Yes, Using Free In Your Business Model Works For Small And Large Bands

from the follow-the-bouncing-business-model dept

With Radiohead's new business model getting so much attention, we're hearing a bunch of folks start to claim that this kind of business model only works for big, established bands. Funny thing is, when we point to smaller artists doing similar things, people say that such a model may work for no name artists, but couldn't possibly work for big pop stars, who would inevitably lose money. The fact is that a business model that involves using the music as a promotional good can work for both small and large bands if you understand the economics of infinite goods and how to apply the appropriate business model based on the stage of the musician's career. So for all those claiming that the Radiohead situation is unique because they're so well known, can you please explain why other, significantly less well known artists have done quite well using similar models? The simple fact is that these types of business models allow some less well known musicians to have a career in music in the first place -- whereas in the past they may have been forced out of music into another job. It's opened up plenty of new possibilities for ways to make a living by growing a fanbase and charging them for additional (scarce) products. So, yes, Radiohead will do well because they're well known and well-liked. But, plenty of less well known artists are adopting similar models because it helps them establish a following in the first place.

Filed Under: business models, music

Radiohead Tells Fans To Name Their Own Price For Latest Album Downloads; Gives Them A Reason To Pay

from the new-business-models dept

The band Radiohead is apparently coming out with a new album; the first after its original record deal was completed. It appears that, like many other musicians, they're realizing that the traditional recording industry business model doesn't quite make sense for them. While there was some buzz about an apparent hoax website about the band's new album, it turns out the real thing is a bit more interesting. That's because Radiohead is doing two smart things. It's telling fans they can name their own price for digital downloads. You just pay the band however much you think the downloads are worth and they'll be happy. But that's not all (though, that's what most folks are focused on). Rather than just offering up the content, they're also trying to give people a reason to actually buy something else. In this case, it's a "discbox," which will include the new album on both CD and vinyl, as well as an additional CD of seven extra songs and photos, artwork and lyrics. The whole thing will be packaged in a nice container. In other words, the band is following in the footsteps of folks like Trent Reznor, in realizing that the music is promotional for other stuff -- and you can still sell stuff if you make it worthwhile. In this case, Radiohead isn't really selling the "music." After all, you can get that for free. They're selling the full collection of stuff that comes with the music. Funny how it's the musicians, and not the record labels, who seem to realize that adding value and getting people to pay for it is a business model that beats suing fans.

Filed Under: business models, music
Companies: radiohead

Music Without Borders -- How Amazon Can Go One-Up On iTunes

from the drm-at-the-border dept

Recently, we mentioned that Amazon's MP3 Download Store got the DRM-free part right but screwed up on the pricing model -- the real Achilles heel of iTunes. As it turns out there's another angle from which Amazon could go one-up on iTunes: extend the offering across more countries. The moment I heard about the launch, I enthusiastically hit Amazon's MP3 Download Store and eagerly clicked on a "Buy MP3" link only to be greeted with a "We are sorry... We could not process your order because of geographical restrictions on the product which you were attempting to purchase. Please refer to the terms of use for this product to determine the geographical restrictions. We apologize for any inconvenience this may have caused you."

Wow! What's that again? Geographical restrictions on music? Because I am a citizen of India and not a citizen of a country where the music labels think that DRM-free music should be made downloadable? That's just dumb. Similarly, a long time ago, iTunes informed me that I don't have a "foreign" credit card and hence it won't let me download stuff although I am willing to pay for it. There are more than a few ironies here:

• The music that I am trying to purchase is readily available DRM-free on CDs at a store nearby. So why place an embargo on the digital one?
• I can order stuff from Amazon and have them international-couriered to India, but I can't download a digital file off Amazon because I am in India.

Here's my feedback to Amazon: If you really want to exploit the "long tail" and "short head" economics of online music and be anywhere close to a threat to iTunes, look at creating a world where music is not constrained by borders. You have the clout to do that.

