Michael Wolff of New York Metro compares the future of the music industry to the current publishing industry.
This interesting take on the future of the industry takes a different look at the question of the future of music. The article isn’t about the collapse of the music industry paradigm, it’s about what happens when a star-based paradigm collapses, and it finds a parallel in the book publishing industry. It takes it as a given that the collapse is happening. I’ve discussed Virginia Postrel’s take on the economics of book print-runs as applied to the recording industry, but didn’t take the parallels as far as Wolff. And that’s just his jumping-off point.
If you’re providing free entertainment, which is obviously what the music business is doing, then you have to figure out some way to sell advertising to the people who are paying attention to your free music. But nobody seems to have any idea how that might be done. Or you can provide stuff that’s free, and use the free stuff to promote something else of more value thatpeople, you hope, will buy — now called the “legitimate alternative.” (Putting video on the CD is one of those ideas — though, of course, you can file-share video too.) Or sell the CD at a level that makes it cheap enough to compete with free (free, after all, has its own costs for the consumer).
It’s a spreadsheet solution. There will continue to be a market for selling music, however diminished — but it will have to be cheaper music. Margins will shrink even more. Accordingly, costs will have to shrink. Spending a few million to launch an act will shortly be a thing of the past. (The formal catalyst of the beginning of the end of big development costs may be the Wall Street Journal’s story a few months ago that precisely accounted for the $2.2 million launch costs of a singer named Carly Hennessy, who went onto sell 378 CDs.) A&R guys making half a million are also history (in the future, they’ll start at $40,000 and max out at $150,000). And no more parties.
Amongst the other implications is that the key to controlling the future of the industry is controlling the filtering mechanisms people use to find music.
Worth a read, including the disturbing idea that the success of the music industry is an unsustainable bubble built on the baby boom and effectively over.
UPDATED: I’ve been thinking about this, and I don’t think the book/CD comparison adequately considers the differences between media. I don’t think that the similarities are wrong, but Wolff should have addressed the differences.