quoted 4 lines Sure; but the fact that a small fraction of the global music-buying
> Sure; but the fact that a small fraction of the global music-buying
> population can choose to use P2P to acquire some fraction of the music they
> want doesn't mean that record labels are now obsolete, which was the original
> assertion.
I'd argue that while they are not yet obsolete, their business model will
quickly become so. Broadband will become ubiquitous, like pagers and cell
phones have (even in the very poor places listed earlier). My guess is that P2P
music options will continue to multiply and become easier to use. While there
is something physical to browsing at the record store, but it can be done in a
not-too-dissimilar (maybe even more advantageous) way with P2P and various
on-line review sites like allmusic.com. The advantages to consumers to buy
physical CDs are quickly disappearing.
It's clear that record labels have expenses that are quickly exceeding their
profit. P2P is a major contributor to that trend. Labels have already begun to
die; Strictly Rhythm, one of the largest house labels, is one of the first.
There will be many more.
http://www.discjockey101.com/oct2002.html
* Strictly Rhythm/Groovilicious Records closed its doors on October 2, 2002.
According to their press release, the dance label was affected by the current
state of the economy, as well as lost revenue due to Internet downloading/CD
burning.
While there are kind people on this list who respect the contributions of
artists to our society, the majority of music consumers (like the majority of
all consumers) want to get the product for less.
From Early to Rise, 783- Defeating The Persistent Disintegration of Profits:
DEFEATING THE PERSISTENT DISINTEGRATION OF PROFITS
Something to ponder: All your clients, customers, and employees have a hidden
mission -- and that is to reduce your profits to zero.
It is a cynical thought, but it's true. The moment you let up on the pressure
to produce, sell, save, and improve, your bottom line will begin to shrink. If
you let up on it long enough, all the profits will eventually seep out of your
good business.
Consider this:
* The primary personal goal of each customer is to get the most from you and
pay the least amount to you.
This is a problem not only for the record industry but for American and
European companies in general. The above writer is an extremely successful
businessman writing for other businesses. Look at how many manufacturers are
left in the US; most left long ago, and more and more spring up in China.
Record labels will have to alter their business model to stay in existence.
Selling CDs, with the attendant publicity and distribution system, is clearly
an inefficient model. The choices are adopt a new business model, find a way to
slash expenses, or disappear.
I think there is some potential to subscription services, but their cost will
have to be incredibly low. They will also have to add considerable value to
their subscribers.
Hip-hop artists have already found that endorsements can be a strong source of
revenue. Live performance can (though definitely not always) also provide
revenue to artists. Peripheral merchandise (t-shirts, bags, posters) have long
been an additional source of revenue. Anyone have others to add to the list?
What about new ways that haven't been thought of?
Jeff, are you at liberty to tell us about Ninjatune's plan to weather the
storm? What about you, Philippe? What about the other label people on this list?
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