Tuesday, April 05, 2005



Digital Music: Fixing The Problems (Part 1)

Anybody with a sense of human nature knows that people tend to suggest solutions to problems that are from their own perspective, and, are from their own selfish best interest. A gardener will recommend that you need more landscaping. A plastic surgeon will suggest a slight nose job, "to improve your profile." A tire shop will notice worn treads quicker than anybody else... Can you say, "New tires wouldn't hurt, ma'am."?

My point?

When the music industry went seeking solutions to their fears about the impact digital music distribution would have on their revenue, they turned to technology companies for those answers. Tech companies recommended tech answers.

What if the music industry had asked for a business solution, instead of a technology solution. What answers would that question reveal? What if the "problem" of potential lost revenue from digital music isn't a tech issue at all, but is a business issue?

The Root Of The Digital Music Problem

Music industry leaders made a mistake 2-years ago. They actually started listening to Steve Jobs. Mr. Jobs saw a group of industry executives perplexed by a problem, a problem that scared them because they had no convincing solutions. And, into that group of fear-motivated listeners, he carried a convincing, compelling answer, and carried it with evangelical ferver. It was a technology answer, because, technology is what Steve and Apple do for a living. But, it was also fools gold.

The iTunes Music Store and iPod have made a shiny first impression, with a glittering and mightily impressive early success. But, recall, that the iTunes Music Store was promoted to the music industry as the solution to their problem of losing revenue to digital music. Just how well has iTunes proven to be the answer to that problem?

Frankly, the iTunes Music Store, and the other legal download services have done nothing to solve the basic challenges that digital music presents to the music industry. This entire branch of commerce has been little more than a distraction from the real underlying issues raised by digital music. And, for two years, the music industry has sat in idle, rather than continue to seek fundamental answers to some very pressing questions.

While legal downloads are good for iTunes, MSN Music, Napster, and the rest, they do nothing to help the music industry solve the core problems created by digital music. P2P systems still exist. CD sales are still flat. Industry revenue is still flat. Where is that magic cure promised by Steve Jobs, during his famous lap around the music industry?

Fix The Business Model

Many of the answers to the music industry's digital music challenges can be found right across the street, within the movie industry. Surprisingly, the answers are business method answers, not technology answers.

In my next installment, I will discuss some of the basic, proven, solutions to declining revenue in a digital marketplace, and, how the music industry can not only stop revenue declines, but actually increase gross sales and profits by adopting them.

3 Comments:

Blogger Wayne Smallman said...

I'd contest that the aforementioned ills are neither a technological nor business problem .. they're as a result of social problems.

Society breaks down into various cliques and groups and the internet is by no means an exception.

So those individuals who have been there as long as you or I have since fathomed ways of copying & sharing things.

Technology simply enabled a societal group to do something very, very natural .. share.

The business models simply weren't in place to capitalize on this burst of technological creativity and as a result, initial resistance created a technological arms race.

So for a time, disruptive technology did just what its name suggests, right up until the music industry capitulated.

If by using technology to pave the way for more socially responsible citizens to do their digital thang, the music business -- and by extension, any other business who has an eye on the internet -- will benefit greatly.

There's a moral to all of this and it is that technology is neither good or bad, technology merely enables...

12:15 PM, April 06, 2005  
Blogger Jack Campbell said...

True enough. I utterly agree with you, from a societal perspective. My teratise her, though, is aimed at the viewpoint of the record company cartel, and, whether the present technology solution is the right road to maximizing their future success.

Steve Jobs said, "I can solve your problems."
The record labels said, "Okay. Show us. Here's your rope."

My question is, two years later, did the Jobs solution actually fix the revenue loss problem perceived as then existing by the record labels? Time permitting, tonight I will post my thoughts on that idea.

3:47 PM, April 06, 2005  
Blogger Wayne Smallman said...

"My question is, two years later, did the Jobs solution actually fix the revenue loss problem perceived as then existing by the record labels?"

Well .. I'll wait for your post, first!

12:35 AM, April 07, 2005  

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