‘Music as Free’: Solutions

I’ve been encouraged to see a significant upturn in the number of pro-music posters participating in the ‘Music as Free’ debate, it’s brought some long overdue balance to the argument.  There have also been some interesting suggestions about potential next steps. 

 

Here are some strategic and tactical suggestions for tackling the incessant trend towards free:

 

Aggressively engage file sharers with legal free music: free must be fought with free.  The likes of Comes With Music, We7 and Spotify all focus on delivering on demand free music experiences.  These sorts of services need to become the focal point of engaging young file sharers.  But they need to add real value to compete.  Depth and breadth of content is of course important, but discovery and editorial is at the least as important.  And I don’t just mean recommendations etc, but truly immersive content the becomes entertainment in its own right, rather than simply information. Also strong recommendation engines.  Currently there is not enough that combines all of those features for free.  If Spotify had We7’s programming and discovery, or We7 had Spotify’s catalogue, then we’d be getting some where.  And before you worry about it competing with premium, streaming or restricted portability are the key differentiators.  Some posters have argued that streaming does compete with paid downloads.  It probably does to some degree, but the challenge is to compete for illegal down-loaders who don’t actually buy anything at the moment.  It needs to be compelling enough to compete.  Sure some premium revenue will be cannibalized but that is a tactical cost for a broader strategic return.

 

Leverage new partners:  I’ll caveat this with saying I have a healthy degree of skepticism for using brands too heavily.  However used appropriately brands can provide value, and crucially revenue, for artists and labels.  But the net needs to be spread wider, and indeed already is by many artist managers.  The bottom line is that record labels are learning less from recorded music.  Their budgets for investing in artists will shrink.  Advances will get smaller and the number of artists signed with lessen.  So artists need to look to other partners to compensate for the short fall and labels similarly need to look to partners to help them fund.  Artist investments could become a broad project with various vested parties paying into the pot.  Of course partners need choosing widely and there’s no getting away from the fact some partners’ requests may not be 100% comfortable e.g. endorsing a product.  But the harsh reality is that artists and labels need the investment to achieve their goals.

 

Changing artist contracts: I’m not a big fan of 360o contracts.  I think it takes too much valuable income opportunity away from artists.  But I do like Terra Firma’s Guy Hands’ approach to reduce advance payments to artists in return for increasing Net income shares.  This is how many indie deals already work.  I used too be on a 50/50 Net income deal.  It gives the artist a strong vested interest in ensuring their recorded music sells.  Rather the current situation where many don’t see much revenue after recouping, and consequently advocate file sharing.

 

Monetizing modest potential artists: the rise of sites like MySpace and Sellaband bring audiences of scale to artists that in the pre-Internet age could have only ever aspired to playing their local pub.  The Internet doesn’t inherently make them any better but it does mean that they can reach the same small % of people that like them but because it is spread globally it can number in the thousands.  These artists are probably never going to be good enough for even a smaller indie deal.  They certainly don’t work in the current structure of majors.  But if record labels developed divisions which specifically catered to monetizing these artists, small investments could generate cumulatively significant revenue for labels, and previously untapped revenue for artists.  MySpace made the right first steps with their Snocap partnership.  Unfortunately execution let it down.  The concept remains a valid one.  And of those low level artists a smattering will mature into fully fledged artists.  Thus labels could additionally use this raft of sub-label artists as feeder clubs for their core label operations.  If majors participated it would go a long way to also help their perception as being ‘artist friendly’.

 

Seeding by-product content:  All of the content which is created as a by product of the creative process, e.g. out takes, un-used mixes, behind the scenes footage, are valuable to fans.  These are increasingly used to help promote sales of albums etc. but the process should be re-focused so that this content explicitly becomes part of the core product: a constant stream of content to fans as product.  But not just on the artist sites and pages, also delivered into music services and stores.  Keep people more engaged and not tied to sporadic release schedules.

 

There are many more possibilities, and no single tactic will solve the problem in itself.  The broader issues is to give people a reason to value music, and to value it from legitimate sources.

6 thoughts on “‘Music as Free’: Solutions

  1. Nice post, and good to see some proposed solutions, even if it didn’t get as many comments as proposing why music can’t be free!

    I think all are viable enough to warrant experimentation and trial…there’s a great example of monetising a mid-level artist in the Topspin talk that was linked to in one of the comments on the previous posts.

    I love the final summary – one thing to keep in mind is that there’s a huge number of people downloading both legal and illegal free music for various reasons, and portraying them all as stealing for the sake of it, as some comments did, isn’t in any way accurate.

    It’s about providing value that a significant proportion of people will appreciate and be willing to pay for.

  2. Dan – I completely agree that it is dangerous to try to simplify the situation. There is a marked overlap between P2P and legal downloading. Approximately 40 percent of European digital music buyers also use file sharing networks.

  3. Nice Post and good to see that the dialogue has moved beyond the oversimplification of free music as the savior of the business.

    I agree with most points (contracts are well on their way to evolving) and I have great example of “Seeding by-product content”.

    This type of content can become become part of the “product” for some fans, and I’ve been working on creating music experiences with this type of “by-product content” tied to albums in a way that grows the business, and the experience for fans.

    Check out Mission Metallic: http://www.missionmetallica.com (it’s in archive mode now). We worked with the band to roll out over 200 hours of footage over a five month period before the album came out. The offer was a pre-order of Metallica’s new cd Death Magnetic, plus access to the Mission Metallica site, for one price. There was an extra charge to buy the album and the “experience” together, but with everything you got, it was the complete way to experience the new album. Over the course of the release campaign the Mission Metallica also site got everything first (new single, video, even ticket pre-sales). So if you pre-ordered Death Magnetic this way, it was more than just a new album.

    There was also a free tier, so if you wanted to buy the new album somewhere else, or were price sensitive, there was still plenty of content to get the word out about the new album and keep fans engaged.

    Think of it as the bonus dvd on a premium edition of an album, but rolled out on-line before the album comes out. It all started before a release date was set, or there was even a title for the project

    It was a huge success in all aspects, fans band, and the business of the idea itself.

    Many things we would do differently next time, but the band was engaged, and a “fans first” mentality prevailed over the entire endeavor.

  4. The solution is to penalize piracy consistently, with fines strong enough and well-enforced enough to deter the thieves, and with the resulting capital distributed to the intellectual property creators and owners.

  5. Pingback: ‘#Music as #Free’: #Solutions | musicindustryblog 2008 | # ! #Old #Ideas for #New #Businesses… | gonzalosangil

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