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Wednesday, October 1, 2003

new music business models

i’m a couple days behind, and have a lot to say on these subjects, but i don’t have the time for my traditional-length rant, so this will be just a couple quick hits today, despite the rich body of new material that i have to riff on….

the music business discussion has expanded significantly, with a response from a new player, and a few updates at due diligence that touch on another subject i seem to address here a lot lately (language problems). tim has brought in another kevin (kelly), who has a year-old view of the future of music, and shares an interesting email conversation with the rest of us.

the quick points i’d like to make on all this new material:

i still think musicians are monopolies and so i disagree with barry ritholtz. they may be incredibly weak monopolies, but art is not fungible, if only because it’s a completely personal valuation. even the best elvis impersonators are not elvis.

on the other hand, barry concludes his comments with an observation that i do agree with: “They certainly arent prepared for a 500 bands selling 20,000 copies each, yet thats where the music itself wants to go . . .

music, as a business, is substitutable. again, the value is in the hands of the audience – a stones concert ticket is worth $700, and an open-mic-night at a local coffee shop may be worth a $4 coffee – but the real issue here is not the value-in-dollars but the value-in-attention. if a movie feels like a better way for me to spend two hours, i can’t be listening to the new britney album at the same time (unless, of course, britney’s gotten her tracks into the movie…)

this means the business of music cannot be studied in isolation – it does have to be viewed in the context of the broader industry of entertainment, but again there are degrees and nuances that defy ready analysis. do captive audiences count? does elevator music or music in the dentists’ chair count? does background count, or does it have to be an active listener? if a song is in a soundtrack, or a singer becomes an actor, what’s the appropriate “attention split”? did you go see the movie for a great story, enimem’s acting ability, or because you’re an eminem fan and have every album? we’ll never be able to quantify all these pieces.

and now for a couple pushes in new directions:

one thing that i haven’t seen discussed at all in these pieces (so far) is that the “pop star” has more than an economic/business-model function. there is an important social aspect to the big hits and big stars, because they give us a common touchstone in culture (even if you hate them, they are pervasive enough that you know them). i don’t think they’re going to just “go away” and be replaced with hundreds of “mini-stars.”

another important point that’s also missing is that most of this discussion has revolved around the “high end of the power curve” – and that’s a valuable place to start (if only because of the social implications – we can all talk about the stones). but it is just a few players, with pretty much the same model, and really doesn’t capture the breadth of “creative business models” that are already at play in this crazy business of music.

and finally, there’s the “non-music” markets that are worthy of discussion. it’s not just musicians-trying-to-be-actors, it’s merchandise, in the broadest sense. it’s branding and pitching and other revenue that comes not from the music, but from the social status that came through the music. is “music business” (at least at the top end) an end unto itself, or just a tool to leverage on your way to a new basketball shoe?

i do hope to get back to some of these points and write in some detail, but for now… back to the real world, and let the blogologue continue.

update: barry has commented that there are interesting models, but i was trying to point out that they (and this echoes one of tims earlier approaches) generally don’t apply to the top of the curve where we’ve been holding most of this discussion. i think it’ll be very difficult to convince the stones or britney to get into the magnatunes or weedshare models. important questions to bring up in this context are: can any of the new models create a new pop star? should they be able to? is there a fundamental incompatibility in these models? does that matter?

tim rightfully points out that he did address the non-monetary social issues of “star power” – just to refresh my own memory, and make it painfully obvious, here’s part of his comment: “This kind of high grossing big act isn’t going to go away. There’s always a top end of the power law curve. And there’s a social role for them: For the 15-25 year old segment that are the dominant buyers, they are objects of common attention that symbolize group membership, a sort of media plumage that’s part of the adolescent socialization process.” sorry about that – we’re playing the same tune on this one.

posted by roj at 8:45 pm