Sorry, There’s No Silver Bullet Business Model For The Music Industry

Forrester analyst Mark Mulligan believes that the problem for the recording industry is one of demographics. Mulligan uses the fact that the billionth application purchaser on iTunes, 13 year-old Connor Mulcahey, was much younger than the 10 billionth iTunes music purchaser, 71 year-old Louie Sulcer, to highlight the issue:

 older users may still pay for music tracks, but younger users are more likely to “part with their cash” for apps than for music. To Mulligan, the problem is with the current digital-music product itself. Thus, he prescribes a feature-rich app as the savior — and the future — of the music industry. He proposes a music application that wraps digital tracks with social networking, live on-demand footage, song lyrics, games, and forums. This sounds like an interesting idea, which could see some success (if well-executed), but if the music industry is seeking a “silver bullet” business model, this is not likely to be it.

It’s pretty well understood that what has driven the recording industry for decades now is “format change,” where the record companies have continually asked their customers to essentially re-buy their recordings each time a new format is adopted — from records, to cassettes, to CDs. With each new technology, customers were compelled to buy the products not by legislature or law, but rather, by a continual desire to have their music be more accessible. First, the phonograph made music more affordable and accessible, as compared to hiring a band of musicians to come and play in your living room. In the 80s, the cassette tape made listening more portable, albeit with a loss in audio quality. Then, in the 90s, the CD combined both portability and high audio quality into one small package, leading to a huge up-swell in recording purchases. For years, the recording industry has had a fantastic, well-defined business model: Record music that people want to hear on physical media. Sell that media. Repeat. Then, the 00s brought the latest maturation of the recording format, the mp3, with its near-infinite portability and an audio quality that can only really be contested by audio snobs. Since it could be easily copied and used in many different devices, it had the opportunity to become the most widely used music format ever. But, because of its near-infinite portability, the recording industry’s old tried-and-true business model of selling physical media was no longer as viable.

The evolution of recording formats shows that what has really driven the industry has been a hunger for increased accessibility and portability, not necessarily the introduction of new features. So, while Mulligan’s music application idea may drive some interest in recoded music, by empowering the audience to do more with it, it is very unlikely to drive the type of purchasing behavior that, in the past, came with each new recording format — and it certainly won’t “save recorded music.” The problem is that the user is no longer locked into the recording industry’s physical product for the distribution of music. There is no “one thing” they can sell that the audience will have no alternative but to buy. To be successful, the recording industry is going to have to experiment and figure out how make revenue from many different sources, which requires creativity that the labels have so far been unable or unwilling to muster. While the industry is out there looking for the “silver bullet” of a business model, the reality is that the answer is more like a whole clip full of silver bullets, coupled with some garlic, and finished off with a wooden stake or two.

Source: TechDirt