It reminds me of the year 2000. Only this time the dupes aren't the venture capitalists, but the labels themselves.
Back at the turn of the decade, Silicon Valley financiers believed technology triumphed. They believed if they built it, people would come. And people did. It's just that the labels didn't. And, without licenses, all you've got is lawsuits.
With the suit of Hummer Winblad, no Silicon Valley investor will touch music. Therefore, the labels believe they have won. They've come up with a better system than the P2P of the techies. Sale by TRACK!
Sale by track is death.
If the singles business was so good, why did the labels kill it? If you could make so much money selling individual tracks, why did the labels focus on albums?
When the 45 ruled, the business was a fraction of the size it is now. You just couldn't make that much money. It's only when the Beatles arrived, and the album became desirable, and then FM radio SOLD the album, that the business blew up. THAT'S when all the conglomerates got in.
So, I ask you, what's different now that you're distributing said singles on the Web? It reminds me of the dot com era. When everybody thought if you distributed something via the Internet, you'd make a lot of money. Funny how the economics didn't translate. And all those companies went bust.
The Apple iTunes Music Store is a colossal failure as a replacement of the physical CD business. But, after reluctantly agreeing to its establishment, now the labels are believing THEIR OWN hype and seeing it as their savior. When nothing could be further from the truth.
Today the L.A. "Times" announced Amoeba is forming an online label. Watch them lose their shirt. Just like Hummer Winblad and the NEW, money-hemorrhaging Napster. Rule one of business, you've got to deliver what the people want. And the people don't want copy protected single tracks in any vast quantity. The people wanted what the original Napster delivered. All you can eat. But, the labels were scared of that. And have substituted this fallacious new system.
Variable pricing at the iTunes Music Store is like variable pricing at Disneyland. They USED to have that. Then the park realized they could make A LOT more money by giving their customers freedom. To not plan their day, not deciding how to allocate their E tickets, but just riding what was DESIRABLE!
How come theme parks figured this out DECADES ago and the record labels still haven't?
At best, record labels are good at spotting talent. And marketing that talent. And distributing it via brick and mortar. They know NOTHING about Internet distribution. Why can't they leave it in the hands of the techies? Why do they insist on driving themselves out of business?
You've got to sell people the bundle. The EQUIVALENT of the album.
It's just like cable TV. Get everybody in for one price. Who gives a shit if someone gets a deal by watching HBO 24/7. There are always fringe idiots that take advantage of the system. But the average person has a life, and flat fee pricing works out.
As for people logging on and taking everything they need and ending their subscription... Disneyland and HBO learned it's incumbent upon them to always construct new attractions, so people come back, so they DON'T disconnect. They build religion. They try to be in BED with the customer for life, not just have a one night stand. If labels keep coming out with great new stuff, people will STAY CONNECTED!
It's entirely laughable watching the industry drink its own kool-aid. If DRM was such a good idea, why do ASCAP and BMI allow restaurants to play whatever they want? Shouldn't they have to pay for each track? And not bring a CD from home?
To start a label selling 99 cent tracks is to burn your money. There are some decent acts on that new Warner e-label Cordless, but the online store is doomed to failure. Because the price is too much of an impediment to acquisition. Charge people a couple of bucks a month and let them take whatever they want. THEN you'll see these acts blow up. As fans e-mail and trade the tracks, spreading the word.
Think about it. The best way to sell music is via word of mouth. And this is what the labels are trying to kill. The public is doing their marketing work FOR THEM, FOR FREE! Yet the labels are too stupid to see this. Just place a toll on this behavior. A low one. Hell, do they charge you a thousand bucks a month to subscribe to cable? That's what it's worth, with all that programming. But, spread over TENS OF MILLIONS OF CUSTOMERS, it's only a HUNDRED bucks per month, and the purveyors are making A TON OF MONEY!
The major labels want network TV and network TV only. They want to leave all the money of cable on the table. Fearful of the future.
The old pricing model is history. Just ask any kid with a hard drive what a track is worth. 99 cents? Are you kidding me? You're telling me that hard drive is worth TWO THOUSAND DOLLARS? Because it's very common for a kid to have two thousand tracks on it. Which he can give in minutes to a friend. Music IS priceless. But it's got to be sold like SCHOOL! Everybody must pay so everybody can partake. Everybody is educated, everybody listens to music. Why do the labels want to KILL the spread of their wares? Learning is priceless, but with taxes spread over the entire society, it's cheap. Everybody with an ISP should pay for music. And then the pot should be divvied up a la ASCAP and BMI.
I just can't listen to one more label exec tell me how the digital sale of singles is going to save their business. It just doesn't MAKE SENSE!
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