Essay 3: The Future of Music

I have forgotten since when the Sony Discman and Walkman had been lying at the corner somewhere in my drawer, but I do remember who replace the role of them, iPod. The rise of the iPod has coincided perfectly with the blooming of the Internet. More and more people prefer to transmit information and communicate with others through the Internet, so transmitting music is, of course, the next logical step. Completely digital transmitted music is cheaper, more efficient and less wasteful than CDs.

Motivation for the changing

There is money being made from digital downloads - it's just not of the scale that the major record labels are used to. In 2007, there were 844.2 million digital tracks sold. Radiohead's recent experiment, in which the band released an album online for free download and asked listeners to pay what they wanted, made them more money from the digital distribution then they made from the digital distribution of all the rest of their albums combined.

Radiohead could do this because of their contract's ending with the record label, which enabled them to do whatever they want with their music. It seems to be a pretty good way of running business for the musicians, but their success also depended on the reputation and the huge fan base they have earned all these years, so the marketing works for them is not as difficult as those indie musicians who despite enjoy the freedom of their music rights and relatively small but loyalty fan base, but lack of enough resources and capability to do more professional and massive extend marketing and distribution work, at which the record labels are pretty good.

So the situation of the music industry is more like an emergency for changing to respond to this digital revolution rather than merely dismissing in it. And a new business model is needed here, which could make both the record labels and artists survive.

Future business models

Who is the target group

In the past, the marketers just figured it out by some market research and assumptions based on it, and make some strategies for this target group. But now, thanks for the help of Internet; we are able to find our target group more easily and efficiently. The free track could be given out on online store or at some SNS like MySpace or Facebook by asking for a email address of the audience and some other personal information, which is much more important than the $0.70 they get form iTunes. All the Big Four have begun offering DRM-free songs, which might be a sign of free digital track next step. Traditional way is still an effective way of segment positioning, but facilitated by the Internet, target group would be more precisely, and the target groups' information is really the valuable and basic resource for the future.

How is the value chain

The artists are always the content provider in this value chain, they write and produce the songs for the audiences and market, their job and role won't be changed a lot. The biggest change happened on the record label, they used to be the interface of the artists and market, which would be still in the future, but the role might be transformed from owning the artists to facilitating them with the booking, marketing, and networking from the promotion aspect instead. They do all those without owning the rights of the songs, and get the paid form musicians. And the distributors are increasingly moving online to deliver the tracks to the audience.

In sum, the roles in the value chain are pretty much the same, but the focus of the job or the position might be changed a little, which is aiming to adjust to the digital revolution and the new customer behaviors.

How to make money

Direct marketing

After knowing the audience who actually listen to the songs, it is naturally to assume that they are the target audiences or at least interested in the artists and their music. The next step should be directly contacting them through the email or the group of the SNS and propaganda the music relevant products, live performance and campaign or the concert. Since it is the target audience who choose the artist or the music first, so they are more likely to perceive that information they get as valuable information rather than merely advertisement.

Live concert and merchandise and limited edition CD

That the songs are making less money than before does not mean that the music industry is not profitable any more. Actually, there are other sources of money. And the biggest one is live performances and concert. The songs especially those free ones become the investments of advertisement for the concert. Some music or artist relevant merchandises are also a good way to make money, and by franchising them, the musicians may make even more money than they image. The CDs are still demanded, just not that much, so the high quality and some limited edition CD have reason to charge more than before.

More channels available

The time of buying CDs form stores laid on street has past. People are exposed with more channels, online store, mobile, and mp3 player or even the cable TV can be the channel for you to reach and buy the music. The only thing an audience needs to do is to decide whether he or she likes it or not.

More versions and formats for each song

Because the songs are no longer needed to be gathered until they are enough for an album, the artist could just release the song soon after they finish it and with more versions. There will be more live performance and acoustic versions of songs, and more interesting bits, more looks into the recording studios, more evidence that songwriters and musicians are humans and that every version that they play isn't perfect.