Article of the week: Out Of The Ashes (Ted Cohen (TAG Strategic)
This article is taken from Issue 4 of the AIM Journal, first published in July 2008. This, and other issues are available here to download for free.
The Digital Revolution has single-handedly killed the record industry and I, for one, am glad! There, I’ve said it and I feel much better! Having spent the last 25 years evangelizing this inevitability, I’m relieved that it’s finally happened. Oh, the body isn’t cold yet, but the pulse is weak and rigor is setting in. Those involved went through the classic stages of grief: denial, anger, bargaining, depression, and acceptance. If we can now acknowledge that we can’t “bring it back,” then we have a unique opportunity, to build a truly viable ecosystem where talent is recognized, appreciated and rewarded.
And if there is one sector of our industry that has most to gain from the revolution unfolding before our eyes, it is the Independents.
I spent mid-2000 through mid-2006 at EMI Music as part of the Digital Business Development Group. Every time there was an opportunity to take a major step forward, it was blocked by “we can’t do that, it will hurt CD sales!” That argument is now thankfully irrelevant. The CD will be around for a while, but only as a shadow of its former self. The era of music as product is almost over, swiftly being replaced by music as service. Subscription services like E-Music and Napster, whether fee-based or ad-supported, allow music fans to experience all the music they can possibly absorb without any friction. Why should 99p be the barrier to discovering a song that really matters?
Combined with state-of-the-art recommendation tools such as The Filter and EchoNest, the well-constructed playlist has become the new social currency, rendering file-sharing passé. If you can listen to anything you want, whenever you want, wherever you are, why do you need to own it? A fan may no longer feel the need to buy a song at a time, but they will pay for experience, relevance and community.
In a fully connected world, access trumps ownership.
The recorded music business is currently experiencing the worst economic downturn in its history and no one seems sure as to what to do about it.
If I were setting up an Independent label today, my strategy to succeed would be simple - Try Everything! Experimentation will lead you to the new models, the new paradigms and, most importantly, the new revenue streams.
This gives UK independent artists and independent labels an extremely viable opportunity to connect with a global audience. That said, one myth needs to be addressed; the Internet as the great level playing field, where every artist has an equal chance for fame. Actually, it is so level that it’s increasingly difficult to stand out in any meaningful way. It’s now the Attention Economy, where distribution is trivial and getting me to notice you is the real name of the game.
To achieve this, you will have to be more professional than ever, making great music, playing out, building up your e-mail lists, pulling your audience to you and then super-serving them. Don’t worry about being paid for everything you do, think from a fan’s perspective. Give them access to photos, videos, live tracks, etc., they’ll reward you with loyalty and revenue.
For example, there remains many concerns over the unlicensed use of music. One of the main focuses currently revolves around the MP3 blogs. My feeling is that, on balance, this is a new art form that ultimately benefits artists, my advice is to embrace and participate.
Be fearless, be relentless and be unique, it will pay off.
When will the chaos subside? Hopefully never! But there will need to be a bit more structure if the digital revolution is to deliver on its promise. If you’d like a glimpse into the future, it’s always good to consult the past. A book you should read is ‘Ruling the Waves: From the Compass to the Internet, a History of Business and Politics along the Technological Frontier’ by Debora L. Spar. She is a Harvard Business School professor with a refreshing outlook on how some degree of order is necessary in any new paradigm if it is ever to become economically viable.
My outlook is as follows:
Music Industry 1.0 is now officially over
- It’s not about business as usual, it’s about being unusual.
- It’s not about protecting music, it’s about monetizing it.
- It’s not just about revenue, it’s about mindshare.
- It’s not about suing consumers, it’s about serving consumers.
- It’s not about file sharing, it’s about sharing experience, recommendation and discovery.
- It’s not a devaluation of music, just a revaluation.
- It’s not about music as a product, it’s music as a service.
- It’s not about advances, it has to be about partnerships.
- It’s not about overthinking, it’s about experimentation.
- It’s not about being desperate, it’s about being brave.
- It’s not too late, it’s just the beginning.
Integrating his widespread digital authority in music, mobile, IPTV and next-gen product & service development, Ted Cohen is the Managing Partner of TAG Strategic, a digital entertainment advisory business with offices in LA and London.
While the music industry has been somewhat slow to embrace the digital future, Cohen is a striking exception to the rule. Of course, when you start your career on the road with the Sex Pistols and Van Halen, you're more primed for the unexpected.
Known throughout the technology and music industries as being "part ambassador and part evangelist," Cohen was instrumental in crafting the licensing agreements upon which the Rhapsody subscription service and the iTunes Music Store were built.
A 30+ year industry veteran, Cohen serves on the NARAS (Grammy) Los Angeles chapter Board of Governors, the Board of Directors for the Neil Bogart Memorial Fund, and lends his time and talents to music & technology education efforts such as the Grammy In The Schools Program.
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