When the rules change, sometimes the ways in which companies are paid needs to change as well.
This is becoming a very true reality for the music business. Where they used to charge close to twenty dollars for a full CD, they now find themselves pulling their revenues from individual songs at $0.99. With dramatic changes and the digitization of that industry, something more has got to give. Their traditional model for publishing and licensing fees made sense when there was a monopoly on how music was transmitted. So, if a television show wanted to use a popular song, the music label had some semblance of negotiation and power. The same was true for radio. For radio to earn significant advertising dollars, they needed mainstream major label music to get mass audiences, so the music industry brokered deals where big money was exchanged.
When anybody can digitize a file and stream it to the world, the model changes – everything from distribution to pricing.
The music label has been fighting this for years. They’ve sued their consumers, they’ve tried to lock down the content to make it more difficult to pass along and much more along the way. Things might be changing just a little bit moving forward. The New York Times featured a great read on May 27th, 2009 titled, Music Labels Cut Friendlier Deals With Start-Ups:
"…a new accommodation is being forged between Web music start-ups and the companies on which they are almost wholly dependent, the major music labels. The recording industry is considering an all-digital future in which it needs popular Web services like Imeem, both as sources of revenue and as supplements to older channels of promotion like radio and MTV.
As a result, music labels are now striking more favorable terms with Web companies, and the start-ups have come to realize they cannot rely on Web ads to support themselves. For example, as part of its new plan, Imeem will try to push users into buying more T-shirts and concert tickets, and will soon add its own MP3 download store similar to iTunes, sharing revenue with the labels."
Working with start-ups to build buzz and excitement and understanding that sometimes a start-up can do it a lot more efficiently than a big, corporate behemoth… is there hope for this industry yet?
We’re not just seeing this in the music industry. In the Marketing industry, you would rarely see a large multi-national brand working with a small boutique shop. It simply was not happening that frequently. Now, as our industry shifts and morphs, we are seeing many of these brands bring in small to medium sized Digital Marketing agencies with significant mandates and budgets. The bottom line: it’s working. The interactive agencies are delivering and the final strategies and tactics are bringing these big brands closer and to the people.
There’s a lesson here: you may think you need a certain sized company to really get the results you are expecting. But, sometimes, less is more.