This week brought two thunderbolts to the music industry and I wonder whether this will be remembered as a seminal moment in the evolution of the industry.
The first is an interation on an existing trend, i.e. online distribution direct by the artist. What's new is pricing. I just paid £5 for the newd Radiohead album on inrainbows. Why £5 ? Because I am a mild fan of more recent Radiohead and felt this was my correct marginal price for the tracks. Get to checkout and you are being asked what you feel like paying. It's an Amie Street variant (where popularity drives pricing). I guess the idea is that you will test the market's elasticity and people propensity to pay the right price. Whether that means the marginal price paid by users groomed on piracy ends up being zero, we will find out. If the album is as good as OK Computer, I will go back and pay another £15, but then I am old skool.
<--- UGC pricing for you
The second is much more meaningful. Industry fact: the value of recorded content is trending towards zero, the value of live is trending ever higher. A Madonna ticket gets a face value of £100 these days. So guess what: the new boys in town are people like LiveNation, managing music sales as a by-product of live. Madonna, one of the foremost business innovators in music, just announced a massive deal with Live Nation, effectively firing her label Warner Brothers.
- “The paradigm in the music business has shifted and as an artist
and a business woman, I have to move with that shift,” commented
Madonna. “For the first time in my career, the way that my music can
reach my fans is unlimited. I’ve never wanted to think in a limited way
and with this new partnership, the possibilities are endless. Who knows
how my albums will be distributed in the future? That’s what’s exciting
about this deal — everything is possible. Live Nation has offered me a
true partnership and after 25 years in the business, I feel that I
deserve that.”
Link to this the fact that the TicketMaster deal will not be renewed by LiveNation, and you can start to see the trend here about who is the new boss in town in the world of music.
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Very interesting post. I think Radiohead, Madonna, Nine Inch Nails, etc. are really leading the trend here. While music labels are still fighting piracy, etc, the artists will embrace this growing digital trend, not fight it, in a way that will leave them out on top.
Posted by: David Fishman | October 22, 2007 at 08:30 PM
If this launch is the future of music, then we're all doomed. (I've had nothing but grief trying to buy and download a copy of the music from their site...)
Prince is actually the authority on disruptive distribution.
Posted by: Jason Ball | October 19, 2007 at 05:12 AM
The Radiohead honesty box is something that has interested me. Yesterday I found out that 33% of people who have used it have paid zero, and the rest have paid an average of £6 per download. One guy paid £40.
But with pirating pusic so rife and people's expectations of 'soft' product to be free, to me it's no wonder so many people paid so little. It's not so much about the customers, more about the product.
More interesting for me would be if Glasses Direct had started out life in an honesty box capacity. With people unaware of the actual cost of glasses, with the high perceived value of the product, I wonder what the ASP would be? Now the cat's out the bag it's probably too late...
Posted by: Jamie Murray Wells | October 18, 2007 at 12:50 PM
Why a non-rival and abundant good like digital music should have a variable price ? Most of the music is meant to become free.
Check RW/W entry here:
http://www.readwriteweb.com/archives/music_industry_5_alternative_business_models.php
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Laurent
Posted by: lkratz | October 17, 2007 at 10:07 AM