Rubin and the Public Good

September 11, 2007

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There was a great Rick Rubin story a few days ago in the New York Times Magazine. Rubin, perhaps one of the most important music producers alive, co-founder of Def Jam and now Co-CEO of Sony’s Columbia Records, made some interesting statements on the recent situation in the music industry.

“Until a new model is agreed upon and rolling, we can be the best at the existing paradigm, but until the paradigm shifts, it’s going to be a declining business. This model is done.”

He also mentioned some interesting thoughts on the pricing of music.

“The subscription model is the only way to save the music business. If music is easily available at a price of five or six dollars a month, then nobody will steal it,” says Rubin.

“In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You’ll say, ‘Today I want to listen to … Simon and Garfunkel,’ and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now.”

He is so right!!! And than he said this:

“Either all the record companies will get together or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done.”

Thanks Rick!

The Register wrote an article on Rubin’s pricing statements and mentioned some older statements to the “subscription theme” from Jim Griffin and Will Page. Both economists who see music as a public good in the future (One person’s consumption doesn’t harm another’s, non-rivalrous and non-excludable). Very interesting thougths.

I have the same point view. Music will be (actually is) for free, but I am sure that you can earn money with a great service performance and brand experience.
I like the last statement of the Register article:

“The trick the industry has, along with networks and other digital service providers, is making that $2 “feel like free”.”

The big question still is: Where is the optimal price point for such a subscription service?

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