Archive for the 'pricing' Category

Nine Inch Nails Case Study

February 5, 2009

Last year the name Nine Inch Nails or Trent Reznor was mentioned a lot, when someone was talking about the future of music marketing. Trent has developed a complete new way for music marketing using the whole potential of web 2.0.
He demonstrated on how many ways you can connect with fans and how you still can give your fans a reason to buy in the digital age. There is more than MySpace, there is more than just giving your songs away for free in hope the audience comes to your live shows.
Mike Masnick was summarizing the NIN Campaign in his presentation given to MidemNet this year.

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Go legal and die!

December 2, 2008

legal

The year 2008 is nearly over and we are still having a situation on the digital music market that cause entrepreneurs like Michael Robertson (CEO of MP3tunes) to write articles with headlines like: Legal digital music is commercial suicide – Fans suffer as lawyers get rich (Article for The Register).

Still record labels or copyright holders (collecting societies) are torpedoing successful music services with big financial requests from labels for “past infringement”, plus a hefty fee for future usage.
Michael Robertson´s comment: “Any company agreeing to these demands is signing their own financial death sentence.”

But Robertson is not only accusing the record industry:
The root cause is not the labels – chances are if you were running a label you would make the same demands, since the law permits it. The lack of clarity in the law is the real culprit – and it’s the huge potential penalties that create an incentive for the big record labels’ law firms to file lawsuits. Without clear laws and rulings from the court about what is permissible, every action touching a copyrighted work is a possible infringement, with a large financial windfall if the copyright owner can persuade a Judge to agree.

The problem is that changing the copyright law will need many more years – (Creative Commons and Lawrence Lessig are unfortunately no superheros) – … so the market has to be faster… has to find a solution… has to create an environment, where innovative business models can be develop without the fear of being sued the rest of your life. Why is there no chance to negotiate a true partnership between net companies and the content/copyright industry, where going legal is a real option for a start up, where both sides get the ability to create a profitable business?

Is Ubiquity After Scarcity The New Way To Make Money?

October 10, 2008

Paul Sweeting had a good note on this yesterday at DMW:

“Is scarcity still a viable foundation for a business model for content owners? For most of their histories, movie and TV studios relied on a strategy of limited distribution to extract maximum value from their works. Movies were released through a carefully ordered sequence of exclusive windows defined by distribution channel (theaters, DVD, pay-TV, broadcast); network TV series didn’t enter the broader syndication market for three or four years after their debut, assuming the series lasted that long. In each case, the relative scarcity of the content provided the content owner with maximum pricing power. Since the advent of digital platforms, however, ubiquity has become the name of the game, challenging content owners’ pricing power and business models.”

And I fully agree. In a time where we have no control over distribution anymore, where we get networked, where every user is potentially their “own distribution channel”… in a time where we are talking about the Attention Economy… scarcity makes no sense anymore for digital media products.
We must realize: Attention is the scarcity now, not (even good) content anymore.
And immediately publishing your content for free on your own website, like NBC is doing on Hulu, would be just the first step.

Content syndication could be a very important thing in the future. Get your content in the “pole position”, make cooperations, go there where the traffic is and make your content available… and as a content owner, maybe you market your potential ad inventory yourself and the platform owner gets the content (with the attached ads) for free.

A minute attention is a minute attention is a minute attention is a minute attenion… you will be able to capitalize this attention, wherever you get it…
It`s one of this famous good old Google priniciples: Focus on products that draw users and money will follow…

People won`t automatically go to the place, where they would get the content legally, even if it`s there for free… people go where they can get it first, where they can see it first. Most users don`t care about whether it`s legal or not. The Radiohead “In Rainbows” example shows exactly this. There were far more “illegal” torrent downloads than downloads on the Radiohead website. Even though every kid knew, cause of the media hype, that there is a free legal alternative…
So… try to go where the traffic is.

iTunes Dominates the Market

October 9, 2008

A survey of 1,148 Internet users in the summer of 2008  revealed 58% of people believe iTunes is the top fee-based digital music service or download store according to a report from market research firm Ipsos.


By far the best known brand is also iTunes with an unaided awareness of 39%. (Second is Napster with just 13%).
Hopefully this dominance won`t be a problem for the music industry to establish or improve their business or pricing models. These figures show that most people still think there is just one brand out there. And if you know just one brand, you won`t know the business or pricing models of other brands…  right?
Best example: Last.fm. Maybe one of the most innovative music services out there at the moment, but it faces incredibly low unaided (0%) and aided (6%) awareness.
And the time it takes to get a high awareness, even when you are a “mainstream brand” is a long journey. This is shown by the Amazon example, who get just 5% unaided awareness in their first year in the music download business.
So in the near future iTunes will show us the way…if we like it or not…

The Free World

October 7, 2008


Universal McCann publishes every month a small “brief for executives” titled “Trend Marker”. In July they had the theme “Welcome to the “Free” World”. It`s 12 pages long and summarizes some interesting facts about this new “culture of free access”. It shows why this “Free Culture” exists, what the business models are and has some case studies of brands, who already navigate the “free world”.

The paper is just a short overview, and it claims not to cover the theme completely … I`m looking forward to Chris Anderson`s new book for that… but it summarizes some points of this area quite good.

