The music war
One of the best stories of the world wide web, IMHO, is the Napster rise and fall. That story shows you how the web empowered genius minds to send shock waves across the world and force some of the biggest corporations in the world to wet their pants.
The digital era, where production is in fact just a big copy-paste action, shows us that the analog-digital transition cannot happen without a clear, thoroughly thought approach to the change the transition itself brings. The mass production of CDs or LPs had its per-unit cost, while the production of 1 or 100’s of mp3’s of the same song have always the same initial production cost. That simple difference brought a complex and challenging situation where a phenomena that was marginal in the analog era became widespread in the digital one; piracy.
The music industry never made the transition from LP to mp3. The business model remains the same. One album on CD or one album in mp3 is priced and sold in the same way. Yes, iTunes made some changes and forced a different approach, but only on one side of the spectrum. The mindset shift never happened. Consumers are merciless when it comes to music. You don’t need music, you will not earn more or fight the flu with music. It does not even fit in the entertainment spectrum as you want music to match your mood or your lifestyle. You use music to express your feelings, your thoughts and your character. It is so much under your skin that the widespread consumerist mindset just breaks. We listen to radio for free, we watch MTV for free, why then sell it in the first place?
Over the years, the music industry approached piracy with a simple tagline: piracy is stealing. When Napster, the first true digital social network, came along, the industry reacted with “remove everything”, “shut it down”, “thieves”. The culmination of the show was Lars Ulrich from Metallica climbing the “most hated rock stars” chart and claiming the top prize for attacking Napster (http://www.youtube.com/watch?v=kP_sGdEFvRk) and Metallica fans that shared the music without paying anything to the labels and the band. Instead of understanding the pattern, the industry tried to fight it. The seller insisted on selling something the buyer wanted in a way the buyer did not want to buy it. In a sane environment the seller would go bankrupt and the competition would take over. Unfortunately the seller had an exclusive agreement with the producer.
This brings me to the point that the whole war between the industry and consumers is indeed a war supported by the artists. They create music and don’t care about how that music is being distributed or sold. The entire process has become “profits only” as labels present themselves as the unavoidable middle man that makes the entire process worthwhile. Radiohead broke that rule and eliminated the record labels. We can spend hours and hours arguing if that move was a winner or a loser, but it shows that if your selling costs are near zero (selling 1 mp3 album, or 100.000, it is the same – if you ignore bandwidth) you have a direct interest in selling as much as you can. And if you want to sell as much as you can, you sell it for a price that the majority of people is willing to pay.
I strongly agree with the steps taken by Spotify and explained here by Sean Parker. The era of selling music is over. Now you have to sell everything around music to make it work. Think when was the last time you bought your mobile phone without a subscription. The mobile networks knew that in order to get more people to use their services, they had to take the punch when selling phones.
The record industry must change. Labels are a dinosaur of some ancient times and should be eliminated. It is a big fortress, but it will eventually fall. And they know it.