Wednesday, December 15, 2010

The Music Industry's Biggest Blunts

Paul Resnikoff's Digital Music News had a great story the other day entitled "The Music Industry's Biggest Blunts 2000-2010" where he used the analogy of some of the industry's highconcepts to passing around a joint. It's a fun read, very poignant, and in some cases, hits really close to home.

Why do we play this game?  It seems that in times of digital disruption, the music industry has had this strange tendency to cling to potential saviors, almost all of which disappoint.  The major labels are masters at this, though this goes far beyond the Big Four.  And, it makes you wonder whether the same blue-sky, save-the-industry mentalities are currently driving areas like cloud-based models, DIY distribution, and  'middle-class artist' concepts.     

But what are the biggest blunts this industry has smoked so far?  

(1) The a-la-carte download. Remember when Steve Jobs was praised for 'saving the music industry' by simplifying music purchasing?  These days, he's mostly praised for making billions for Apple and tripling Wall Street investments, not for enriching musicians or labels.  And the a-la-carte, variably-priced download is hitting its plateau.

(2) The ringtone. In hindsight, this was a billion-dollar hulu hoop, but labels, mobile startups, rappers, and everyone in-between were pegging serious fortunes on the ringer.  These days, there's still some scratch, but mobile entertainment is a totally different - and tough-to-monetize - space.  

(3) Mobile Music. That is, controlled, walled-garden environments that would force fans to pay.  That is, before the phone became smart, and totally connected to the PC.  

(4) Subscription services. There was a time when services like Napster and Rhapsody were viewed not only as saviors, but potential multipliers of broader industry revenue.  These days, both are currently swimming in niche waters, and publications like Digital Music News have been accused of smoking another spliff called Spotify. 

(5) 360-degree deals. Not sure if this is as much a blunt, or merely some diversified resin to keep the party going. 

(6) Branding and sync licensing. Everyone wants a branding deal, and music supervisors are chasing every last sync possibility.  But it seems that this area is best viewed as a revenue enhancement, not a revenue replacement, and a rush of creative supply is only driving down potential payouts.

(7) MySpace Music. Sort of a mandatory parking spot for bands, but the monetization part never quite ramped.  

(8) Ad-supported music services. One word: Spiralfrog.

(9) Publishing. Once upon a time, publishing was viewed as a rock in the storm.  The only problem was, this rock wasn't that big compared to recordings - nor was its fate truly independent.  Instead, publishing is getting dragged by mechanicals, sinking syncs, and broader economic malaise.  And these days, most publishers are thrilled with flat financials.

(10) Touring. This is where the real money was!  Except, bands taking this advice often found themselves struggling to fill clubs, earn gas money, and create meaningful revenues.  Not only that, everyone was getting the same memo.  Meanwhile, for big fish like Live Nation, sagging attendance is currently creating serious revenue problems.  

(11) Licensed P2P. If only the industry had licensed Napster!  But modern-day attempts like Mashboxx, Peer Impact, Choruss, and whatever Virgin Media was trying may have been too little, too late.

(12) DIY Distribution. The hangover is just starting on this one, but the dogma surrounding direct-to-fan distribution remains deafening at times.  Meanwhile, DIY bands are struggling against some serious challenges, including a huge glut of competing content, distracted music fans, and tough monetization models.  This is a blunt in progress...

(13) DRM. Thankfully, this stopped getting passed around a few years ago!  (thanks Larry Miller for adding this one...) 

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