Filed Under: drm, international restrictions, music
Companies: amazon, apple

Next Time You Announce An Agreement To Sell DRM-Free Downloads, Perhaps You Should Actually Have That Agreement

from the just-a-suggestion dept

Michael Robertson, the founder of MP3.com, Linspire, SIPphone and a number of other companies has a pretty direct formula for getting publicity for his new startups: do something outrageous that pretty much guarantees a lawsuit. Then just assume that the resulting lawsuit will drive the publicity of the startup. Of course, sometimes such a strategy can backfire. Earlier this year, Robertson launched AnywhereCD with the claim that he would be selling DRM-free downloads from Warner Music -- perhaps the most stringent holdout in ditching DRM. Except... apparently Warner Music thought it had agreed to something entirely different and quickly sued AnywhereCD. It was actually somewhat difficult to understand Warner Music's claim. AnywhereCD was selling the physical CD, it was just that they would then also offer the digital tracks from the same exact CD. Basically, all the company was doing was saving people the step of having to rip the CDs they had legally purchased. Either way, eventually Warner and Robertson settled, allowing Robertson to continue to sell the DRM free tracks... but only through the end of September. If you look at your calendar, you'll realize that this is the end of September and Warner Music certainly had no interest in renewing any kind of deal with Robertson -- so it should come as no surprise that AnywhereCD is shutting down. It certainly looks like the controversial marketing strategy failed in this case. Previously, the lawsuits tended to be from competitors. When the lawsuits are from your suppliers, it gets really difficult to build an actual business.

Filed Under: downloads, drm, drm-free, michael robertson, music
Companies: anywherecd, warner music

Prince Misses The Point: Sues YouTube, eBay, Pirate Bay For Copyright Infringement

from the and-it-looked-like-he-was-getting-somewhere dept

For many years it had seemed like Prince was one of the major music industry stars who actually understood the new business models made possible by the internet, and how those could be leveraged without wasting time on worrying about those who were making unauthorized copies. Unfortunately, for all his innovation in the space, it looks like he, too, has fallen victim to trying to sue those who are out there promoting his works. Prince had experimented widely with a variety of innovations in making, distributing and promoting music -- including his recent offer giving away his latest CD for free with newspapers. He'd also done a number of other promotions, all designed to push more people to his concerts and events where he could make even more money. That's why it's both surprising and disappointing to find out that Prince is now going to the other extreme and is suing YouTube, eBay and the Pirate Bay for making his works available.

There are quite a few things that are problematic about this lawsuit -- with the first one still being that he's suing the wrong parties. The sites he's suing are all the platforms which others are using for distribution. They're not involved in the content at all, and if he wants to sue, he should be suing those who are uploading his content. However, the much more important issue is how backwards this is and how it goes against nearly every other part of his strategy. Nearly every other part of Prince's strategy had seemed to be focused on the simple idea that the more his music got out there, the more ways there were for him to make money -- whether it be from more people wanting to see him in concert or getting others (sponsors, partners, even fans) to pay him upfront to create his next group of songs so that he doesn't need to worry about monetizing the music after it's been produced. These are strategies that make sense, and actually become even more valuable when his music is being heavily promoted online for free by his biggest fans. This kind of strategy backfires when you try to also maintain strict copyright control. For someone who had been so creative in figuring out new business models that don't require limiting fans via copyright, it's disappointing to see Prince go in the opposite direction -- potentially harming much of the good will he's built up.

In the meantime, it's looking like Trent Reznor may quickly be taking away the baton as a well-known musician who is experimenting with cool new models designed to get more music out there and then providing incentives to make money elsewhere. Reznor is now being quoted as telling fans that they should be downloading his music for free from his own site, rather than wasting money on buying counterfeit CDs.

Filed Under: copyright, music, prince
Companies: ebay, google, pirate bay, youtube

Universal Music Thinking Subscription... But In A Way That Will Never Succeed

from the ah,-back-to-this-again dept

Last week, there was a lot of buzz about the NY Times Magazine profile of Columbia Records boss Rick Rubin. Among the interesting tidbits was the idea that Rubin and many other executives in the industry have finally started to come around to the idea of a universal "subscription" service -- which many people had suggested years ago (and which the recording industry insisted would never work). Of course, the devil is always in the details -- and a big question is whether or not record labels will set this up like the existing "subscription" services like Napster and Rhapsody, or will actually recognize the value of going DRM free and making it more of a licensing program, rather than a limited subscription service. Nearly as big a question is whether or not all of the major players would ever agree to terms that would make such a system work.

