Music: Old Models In A New Economy

I was inspired  by Peter Kafka’s piece on the music business in Allthings D yesterday.  Peter points out a few bright and shiny spots in an overall dismal picture for the industry as it continues to trade analog dollars for digital pennies:

  • U.S. music sales, by unit, are up 1.6% for the year-to date
  • Warner music reported an increase in sales this year
  • The Beatles released their catalog in the fall of 2010 on iTunes

So, while it’s not all doom and gloom in the music business, there is a plethora of evidence that the bottom is still yet to come.  This year has seen two all-time record low weeks for the #1 spot on the SoundScan charts: Cake, then Amos Lee both topped the charts at record-low numbers within three weeks of each other.

So where’s the innovation?

With the advent of digital music distribution,  one innovation that I haven’t seen yet but that I’m curious to see explored, is album length and release timing.   The industry continues to release LP albums based on a production cycle that used to involve larger budgets and longer lead times.  It’s a bit of a chicken-or-the-egg subject, but I think the industry is driven to maintain this because their metrics haven’t changed yet.  Here’s SoundSan’s recent reporting:

Total Albums w/TEA +1.6% (Track Equivalent Albums)

Overall Albums -1.5%

Physical Albums -8.3%

Digital Albums +16.8%

Digital Tracks +9.6%

Physical Formats:

CDs -8.8%

Vinyl +37.0%

By Current/Catalog:

Current -7.0%

Catalog +5.4%

This is reporting the metrics of an old business that still sells music in ten-twelve track bundles.  Long form albums are a product of analog technology and  year-long production / marketing cycles. With the adoption of digital media, short-lead press, social media, Internet radio and digital production techniques, albums should cost slightly less to make and a lot less to market.  Why can’t artists start releasing five-track albums every quarter?  The old cost-restrictions no longer apply in the digital world.

You Can’t Survive on Legacy

One other observation: if you notice the catalog sales growth in the stats above, and look at it against the increases in digital tracks and albums,  another issue becomes apparent.  The music industry is still surviving on catalog sales, which can’t last forever and won’t drive future growth.  Michael Jackson and The Beatles are certainly timeless, but won’t float the industry until the end of time.

Even Concerts Are Innovating Ahead of Albums

Relevant to the music innovation conversation, I think the new Groupon/Live Nation partnership is a fantastic example of innovation for the concert industry that I plan to use often, assuming that Live Nation puts its money where it’s mouth is and actually provides decent inventory.  Check it out:

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Twitter, Media and the Osama bin Laden Story

Last night re-confirmed that Twitter is the medium of choice for breaking stories.  As a media channel, Twitter scooped literally everyone….again.  The story of the killing of Osama bin Laden drove massive amounts of sustained traffic, sentiment and insights throughout the night and into Monday.

Measured in Tweets-Per-Second,  the bin Laden story generated the highest sustained tweet rate in the channel’s history, an average of 3,440 tweets-per-second.  This type of activity is still mind-bending to me from a traffic volume standpoint.

Also…well, I’m still shocked when someone like Keith Urbahan, the “original” source,  is able to just tweet it out there and beat everyone to the punch.  Not only that, but the entire incident was live blogged by Sohaib Athar on Twitter.  Nearly all of the meaningful coverage and content touched Twitter first.  Even the mainstream media organizations broke the news on Twitter simultaneously with their regular channels.  I was watching CNN for the broadcast, but the entire time I was reading my Twitter feed and I got better info from it than I did from the CNN commentators.

Of course, this isn’t the first time that Twitter has been the originating source media of a major story.  During the Iran protests, Twitter was so vital that the State Department contacted them and asked them to delay a network upgrade to protect the stream of content coming from Iranian protestors.  This was content that couldn’t be accessed by “mass media”, and peer media networks were the only way that information could escape the country. It was literally a lifeline for people.

Mubarak learned that turning off the Internet should be priority number one in any dictator’s effort to suppress  a story from blowing out of control.  He was right.  He was late, but he was right.  I found it odd and scary that he was able to do this,  and I wasn’t the only one.  It’s scary that someone can take this new thing away.  I’ve come to depend on Twitter as my most important source of news and content and I’m pretty sure that I’m in the norm.

With peer media, there’s no fact-checking.  There is no code of journalism. There’s no filter, no edit and no curation, just a massive amount of tweets.  But, the way peer media works,  the “best” stories have a tendency to float up if they are relevant, timely and started by reputable people. I think that’s where the fairness comes in to this type of a system.

I’m fascinated by what Twitter can be and I feel like we’re better off because of it.  I think decentralizing information distribution by creating peer networks makes the world more honest, and that’s good news for everyone.