Mp3 music should be free?
To replicate an mp3, how much does it cost? To do a simple copy and paste, what is the “real” cost? And by real, I mean money directly coming out of your pocket as a result of pasting the file. Not the electricity bill or the cost of the computer you are using. Now compare that to actually replicating a cd, or doing a live show again. Get the drift? The marginal cost of creating additional copies of digital music is virtually zero. So would it be such a bad idea to just give it away for free?
What do other people think?
Here is an interesting quote from Chris Anderson, author of The Long Tail. “The underlying economics of the era we are entering is that free becomes not just an option, but very typically a price point that’s out there in the market,”. He goes on to say, “It may be the price point that you choose, that the pirates choose for you, or that your competitors choose, but free is out there. And it is entirely possible to make money from free” (Page B., 2009).
Make money from free? How is that possible you say. Well, music streaming services like Spotify and Deezer seem to be doing alright. Both have signed deals with major record labels, but hear this; “These services are luring pirates into legal content, but they are also leading some users to buy less music, which is why we want to get paid.” That is Pascal Negre, president of Universal Music France commenting on free music streaming services (Pichevin A., 2009).
He has a point. But looking at it from the perspective of the businesses providing the streaming, how effective are ad revenue models? Let’s look at Deezer, the leading French streamed music service which attracts 5 million unique users a month. You would think they are making a lot of money off ads right? Wrong. Laurent Petitgirard, chairman of the French royalty collecting society Sacem, complained earlier this year that a song which was streamed 240,000 times on Deezer had generated income of only $187! (Pichevin A. 2009). How viable a model is that, really?
Seth Godin, a brilliant marketer, warns of the danger of excessive freeness in his recent post here. Saturation of the market place with more free products and services, means we are likely to move
from ‘you will pay’ to ‘it is free‘ to ‘I will pay for ads to alert you it’s free‘ to ultimately, ‘I will pay you to try it’. - Seth Godin.
Another factor of concern is also pointed out by Kate from Outlandos Music who argues that by making a product free, inherently it is also valueless.
What do we think?
To answer the question in the title, we think that YES mp3 music should be free. Technology (torrents, rapidshare blogs etc) has put the music industry in a tight corner where it has one of two options. Prolong the fight and suffer further losses or throw in the towel and start afresh. With the way the internet is progressing, the most definite of all futures is that of free digital music.
It is becoming easier to download an album for free than to buy it. It takes more time and effort to create an iTunes account, sign up with your credit card, log into the iTunes store and download an album than through a torrent or google and rapidshare search. The less computer literate might find the iTunes option easier but this is the exception.
Record labels should therefore look at diverting this “rapidshare” and “torrent” traffic to their websites where they can host the music or distribute it through torrents with their own index and tracker. From here, they may position their “services” and other products that can generate real profits. The digital music would simply act as a marketing tool as some have suggested before.
But if people don’t pay for music, how will musicians be compensated for their work? They can still generate money through live shows, merchandise, licensing deals or some variation thereof. So all is not lost. Less physical sales and free digital copies may mean less money for artists and labels, but if we are smart and creative about how we engage with, and provide “value” to the fans we could in fact end up with more money!
What do you guys think?
References
Page B. Free radical. Bookseller [serial online]. March 20, 2009;5374:23-23. Available from: Business Source Premier, Ipswich, MA. Accessed May 13, 2009.
Pichevin A. MAKING ‘FREE’ PAY. Billboard [serial online]. March 28, 2009;121(12):13-13. Available from: Business Source Premier, Ipswich, MA. Accessed May 13, 2009.
Photos
featured photo by johntrainor
guyoncomputer photo by Bombardier
front page photo by copenhagenbrains
I really enjoyed this article and it sums up the situation very well. However, I would just like to emphasise that had the record industry not behaved in the way that it did against Napstar in the beginning, then the recording industry wouldn’t be in this dire situation.
Napstar was the future and instead of accepting the new technological changes and working towards a win-win outcome with the 40 million plus downloaders on Napstar, the record industry criminalised and alienated downloaders. As such, out sprang Kazaa, LimeWire and many other sharefile sites; costing the industry billions of lost income every years.
From my perspective as a music manager and co-founder of a hip-hop label, music should be free. It is the future and whether the industry likes it or not, it is going to happen soon enough. The question doesn’t become ‘how do I sue the downloaders’. The question is ‘how can I innovate and create a new model that monetises free music?’. Based on the previous behaviour of the recording industry, I am not too confident that innovation will be a particularly rapid success.
Keep up the great work. I’m loving this site.
Best,
Andy
thanks Andy! I think it is the indies that will bring this innovation because clearly, the majors are some what lost. and by innovation i mean that which is beyond the bog standard live shows, licensing and merchandizing deals.