Five Reasons Why Buying Music is Headed for the History Books

The collapse of the traditional music industry has been well documented.  The Virgin MegaStore just closed for good in Union Square and the Tower Records franchise that was once a vibrant hub for music is gone from the landscape.  The number of CDs sold is at an all-time low and I am willing to bet if you eliminated all sales of CDs to anyone over 30 the figures would be staggeringly low.

Sure, for the moment, there is still a brisk business in the sale of legal digital downloads.  iTunes and Amazon both seem to be making some reasonable coin on the practice.  Still, it is hard to imagine that this will last much longer.

Here are five reasons why buying music is headed for the history books:

1) The legacy of Napster – Napster, in its original incarnation, was our first taste of how easy, fun and beneficial it was to be able to share your entire music collection with other people all over the world and have the chance to share the music libraries of those very same folks.  Sure, the free aspect was cool, but the best part was the endless selection and immediate accessibility.  Napster taught us that music did not have to be locked down on physical formats or hidden behind DRM.

2) The Return of “Radio” – Sure, traditional, terrestrial radio may not be a threat to record sales, but the world of webcasters combined with the fact that all those traditional stations are available online means that there are an endless stream of free listening options that combine the ability to refine genres with the chance to discover new music.  From Pandora to Last.FM to the basic “radio” options embedded in iTunes, it’s easier than ever to simply tune in, sit back and enjoy.

3) The iPhone (and its brethren) – Nearly every major music webcaster now has an iPhone application that will stream content to you anywhere you can get a signal.  This is not limited to WiFi zones but most will deliver content of 3G and even Edge.  This means that unless you spend a lot of time underground (like I do in the NYC subways) you never have to disconnect from the flow.  Why cart around 10,000 songs when you can just press the Slacker icon and gain access to over 1,000,000 tunes.

4) Songza et. al. – For those not familiar with the site, Songza.com is a music search site that scours the web (mostly YouTube, actually) for recordings of any song or artist you enter into the search box.  This solves the, “I wanna hear the song right now” problem that you face with Pandora and the like.  Whether the major labels and RIAA like it, just about every song and artist I can come up with results in a successful search on Songza.  The point is, legal or otherwise, every song is out there somewhere already, making it tough to convince me why I should pay to buy it.

5) The Generation Gap – Try this: find any kid under the age of 15 and ask them what was the last album they bought.  Chances are, there is no last album.  In fact, studies in the UK have shown that kids are  buying less music online but they are not replacing that with some kind of piracy – they’re just not downloading music to “own” for free or for a fee.  What’s the point of buying music when it is already out there to be heard?

UK Music Label CEO Still Doesn’t Get It

In yet another attempt by a major music label to justify it’s continued existence, the CEO of the UK label BPI has written a rather pathetic, rehashing of the same old arguments against file-sharing masked as a look back on the ten years since Napster changed everything, forever:

Many critics have argued that the music industry could have avoided some of the problems it faces today if we had embraced Napster rather than fighting it. That’s probably true, and I, for one, regret that we weren’t faster in figuring out how to create a sustainable model for music on the internet.

Ok, I’m listening.  Tell me what how your new vision and understanding will translate into a new busines model that takes advantage of, instead of fights futilely against what the internet does best:

But this innovation, and the vital investment by labels in new music, is constantly undermined by the various P2P successors to Napster. These companies take and exploit what musicians and artists create, without being honest enough to reward them. And the publishers of books, journalism, films, TV programmes and other media are now lining up with us in the fight against illegal downloading.  Like us, they see how it will destroy their ability to create new content. So we are united in calling for ISPs to play a more positive role in steering consumers towards digital services that reward creators.

Oh, wait, you don’t want to change anything AND you aren’t even remotely listening to the issues and complaints by some of music’s biggest acts including Radiohead and NIN.

Well, maybe you’ve at least moved beyond thinking that the future of the music business will be driven by album sales:

It is true that some people use P2P for music discovery and spend more on music as a result, but in the aggregate they are heavily outweighed by the number of people whose downloading substitutes for purchases. If the reverse were true, our business would be booming and not contracting right now.

