download them. Comments would be offered and that way we could gauge response. Also word of mouth will get the message far and wide that these demos are available and that we are working on the new recordings – no PR required.
04. Understanding the data which will then help us understand our fans’ behaviour.
05. It’s imperative that we give away MP3s.
06. Enroll our most rabid fans to help us market and promote the band.
07. We must partner only with an indie label for any physical good that we release.
08. We must take meetings with people like Kevin Arnold at IODA and Shane Tobin at iMeem whose companies offer very distinct ways to reach music fans.
One intriguing light bulb moment for me was the realization that being out of any contracts for a long time and being well beyond any re-recording restrictions, we now own the master copyrights to any and all of our live concert recordings.
And then the big one – What’s our brand and what’s it’s value? And is this what a new ‘record’ label looks like?”
-
I think this could be a quite good model for the future.
It is obvious that there’s a new model. But the new model is not about recorded music. It used to be that recorded music was what got sold and the concerts were the promotion for that recorded music.
Sure, people paid for tickets, but the concerts were usually part of tours to promote new releases.
Now things are swinging the other way around. Look at Prince. Get the record into the hands of as many people as possible, and then make money on the concerts. Now, of course Prince made money on that record — but that’s not what people paid for.
The new model is the experience of music, not the ownership of it.
I disagree with Ludwig. People need to pay for music otherwise they won’t value it when they get it. While a blanket fee will inject money into the music industry, it creates a real problem, and that’s the collection and distribution of that money.
Centralised collection agencies for music have the real problem of data management. You can’t track and pay for every single download by every single artist from all of the different sites around the internet without a massive bureaucracy and surveillance system in place at every node on the network.
Either the administration alone would eat up most of that revenue — or the little guys just wouldn’t get counted properly or catered for in a ‘proportional’ system.
The better model is subscription. In that way, people are subscribed to a particular site (like eMusic) who can keep track of individual downloads and distribute funds appropriately and accurately for the artists that they carry and the customers they have.
It’s not ideal, maybe — but nothing ever is. I think if you’re talking about models, the real model has to be subscription. Pay per item is old thinking… but people still want to ‘shop’.
We want artists to be paid, yet we do not want to pay them. Advertising lets them be paid and all it costs is a little bit of our time. The model for music consuming online needs to be advertising with the music. Advertisers can pay artists more than we can too!
this is the model! no, that’s the model!
Hahaha
I like what that Dave Allen guy had to say. But it sounds like it will only work for established artists who are no longer in contract with record labels. How do we get started?
I think the new music business model needs to be similar to what we already have — with big busineses handling the expensive needs of the contemporary popular artists (marketing, video shoots, etc) and let the people who like that stuff get on with it. If they can make money at it, then great.
But in this new ‘ecology’ there’s more room for more specializing, and different audiences want different things. I imagine a handful of models that apply to different genres. One thing for the indie, rock and pop kids (maybe free downloads, pay for the concert?), another for classical music listeners (expensive packaging for physical products and free streaming music), another for hip hop, or reggae, another for maybe jazz or world music.
Different people like to get music in different ways. Some dance to it, some sit and listen in special listnening rooms. Some collect it, some throw it away.
I think there’s not one model that fits. There’s about five or six different ways of doing it, and each scene should stick to which one their audience wants.
People DO still want to shop and people SHOULD shop. People should pay for music! Simple as that. The model we have is actually fine. People pay for music, then they get music, then they listen to music. It’s not fundamentally broken.
What needs to happen is for record labels to put pressure on the online retailers to vary the pricing. Not everything should cost 99cents on iTunes (or 79p). Some things need to be marked down to bargain basement levels in order to help shift units of forgotten and “unloved tunes”. New releases and perennial hits need to be at a “premium” price. People will still steal music, and there’s not much you can do about that, except keep on making examples of them from time to time to keep the numbers down. But there is a legitimate market for music. It just needs to reflect the flexibility of a “real” market for music, with flexible pricing.
The new model is the old model implemented properly.
Simon – the current model is not fine my friend. People aren’t paying right now. I agree with you… they should. But P2P is bigger than ever. We need to get money flowing again.
Angela is spot on. The new model is experience, not ownership. Attention is the new currency. Do a Google for “attention economy”. Music would still feel valuable to those bothering to listen to it – merely in the act of listening.
As to Petersen’s savvy concerns about administration:
1. Tracking Privacy: You are already being tracked. Every Digital Cable subscriber is being tracked, every iTunes customer is being tracked, hell… many broadband subscribers are already being tracked by service (many throttle down Bit Torrent traffic). Big Champagne tracks P2P. Tracking in digital media seems unavoidable. Gmail looks at all the files you attach to your email. No one seems to mind.
2. Tracking Accuracy: Couple options here… the current generation of carrier-grade routers can easily look at the file types passing through the last mile. Worse case would be inspection samples every five minutes if not comprehensive inspection.
Alternately, why not an iTunes-like experience that didn’t require credit card payments? If this was all legally sanctioned and high quality, it would be reasonable to compel people to a cluster of central servers. Each major carrier would have an edge-cached version of the music database a la akamai.
2. Payouts: There’s no hue and cry right now about ASCAP or BMI. There are practical and healthy systems in place already for publishing payouts. Are they vulnerable to gaming or insider shenanigans? Sure. But that’s why a new recorded music license payout scheme would have to be extremely transparent. Not a trivial task, but certainly not impossible.
