How to Save the Music Industry – The Perfect Distribution Model?

In General | 8 comments | permalink

A lot has been said about the recent radiohead publicity stunt, some people have even gone as far as saying that this could be the business model of the future for the music industry.

Nobody has asked me what I believe the best business model for music distribution should be… and that saddens me ;-) But if I had been asked, I would have responded thussly:

The best business model for music distribution is this:

1. 192kbps MP3s for free
2. 320kbps MP3s for $5 or
3. FLAC files for $5

This model allows people to download for free, thus virtually eliminating piracy. But if you really enjoy the album, you are likely to want to pay for the upgrade to 320kbps. After all, $5 is not a lot of money, and I believe that many people will genuinely be happy to pay for good albums.

I personally downloaded all the Muse albums last year, but I enjoyed them so much that I went to HMV and ordered every CD at full price.

For me, this model is close to perfect, and would work really well.

Want to see this model in action? Here ya go: Saul Williams.

Disclaimer: I don’t know who Saul Williams is. But I do know that he is the first artist to use this model properly, hopefully in 12 months time this will be the industry standard.

email this | tag this | digg this | trackback | comment RSS feed

Subscribe to my FEED if you like the smell of money

8 COMMENTS

  • http://www.distilled.co.uk/blog Tom

    Wow – nice find. And I’m even a fan of saul williams so thanks for the link :-)

    You’re right – I think this is the business model of the future, not to mention the fact that if they use your email address sensibly then they can alert you to future albums/singles/gigs/tshirts a lot more effectively.

    The site could do with a slightly nicer interface but other than that I really like what they’re doing (and this site is so much easier to use than the mess that is the radiohead site)

    Current score: 0
  • http://www.samlown.com Sam Lown

    I also haven’t been asked (we’ll have to ask each other at our next meet-up :-) but my current thinking is that its a bit pointless to charge for any form of music transferred digitally, be-it CDs, MP3s, FLACs, or OGGs, as charging is only going to delay the inevitable, copying, or pirating. The only reasonable reason for charging, IMHO, is to cover the Bandwidth cost (and other variable costs), and offer a system for donations should you manage to guilt trip anyone into paying more :-)

    The record companies need to start realising as soon as possible that their current systems are flawed, as they were designed for a time when copying and sending data or music was expensive and difficult, and not for the current state where the same costs are pretty much zero.

    I think the only real way the Record monsters can expect to survive is by providing the one thing they’re good at selling: an experience. We all know that the sound quality in a concert pretty much sucks, and the beer is always over-priced, but people still go! This is purely because the same feelings, emotions, and vibe of watching your favourite band play several meters away is not something you’ll ever be able to reproduce in your living room!

    I’m also going to go out on a limb, and agree with the following article:

    http://www.wired.com/entertainment/music/commentary/listeningpost/2007/10/listeningpost_1029

    Vinyl isn’t recorded based on mathematical equations, its analogue, it records just what is heard, exactly the same vibrations felt in the recording studio, are recorded onto the disc, and played back. As I’m sure most audiophiles would agree, this provides a far more authentic experience than any CD or MP3.

    Checkout some of Simon Yorke’s thoughts on this for an enlightened approach to the way he makes his record players:

    http://www.recordplayer.com

    My 2 centimos, sam

    Current score: 0
  • http://deanhunt.com Dean Hunt

    Sam,

    Great points.

    I would imagine it is going to be more of a transition at first, and the next major step in my opinion will be the model I mentioned. But 5 years from now, I agree that it will most likely be free.

    Speak soon.

    Dean

    Current score: 0
  • http://opensourceinnovation.wordpress.com Innovation Catalyst

    I’ve been posting about this for the past month or so. I think the business model for the music industry is evolving from “live performances to promote record sales” to “MP3s to promote live performances.” Witness the calamity created by Hannah Montana ticket scalping – state legislatures are intervening to make sure their constituents get reasonably priced tickets. People are willing to pay a lot of money to see their fave performer, but are not willing to pay much for their recorded music.

    Also, some believe the subscription model will win out over the iTunes model, but Napster’s recent problems don’t support that notion. People like to possess their music and take it with them.

    Current score: 0
  • http://www.evolvor.com evolvor

    Agreed. I recently discussed pretty much the same thing. It’s obvious this is the way to do things, why is it so hard to make it happen? Stubborness. It will take some time.

    http://www.evolvor.com/2007/10/30/how-should-i-distribute-my-music-on-the-web/

    Current score: 0
  • http://www.klaxxon.com Nick The Geek

    Hey Dean

    From memory Saul is the (business/otherwise?) partner of Trent Reznor of Nine Inch Nails who likes to really push the envelope creatively and also marketing-wise too.

    Some more info for ya:

    http://www.digg.com/search?section=all&s=trent+reznor

    I’ve been saying to anyone who got me drunk enough for the last 5 years the answer to music piracy was to ask for a donation for the music and make money from the concerts and merchandising.

    Oh well … too radical an idea until now then …

    Current score: 0
  • http://PulpFictionMafia.com Steven Henderson

    Yeah – segmenting the product spec for different market tiers is pretty standard in some industries – like computer and related hardware for a start.

    I once saw some interesting data from an experiment in software download pricing. When customers were asked to pay the amount THEY deemed the software to be worth, the actual revenues generated were higher than from any fixed price model – no matter what price point was chosen!

    If you think about it, it makes sense because some customers always pay less that they would be prepared to under any fixed price model.

    In this context, all customers would have to make some donation for the superior spec – but they could set their own amount.

    Another interesting thought from the IM sphere – if a fixed price model is dear to your heart – there is adaptive tracking software available that will run split tests and adapt heuristically to favour the better performing choices. i.e. set the price to the fixed level that generates most total revenue.

    I prefer the variable donation model.

    The recording industry is run not very nice people, mostly dinosaurs with hooked noses clinging on for dear life to a discredited business model in a discredited industry. Good riddance to them.

    Current score: 0
  • http://www.top-work-from-home.com Chris

    NO one has asked me either but I think the music industry is going to change to no longer produce CDs or whatever you want to call them.

    I see artists creating songs and releasing them one at a time. You can download them for $1 each and then when the downloads slow down they release another single.

    After the artist has several singles that have all been downloaded x number of times they go on tour and sell T-shirts for $25 at concerts that cost $0.50 to make – that is where the real money is!

    Current score: 0