Guest Columnist ..."Why the Music Industry is Heading Towards Lower Prices and Higher Values" by Gerd Leonhard
Music and Media Futurist

Here's another bottom line: The real problem in the music industry is not file-sharing, piracy or lack of consumer interest in paying for music. Rather, it’s that the industry is WAY too slow in baking a bigger pizza. Rather, many incumbents are still obsessed with snapping up the same slices from under each other’s noses as quickly as possible. The bottom line is that we need to create a larger market, all-together – a market that has 9 out of 10 consumers buying music, not 2 out of 10 as is the case in the U.S.today.

And how would we do that? The answer is simple yet, of course, its realization is not: lower prices and higher value. Look at the airline and travel business, or at banking: the customer is truly becoming the uber-king, and demands constant value-upgrades for less cash. As I said before (even though I did not invent this catch-phrase;): content is king, customer is Godzilla, and service is King-Kong! If the music industry ‘leaders’ would finally get on with this we would see a significant lowering of CD and download prices (i.e. license fees!), and a flood of additional content that the users would get ‘for free’ – SonyBMG has started doing that with the dual CD / DVD idea, lately (but hey – where it goes wrong is that they want a higher price!!!). Imagine this scenario: if a CD costs $9 / Euro 7.50, and downloads cost between 10 cents and $1 (yes, sorry – liquid pricing is a MUST), who would bother with limewire, grokster and Kazaa? Better yet, if we could get 98% of all consumers to buy into a ‘basic music’ subscription on any and all digital channels (TV / cable, satellite, radio, net, mobile, wifi…) for only $3 / month we would all of a sudden have a HUGE pizza that would have more than enough slices for even the hungriest record label, music publisher, producer, agent or artist. Music Like Water, once again. Do I hear you mumbling ‘pie in the sky’… dream on?  Well, I don’t agree: consumer electronics companies, internet service providers, telcos, advertisers, and wireless companies will make this happen sooner than you may think – their combined market power is 150:1 if compared to the music industries. And all of this will be great news to the artists, writers, producers and composers since exposure always leads to discovery which always leads to revenues, dime after dime. And then, we can finally and for good shed the idea that making-money-making music simply means selling copies of songs (whether physical or digital) – there is a lot more to this business than that. Think branding, sponsorship, licensing, advertising, merchandising and of course performance royalties.  And finally: “I can't understand why people are frightened of new ideas. I'm frightened of the old ones” — John Cage

-Gerd Leonhard


 


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