Surprisingly, it sounds like Universal Music is trying to take the lead in pushing out just such a subscription service, but the details are lacking. What details there are don't sound particularly promising. Basically, the program would require (yes, require) ISPs and mobile service providers to buy into the program, forcing all customers to opt-in. Effectively, this would be about ISPs and mobile service providers raising the prices on all customers, and offering them access to music in exchange. As you might imagine, that proposal has been something of a non-starter with most ISPs approached by Universal. It's also not clear if other labels would be involved, or if this would be a Universal-only sort of deal (which would also doom it to failure). In the meantime, given Universal Music's recent attempts to squeeze money from everyone they can, whether or not it makes sense, you can pretty much guarantee that the terms on any such proposal won't be too agreeable to anyone... other than Universal Music.

Filed Under: music, subscriptions
Companies: universal music

Blaming MP3s And iPods For Ruining Music

from the gotta-love-the-audiophiles dept

It seems that with every new generation of music delivery, there are going to be people who complain that the quality just isn't up to par with what came before. Remember when CDs first came out, there were quite a few upturned noses who insisted the sound quality just couldn't compete with vinyl LPs. And now that mp3s are becoming the standard, folks are complaining that the quality simply can't live up to CDs. This has certainly gone on for a while, as we've noted there are even online stores that cater to audiophiles who believe that compressed mp3s just aren't worth listening to. However, now it's going even further, as the WSJ claims that some audio engineers are saying that the popularity of mp3s and iPods is ruining music. The theory is that audio engineers are using iPods and mp3s as the lowest common denominator for recordings. Since they know that so many people are going to end up hearing the song just through the cheap white earbuds of an iPod, that they don't bother to make a high quality recording that would sound better on high end stereo equipment. Thus, the claim goes, pretty much all music is sounding somewhat crappy, and it's turning people off from the latest crop of new songs. In other words, music is less popular today, because the songs are engineered to sound like crap. This seems silly. It's certainly a different argument than the industry's typical claim that downloads are killing the music business -- but it's equally ridiculous. Sure, there may be some engineers who are doing a cruddy job in engineering the music, but as one audio engineer in the story notes, there's no reason to ever engineer a song "down" to mp3 levels. Instead, you should just engineer it to a higher level and it'll sound fine on a CD as well on an iPod. However, to put the whole thing in perspective: songs compressed to mp3 level certainly do lose some quality at the margin, but there's only a small group of audiophiles who really care or will notice on a regular basis. At the same time, compare that to how much more music is being produced today thanks to cheaper production tools and easier distribution of music through the internet, and I think you could make the case that the mp3 and the iPod has done a lot more to improve music than to hurt it.

Filed Under: audiophiles, ipods, mp3s, music, quality

Canadian Newspaper Gives Away Free Music Downloads

from the that's-the-spirit dept

Earlier this year, there was a huge fuss over the UK's Daily Mail newspaper's promotion giving away the new Prince CD for free with a copy of the newspaper. It seemed like a pretty good way of dealing with the troubles facing both the newspaper industry and the recording industry -- offering a new way of financing music combined with a new way to promote and distribute music, all the while helping give people a reason to actually buy a newspaper. It was so reasonable that it freaked out the recording industry, music stores and even other newspapers. However, it appears that some newspapers have decided to go even further. Michael Geist lets us know that over the weekend, the Vancouver Sun put up a freely downloadable compilation of songs from Nettwerk Music. You may recall Nettwerk as being the Canadian record label that seems to actually understand that the trick isn't in fighting against consumers (or in suing them), but in giving them what they want. Thus, it's not really a huge surprise that it would be this label that took part -- allowing well known acts like Sarah McLachlan and the Barenaked Ladies to take part in this promotion. What's a little strange is that the promotion only lasted for one day. However, it is good to see more newspapers (and bands) at least experimenting with this type of model. It has a long way to go, but through this experimenting the next generation of music business models are going to be discovered.

