Biz – The Access Model

As in: access over acquisition.

Charles M. Blow, on one hand, could be viewed as late to the record industry implosion party, (or RIIP,) in gaining some exposure on the NYT’s editorial page. Swan Songs? July 31.2009 On the other hand, he makes some killing points.

I.

The problem is that if people can get the music they want for free, why would they ever buy it, or even steal it? They won’t. According to a March study by the NPD Group, a market research group for the entertainment industry, 13- to 17-year-olds “acquired 19 percent less music in 2008 than they did in 2007.” CD sales among these teenagers were down 26 percent and digital purchases were down 13 percent.

II.

This is part of a much broader shift in media consumption by young people. They’re moving from an acquisition model to an access model.

III.

A study last year conducted by members of PRS for Music, a nonprofit royalty collection agency, found that of the 13 million songs for sale online last year, 10 million never got a single buyer and 80 percent of all revenue came from about 52,000 songs. That’s less than one percent of the songs.

(My comments) Behavioral economics would suggest that the high time/effort investment in downloading, whether as a paying customer or freeloader, favors only those downloaders who appraise that the investment has a positive payoff. Freeloading is not very efficient, but, it does have the upside of quantit. In fact this would figure into a positive behavioral model—even if the end result is acquiring more music than one could ever hope to listen to. (Ha! Visit my basement.) This also favors fanatical listeners, always a tiny slice of for-a-price music consumption.

The move to access rather than acquisition constitutes a different behavioral model altogether because, obviously, access-on-demand means the consumer is matching their listening time precisely to, as it were, turning the web radio on. There really is no business model for this from the record industry’s point of view.
But, it’s easier to shut down for the time being. The record industry could vanquish iMeem and Pandora and Grooveshark and all the others open access DIY podcasting services. Except then crowd sourced casting would really erupt, especially if people served tunes back ‘up’ into the network. Instead of menus of streams, you’d literally have crowd sourced clouds. This will eventually happen anyway. My guess is we will go through some heavy handed industry quashing of the DIY services, so it will swing back to acquisition for a while before the transition to crowd and cloud.

None of this matters much in the broad sweep of things. The record business, both tangible and digital, is just about finished.

80% from less than 1% of all available songs? Sounds familiar. But, the actual consumption when you include freeloading, is probably many times the size of the paying market. I don’t know the metrics, but it is safe to say the amount of music being listened to has never been greater than in today’s environment.


Side note: I’m still a customer of eMusic. This is after they jacked up (for me – 150%) the per track cost at the level of the monthly subscription, and, also let the other shoe drop by ending the ability to count your monthly downloads as single tracks against your monthly quota irrespective of how many tracks were on an album. (So, a six track album can count 12 credits.) Does that sound complicated? It is. eMusic’s principle innovation was to make the downloading model really complicated.

This is stupid on their part, but it’s understandable as a short term money-making bridge to eMusic’s going belly up. An objective eMusic seems hellbent on realizing. But, eMusic is almost completely in their own universe of stupid in an industry that has redefined the term stupid.

Still, I am a happy customer. eMusic remains a tertiary source of interesting music.

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