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Posted by Jason Horton on July 17, 1999 at 21:35:59:
In Reply to: Why don't we give it away? posted by Alex Barnes on July 16, 1999 at 16:58:22:
: While the "free song" business model might be viable, I have some concerns:
: 1. It favors large, diversified marketing organizations (such as the big record labels) even more than the present way of doing business. Since the revenues will come from spinoffs, merchandizing links, promotions, etc, this will favor whoever can generate the greatest volume of publicity, which means media buys, which are expensive.
: 2. In the software business, giveaways work under two conditions: (a) Dominant market share is critical to survival; and (b) The vendor offers one piece of the puzzle for free, and sells other pieces at a markup. For example, Netscape was giving away its clients to establish market dominance, and to promote their server and back-office solutions. It's unclear, in a musical context, what those "other pieces" are besides music. Again, unless your argument is that, for musicians to make a living as musicians, they have to earn money by doing everything BUT being a musician.
: Hmmm, a cynic would say that's the way things are now too.
: Conclusion: The revolution, on closer examination, is more of the same with different technology, and the food chain looks a lot like it did before.
Hello Alex,
You have raised some good points there, however I feel the future for
smaller artists and labels is stronger than ever under my proposed
model.
You are correct that in this model the value is derrived from activities
surrounding the music rather than directly from the music itself I've suggested
that this is the same as it's always been in the music industry.
The big difference is that the advantages major labels have: more spending power
to attract tallented staff, more advertising etc. are somewhat discounted when
you look at the disadvantages they face: legacy arrangements for offline distribution
which impeads their ability to take advantage of online distribution.
In the speech I gave at Cybeat 99 which you've read here,
I only gave away some very simple parts of how this new model works, the complete
model actually shows that new entrants have a huge advantage over existing players
and it also encourages fans to invest in new artists earlier and more often than
the existing models do. Unfortunately the rest of the model is not available to the
public yet so I can't such much more than this --- watch this space and hopefully we'll
have some groundbreaking announcements in a few months.
As far as the software example goes I would dispute that dominant market share is the
key - there are many small non-dominating software authors with products here on Shareware
Music Machine who are earning a lot more revenue and recognition than they ever could have
under the traditional retail/distribution models.
You mention the fact that software authors give some pieces of the puzzel away for free
then sell the rest at mark up - this is correct and it is also exactly what I'm proposing
with the use of serialized songs - the music is the free piece of the puzzel, but it's
true value is in the second piece - the serial number encrypted in a watermark embeded
in the song.
I promise you that when we are in a position to publicize the complete model, that the
revolution will result in a very very different look to the current industry structure
- some of the old players will remain, many won't, and there will be many new parts in
the value chain.
Best Regards,
Jason Horton.