Goodbye Music Industry?

About a year ago, Mashable posted the Infographic below.  I'll explain what it is, then you can have a look at it. It outlines how digital music has affected the music industry's profit models. With the advent of streaming services becoming more and more prevalent in our worlds and lives, you can quickly see how many times an artist has to have their song aired on a streaming service to make minimum wage ($1160 a month).

However, it is a bit of a loaded graphic because EVERYONE knows that artists don't make their money from album sales, they make it from touring and getting other artists to sing their songs (royalties is where the money is).

Another point to throw out as well: is the invention of home recording software making it easier and easier for artists to create their own work and sell it? Are independent artists able to market themselves like record companies can market? Can streaming music services like Pandora, Spotify, Rdio, and Mog help do some of marketing for an independent artist?  You can probably answer all of these yourself. You will probably notice that these answers don't really correspond or get along with each other.

I think the bottom line is this: while record companies have been getting rich off of artists' talent for years because they were willing to risk the capital up front, they have been unable to continue on that profit path because the original Napster and other P2P networks came through and made it incredibly easy to steal (I have argued before that this might be because the record companies failed to innovate). Trying to find a way to fix this, companies that didn't care about the profitability of the record companies (like iTunes by Apple) came through and figured out a way to do this digital download stuff legally.

Record companies lost out. Because of that, artists lost out. And because those responsible for the content creation have let others innovate for them, they've lost even more.

Friends, it is time for the music industry to innovate with new models THAT THEY CONTROL of profit gain so that they can be sustainable.  If this doesn't happen soon, the whole industry might close up shop.

See graphic below.-B

The New Music Business

Mashable posted the above graph earlier today outlining what would have happened if peer-to-peer file sharing services such as Napster, Morpheus, LimeWire, Vuze, etc had never existed. Given the above chart, the support seems to be in the music industry's favor.

They claim a loss of $55 billion since the inception of Napster. They are suing LimeWire right now for a loss of income (and thus a decline of the business model) and if guilty, LimeWire is going to owe Sony and Warner in the billions of dollars. Billions, with a "B" as Kevin O'Leary says.

This story reminds me of when Bon Jovi blamed Steve Jobs as having single-handedly killed the music industry. If anything (given the chart above), Steve Jobs helped give the industry a fighting chance.

To me, this brings up several questions regarding the role of technological innovation in the production of content.

Are the file sharing companies responsible for the dying business model? Or is the music industry's refusal to move forward, with thoughts and progression technologically, to blame?

I'm not quite sure of the answer here. There is no doubt in my mind that the file sharing services have hurt the industry, but digital music was becoming more relevant with the iPod and all of a sudden carrying your entire CD collection around with you (having to switch cds in and out) seemed impractical. The music companies were against this entire process because it placed music files into places where they could not only be shared (no one has ever borrowed someone else's cd right?) but edited, morphed, and uploaded to sites like YouTube.

It made the music...interactive.

Napster (and those like it) created a sense in America that you didn't have to pay for content. iTunes has successfully changed that. But, they neglected the idea of an album to do it.

So, in a sense, Steve Jobs did ruin the music business (because the entire industry was based upon selling $15 cds that people bought to hear 2 or three songs).

Or, if you are me, you see it as progress of technology blowing open a lucrative business model that was based off selling things to people that they didn't want, and then jacking up the price.

It would be as if the grocery store told you you could only buy the good bananas if you bought a group of them (of which only two were really enticing) and they charged you $15 for the group. If people could find a way to get the bananas one at a time, they would (even if it meant stealing). Either that or the banana business would go downhill.

And, that, is why bananas are sold by what you choose, by the weight. You only pay for what you like.

If the music industry would wake up to this reality, their business model would change and again be able to afford to stay in business and grow. I love the music industry, so I hope they do.

Sometimes things change. You must change with it or it will redefine you. And then you die.

-B