This CHART tells you all you need to know: The Death Of The Music Industry

chart of the day, music industry 1973-2009, feb 2011

CHART OF THE DAY: The Death Of The Music Industry

This stunning chart needs to be put in some context to understand the true nature of the upheaval facing what I like to call the “Dinomedia”:

1) Forget About Buying Music Online – People Don’t Even Want To STEAL Music!

2) FREE can actually work, with a little creativity: “How Girl Talk mashes up the Music Biz”.

3) Sony’s new “idea” to launch a me-too Music subscription service priced the way they are proposing is 1) Doomed, and 2) fails to take the reality of the above chart into account:

“Sony believes its huge userbase and retail presence can help its subscription music service succeed where countless similar services have failed.

The Basic tier of service — which will cost $3.99 per month in the U.S. — gives users a set of curated music channels with the ability to fast-forward and rate songs. That’s very similar to what users can get for free from Pandora and countless other Internet radio stations, as well as the free music channels on digital cable TV systems.

The Premium tier — $9.99 per month in the U.S. — is the same price as countless other subscription services (Rhapsody, MOG, Rdio, Microsoft’s Zune Pass, and so on) but doesn’t have any mobile story [yet].”

Their retail presence?! Really? That is exactly the portion of the music business that is dying completely. I thought Denial was usually one of the earlier stages of the “5 Stages of Grief” model…

Why can’t they understand that they have next to NO PRICING POWER left? (Again: Many cannot be bothered to STEAL their product anymore…).

That they are much better off gaining whatever Attention Pie/eyeballs/earballs they can for their music ecosystem (and make further back-end sales there later on, similar to what ONE LONE, yet innovative DJ is able to do)?

For example, what if Sony were to do something bold, and price the “Premium” subscription at $1/month, no contract. That would put it in the complete impulse purchase, don’t-need-to-think, will-likely-never-cancel-for-any-reason category.

What if they could thereby garner 100 Million users, who would be spending about $1.2 Billion, in other words…about 20% of what still is left of the global music industry?!

At that price, could they get 200 Million users? One would hope so. Given that Apple is expecting to sell 40M+ iPad tablet computers costing $499 and up this year alone…

Wake up, #Dinomedia, before it is forever too late…

This SiliconAlleyInsider Sub Headline Reveals Why You Must Move The Freeline

Stop Whining About How Elitist And Expensive TED Is [Just Because] You Didn’t Get Invited
Feb. 15, 2010, 9:17 AM

>> Too bad you missed it! Larry Page gave everyone a free Nexus One.

.

via Silicon Alley Insider.

(Minor edit for colorful language.)

What is amazing about this (the subhead sentence after the headline), is not what it says about TED, but what it says about the future of content creation, and the question of charging for it.

Yes, Larry Page is a multi-billionaire who gave away free Nexus Ones created by his Fortune 500 (currently ranked #150) company, Google, to other well-to-do folks who were able to afford to pay $6,000 for the exclusive TED Talks experience. In doing so, he is following word of mouth (WOM) marketing model 101, of getting your product into the hands of key influencers, and hopefully winning them over, and getting them to evangelize your product.

But aside from all of that, he is showing what the future really holds: With ever cheaper reading & communication devices such as the Nexus One, it will become increasingly common to give those away to users, JUST to have SOME influence over what content (and thereby advertisements) they consume.

In essence, such a give-away represents A PAYMENT of the consumer for consuming content on the “gifters” platform. That is how important it is to get some, any slice of the attention pie. The getting of some of which implies that you will have opportunities down the road to do business with the “giftee” in the form of offers (ads or otherwise) that can be embedded with the content.

Note that it is taking for granted that a lot of content itself cannot be charged for. Why? …

Continue reading “This SiliconAlleyInsider Sub Headline Reveals Why You Must Move The Freeline”

How Wrong Is Rupert Murdoch To Think Old Media + Pay Wall = The Answer? Very.

Rupert Murdoch in a speech he gave in China entitled The All-You-Can-Consume-For-Free Internet Era Is Over recently said a lot of “not-very-nice” things about the Internet and Internet related companies that I fervently disagree with. Here the most relevant excerpts (my BOLD highlights):

There are many readers who believe that they are paying for content when they sign up with an internet service provider, presuming that they have bought a ticket to a content buffet. That misconception thrived on the silence of inarticulate institutions which were unable to challenge the fallacies and humbug of the e-establishment.

The value of content has been volatile in the past decade but we are entering another decisive phase in which device makers are again courting the creators of content. I have sensed that shift in recent days during my travels in Japan and South Korea where I met some of the world’s leading electronics manufacturers. These companies don’t want their customers to be served a diet of digital dross, and yet that will be the inevitable consequence if the worth of content and creativity are not appreciated.

The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid-for content, it will be the content creators, the people in this hall, who will pay the ultimate price and the content kleptomaniacs will triumph.

