Friday, January 11, 2008

transition: falling to free

"The economy as we knew it before was the science of the administration of scarce resources."
--- Max Ugaz, from The Emerging Digital Economy

Rather than bore you with a faux dissertation on a topic that has already been. . . dissertated. . . into oblivion, let's just think about what makes the business of creating digitally recorded music vulnerable to a fall to free:

Music is:
  • Primarily purchased by individuals
  • Primarily implemented by individuals
  • Primarily operated by individuals
  • A product that can be copied and distributed easily, and with complete success, with a minimum of technical savvy
For manufacturers of music:
  • There are too many competitors to justify raising barriers to individual consumption
  • There are too many consumers to police against "unauthorized" consumption
  • There are too many implementation environments to support, resulting in a "you're on your own" usage mentality (no personal support always equates to no personal loyalty)
I posit that individuals, left to their own devices, equipped with the right tools, and free of any supervisory authority, will only pay for what they need to pay for. So it follows that in an era of functionally limitless storage and bandwidth and ineffectual license enforcement, individuals will not pay for music in the same way they did in the past, if at all. QED.

Is it any wonder that the music industry is falling to free, even as it attempts (with varying levels of success) to explore business models that will preserve it?

I use the word preserve because I think before the music industry will grow again it will need to be completely remade; there is no future in free, unless free is part of a larger "solution" that delivers a uniquely compelling product that individuals see as scarce, perishable, and worth paying for out of more than a sense of personal honor.

This is truly a new age - for musicians, there is no need to sell your soul to the company store anymore. For record companies, there is no need to lie to musicians and tell them that they will fail without your support. Neither scenario is believable.

I know this topic has been done to death, I know. But as I see Radiohead sell a little more than a third of the number of albums than they did with their last release, and only one in five of those who downloaded their new album for free paid a cent for the privilege, it's clear that we're at a tipping point.

Be prepared to see more examples of this. Which in and of itself is the surest sign of an industry clutching its concrete life preserver.

1 comment:

Max Ugaz said...

Hi Bob. Thanks for the quote. Here is a link to chapter 4 of the book of Kevin Kelly "New Rules for the New Economy" that explains very well why prices move inexorably toward the free and how to seize the opportunities that this phenomenon tender to us.