Forrester Plan For 'Saving' The Music Industry: Annoying Windowed Releases?

from the copying-bad-movie-industry-ideas? dept

Fri, Sep 11th 2009 5:22pm — Mike Masnick

Last year, we wrote about a claim from Mark Mulligan, a VP and director of research at Forrester (the big analyst firm), who argued that music can't be free -- even as a bunch of musicians were proving him wrong. His argument was based on a faulty understanding of both the industry and economics. Mulligan is also the guy who wrote the Forrester report (funded by the recording industry) that involved some nifty guesswork and totally made up numbers that the UK government is now relying on to describe the "piracy problem" in that country.

His latest effort is to release a report on how "to save the music industry from the current Media Meltdown it finds itself in." Funny, I thought we were just seeing multiple studies -- including one from the music industry itself -- noting that the music industry is getting bigger, not smaller. Not quite a media meltdown. What's been getting smaller is one increasingly obsolete portion of the industry: selling songs (or, really, selling physical media with songs on it, and a weak attempt at replicating that online).

First, the good news: somewhere in the last ten months or so, Mulligan has recognized that free music can exist. That's progress! The second part of his theory is also a big step forward, claiming that the key to "saving" the industry (that doesn't need saving) is to create "a continual artist-fan relationship." Yes, exactly. Some of us have been saying that for years. There's more in there too about how much of the industry needs to change and innovate to keep up with the times. Good stuff and great to see Forrester finally catching up and catching on to where the market is headed.

But, of course, parts of the plan are a bit of a headscratcher. It still seems very much focused on getting people back into "buying music" rather than coming up with actual scarcities to buy. Instead, it tries to invent new artificial scarcities, mostly by copying an awful idea from the movie industry: windowed releases. The idea is that "premium club" members would pay to get access to music before others, and could get some sort of bundle of content. Two weeks later, the regular "release" would happen, with CDs, download stores and radio. Then, three weeks later, there would be a "free" component that actually is more "feels like free" using either ad-supported downloads or streaming.

Of course, like the movie industry, this ignores both reality and what people want. Those timelines won't make much sense, because as soon as the music's out, it'll be widely available. There's just no stopping that. Artificially holding it back doesn't do much good and doesn't give anyone a reason to buy. If anything, it actively drives people to unauthorized copies. Those who don't want that "premium club" offering won't wait six weeks for the official "free" streaming version with ads. They'll just go out and get an unauthorized copy.

So, while I'm glad that Forrester and Mulligan seem to be trending in the right direction with this report, it still seems to come up a bit short in terms of reasonable concepts for the industry.

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Filed Under: business models, free, music industry
Companies: forrester

17 Comments

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6 (profile), 11 Sep 2009 @ 6:16pm

Mike you need to sit down and write a detailed paper, not a blog entry, on reasons to buy. Why they're important, why they're the only way forward, what they are, examples, relevant crowds, etc. In depth.

Then publish it. And promote it just the same way you advise others to do.
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Trails, 11 Sep 2009 @ 6:17pm

How not to save a business model:
Introduce more inefficiencies.
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Trails, 11 Sep 2009 @ 6:18pm

Re:
Absolutely, cause, you know, this techdirt thing clearly isn't panning out...
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Chargone (profile), 11 Sep 2009 @ 6:48pm

did he miss the part where one of the big causes of piracy in a lot of places is needless release delays then?
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Anonymous Coward, 11 Sep 2009 @ 8:49pm

Mike you are letting your ideology and beliefs cloud your common sense. There are things wrong with the system, but you need to come up with a viable alternative.
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mass comm major, 11 Sep 2009 @ 10:29pm

dont wait.
The problem stems from a middle man [the record label] trying to maintain his service while technology [the internet] has already made what he offers obsolete. We are dealing with an old media framework fighting to survive against a cheaper, more efficient, neutral framework that has already shown its ability to spread the highest quality – not the most advertised – content currently available in today’s media pool.

Media as a whole needs to move forward and fully take advantage of its new medium [the internet]. Its amazing to see such a promising market being turned to shit by companies who underestimate it, especially when they try to control it. The internet cannot be controlled and you cannot control the path a piece of media follows once its been uploaded to the net. Piracy is a prime example. I’m not waiting for mike to give me his solution to this “problem”. It doesn’t really exist yet, at least not on the financial scale of present day media companies. I am being an entrepreneur in this still fresh media market, as we all should.
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Anonymous Coward, 12 Sep 2009 @ 1:28am

Re:
People release free music under CC licenses all the time, much of which is good. See http://www.jamendo.com/en/

So what are you talking about? We have a solution and it works great. Ignore the RIAA, ignore artists who are signed, and download music that people release for free (and there is PLENTY of it) and people can donate to the artists they like.
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PaulT (profile), 12 Sep 2009 @ 6:28am

Amusingly, in my experience at least, such windowed releases were often the driver for people getting into piracy in the first place. Songs would play for weeks, or even months, on the radio before the public were granted the option to buy them. Singles were over-priced, and the song that's now been played to death was often the only decent track on the album.

People realised that they could download a copy of the song well before the official release, making the official release date obsolete. It's no accident that the ridiculously overpriced singles market was the first to feel the pinch when the sea change started (in the UK, I remember £3-4 (US$6-8) being the norm for a chart CD single during the late 90s).