Christ, you still think you’re business is collapsing because of pirates?! How about your insane treatment of fans as criminals?  How about your insistence on raising the cost of an album even while the cost of making and distributing that album has plummeted?  How about all the artists that have been screwed by devious contracts and cheating accountants?

Once again, the music industry demonstrates why they will not be long in this new world.

MPAA Wonders Why Public Views Them (and RIAA) So Poorly

There is a devestating post in response to comments made by Fritz Attaway, executive vice president and senior policy adviser for the MPAA at the World Copyright Summit, who said:

”The enemies of copyright have really done a good job at creating the false premise that the interest of copyright holders and the interest of society as a whole are antagonistic, and they always talk about the need for balance.”   LINK

ZeroPaid’s Drew Wilson asks, “Gee, why would the public view them as antogonistic?” He then answers with a few possibilities:

…destroying Napster and Audio Galaxy and not creating an alternative for the get-go, raiding people’s homes because they uploaded Star Wars (not necessarily leaking it in the first place), hacking the URN hash and polluting FastTrack, hacking The Pirate Bay, having Viacom serve DMCA notices to people posting video’s of people eating in a restaurant on YouTube, suing tens of thousands of average American’s including fining one individual $222,000 for sharing a couple songs, saying that files in a shared directory is copyright infringement in court, saying that evidence is too hard to get and that the industry shouldn’t be burdened to prove their cases in court, suggesting that iPods are little more than little pirate ships…

And that’s just  a taste of the entire post.  When people of the future look back at how the massive entertainment industries of the late-20th Century crumbled, this post would be a good starting point.

Pondering Pandora’s Possible Profits

Pandora is easily one of my favorite streaming music sites and one of my most used iPhone apps so I can’t say I was shocked to read that they are headed toward profitability within the next year:

Revenue may double this year to about $40 million, Westergren, 43, said in an interview yesterday in San Francisco. The advertising-supported service has 27 million registered users and is adding members at 50,000 to 60,000 a day, faster than in previous years.  LINK

Now, I have no idea what their costs are for running the site, streaming all that data and paying the royaltees but $40 million in revenue is pretty good for a site that doesn’t charge users.

However, a closer look at their numbers has me wondering.  With close to 30 million registered users and $40 million in revenue, it means that Pandora is only making a little over $1/year per registered user.  That strikes me as awfully low.

Napster just launched a plan to let user stream specific music for $60/year ad-free.  I wonder if Pandora’s 30 million users would pay, say $5/year for an ad-free version of Pandora’s current service?  That would be $150 million in revenue right there.  Plus, Pandora is already fully portable, unlike Napster.

Napster, Reborn, Again, Tries the Subscription Plan

Napster holds a special place in internet history as one of the first sites to bring P2P file-sharing to the masses.  Napster is also often wrongly blamed for bring down the music industry.  Those of us with even a shred of intelligence understand that the music industry, or big labels to be more specific, brought themselves down with bad business practices that treated musicians as indentured servants and fans as potential criminals.

Anyhow, Napster was bought by BestBuy not too long ago and they have relaunched with a model that is growing in popularity:

…if you subscribe for a year and pay $60, you get a year’s subscription to a pretty decent on-demand music service. You also get access to 60 commercial-free internet radio stations and 1,400 “expertly programmed playlists.” And when you cancel the service, you’ll get to keep 60 songs… which probably would have cost you about $60 anyway if you’d purchased them from Amazon, iTunes, or another online music store. LINK

Of course, this isn’t anywhere close to the first subscription music service and right now it requires you to be at your computer and online to use the service – no portable device support as of yet.

The advantage of this service to something free like Slacker.com or Pandora.com is that it gives you the freedom to pick the exact songs you want to hear when you want to hear them.

Here are the issues that will effect the potential success or failure of the Napster plan:

1) Is $60/year a price the market will deem “fair” AND is it enough money for Napster to pay the rightsholders should users stream music at heavy rates?

2) Will the lack of portability make this a no-go from the get-go?

3) Can Napster supply a broad enough library of music to keep the audience happy?

4) With all the free options out there is this enough of a service to compete?