Friday, February 25, 2011

Are music consumers stepping on us?

From today's Digital Music News:

Are Music Consumers Stepping On Us?

That was the question posed on Thursday by NPD analyst Russ Crupnick at Digital Music Forum East in Manhattan.

"Consumers are flipping us the bird," Crupnick declared while trotting through slide-after-slide of distressing data. Exhibit A? Crupnick listed a litany of concessions and pro-consumer offers from this industry over the past ten years - all of which have produced few substantive revenue returns.  These include: 
  • ubiquity
  • disaggregation
  • fragmentation
  • liberal licensing
  • disabled DRM
  • disinflation
"These are great things we've done for consumers, but what have they done for us?" Crupnick posed.  Well, the answer is very little, and Crupnick's stats proved it.  Over the past 5 years alone, Crupnick noted that the population of buying music fans declined by 20 million, and per-capita spending has dropped by 40 percent.  Meanwhile, just 5 percent of US consumers are using subscription services, including free trials.  "We're being too liberal," the analyst continued.  "We need to demand more from consumers."

But there's a funny twist: among the buyers that remain, a majority are only buying CDs.  In fact, Crupnick noted that 55% of paying music fans are solely purchasing CDs, down from 80% percent in 2006.  Just last week at New Music Seminar in Los Angeles, Tommy Silverman reported that two-thirds of all album purchases are physical.

And what about the superfan, won't that save us?  Well, Crupnick popped that balloon quickly by noting that superfans are also buying less.  But, their percentage of overall purchases is increasing as more casual fans leave the building.  "Fewer and fewer people are buying music, so the percentage of buying by uberfans increases," Crupnick noted.
My comment:

"I can't comprehend the logic of "demanding more from consumers." Show me a good product manager who agrees with that reasoning.

It is hard to compete with free but that's the reality today for any media business. Consumers have unprecedented choice and an enormous sense of entitlement. If you want to succeed in the marketplace you have to get real about that.

Also, the recording industry was a ridiculous bubble economy for over 20 years. Now it is leveling out and that is painful. The industry will be smaller in the future, more personalized, and consumer driven. 

Things will continue to shake out for awhile.

Join the discussion here...

Wednesday, February 16, 2011

Is Apple Killing the Golden Subscription Goose?

I have been using Apple's products since the 512K Macintosh. I have immense respect for the company's user-focused product management and business models. However, once in awhile they go too far and do something stupid. Apple's new subscription licensing policy could seriously impact subscription music services,  an important developing market. The same is true with the continued market leadership of the iPad. If media companies part ways with Apple on this, everyone loses. Maybe my next phone will be an Android after all...

Apple's New Subscription Model Is Evil - Gizmodo

Rhapsody CEO Blasts Apple - hypebot

New Apple App Rules Could Kill Subscription Music - hypebot

Wednesday, February 9, 2011

California Copyright Conference: The Future of the Latin Music Market

On February 8, 2011 The California Copyright Conference hosted a panel discussing the current state and future possibilities of the Latin music market, organized and co-moderated by Eric Palmquest - Director, Disney Music Publishing and Marissa Lopez, Associate Director, Latin Writer/Publisher Relations at BMI.

The panel featured:

Richard Bull - President of The Sixth House, a management company with touring, label, licensing, publishing, and corporate marketing arms.
Tomas Cookman - CEO, Nacional Records & Cookman International, and founder of the Latin Alternative Music Conference.
Yvonne Drazan - Creative Director, peermusic
Nir Seroussi - VP, Marketing and A&R, Sony Music Latin
Kike Santander - Multi Grammy Award winning songwriter and producer, Chairman of the Latin Academy of Recording Arts and Sciences (LARAS) and CEO of Santander Records.

Marissa Lopez (whose career began as a Latin radio DJ) kicked off the festivities with a mix of regional and Latin music styles. Although the topic of the panel was the decline in Latin music sales, particularly in digital, the panelist were uniformly upbeat and excited about the wide open future for Latin music.

Richard Bull and Tomas Cookman have had strong successes with synch licensing and developing strategic partnerships with other companies both inside and outside of the music industry. The Sixth House’s partnership with peermusic has been particularly rewarding for both parties. A common theme was the need to exchange services and develop diverse partnerships. Each situation is unique in today’s marketplace. Cookman: “There is no right or wrong answer. If it works for you, it works for you.”

Panelists agreed on the need to control master recordings to simplify the process of clearing masters and publishing rights in one shot. Tomas Cookman described his strong relationships with music supervisors as being build on his ability to clear tracks for synch within a few hours.

Technology has created easy access to a global marketplace which raises the bar for music quality...the best music wins. Kike Santander passionately described how his commitment to music drove the decision to start a label at a time when others a running in the other direction.

Except for younger fans who follow edgier, alternative artists, the general Latin market has not been as quick to accept digital downloads. However, this market skews much higher on the use of mobile devices according to Richard Bull.

When asked how to encourage fans to engage in the digital download market, Nir Seroussi stated that the concept of music ownership is going away. Fans want music anytime, anywhere, and labels must think of themselves as service businesses. The future lies in building strong artist brands and alliances with a broad range of business partners.

Global Music Registry Meets Consumer Consumption Model

A thought provoking post from the Rethink Music blog. The barriers to creating a global music licensing registry are substantial in and of themselves. As consumer behavior shifts away from ownership to an "anytime, anywhere" access model, accurate, streamlined licensing will be key to a great music experience for the public as well as solid monetization for creators.

What do you think?
Rethink Music