{"id":389,"date":"2003-11-25T17:23:06","date_gmt":"2003-11-25T22:23:06","guid":{"rendered":"https:\/\/rojisan.com\/blog\/2003\/11\/running-away-from-the-high-end\/"},"modified":"2003-11-25T17:23:06","modified_gmt":"2003-11-25T22:23:06","slug":"running-away-from-the-high-end","status":"publish","type":"post","link":"https:\/\/rojisan.com\/blog\/2003\/11\/running-away-from-the-high-end\/","title":{"rendered":"running away from the high end"},"content":{"rendered":"

a while ago, i took a shot at a business model<\/a> for the high end<\/a> of the music business<\/a>. i was a bit reluctant to go there, but it was an interesting exercise. it’s certainly not the only plan that could work and it might not work, but i think it’s got as much of a shot as most. that said, and with the exercise behind me, it’s time to come out and remind everyone that i ran away from the high end – and i’m probably still running.<\/p>\n

at the top of the curve, where the music is locked up in back catalogs and huge promotion budgets, the whole pie is about $30 billion.<\/p>\n

there are 5 major labels (going on 3<\/a>), 7 major physical retailers (playing with echo<\/a>) and at least 9 major players in the online music sales<\/a> business – itunes, buymusic, musicmatch, napster 2, musicnet, rhapsody, an mtv project, a walmart project and a microsoft project. and maybe a few others that either escaped my attention so far, that i forgot about, or that are in “stealth mode” and planning to sneak up and take the online music sales business by storm.<\/p>\n

that’s 20-ish major, well-funded (presumably) companies chasing after the same sets of ears. you can’t afford all this music<\/a>.<\/p>\n

tasked with the job of “preserving the value of the back catalog” – there isn’t a good solution. there is no perfect model<\/a>. there is no formula. and, from all appearances<\/a>, everyone is picking the same basic formula – online track sales at just under a dollar, drm, and a big catalog of all your favorite stuff.<\/p>\n

walmart has decided to get into the online track-sales game. this is a big clue that the value in the back catalog is going to shrivel up and vanish, no matter how much copy-protection you wrap it in. and, by the way, as soon as you wrap it in drm, you’re destroying value<\/a>. take many percent off the top right away.<\/p>\n

for some musicians, licensing to advertisers (something i touched on here<\/a>) is a good way to recapture some of the value in the back catalog – all your fans may already have the cd, but if microsoft is going to write you a big check, why argue? after all, “artistic integrity” is for people who can afford to eat<\/a>.<\/p>\n

while i was thinking about all this mess, crysflame<\/a> pointed me to a thought<\/a> from martin geddes<\/a>.<\/p>\n

with a long-term view, some interesting structural parallels emerge. where the telecom industry is facing the last circuit-switched call by 2020 (gartner’s prediction), the music business has many predicting the death of the cd (and while i don’t think it’s dead yet<\/a>, even i’ll concede that 16 more years is pushing it).<\/p>\n

let’s pretend for the moment that both industries are on roughly the same schedule – about 15 years until the last cd is burned and the last circuit-switched phonecall. (like martin, i’m painting in broad strokes).<\/p>\n

the $30 billion<\/a> recorded music business will have to “switch over” to new models to replace something on the order of $2 billion in sales every year for the next 15 years. while they’re doing that, they face the walmart effect<\/a> – “lots of cheap crap<\/a>.” even without walmart in the game, we’re quickly approaching a dozen online music sites, and the undisputed leader in the field can’t make money<\/a> – despite a several-month head-start. will the 99-cent track survive? how many ways can you slice a dollar?<\/p>\n

the race to the bottom from the high end is on.<\/p>\n

my money is on artists getting squeezed first and hardest – in part because it’s tradition, and in part because they’re at a structural disadvantage – they have no leverage.<\/p>\n

there is an upside – while the industry focuses on destroying itself and fending off the well-financed newcomers – those of us who aren’t already in the machine will find the cracks and some of us will get a toehold.<\/p>\n","protected":false},"excerpt":{"rendered":"

a while ago, i took a shot at a business model for the high end of the music business. i was a bit reluctant to go there, but it was an interesting exercise. it’s certainly not the only plan that could work and it might not work, but i think it’s got as much of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[],"_links":{"self":[{"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/posts\/389"}],"collection":[{"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/comments?post=389"}],"version-history":[{"count":0,"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/posts\/389\/revisions"}],"wp:attachment":[{"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/media?parent=389"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/categories?post=389"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rojisan.com\/blog\/wp-json\/wp\/v2\/tags?post=389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}