Fast forward to today, and release dates are still a primary driver for piracy. Fans of an artist looking forward to their new album will often download the leak first, rather than waiting another 3 weeks for their pre-order to arrive. People stuck in markets treated poorly will often not bother waiting the months or years it takes for their market to be sold to.

This is the same for movie fans as it is for music fans. Take for example the recent Ponyo, an animated feature from the legendary Japanese animator Hiyao Miyazaki. Japanese cinema release: July 2008. Japanese DVD release: July 2009. US cinema release: August 2009. UK cinema release: February 2010. Guess what a lot of UK Miyazaki fans are doing instead of waiting the utterly pointless extra 6 months, even if they were willing to wait for an English dub in the first place? Not everyone will download illegally - many will import the Japanese or other region's DVD, despite the movie industry's best attempts from stopping people from doing that - but many others will.

Forcing people to wait needlessly will inevitably backfire. It's part of the cause of their current situation, and digging further downwards isn't going to get them out of that hole. Whether you agree with the morality of bypassing release schedules in such a way, it's hard to argue the point that such schedules encourage people to do so. offer people what they actually want, instead of attempting to force things to work in a way that's best for you, and you'll reap the rewards.
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Daniel Tunkelang (profile), 13 Sep 2009 @ 4:51am

market segmentation
Mike, it's easy to see why this approach might not work--as you point out, unauthorized distribution happens extremely quickly, making it near-impossible to implement windowed releases. That said, the fact that people still buy music despite most of it being available for free tells me that we shouldn't be quick to assume it won't work just based on the unauthorized distribution channels.

Regardless, your opposition to creating artificial scarcities as a means of maximizing rents strikes me as more about ideology than logic. You talk about "what people want" but ignore that different people want different things. An approach like windowed releases at least recognizes the reality that some people place more value on immediate access to the music than others. Are you opposed to market segmentation in general?
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Anonymous Coward, 13 Sep 2009 @ 5:58am

Finally an idea that makes sense
After we "save" the music industry we can move on to save the newspaper industry the same way - some news items will only be available to non-paying "consumers" after two-weeks. Hey, it's OUR content, so WE make the rules, right?
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mrtraver (profile), 13 Sep 2009 @ 8:20am

Re:
Maybe you are being facetious, but if not, why is it Mike's job to come up with a viable alternative? He is not employed by the music industry.
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Ben, 13 Sep 2009 @ 12:57pm

We use meltdown a lot and seem to fail to understand the connotations. A "meltdown" is actually a rapid EXPANSION. In nuclear physics the end result is a lack of the original resource. This problem is not really an issue in this case because we have no end of the original resource. Let it meltdown, thats the fastest way I know of to make something grow and since we have nearly an infinite supply there shouldn't really be an issue. It will grow, stabilize, and thrive.
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Mike Masnick (profile), 14 Sep 2009 @ 2:14am

Re: market segmentation
Regardless, your opposition to creating artificial scarcities as a means of maximizing rents strikes me as more about ideology than logic.

Not at all. It's based on economic fact. You can't build a successful long-term model by leaving the more efficient option off the table. It's too tempting for others to take -- whether via legitimate means or not.

It's got nothing to do with ideology, and everything to do with basic economics.

You're free to try the inefficient solution. You're also free to fail at it.
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Mike Masnick (profile), 14 Sep 2009 @ 2:15am

Re:
There are things wrong with the system, but you need to come up with a viable alternative.

First off... why? If the economics say the industry is going to flop, why should we ignore that if there isn't a response that explains the alternatives?

Second... I have come up with viable alternatives and have explained them for years, both with theory and examples of those putting them in practice.
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Hephaestus (profile), 14 Sep 2009 @ 7:26am

Re: Re:
I agree with Mike about 70% of the time. "the economics say the industry is going to flop," is one of the things we agree on.

AC where you state "you need to come up with a viable alternative" the question you are asking is, how do you keep big media (music, video, newspapers) going at it current profit levels? The answer is you can not. The reasons are simple.

1) competition from people outside the big 5 music companies. There are around 300,000 artists/bands (most of them suck but there are some gems) not contracted to them. (need a ref for the 300k number)

2) with the the internet, there is no need for the middle men any more.

3) The big media industry is slow to adapt and fearful of change. The fear of loss of quarterly profits is the main concern.

4) The use of fear and intimidation tactics tend to back fire and cause revolts.

5) Nothing happening outside the music industry makes financial sense for them, or isn't scalable.

Because of these reason and more, the industry can not be saved.

If you want to discuss what to replace it with, I do have a very detailed plan with check lists, timelines, contacts, costs, etc. In this plan the profits for the middle men drop substantially, the profits for the artists rise substantially. To misquote Hamlet ... "therin lies the rub" for the recording industry. In a digital age they are not needed.
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Anonymous Coward, 14 Sep 2009 @ 2:48pm

Of course windowed releases don't work. Unless you want the Tech Dirt Crystal Ball. You can buy it here for just $15.

Tech Dirt Crystal Ball
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Mike Masnick (profile), 14 Sep 2009 @ 10:51pm

Re:
Of course windowed releases don't work. Unless you want the Tech Dirt Crystal Ball. You can buy it here for just $15.

Heh. If you honestly think that's the same thing as what's being discussed here, you really need to get out more.
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