Digital Nutshell: Issue 4 – MidemNet 2009 Special ~ Digital Music 2.0
Next stop after Las Vegas (as well as a brief stop over in Gibraltar – full analysis of the Online Gaming industry coming soon…) was onto Cannes and the MidemNet digital Music conference – and what could be classed as the Music industrys defining year such as the web was 2 years ago ~ Digital Music 2.0
Each year the music business experts, analysts, strategists and labels descend on Cannes to discuss the future of Digital Music and the year ahead…
2008 was the year of FREE and the embarrassing launch by QTrax – 2008 saw Nokia Comes with Music, QTrax finally launching, Rob Lewis & his Omnifone company going from strength to strength and music labels willing to do any deal possible…
2009 however was a more sombre affair… The global economic meltdown ensured that as CES, the US Snr VPs, CEOs were very much in absence. A few had fallen by the wayside (Pinnacle being a prime example) However it did seem somewhat perplexing that while over the weekend the digital heads were figuring out what models work in the digital world, where the gap will be filled by the falling physical sales – the Monday saw a plethora of companies selling their plastic discs to anyone who would listen – from the Music of Luxembourg & Canada – to British music at its best!! It didn't really fit – and actually looked like two totally different businesses rather than a joined up industry…
So Day 1 was a great insight into CwF + RtB = $$$$ which means Connect with Fans + Reasons to Buy = Make money $$$ – however looking at a longer, lasting and wider business model this didn't really stack up at all. We saw a great example of avant garde guerrilla marketing and delivery model by the phenomenal Trent Reznor and Nine Inch Nails – but after the euphoria of making over $1.5million in month 1 – the remaining 11 months were not discussed. Also the amount of money, time, effort and real creativity needed to run and sustain a campaign such as Trent did – would not work for Girls Aloud or Coldplay. The fan (short for fanatic)base of the mass audience is not interested in matching up the bold letters on a tour t-shirt to then add these to create a single line of words that if you put a .com at the end would take you into a hidden world of mystery and riddles. Finally ending up in the toilets of a venue in deepest darkest Texas where USB sticks were hidden with unreleased music…. great for the fanatic – but not for the average music consumer clicking on iTunes or going into their local HMV for the latest album by Simply Red. As a dedicated music fanatic and passionate about all things music – that really appealed to me and my senses – but only if you have the worldwide audience of someone like Metallica, KISS, NIN or Radiohead…does this really work in the longer term. Perhaps that's why these types of bands don't succumb or are virtually unaffected by the current music crisis – they have a loyal following built around live / touring and albums – they have no real need to worry about radio airplay or appear on X Factor or American Idol – as they already have a core that can deliver sales of 2million physical CD sales in one month (AC/DC as an example) However ridiculed by music labels / tabloid press etc.. they deliver time after time for their labels and fans. Doing a deal with a retailer, a solid and reliable web site where the fans can connect, communicate, share and discuss are all key tools and marketing concepts that really create an ongoing relationship way beyond the here today – gone tomorrow attitude of the labels just now, as well as constant touring around the world is all very hard work but in essence will deliver returns beyond most peoples wildest imagination… This in essence is what Live Nation saw and tried to make their business model based on these principles – however they were mysteriously absent and never gave their insight into how this “fan” based business model is working (or not) for them
Feargal Sharkey and the UK Music held court as well with the ISPs and BPI to show that progress had been made and that with legislation they would have a reply and solution to the illegal file sharers and Pirate Bay! Feargal was fed up, frustrated and simply bored at the the talk of us strategists and futurists who after seeing many industries needing to change and diversify their core business and where this whole music industry mess was headed – had already sorted out an idea, some legislation, ISP agreement, government acceptance and industry approval that we should stop talking and get on with it!!
So here we are again where we have old thinkers protecting their nest egg by trying to plug their analogue business model into a digital industry. IT WILL NOT WORK!! The full detail is yet to be released but by hinting at a Digital Music TAX on the ISPs – who in turn will pass this onto the end user will NOT fix the issue that the industry has.
