Just about everyone associated with any form of replicated creative product – music, books, movies, you name it, is wrestling with how to get paid for the content in the electronic paradigm. Perhaps it’s time to reevaluate some underlying assumptions.
What if consumers won’t pay for content. What if they believe they never have. What, then, have they been wiling to pay for, and what are they still willing to pay for. What does this all say about the business of content creation and, most importantly, what is the take away message for emerging artists.
Ok, the baseline premise is that consumers have never paid for content and are loath to start. What they have been paying for, and continue to pay for willingly, is ACCESS. Whether that be a communications channel, a piece of physical media or a seat in a venue; those are tangible assets that a consumer can assign value to… a song or a story is not so easy to quantify.
Think of it like this:
It’s not buying a CD of YOUR MUSIC,
it’s BUYING A CD of your music.
It’s not going to a club or hall to HEAR YOU PLAY,
its GOING TO A CLUB OR HALL to hear you play.
It’s not using an on-line source to obtain YOUR MUSIC,
it’s using an ON-LINE SOURCE to obtain your music.
The key is that the shift in emphasis applies even if they really are explicitly looking for your music. The value is placed on the method of access (physical package, convenient/comfortable venue, elegant user interface).
Supply and Demand
There is also a subconscious awareness of the economics involved. The knowledge that there are far more talented creators out there than there is capacity to experience them all. Such an oversupply drops the value to nil. Any real value to the consumer is in the screening, packaging and distribution of some subset of the abundant (over) supply.
In the old days, this was provided by Radio stations, record labels, clubs, which promoted the content in order to attract consumers to their method of access. Thus the content was essentially advertising to attract buyers to the “access product”. Radio stations make money on the advertising/underwriting of being on air, and only care about the content in the sense that it attracts listeners. Record labels are concerned with unit sales, the content being their market differentiator to sell those units. Clubs make money selling food or beverage or just a seat, and the content , then is just the lure to fill the hall. License fees (performance, synchronization, duplication) represented the cost of that advertising and were paid by the providers, not (directly, at least) by consumers.
Case Study: iTunes
What about iTunes you say? Here again what consumers are paying for access. Many alternative on-line music schemes founder in the face of iTunes because iTunes has invested in the access experience where the customer perceives actual value, and is therefore willing to pay to access a song via that channel.
Ok, Now What
So here’s the “chicken and egg” conundrum. In order for the consumer to be willing to pay for access, it has to want access to something and that something is the content. If they can access the content for free (terrestrial radio, internet file sharing, a friend’s CD) they’re less likely to pay for access via any other channel… unless there is some compelling value to the access itself. After all, some folks are still selling music on vinyl. There is a compelling value to some consumers with respect to vinyl as a medium. The same collection may only be 9.99 on iTunes or 5 dollar CD special at CD baby, but people pay more for the vinyl… again… for the same songs. They want the music, they pay for the method of access, in this case physical packaging. In the case of something like iTunes there are compelling features such as ease of use, search proficiency, size of catalog and seamless integration with players.
Perhaps where traditional record companies go wrong is misunderstanding the value proposition to their customers, or even who their customers are. Somewhere along the line, as the number of access options expanded, buyers in traditional channels decreased. This resulted in the backhanded approach of DRM which, of course, only further limited access to their product and the death spiral began in earnest.
This, of course, throws the whole compensation model on it’s ear. The question is not that an artist be compensated for every instance of their work out in the wild, but rather that they negotiate a sales commission for each piece of stock, or connection minute their content draws in. Content manufacturers and distributors need to reassess their means of providing access and adopt new methods. Yes there is lower pricing, but there are also lower costs. It means restructuring the value chain to the current realities and letting the big chips fall where they may.