2007 was quite the conference year for me. Music industry folks rubbing shoulders and what not. But as I mentioned RE: the Bandwidth conference, for all of the discussion of “new business models” there was very little talk of one of the most significant new models that applies to the new music industry – Free.
If you need a recap, “Free” or “The Economics of Abundance” simply states that when copies are super abundant, they become worthless. When copies are super abundant, stuff which can’t be copied becomes scarce and valuable.
Founder of Wired and The Whole Earth Catalog, Kevin Kelly, has recent post called “Better than Free” which is a very eloquent example of how to monetize the scarce elements in any industry where “Free” is a viable part of a business model. It’s a wonderful jumping off point and I’d encourage any new artist to seriously consider the guidelines here if you want to become an independent music business in your own right.
Not only that, but it’s a concept that’s been around for a while. Techdirt’s Mike Masnick’s “Free” based business model, suggested back in 2003, was recently adopted by former major label artist Kristen Hirsch. And author of “The Long Tail” and Wired editor Chris Anderson is also a proponent – Chris is releasing a book on the subject, called “Free”, in 2009. It’s been talking to and reading these gentlemen’s ideas that have set me on my current course.
It perfectly natural to be resistant to “Free”, of course. The music industry has been built on monetizing the artifact (CD, wax cylinder, whatever) of recorded music for over 100 years. And like most technological transitions there are no absolutes – the sale of recorded music is still a multi-billion dollar industry and one that Penny Distribution, via our digital distribution agreements with artists and labels, still sees as an important part of our model now and in the future.
But I don’t think it’s a stretch to say that it’s impossible to create a viable music business based on the sale of recorded music alone.
The question is: Why is “Free” not a larger part of these new business models?
Here’s a little experiment: try telling a label, or artist, that their catalog of recorded music has been devalued to the point where it’s almost worthless. You won’t even have time to explain the concept of monetizing the scarce features of their catalog before you get a look of incredulity and an end to the conversation.
And the reason? Because Label 1.0 (and indeed Recorded Music 1.0) is based entirely on the worth of sound recordings – most record labels require that they own outright the sound recordings that they pay for artists to make – and the “right” to decide how much to sell them for and to whom is the cornerstone of their business model.
As I mentioned before, working for a Label 1.0 made me realize how closely we cling to our ideas of how a certain business “works”. To do business in any other way goes against the patterns label owners and artists used to make their fortunes for, sometimes, over half a decade. Like any habit, it’s hard to break.
There are often emotional responses to ideas such as this: “How will music survive?” label heads say, “How will artists make money?”, “Won’t someone PLEASE think of the children?!?” It’s arguments such as these that organizations like the RIAA have made in the past in defense of it’s campaign of lawsuits. But we knew then, as we know now, that P2P is an inevitability.
And “Free” is an inevitability by extension. The question is not “How do we stop it?” but “How do we take advantage of it?”
There are no definitive answers here: “Free” isn’t the ONLY answer, but should be at least part of a viable music business solution.
Subscription models were seen as a “savior” early in the decade, but disappointing performance from Napster and other major players (Coke, AOL, MTV) highlighted the many flaws, not least the fact that if you stopped paying the service, you lost all the music you’d downloaded.
The latest buzz is about Ad-Supported music (Imeem, We7, qTrax), but evidence is arising that basing your business on whether or not people click on ads in a social network environment may be a bad idea.
It’s high time “Free” (with intelligent implementation along the lines of Kelly’s article) got some serious consideration – and if major labels want to ignore another elephant in the room, Penny Distribution and others like us will be happy to pick up the slack.
Both of Penny Distribution’s debut releases, Departures by Tom McShane and Mistake: Do Over by The Terribles (Artwork, Lyrics, 320kbps MP3s) are available for free. Tell your friends, take ‘em with you and spread the word if you like them. These and future releases will use “Free” to it’s fullest advantage.