Friday, June 29, 2007

Let's Catch The Real Pirates

Hey RIAA, time to sharpen your legal pencils again! Hot on the heels of the First Family's admitting to creating an illegal mix CD comes another confession, this time from the pages of People Magazine. There, American Idol star Fantasia Barrino freely admits to cherishing a mix CD given to her by "a friend."

A quote from the RIAA's website -

Do The Crime, Do The Time

If you do not have legal permission, and you go ahead and copy or distribute copyrighted music anyway, you can be prosecuted in criminal court and/or sued for damages in civil court.
  • Criminal penalties for first-time offenders can be as high as five years in prison and $250,000 in fines.
  • Civil penalties can run into many thousands of dollars in damages and legal fees. The minimum penalty is $750 per song.
Seems like these folks are in a whole heap of trouble or is that only reserved for students, grandparents, disabled mothers, pre-teens and all the other riff-raff, pirating trouble makers?

Thursday, June 28, 2007

Record Industry Decline - The Rest Of The Story

Rolling Stone has a nice piece on the rapid decline of the record industry. They put the blame on the label's early 2000's decision not to embrace Napster. Whilst I agree this is a major factor I think the grave plot for the industry was prepared much earlier than that.

1) They killed off the 7" single - although not known for it's musical quality the 45 rpm single was a great introduction to the concept of purchasing music. Highly portable and pocket money priced they introduced younger consumers to the concept of buying records regularly. The replacements were either too clumsy (cassette singles) or too expensive (CD singles). Digital downloads have reintroduced the concept a decade too late.
2) They forced customers into expensive CD's - rather than letting the market slowly switch over, the labels abandoned the vinyl album (priced at around $6.99) and forced them to purchase CDs at double the price. Music buying became a more risky proposition, a $7 mistake is easier to stomach than a $17 one. After a great run of reselling customers music they already owned the simple economics of price elasticity kicked in.
3) They fought the internet - as use of the internet exploded the labels did everything in their power to fight it. It's not just Napster, there were hundreds of missed opportunities. As their core demographic became increasingly wired the record companies headed out on a suicide mission.
4) The Product Sucked - the labels forgot about investing in talent long term and scrambled all over each other to release huge numbers of poorly conceived, one hit artists and albums. The result was mass consumer confusion and turn-off.
5) They Ignored Profitable Market Sectors - deciding to focus purely on the MTV demographic (which changes every 5 years) the labels forgot all about selling to a maturer audience, even though these are the people with the most disposable income and loyalty to acts.
6) They Allowed Radio To Get Away With It - commercial radio is all but dead, killed by corporate greed and homogenization. Rather than forcing radio to open up their play lists and expose consumers to new music the labels colluded with the folly, narrowing the selection further.
7) Now They're Killing Internet Radio - not having learned any lessons, the labels are forcing usurious (and back dated) fees for internet radio stations. Like Napster in reverse, this ploy seems to be aimed at forcing the legal stations out and paving the way for an underground community.
8) They Sued Their Best Customers - a recent internet poll lauded the RIAA as the worst company in America (admittedly they're a trade association), true or not it's a public relations nightmare. Abusing the legal system and using the courts to shore up their business model, the labels have created a "screw-them" mentality amongst consumers. Piracy is relished as a way of getting back at the industry and a fake Prada & iPod full of P2P music is a badge of honor amongst young consumers.

The record industry has one, last chance. It's going to require a complete realignment of their business models & the alienation of some huge customers (Target, Best Buy, Wal-Mart). Much creativity and imagination are going to be needed but luckily for them the research has already been done and customers numbering millions have shown their willingness to embrace the new distribution model. It looks like this.

OK, sorry, it looks like this.