Posts Tagged ‘Business Models’
Is the US at risk of a digital music retail monopoly?
Posted by Richard in Music Sunday, 9 March o 20:26 No Comments
Perhaps the demise of the CD will come more rapidly than first thought. Over the Christmas holidays, the number of downloads on iTunes skyrocketed, proving Apple’s smart tactic of selling iTunes gift cards at retail outlets. Since then more indicators are emerging.
Last week, Trans World announced their Q4 2007 financial results. Music sales dropped 28% in Q4, the top 50 music titles dropped 35% in Q4 and for the entire year the store’s music sales dropped 23%.
Two weeks ago, the NPD group released a report indicating that “consumer music acquisition increased by 6 percent in 2007, but average annual per-capita music spending fell by 10 percent”. The report also indicated that one million consumers dropped out of the CD buyer market in 2007, led by younger consumers. According to the press release, 48 percent of U.S. teens did not purchase a single CD in 2007, compared to 38 percent in 2006. Also NPD ranked Apple’s iTunes as the number two US music retailer, only behind Wal-mart.
Also last week, JupiterResearch announced that the digital transition was well underway, but digital sales are not enough to save the music industry. The announcement went on to say that “Yahoo! became the third big player to drop out of on-demand subscription services”.
Is Apple going to be the recording industry’s nemesis? Who will step up to the plate and provide consumers with a healthy alternative? Yahoo! couldn’t do it. Tower Records couldn’t do it. Trans World isn’t doing it.
Apple really understands the entire music experience. Apple also understands how to make it “just an Apple experience” and how to “lock us in” to their approach.
As far as the CD is concerned, its time has passed, just as vinyl and tape cassettes. This is the time for digital music, either as downloads or streams. As the market evolves, I hope that we have more than one choice of digital retailer to purchase and experience music. Competition not only maintains a healthy price point, but it also helps create interesting innovation.
Popularity: 5% [?]
UMG new music service: Total Music
Posted by Richard in Music Tuesday, 16 October o 23:06 3 Comments
Universal Music Group along with SonyBMG and potentially Warner Music will join forces to provide a new subscription based music service targeting the iTunes and mobile consumers.
According to Macworld: As well as launching a rival to the iTunes music store UMG hopes to nurture the adoption of other music players such as Microsoft’s Zune, and develop a new business model in which music for consumers becomes essentially free.
JupiterResearch’s Mark Mulligan believes “the idea of working with device manufacturers to get revenue directly for music is not actually that crazy an idea”, while podcasting news provides us with Five Reasons Total Music Will Be A Total Failure.
From everything I’ve read, I’m of the opinion that Total Music is counterproductive in terms of DRM, consumer rights and business model.
The recording industry needs to agree on a viable approach to DRM that encompasses multiple devices, including the market leading Apple iPod. If Total Music doesn’t interoperate with Apple’s iTunes/iPod it will face an up-hill battle. Removing DRM and using watermark or similar technology will go a long way to overcoming the DRM issue we face today.
Total Music and its association with the big recording giants is likely to confuse people. On the one hand the recording industry is intimidating people through RIAA lawsuits, while on the other hand they want to hide the subscription fee so people don’t know they are paying for the right to legally listen to music.
No business model is free to the consumer. There’s always a hidden price to pay somewhere. It could be built into the purchase price of a device, subsidized by advertising or incorporated into a monthly phone bill – ultimately the consumer will be paying for the service. It seems to me that the recording industry is applying a web 2.0 approach to the Total Music business model and ultimately creating a very interesting experiment.
Clearly, this is an attempt by the recording industry to ensure that Apple iTunes/iPod does not develop a stranglehold on the digital music sector, something the PC industry couldn’t do with Microsoft. I believe that Total Music will be a distraction from the real work, that of alligning the business model with consumer behaviors and market opportunities.
Popularity: 11% [?]
Maybe it’s time for the 3 track digital album!
Posted by Richard in Music Friday, 6 July o 07:27 No Comments
According to Nielson Soundscan, album sales continued to drop in the first half of 2007 by 15% while digital track sales gained 49%. As compared with previous years the decline in album sales is accelerating from 4% in the first half of 2006 and 10% during the same period in 2005.
We’ve gone full circle. The single is back and it looks like it’s here for good. Single digital track sales allow people to buy only the songs they want, and skip buying 10 track CDs, with song they may not want. While it looks like the music business is healthy, the revenue generated from album sales is declining faster than the increase in revenue from single digital tracks.
In an early post, The 3 track ablum and other heresies I suggested that one way for the recording industry to overcome this decline in 10 track albums might be to produce 3 track digital albums for the consumer. Hopefully, the labels are looking at this or other innovative ideas to overcome it’s woes.
Popularity: 2% [?]
Update: The Future of Music: Digital Rights or Wrongs Panel
Posted by Richard in Music Sunday, 1 July o 10:57 No Comments
The Commonwealth Club radio program of the Future of Music: Digital Rights or Wrongs panel will air this week on NPR. The program will be broadcast locally in the San Francisco bay area on Tuesday, July 3rd, 2007 at 1 pm on KALW-FM, 91.7. It will air at different times across the country.
Click here to listen to this program using the RealOne Player.
Popularity: 3% [?]
Digital Hollywood Panel
Last week, I was a panelist at Digital Hollywood. As usual I was invited to speak to issues around the intersection of technology, digital entertainment business models and content licensing. It turned out to be a great discussion. I suspect that the panel moderator, Mike McGuire of Gartner, had hoped to pit us against each other, and to a certain extent he did. In fact we did not agree that outdated copyright laws and complex content licensing are a bad thing.
The panel split into two groups, the lawyers and the entrepreneurs. We had very different perspectives on how to solve the difficulties, complexities and time involved in negotiating content licensing, especially for new tech enabled entertainment startups.
Technology now enables us to push the edge of the envelope with new entertainment business models. Consumers and artists are ready to try new approaches. In fact, one audience member suggested that Creative Commons offers a solid alternative to the current approach.
This panel, reinforced my opinion that the greatest obstacle to new entertainment business models may be outdated copyright laws and not content pirates or fear of technology.
Popularity: 7% [?]
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