BTW – people could still sell CDs! The micro players can make and sell them directly via their own relationships. Or sell MP3s directly as well. Or how about the tip-jar model? Fans of micro players would pony up a few bucks just to help them along.
I agree with Katrina’s conclusion in that artists will have to discover what mix of strategies works for them.
Also, music-acquiring behaviors of an online audience don’t necessarily reflect those IRL. You may need to develop different approaches for each since each has different needs and expectations.
We also need to lose the contempt we have for our audience, and get over the fact that music has become uncoupled from the $18 piece of plastic.
A lot of musicians are looking for the one-size-fits-all solution to replace the traditional album release cycle, when there really isn’t one. IMO there’s still way too much focus on monetizing the product and not enough focus on adding value to the artist-fan relationship.
I like what Ludwigs saying. Is it related to the kinda stuff Seth says in his blog . . . and scotts saying right there above me?
Maybe there’s an element of blind faith, but without blowing my own horn I try to reflect on my own web 2.0 successes.
18 months ago I was scraping together a living out of running a poster print and distribution service for gigs etc., but ever since I became a web 2.0 and social media outfitter for muso’s entertainers and beyond, things have been going almost uncontrollably well.
I’d be signing up for the 40 pound deal if I wasn’t already struggling to cope with demand and growth management. Oh and that Dubber would probably tell everyone I’m a spammer. But I’m like charlton heston on it. “Automation” doesn’t spam people. People spam people.
:p
When Andrew and Gerd were duking it out earlier it really put the shits up me. First I was like – “sure dubber, when musics free we’ll all be listening to coldplay”. But the more I thought about it the more worrying it became.
I’m positive innovative thinking and exploring diverse revenue streams will pay off, as I’ve already seen personally, especially as traditional advertising as a marketing technique becomes more passe.
here’s some recent stuff from my blogs – firstly on me:
http://kurbpromotion.wordpress.com/2007/11/19/working-backwards-from-success-content-and-trust/
and rather than picking on Jay Z like everyone else I picked up on the puff daddy 360 thing instead:
http://kurbpromotion.wordpress.com/2007/11/21/new-models-puff-daddy-360-deals-ancillary-earnings/
Hi there all (uh again)
My name is Matt I run a successful business (http://www.kurb.co.nz) providing digital and physical media services to musicians and other creative entrepreneurs.
I have recently written a post in response to the “new models†debate and other stuff written in this blog and touched on a few new concepts of my own including
- “label†takes 100% of content retail?
- wholesale and cut in every partner
- the rise and role of the “online content manager†[that’s me!]
- one flat fee for life long premium access
I am newish to blogging and focusing more on content over presentation ;] but please feel welcome to come and check it out.
http://kurbpromotion.wordpress.com/2007/12/01/matt-from-kurb-can-haz-new-music-industry-model/
I think the new model will actually be individual artist and music lover customization. I am still thinking this through at my blog http://blog.timelineonline.org/2007/12/record-label-20.html
But if you think about say 15% of music listeners are hard core music fans who if appoached correctly could sell or promote your music to the other 85%. In exchange the artist gives that 15% freebies or as I would prefer incentives to do what they will most likely do anyways. Many of the 85% will gladly pay upwards of $15 for that cd that is being remixed as we talk. Bring into that the ability to utilize close to 50% of your fan base to create things like music videos or supply you with song reviews for promotional purposes. You can see music is moving towards not only customization but full artist fan interaction. Granted the future will always be based on what actually gets utilized.
For what it’s worth here is what I am proposing.
I am launching a web site called Music Share Records. It is a 100% donation based MP3 distribution site nothing new…right?
Well…100% of the donated income will be split monthly between all artists sharing music on the site on a pro rata basis. Meaning you will be paid a percentage of the income based on your percentage of the total songs shared on the site.
I am also looking at the same sharing of income format for advertising and licening income as well.
The artists pay a one time set up / maintenance fee of $25.00 which covers setting up and maintaining their artist page, uploading their tunes to the server etc…they never pay anything else. It basically covers my time to set them up and make any updates (including adding music) to their page.
In my opinion this model promotes creativity in the artists because the more music you create and share the more income you can potentially earn and it also supports the concept of strength in numbers.
Everyone benefits from the collective efforts of all of the artists, their fans and the label itself. It doesn’t matter how many times your music is downloaded you can still earn income just by sharing your music on the site.
Yes a certain percentage of people will not donate and just take the music…in my opinion they are acting as the distribution arm of the site because they may tell someone about the music and site who will donate.
The best an indie artists can ask for is their music being heard by as many people as possible. Any income derived from that quest is a bonus.
If you have any questions or comments I’d love to here them!
Cheers,
Chip Gall – Founder
Music Share Records
chip@musicsharerecords.com
Hi Chip,
This is an intresting idea, if I understand correctly it doesnt matter how popular your tracks are its like a huge tip jar shared out to every one based on how much content they have uploaded.
The only problem I could see would be the cheeky rapper who uploads 178 “tracks” of 60 second rymes just to get a larger share. technicialy he could argue they are still vaild songs. How would you plan to deal with this?
However I am intrested and would like to hear more…
http://www.kilotone.com
New Model – True Anthem (trueanthem.com)
Ad Supported Music For Free to Fans
Check the site and the 1st featured client they have – Ultraviolet Sound (Electro/New Wave)
Enjoy!