May 29, 2002

A missed Internet opportunity for record companies

- By Robin "Roblimo" Miller -
This essay is not about Linux or Open Source, but if you like music and the Internet you may want to read it anyway, because record companies are being so amazingly stupid about the Internet and how to use it as a sales medium that I often wonder how the people who run them ever made it beyond the local McDonalds counter into jobs that pay seven or eight figures per year.
On one side of the music promotion coin, record companies constantly complain that they are forced to pay huge fees to "independent" promoters if they want their latest releases played on broadcast radio stations, as described in an ABC News report.

At the same time, the very same record companies are complaining that online music stations are playing music without paying for it, and are agitating like mad (although so far unsuccessfully) for government-mandated royalty payments from webcasters that are much higher than most webcasters' incomes, and much higher than the fees paid by over-the-air music broadcasters.

Yes, broadcasters pay fees to play music. But they don't play a lot of songs that they don't get paid to play. This seems to be especially true of big broadcast station chain owners like Clear Channel, a company that runs mind-numbingly similar (and boring) radio stations in many U.S. cities, none of which seem to have playlists with more than 30 or 40 songs on them. (We can get into the evil of the FCC's nasty decision to allow a few large companies to control most radio broadcasting in this country another time. It's a separate topic.)

Are you with me so far? Does what you've just read make any sense? It doesn't make sense to me. I mean, the words do, but the idea of record companies trying to gouge webcasters even as they complain about getting gouged by over-the-air broadcasters is, flatly, nuts. You would think people who think like this would be kept in asylums, not allowed to run large businesses.

I challenge you to sell me music over the Internet

Why none of the record companies have figured out how to sell music over the Internet is beyond me. Perhaps all of their executives have taken too many drugs. So I will now explain a simple system that will get me to buy music over the Internet, using existing technologies, that could revolutionize music distribution and increase record company profits:

  • Sponsor webcasters and help them flourish
  • Give them low-bandwidth versions of your music to play
  • Make sure every song has a "click to buy" button available on the Webcasters's sites while it is playing, in lieu of royalty fees.
  • Charge me 50 cents or a buck for a high quality download of the song that is currently playing; make sure the fee is low enough that it's an pure impulse purchase.
  • Make sure the "click to buy" feature prominently features not only the current song but the last 10 or so that played, so if I missed one I can go back and pick it up later. A whole catalog of available music should also be on the webcaster's site.
  • If sell-by-the-song is too radical for record company executive's drug-addled brains, at least have "click to buy" CDs of the artists being played, preferably at a semi-reasonable price like $10.99 for current hits and less for older stuff.

You cannot click on your radio and instantly buy music from K-BOR FM, your local over-the-air "alternative" rock station. You can easily set this up for a webcast that people listen to through their computers. It is as natural and simple an ecommerce application as can be imagined, and one that could be used to sell albums and songs not only from a few "major" artists but those produced by a broad spectrum of musicians.

A wider range of sales would make a wider range of music profitable and might kill that constant "only one group in 10 ever makes us money" whine the record companies use to justify their horrible behavior toward artists and their tendency to go with pap instead of producing music with substance to it.

There would be no reason to stay away from pap. Most people, being ordinary, tend to like ordinary music. "Click to buy" would probably help sell Brit'Sync albums as much as it would sell music by the more musically adventerous artists I prefer personally. That's the point: Webcasting can be narrowcast, not broadcast, so teenage girls who want Boy Bands 24/7 can get what they want, and so can those who might want a Basic Bach channel that played nothing but old Johann Sebastian's work all day and night.

Another sales possibility here is exclusive interviews or "behind the scenes" videos of favorite artists. Those who want to know every detail of J. Lo's life would certainly pay for reports of what she ate for breakfast last Tuesday if they were presented in an appealing enough manner.

I'm sure you, being a creative, intelligent NewsForge reader, can come up with another dozen ways record companies could earn money from webcasting, while also using it as a method of promoting the musical diversity we're losing as radio stations become more insipid, to the point where a growing number of classical stations now play the same "lite" classics over and over instead of giving us the hard core stuff.

Too bad record company executives don't read NewsForge. Or perhaps some of you do. If so, the ideas outlined above are free for the taking. I have no intention of going into the webcasting business. I just want to be a listener -- and a customer, too.

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