Ladies and Gentlemen of the Recording industry, thank you for allowing me to speak.
I am nobody special. I am not a rock star, an industry insider or an executive. I am the voice that is never heard. The voice of the customer. What I have to say gives me no pleasure, but I’m going to say it anyway, because somebody has to.
Ladies and gentlemen, your industry stinks. Only the Oil business is more hated and reviled by its customers. Unlike them, however, your commodity is a luxury, and you consider your customers to be thieves.
And what, exactly, is your business? Here’s the surprise – you are not in the Music business.
You are not in the Art business either, even though your suppliers are called Artists.
You are not in the publishing business.
You are in the business of selling little plastic disks, and have been for over half a century. Everything else is secondary to that. The music, the artwork, the packaging, the record deals, the distribution are all concerned with maximizing the price and sales volume of those little plastic disks.
While it is true that music can now be supplied in digital form, sans disque plastique, I am sure that if you could wave a magic wand and make MP3, iTunes et al vanish, you would do so without hesitation. How do I know? Because you have a consistent track record of trying to destroy any technology that threatens your plastic-disk model. The Compact Cassette was nearly destroyed, the MiniDisk was effectively castrated because of your actions; your hatred of the PC, which you consider to be a clear and present danger to your business model, is well documented.
The world has changed. Get over it.
Your paranoia is showing: You have bought and paid for horribly draconian legislation like the DMCA that forces the Government to do your dirty work while making it a felony for your customers to put their music on their iPods because you put some lame “protection” on those plastic disks – protection that does not work, is an inconvenience at best and breaks computers at worst – and that’s ok, because your rights are the only ones that matter enough to need protecting.
Your blatant hostility to digital music is a matter of record. When Apple first came to you in 2000 with iTunes, MP3 was already about five years old; the genie was already out of the bottle; yet they had to wrap it in DRM at your insistence. Now you have a love-hate relationship with iTunes; you would love to raise the prices, but they won’t. You would love to walk away, but cannot say goodbye to the profit
When a Russian site called AllOfMP3 started selling music files online you tried to shut them down. Your claim that they were “illegal” made no sense – you make your plastic disks in China, because it is cheaper, but when your customers wanted to buy their music in Russia for precisely the same reason, that was suddenly “illegal”. They continued to be a thorn in your side until the State Department pressured the World Trade Organization to shut the site down as part of Russia’s price of admission.
In your stampede to put them out of business, however, you missed the point. They thrived, not because people are thieves but because they supplied something you wouldn’t – choice, convenience and freedom from DRM at a price the customer is willing to pay.
You insist that a song download is worth at least a dollar; I disagree – music has become a background task; something we do while jogging, driving or working. It has been years since “listening to music” was considered a pastime. Like long-distance phone service, it has lost its value.
Personally I would pay 25-50c for a high-quality song, $5 for a downloadable album. You may consider that too little, but given that it is almost all profit, with a cost to you of almost zero. At that price people purchase without thinking, and will not care for resale rights. Wrapping it in DRM lowers its versatility, and hence its value to me – so if you want to add DRM, you had better cut the price even further.
You currently insist on charging $10 for a downloaded Album, even though a used CD can be procured for less. You insist on $1 per song, even though it has been proven that halving the price results in a sixfold increase in sales. As Mr. Spock would say, “Fascinating”.
You also insist on pricing new music the same as old music, which makes no sense to me. Personally I believe that copyright on music should expire after ten years – copyright was intended to be temporary – but since your paychecks depend on eternal residuals I have absolutely no chance of persuading you of that.
My purpose here is not to destroy your business, but to point out that your business model no longer works and needs changing. If you are serious about improving your profits, here are some suggestions:
- Lower your prices – $1 per song is ok for hot new releases, but once the hotness has worn off the price should drop. 25c to 50c per song, depending on quality, is good. Anything over 50c per song means that your customers will think before buying; people pick up dropped dollars or quarters; anything smaller they usually ignore.
- You’ve sold plastic disks, why not sell data? A per-megabyte cost works. Higher quality and longer tracks can and should cost more.
- Don’t try to control digital music distribution – iTunes can sell more music and do it better than you can. Let the sellers do what they do best. Stay out of that business.
- DRM does not work – drop it. This has been proven time and time again. If the price is right, people will repurchase if they cannot find their old purchase.
- Simplify the royalty structure. 25% for the distributor (e.g. iTunes), 25% for the artist and 50% for you is more than fair. How many industries make 50% profit? Don’t be greedy.
- Relax… we’re not all thieves, and at 25-50c per song you can compete with free. Just ask the guy who dreamed up AllOfMP3.
- While on the subject, find him and hire him. If you can hire a white house staffer who accidentally “corrected” a law in your favor, you can certainly hire a guy with a proven business model.
Make these changes and I will happily buy digital music instead of used or cut-price CDs. You will get $10+ per month out of me that you weren’t getting before. That’s “easy money”; or to put it another way, “money for nothin'”
Thank you for your time.