Friday, October 27, 2006

Indie Bands, Music Piracy and the Internet

Two recent articles in the Wall Street Journal paint an interesting picture of the evolving digital music industry.

The second one ran in yesterday's edition, and dealt with, ironically, how easy it now is for independent bands to become successful with little or no money, no traditional record label and, thus, no old media agent. Some indie bands do retain what one might call eagents, such as NetWerk Records, a combination indie label and artist management firm. This seems to support my contention that agents, as we have known them, will also be unnecessary for the coming era of online digital video content production, found
here.

What's interesting is that established bands are also exploiting digital downloads, in order to capture immediate interest by fans. Rather than expect, or let, prospective buyers go to iTunes to buy and download music, they are embedding a MySpace MP3 player on their MySpace sites.


This article followed one a week earlier, discussing how artists are now combatting piracy with their own 'viral' digital countermeasures. What some artists and (gasp) record executives are beginning to realize is that "piracy" is actually the behavior of enthusiastic fans who represent, in the longer term, a very lucrative potential market. Essentially, these record labels and artists are exploiting peer-to-peer sites by placing files with music and/or video content on them, often including special offers that result in feedback information from consumers who downloaded the files.

Finally, an entertainment medium, this time music, as opposed to film or TV, is realizing that forgoing some near-term revenues may result in stoking long-term demand by consumers, especially for older material that it no longer pays to promote. This is one of the odd by-products of allowing YouTube to feature copyrighted performances of older bands or TV programs. By reminding older consumers of their existence, and, in some cases, introducing them to younger consumers, the copyright owners actually receive free marketing exposure for something they would never pay to market in the first place.

It's rather exciting to watch the upending of older marketing models, as essentially free, consumer-driven promotional models appear, primarily on free distribution networks. Suddenly, the marginal cost of promoting quite a bit of video and audio content is nearly free.

My guess is that this will accelerate the decline of broadcast and other 'old' media, as yet another benefit of new media becomes clear and economically useful.

This may, quite possibly, make Google's recent purchase of YouTube, and NewsCorp's acquisition of MySpace, look prescient and cheap in the long run.

1 comment:

Anonymous said...

It's odd that it's taken so long for the industry to recognize (and it is JUST beginning to realize it) that CDs are bet viewed as a loss leader to promote the concert tour and merchandise sales where the real money resides. This is the reverse of the old model where the concert tour promoted the album; now, the goal is to get one or two songs out there to heighten anticipation for the tour and sell more T-shirts; if some people pay 99 cents for the song on iTunes or Napster along the way, that's gravy.

Side note: I read this week that youtube is in the process of de-listing 30,000 videos that violate Japanese copyright law. Not sure what it means for the music industry, but it could be the beginning of the end of youtube as free anime shack. It may simply be that Google doesn't see any way to make money by striking a deal to keep these videos listed, as opposed to mainstream movie and music content where the profit potential is (presumably) clearer.