The Impact Of Unlimited Music Subscription Services

October 4, 2008

Nokia and Sony Ericsson are on the verge of releasing their mobile subscription services, so the chance for unlimited subscription music services to go mainstream is on the horizon again… and as always the question arises: Which impact will “mass market” subscription services have on the other distribution channels?
Some people in the industry fear that a “mass market realistic” subscription pricing offer could cannibalize their CD sales and their digital download sales much stronger than their outcome might be through the new channel (Itunes is the best example).

But I think they are missing one important thing. Subscription services are a good and maybe the only chance to get “active file shares” back on the pay bill. The opportunity to get this very active and important music target group back, should be a bigger goal than the fear of cannibalization. Besides I don`t think the cannibalization will be to high, cause cd buyers won`t change directly to a subscription service and “a la carte” customers will maybe leave on average more money as a subscriber… but that is just my first “gut feeling”. Let`s see what some first numbers say..
There were two new survey released on this theme. One I found via Coolfer it`s a study by TNS Technology released a month ago where TNS interviewed more than 1,000 people aged 16 to 64 about unlimited mobile music services. The survey found out that when presented with an unlimited service, 45% of users would buy fewer CDs and 47% would buy fewer digital downloads from online stores. But 38% also said they would reduce their use of illegal file-sharing sites.

The other survey was released by Jupiter Research titled “Subsidized Mobile Music Subscriptions” and tries to find answers on key questions amongst others like “What impact will subsidized services have on the relatively broader European digital music market?”
For me the “keyfinding” of this survey to the question above is: “Just five percent of Europeans said they would pay for subsidized mobile music services, but more than one-half of them are file sharers.”

So, of course the question cannibalization vs. “new customers from the piracy segment” is not answered yet… the Jupiter survey makes hope that there is a chance to mobilize the piracy segment …maybe there are  more figures coming soon…

Gerd Leonhard At Picnic

October 2, 2008

Gerd is doing a great job out there for years now and his blog is really worth reading.
Here a video of his speech at the Picnic Conference in Amsterdam last week.

He summarizes quite well what`s going on in the new attention economy and how the music industry can survive in it building an new Ecosystem.
Watch it. It will be 50 minutes well spent. Really great stuff.

Vodpod videos no longer available.

VIDEO

Will Music Copyright Holders Accept a Revenue Share Model?

October 1, 2008

Hopefully, they will.

Here is a good post at TechCrunch on this theme. Tomorrow there will be an announcement on the new rates of music copyright fees for digital music downloads for the next five years.

As always the music publisher are not realistic when it comes to pricing and even want to raise the fee from 9 to 15 cents per track. Apple is not amused and has vaguely threatened that it might have to shut down iTunes if the new rates go into effect.

Now Apple and the record labels are arguing that the rates should be changed from a flat fee per song to a percentage of revenues.
Hopefully Apple will be successful because this is the only chance for realistic pricing anytime soon.  It will make it possible to be much more flexible with pricing and to expand the business, which in the long term should be a big benefit for  artists.

We will see…

MySpace Music – Wow???

September 27, 2008

The launch of MySpace Music was “the big thing” everywhere last week. Lots of posts and comments… read some thoughts by Mark Mulligan and  his colleague David Card, or a good review by Coolfer.  Some basic info by Hypebot here and here.

MySpace Music is “US only” at the moment, I tested the service just for a few minutes with the help of a “fake” proxy … so no comments from yet.

But obviously the service is not a breakthrough… I didn`t find any “wows” in the reviews. Maybe MySpace can improve the service over time… if they would be able to renegotiate the label deal. We`ll see…

UPDATE: Two more reviews by GigOm and Mashable. The tone gets more severe… there is obviously some disappointment…

Music Access as Product Bundle

September 24, 2008

Sony Ericsson announced today more details to their new unlimited mobile music service. PlayNow Plus will launch in Sweden by the end of the year and will be available globally next year. Reuters reports, the service will cost 99 Swedish crowns (US $15.24) a month. Subscribers can download an unlimited number of tracks to the handset or to a PC. The handset will sync with the PC using broadband and 3G/HSDPA connectivity.

So here we go. After Nokia, Sony Ericsson is now the second big player in the game. We are just waiting on the iPod subscription bundle and then the transition is officially started. We are on the way to the “music age of access”.

Subscription services didn`t get a huge success on their own yet (like Rhapsody and Napster). But maybe they can find success with a device bundle. Of course there is the second big business model “Free”  with ad supported versions like Last.Fm or MySpace Music and there will always be the illegal “darknet” p2p version of music download, but getting your adored “high end” device subsidized is a big lure for many people to make a subscription contract. I´m sure there will be some devices exclusive with the subscription bundle comparable to the iPhone & mobile provider deals at the moment. If you`ve signed a contract and the music service is great, you wouldn`t want to loose it, because it`s “so convenient”. And most important, the service will “feel like it`s free” after a while.  At the moment, the price per month is still a little bit high, but when the price falls to 5 or 7 Dollars per month, many people really won´t care about this addition to their monthly mobile/internet bill.
And at this point there always comes the obligatory question: Do you know how much money you spend for water usage at home every month? Did you ever care about water costs standing under the shower?