Digital Media Digest

EMI Music CEO Elio Leoni-Sceti has been recently quoted saying:

Looking at the music industry, which has become something of a bellwether for other media businesses, we have a situation where seventy percent of music consumption is digital and yet only about twenty percent of music company revenues are derived from digital.  Music is in demand and the demand is growing all the time, but we’ve clearly lost touch with our consumers.

Not to ‘Monday Morning Quarterback’ too much, but I would argue that in order to lose touch with your consumers, you actually have to be in touch to begin with and that has never been the case.  Consumers are ’song’ driven and have been since the beginning of radio, but it was always the format that restricted consumption.  From vinyl, to 8-track, to cassette, to CD there were always natural barriers in place to restrict unauthorized distribution.  While those restrictions were in place, artists were bloating their records with filler and labels were increasing their profits, compounding consumer frustration.  The Music Industry can claim ‘bellwether’ status all they want, but to miss the potential of the Internet was just ignorant, filing copyright infringement suits against your consumers was, and is, counterproductive, developing DRM technology was wasteful and futile, and to think consumers wouldn’t gravitate back to single consumption if given the opportunity is just evidence that a few key people had their head stuck in the sand.  It was a nice effort, but it was all ‘reactive’.  Nothing was proactive.  Nobody thought to look ahead.  Nobody thought to plan ahead, and for that, let’s take a moment and pause for the 7 Ps:

Prior Proper Planning Prevents Piss Poor Performance

So…In order to leave you with something other than complaints about the obvious, here are a few things I’ve come up with that I would have done differently:

• Embrace and build P2P in an effort to monetize, cross-market, gather consumer data, and track consumer behavior
• Demand variable track pricing from day 1 in order to generate revenue with regard to demand
• Raise the ‘Standard’ track price
• Build Label-Owned and Label-Merchandised online music destination equipped to compete
• Empower a 3rd party vendor where competing labels have an equity stake
• Bring Booking, Publishing, and Management, Distribution, and Merch In-House where possible
• Develop a modular and streamlined way of delivering digital product
• Monetize every Artist website and begin a relationship with the consumer at a transactional level
• Abandon all DRM efforts
• Invest heavily in a more positive, artist-driven, public re-education campaign around Intellectual Property and Fair Use
• Aggressively restructure and reorganize
• Simplify physical product pricing, promotion, and distribution

You may agree or disagree with many of these, but I encourage you to leave your own ideas in the comments section, especially if you believe I’ve left a gaping hole somewhere.  Not to necessarily ‘blamestorm’, but to better understand where we came from and what we have come through in order to better prepare ourselves for the future.  Also, if you want to a consistently good read from a guy who really appreciates the history of the Music Business and music in general, subscribe to the Clore Chronicles.

Moving on though, I think the real challenge is where we go from here.  Leoni-Sceti’s comments above regarding digital consumption versus revenue is a huge disconnect and a code that isn’t easily cracked.  It makes it even more difficult to dig out given the macroeconomic constraints present in today’s US economy.  From my perspective, I still don’t think we are proactive enough.  I still don’t think we are aggressive enough.  So many people are just clinging to their jobs and trying to manage their daily duties, previously handled by multiple people.  I’m not sure who’s looking ahead anymore.  Godin and Anderson are two of my favorite idea guys, but they aren’t the decision makers here.  To make matters worse, I don’t think the future of the business is going to be as glaringly obvious as before.  In the last year, we’ve watched Myspace rise and fall, Facebook gravitate towards women over 55, and Twitter rise to the top overnight in a manner that screams ‘fad’.  We don’t have time for a slow build formula, technology, model, or destination, but that’s what instills trust, relationships, and ultimately transactions.

To sum it up:

The Music Industry can’t afford people spending time looking ahead, but then again…they can’t afford not too