Tasha Harrison

The music industry is dying, slowly but surely, as every year record labels lose more and more money. This doesn’t mean, though, that music is dying. In fact, for all the reasons that record labels are dying – file sharing, social media, MySpace etc – smaller bands, who previously would have struggled to get signed, are building their own reputations.

I was reading the blog of Sean Murricane, a member of the band March of Dimes and @seaneeboy,  whose latest blog post explains the importance of Spotify and MySpace for bands. The key point he makes is, “if we’re more likely to be listened to we’re more likely to be liked by more people”. Then more people will go their gigs and they can make money from selling EPs and, possibly, merchandise.

This is the big lesson for the music industry. Instead of trying to rely on their traditional revenue streams, which they are constantly trying to protect by shutting down file sharing sites and lobbying governments to pass draconian internet laws, they should be looking for new opportunities. It’s difficult to have sympathy for the industry when they can’t move forward and embrace the huge social changes that the internet has caused. By continuing to fight the losing battle, they are ruining the industry.

The other key problem is that the big bands and artists won’t make as much money. The money will be spread throughout the industry, meaning that smaller bands won’t have to sign ridiculous contracts to have a chance of being heard. They will be responsible for their own distribution and marketing, operating as SMEs in their own right. We will also see a lot more smaller record labels doing a lot better. They will no longer lose their best bands to the bigger record labels, because if their music is good enough and available in the right places they will get the fans they need.

Further reading:

Labels may be losing money, but artists are making more than ever

Yesterday The Guardian released it’s new app for the iPhone. It costs £2.39, is highly personalised and allows you to listen to podcasts and browse images. The Guardian does have a very good mobile site, but I downloaded the app as I wanted to see whether it would be worth £2.39, which is quite a lot for an app. First impressions are that it makes browsing a lot easier and I can organise it into the sections I read the most. It is a definite improvement, but not completely life changing.

The Guardian are leading the way in monetising the news. I don’t have to download the app to read the paper, I could go on reading it from the web browser, but the app makes it a lot easier and the customisation is great. They have added value to their service and I am willing to pay. It’s a lot like upgrading your Spotify so you don’t receive adverts.

The Guardian recognise, more than any other British newspaper, the need to work with their readers to turn around their declining profits. Instead of rushing backwards to an old model of charging people to read the news (ie what Murdoch is proposing) they have accepted that information on the internet is free. The amount of content that is published everyday has reduced the value of news. Before the internet, everyone had to buy a paper or magazine to gather information and opinions. Now it’s free.

I’ve spoken before about the fact that this is a huge problem for newspapers. The Guardian have reacted by adding value to the experience of reading news on their website. They have subscription services, but they don’t charge for the basic news. They also don’t make a big song and dance of it (like Murdoch), they simply offer these services as a way to add value.

It is too soon to know which model will work, a paywall system, where you must subscribe to read beyond a certain point, or an added value service, where you pay for a better experience. I suspect that the latter will be the more successful.

A few months ago I went to see a new online business with the view to working with a PR company, myself doing their social media. Unfortunately we didn’t win the work, they chose a PR agency with some large companies in their portfolio, who were big players in their industry.  Of course it was sad that we didn’t win the work (and I’m not going to name names btw!), but throughout the two meetings I had with them it really struck me how the impact of the internet has crept up on a lot of business people without them realising.

Their plan was to sell their service for, say, £25 and then sell products on behalf of another company. It seemed a lot of money when people wouldn’t be 100% sure of what they were getting. I worked hard at researching competitors, all of whom offered a similar service, but for free. The client said their service was better than all their competitors, which I had to take their word for.

In our final pitch meeting I tried to explain that their targets were unrealistic and that they would be hard pressed to pursuade enough people to spend the money.  The internet is a crowded place and throwing money at something won’t make it a success. In a futile attempt to win the account I tried to explain why Spotify is such a success – they allow people to try before they buy. They offer their customers the option of paying a monthly subscription with no adverts or they can have the service for free, but with adverts. People realise what a great service it is and consider paying a monthly fee. Some people don’t mind the adverts, so they continue with the free service, which is still great for Spotify.

(Sadly, Spotify now only offer the service free with an invitation. But this is because they were so successful!)

Now they sell music as well, which they make extremely easy to buy. They built mobile applications on both the iPhone and Android platforms. They could well beat illegal downloads and save the music industry (maybe I’m getting a bit carried away!).

The point of the Spotify story was to show them that people online will spend money, but first they need to trust the company they’re buying from. The internet is so overcrowded with various services that people don’t give a lot of thought to something and certainly won’t spend money on something they’re not sure about.

Number one rule if you’re starting an online business – be prepared to give things away for free. If your product is good enough people will spend money with you.