The missing link and the main target was file sharers and bizarrely iTunes (and other retail outlets) The pay extra for your broadband and have access to music shuns the level of investment and customer management that companies like Apple, Tesco, 7Digital & Amazon have put forward. However I’m not judging anything yet I will wait to see what comes out of UK Music and then do a full analysis then. I just don't trust people that have a monetary agenda over a practical or even technical solution to file sharing. However what all the panel can’t seem to grasp and this is the fundamental issue that they face – that as technology develops, at the rate that it is developing the clunky way that file sharers use Torrents to download – we have already seen the next wave of file sharing and its not as simple as looking for specific IPs, P2P traffic and torrents – and that is the worry that actually it will be the average consumer that will be hit and not the “fanatic” or “file sharer” that will feel any impact or financial burden placed on any Music Stealth Tax. They have to engage with Technologists, Futurists and Strategists as well as the traditional old guard and the retailers / resellers if they really do want to halt the progress and continued march of the illegal file sharers – and create a cohesive future for music. The fact of the matter is however, that the value of music is not what it once was or the perception and that spells trouble for all.
Google arrived at MidemNet as almost the Anti-Christ of the music business – here is the technology company that owns a video sharing site where copyright violations are a daily occurrence. Warners have even walked away from a licence deal with You Tube and Vivendi still has legal actions pending. However David Eun VP Partners & Strategy hit straight back at the industry by saying that the “music industry had not embraced change and has no innovation to speak of” or words to that effect. You Tube is a channel for music, video and so much more – but its just that a channel and with Googles phenomenal technology and brilliant minds – it makes you wonder why UK Music and the industry has not asked for help?
So in the end what was the outcome of what was a frustrating few days in the South of France – apart from the fact that the sun rarely shined, I was on a continuous cycle of work, travel, events, travel that would not give me a day off in 16 days (poor lil me!!)
Yes there was some light in the way of some new ideas that are coming from start ups…
PlayAnywhere – its your music and with this application you can access your music anywhere. More on this in a later Blog – but liked the idea and concept – just needs the business model ironed out a bit more of which we will be doing in February then delivering to some of our clients this year.
MPTrax – a great way between clubs / promoters & artists. Flat fee rate and get in touch with the right people for parties, clubs and events that could not necessarily get to book bands for their venues.
MySpace Music – Feel sorry for Courtney Holt the newly appointed President of MySpace Music – suddenly while listening to Courtney talk – you could almost see the strings of the 4 major labels tugging away to ensure that Courtney delivered the correct message. Then I suddenly had it – I was sure I heard MySpace Music before – same business model, same type of “innovation” and same strategy…. AOL Music!! Remember that and what ultimately happened? AOL as MySpace – is a vehicle for the mass market to get information and music. It failed then and although MySpace Music will have a decent run – it will be of its own demise as well. I wish Courtney well in his new role – he will need it – but if he can have some control over what can happen and how it is developed then it may well have a future (Courtney give us a call and we’ll help.. ;)
So in summary what key points can / should we take away from MidemNet 2009 – and what UK Music and the rest of the old guard should think about while polishing their platinum discs..
- The humble music consumer is in fact more powerful than the music industry
- Quality, Convenience, Service and ease of use are expected and demanded and not desired
- Internet has radically changed the way that millions of consumers communicate, interact and change their own relationship to the traditional business methods
- Blending business models and variant platform models are now the norm and should be embraced not challenged
- Innovation and re-invention are the foundations to a sustainable and viable business in the 21st Century
Its not so hard – and we have have examples of other industries that have had to adapt and ovecome new ways of thinking, innovation and create new sustainable business models…
- Traditional High Street Retail >>> Online / e-Commerce / Services / Channels …
- Traditional Banking >>> Trust / Ownership / Social Lending (Zopa) / Nationalisation …
- Traditional Automotive Industry >>> Energy Sources / Renewable / Sustainable / Environmental …
- Traditional Utility Companies >>> Sources / Sustainable / Costs / Environmental / Reliance vs Dominance…
- Traditional Music Industry >>>> Digital / Value / Live / Channels / Piracy / Social…
The trends continue and the challenges that face all industries are discussed and solutions tested and practised – it seems a shame that the music industry fails to embrace the change and innovate and re-invent themselves in a sustainable way… Maybe 2009 will be different…