What the music industry is becoming (part 2)

Reboot

The recent news of HMV Group’s likely imminent demise struck me as unsurprising a couple of weeks ago when they announced “uncertainties which may cast significant doubt on the group’s ability to continue as a going concern in the future.”

For me, the only thing surprising about the announcement was that there continued to be “uncertainties”.

The music industry’s number has been up ever since Mr Jobs announced to top music biz execs that he was about to come and demolish their industry shortly before the iPod launched in 2001. The industry’s well-embedded attitude towards it’s business was ripe for disruption: greedy executives who had no love for the content they were selling, closed distribution, limited choice of a few highly hyped artists, arrogance towards customers.

In fact, the game was up well before then. An essay entitled The Problem with Music by rock producer Steve Albini written in the 90s calculated that on sales of 250,000 albums, a the fictional record company could receive around $750,000, artists would receive approximately $4,300 – less than they would be paid for stacking shelves in their local supermarket.

Now, 10 years on, look what the music industry has become. Instead of truly embracing the web and the networked opportunities it offered, the music industry tried to close down services that could have been their godsend. The industry’s attitude was one stuck in the industrial age, where scarcity equals value. Self-proclaimed futurist and writer Kevin Kelly identified some key differences in the “old” attitude to scarcity in his book “New Rules for the New Economy“: 

Ever since Gutenberg made the first commodity – cheaply duplicated words – we have realized that intangible things can easily be copied. This lowers the value per copy. What becomes valuable is the relationships – sparked by the copies – that tangle up in the network itself. The relationships rocket upward in value as the parts increase in number even slightly.  

Even now, the music business is struggling to adapt to the fact that effectively – and especially once the likes of Apple have taken their cut – the price of their core product (recorded music) is £0.00. The real value is in the people who like and buy their product, and the relationships between them. “Social music” is still an unsolved problem that is again going to be solved not by the traditional music business but by technology players like Apple, Spotify and Last.fm (who were acquired by an enlightened CBS corporation a couple of years ago).

Nevertheless, outside of big business I have taken note of a number of interesting strategies attempting to reverse the decline this year.

1. “Real” is valuable

The stock value of the live event experience is increasing. The web has given artists a wider audience and more pressure to put together exciting live events. The price of gig tickets is rising too. I think it’s no coincidence that one of my fave acts Orbital have reformed after a series of sold out live festival gigs with a new album supported by a tour with dates at the Royal Albert Hall (£25 a ticket plus booking fee). I imagine they needed the cash.

2. Exclusive physical product is valuable

Clearly one for the fetishists but vinyl is becoming even more exclusively designed and increasingly denoted as the “Collector’s Edition” release. Having not bought vinyl for a good few years even I was tempted a few times recently by the Vinyl Factory – see this Massive Attack vs Burial release for example. The eBay market for limited edition exclusive vinyl only collaborations between sought after artists is on fire, too.

3. “Choose your own price” is valuable

Radiohead famously subverted the music industry’s norms in 2007 by asking fans to choose their own price for their album In Rainbows. I’ve seen this being used a lot more by new artists using Bandcamp to distribute their music. If you’ve not got a deal, even 20p for a track shows a bit of love, it’s more than you’re likely to get through Spotify streaming AND importantly you’ll get an email address to play with and to help pay for a full album or come to shows.

4. “NOW” is valuable

A real revelation to me this year has been boilerroom.tv. In many ways this is what radio is becoming. A website that posts reviews of the lastest tracks, a club night that features the latest DJs and artists, an online TV channel (and hilarious chat room) that shows the event live. Over the past year their nights have been a who’s who of current electronic music stars and I note that later today they have Carl Craig and Richie Hawtin live from Berlin. Wow!

Thristian and co appear to be looking to brands and partnerships to monetise their audience. This is interesting because the audience consists largely of hip 20-somethings – a core audience for many FMCG and fashion brands. To be honest I think that’s a shame. I think Boiler Room has enough value for it to be a subscription or pay-per-view service – at the right price. Perhaps if they join up with more commercial organisations they will realise that in 2012.

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