There was a curious note on the front page of the "L.A. Times" Business section at the end of last week. They were dropping stock tables from the paper.
It never made sense to me as a kid. All those pages wasted with information that held no interest for me.
And then, as I grew older and knew more about stocks, it occurred to me that the information was OLD!
But now it appears it's not only old, nobody even looks at these pages anymore, because those owning shares are checking the prices on the Web, the listings in the newspaper are IRRELEVANT!
Oh, let's look at the other side of the coin. Not EVERYBODY has an Internet connection. This is the way it's been done FOREVER! Why CHANGE?
Well, first of all, to save money. Yes, you can use fewer pages and those that remain you can fill with information more interesting to more readers and/or ads.
Does all this sound familiar? Does all this remind you of the record business?
Already this year we've experienced two bombshells. The dropping of film cameras by Nikon and now this elimination of stock tables from newspapers (not only the L.A. "Times", but the "New York Times" and "Chicago Tribune"). It seems that the digital/Internet revolution that was supposed to come in 2000, yet never quite arrived and was laughed at by old wave businessmen, has finally come to roost. And it's wreaking havoc.
Oh, in the old days it was about being too early. But now with 68% broadband penetration, the time is nigh. Music is going to move to the Web almost overnight. You're going to see a DRAMATIC difference within twelve months. One day CD sales are just gonna tank, and the record industry is just not ready for it. (Hell, it could take up to two years, don't hassle me on the exact time frame, but be SURE, it's gonna be sooner rather than later, not five years, but IMMINENTLY!)
Look at it from the consumer's side. He's now inured to music on his computer. It's all over the Web. More and more people will have iTunes on their machines. More and more people will purchase iPods to carry said music with them everywhere. Suddenly, the VAST MAJORITY of the public will see no need for the CD.
Oh, I know you love the artwork. And that the versions on the CD SOUND better. But film has advantages over digital imagery, and it's disappearing. Who says that music must be sold with packaging? Where is it written that there must be a cover photo? Bands centuries back didn't have liner notes. Not that people won't want information, hell, they're getting a PLETHORA of it on bands' Websites. You COULD print it out if you wanted to, but why?
That doesn't mean you can't have high quality files on your computer. Hell, iTunes rips in lossless format if you so desire. But it appears that most people are satisfied with 128 AACs. At least for ripping. As for purchase...
Well, it's less about quality than the price. The price just isn't low enough. However you want to deliver the tracks, via individual purchase, subscription or P2P, people feel that the price is too high. You've got to be able to get more for less. Or else people will get tunes elsewhere. Maybe even via the black market on Russian sites, where they're about a dime a cut.
It's no use arguing. This isn't about philosophy. This isn't about purveyors establishing a price. This is about what the market will bear. The key is to make music so cheap and so easy to acquire it doesn't PAY to steal. Or, in the alternative, to monetize the stealing, at a LOW PRICE!
The Web has changed the playing field. Even Rupert Murdoch admits it. (http://www.theregister.co.uk/2006/03/14/murdoch_newspapers/) Why the record companies believe they're immune is beyond me.
They can whack off manufacturing costs immediately. And most distribution expenses too. They can SAVE money. There are ADVANTAGES to the new model. Look how a hit single can sell on iTunes. Just imagine, if price of acquisition were lower maybe TWENTY MILLION PEOPLE WOULD PAY FOR AND OWN THE TRACK!
Granted, not for a buck.
But, if price is cheap enough, maybe twenty million people will own THOUSANDS of tracks.
The camera and newspaper companies woke up to reality. And gave up holding on to the past and entered the future. Every year CD sales go down. Do the labels think they can retard this trend? Do they think the miniscule sale of copy protected tracks for a buck will replace lost revenue? A new business model is needed. The labels can either jump ahead of the consumer and corral him into something in the future or keep running behind him, railing that he's not buying the music in the format they want to sell it to him for at the price they desire.
http://www.latimes.com/business/la-fi-bizchanges14mar14,1,4319750.story
http://www.nytimes.com/2006/03/14/business/media/14times.html?_r=1&oref=slogin
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