Filed Under: canada, downloads, music, newspapers
Companies: nettwerk, vancouver sun

The 'Ringle,' Or What Passes For Innovation In The Recording Industry

from the something-else-you-won't-want dept

It's no secret that the record labels face a chronic inability to innovate in their business models, choosing instead to continually repackage content and seek ways to force people to buy stuff they don't want in order to get the things they do want. It's this sort of thinking which has brought about the "ringle": a combination of a single and ringtone, and apparently Sony BMG and Universal Music's latest strategy masterstroke. Buyers would get a CD with the full-length track, a B-side or two, and a ringtone for $6-7 -- which doesn't really compare favorably to a 99-cent download and a few bucks for a ringtone (or a download and free homemade ringtone). Is there any real benefit for the consumer here? It's hard to see any, but that's not really surprising. It seems more like an attempt by the record labels to try and deter people from buying single-track downloads, since they don't like the low price and the way they've blown up the album sales model -- which itself is another variation of the "buy stuff you don't want to get the stuff you do" model. It's unlikely that many consumers will fall for it, especially since the CD single is pretty much a dead format. It's probably also worth pointing out that just like the labels try to recycle content, they recycle their innovative ideas as well, since it would appear that Universal tried pretty much the exact same thing in 2004, just calling it the Pocket CD instead of the ringle.

Filed Under: music, music downloads, recording industry, ringtones
Companies: sony, sony bmg, universal music

How The Record Labels Are Only Ten Years Behind In Their Thinking About Business Models

from the eventually-they'll-get-there dept

The NY Times Magazine is running an interesting profile of Rick Rubin, the well-known producer who had tremendous success over the past twenty years producing all sorts of successful musical acts -- from the Beastie Boys to Slayer to Johnny Cash -- and who took over as the co-head of Columbia Records back in May. While the story itself is interesting and focused on some of Rubin's peculiarities and his key focus on finding and producing good music -- there are a few other interesting tidbits that come out. The first is how Rubin was completely pissed off at Columbia prior to joining the company because the Sony rootkit debacle hit just as a Neil Diamond album Rubin produced had come out to great fanfare. It was apparently number 4 on the charts -- the highest ever for a Diamond opening. Except, Columbia is a subsidiary of Sony BMG and so the Neil Diamond album was included among those that had the rootkit -- and the furor over that got it pulled from the shelves, and that basically killed its commercial prospects. So, at least we know that Rubin won't be a fan of such things.

However, the article suggests that Rubin and others in the industry are much more interested in setting up some sort of universal subscription system that would allow any subscribers access to any music on any platform. What's most amusing about this is that this is exactly the proposal the EFF suggested many, many years ago, which recording industry executives insisted would never work. What's even funnier is they might be right now, after managing to screw up all sorts of goodwill from customers. Back when the EFF suggested it, it probably still could have worked. However, Rubin is exactly right on where the industry is headed if it doesn't figure out these new business models quickly: "The future technology companies will either wait for the record companies to smarten up, or they'll let them sink until they can buy them for 10 cents on the dollar and own the whole thing." That's why I've always figured that things would work out in the end. If the RIAA members keep shooting themselves in their collective feet, then the problem will eventually take care of itself. Of course, the labels could avoid a lot of the problems if they learned how to actually embrace certain aspects of file sharing. It's not clear that Rubin (or anyone else in the industry) has gone that far yet. They're just still working through the ancient EFF plan they derided when it first came out. In fact, one of Rubin's other questionable ideas is setting up a fake word-of-mouth marketing organization, where Columbia has hired a bunch of young adults to promote their music online on blogs and in forums and such. Hasn't anyone explained to them that word-of-mouth is about people who legitimately enjoy the music -- not those who are paid to promote it? File sharing was legitimate word-of-mouth marketing. Hiring young adults to spam forums is not.

Filed Under: business model, columbia, music, riaa, rootkits
Companies: columbia records, riaa, sony