In a recent survey by British think tank Demos, researcher Peter Bradwell found that music listeners who participated in illegal file sharing behavior spent more money on music than listeners who did not admit to using illegal services. Two key paradigm shifts created by Internet distribution come to mind:
- Distribution, whether as playlists, recommendations, or downloads, is largely controlled by fans, not record labels or content creators.
- The per unit cost of ‘digital copies’ is essentially zero.
This creates a situation in which even an unlicensed transaction has value for the content owner; a possible new fan, and marketing data. The first challenge is to leverage that value. The second is creating legit services that provide a vastly better user experience than illegal file sharing at a competitive price. In addition, why not simply license file sharing behavior, leveling the marketplace? I know, easier said than done. The issues of copyright infringement are significant, but a major roadblock is the complexity of the traditional royalty model.
People will pay for innovative, superior products. Apple is a great example. Everyone grumbles about the proprietary nature of their business model, but folks are still lining up for iPhones in a recession. The music industry has the potential to transform itself, ushering in a new era of compelling, competitive, Internet marketing and distribution services. Executing will take hard work, visionary thinking, and cooperation.