I believe that Murdoch couldn’t be more wrong in his assessment that he (and the rest of the Old Media guard like CNN, etc.) really can take large portions of the Web back to a for-pay basis.

There are so many things he doesn’t get about the current reality that I’ll likely miss a ton. But a few of the highlights should suffice to make my point:

1) He doesn’t get that 90% plus of the content his minions are producing is so fungible that the half-life is less than 24 hours. That’s why it’s called “old news”. The aggregators et al. are giving that content a few extra days’ or even weeks’ worth of an additional lease on life.

Add to that that he doesn’t understand the SEO (search engine optimization) benefits his content receives via “the copiers” (as long as they link back appropriately), which in turn gives more visibility and findability to his content. No links, no “Google juice”. Sorry.

(Rupert’s Wall Street Journal is tacitly acknowledging this too by the way, as it is secretly still placing all of its “for pay” articles into Google FOR FREE!)

“…will soon have to pay a price for the co-opting of our content.” You can hear how proud good old Rupert is of “his” content, too bad that most of the rest of the world doesn’t really care anymore. There is so much content, there is NO scarcity of it. Zero. None.

If anything, there is far too much content, and lack of intelligent ways to filter it, or to connect the most relevant dots. Oh, and by the way, recent traffic stats show that Twitter, the epicenter of open, no-walls, rapid-fire, “self-liquidating” communication is beginning to move past CNN.com!

2) The internet has created vast ARMIES of people with sufficient expertise that they can write with depth about any topic or news event imaginable. And they are perfectly willing to do so FOR FREE, simply for the chance at recognition, for directing a slice of the attention pie back towards their own personas/personal brands, businesses, products, or services.

If we again take the example of the Journal, there is now a sufficient number of financial news blogs serving up their own news, analysis, and key (linked) excerpts from the in-depth reports of various industry analysts and researchers, etc. (yet more people willing to put their stuff out there for free), that there really is very little need for anything the WSJ may report or opine on. It’s already all taken care of by someone else.

(Examples include: Clusterstock.com 247WallSt.com Minyanville.com SeekingAlpha.com etc. etc. Notice how you won’t hear these blogs crying about how they would like a Pay-Wall…)

The only reason why the Journal has any value left is the strong brand that has been built up over many decades. The brand that has engraved “WSJ = Serious Business News” on the minds of millions of people.

But that doesn’t mean that there is much “there” there. Just go over to WSJ.com and look at each front page article headline for a moment. Spot the ones that are currently denoted as “paid subscribers only” via the little grey key symbol, and ask yourself if you feel compelled to purchase a subscription for any of these. (Recent consumer surveys show that the answer is pretty universally “No” for nearly all basic, yet for-pay content.)

3) The real issue remains that Murdoch and the rest of the Old Media moguls have yet to figure out how to properly monetize the attention they are already getting for their various content ventures in order to cover their staggering overheads and still turn a profit.

I have written previously about how they could turn the attention into profit more intelligently:

“Is Advertising Failing On The Internet?”

which you should by all means read if you haven’t yet. (In a nutshell, the answer is more intelligent ad targeting and/or sales funnels.)

But apparently they steadfastly want to cling to the past. Newsflash: the “good old days” of near complete Old Media control are NEVER coming back. Everyone with either an internet connection or an internet enabled cell phone is now a potential content producer. In some cases even an on-the-scene reporter…

The protection of the Pay-Wall is a complete pipe dream, and not a particularly good one, because, as we can see from Murdoch’s statements above, he is still way too proud of his content, and the only ones on board with his ill-conceived schemes to take back more control are OTHER (similarly misguided) companies. But the power now lies with the consumer.

In an Attention Economy you first have to convince people why anyone should give a dear about what you have to say. And a Pay-Wall will only assure that your content is likely never seen by millions who might have otherwise paid attention to you.

Only AFTER you have garnered the attention can you then proceed to make additional offers for more. More of the same kind or LOGICALLY related content, with more depth, more value, more exclusivity, that you might then convince someone to pay for. It’s called the back-end.

Don’t try to do it by putting your FRONT-END, lower value news stories and so-so quality op-eds behind a barrier where they will not do the lead generation job that your front-end is supposed to do!

For all of his biblical and otherwise ornery bluster, good old Rupert just cannot tell his front-end from his back-end.

[In this he could get together with fellow mogul Sumner Redstone of Viacom:

YouTube vs. Viacom: Should YouTube be torn apart by piranhas?

Oddly enough, back when this post was written, Murdoch still seemed to take a somewhat more enlightened view – see quote.]

If you erect an ill-conceived Pay-Wall, there will always be dozens, if not hundreds or even thousands of enterprising companies willing to bet that their method of monetizing a free front-end can win. And they will end up with what previously used to be your piece of the attention pie.

Always remember what John Gilmore of GPL/Open-source fame once observed: “The Internet perceives censorship as damage and routes around it.” A Pay-Wall is not all that far removed from censorship, especially when it comes to the news side of the equation. But even in a more economic sense, the Internet will likely rout around it.