Future of the music industry

Music listner

Paul McGuinness, manager of U2 for 30 years yesterday gave his view on the future of the music industry (reported in the FT):

Mr McGuinness, a highly-respected figure in the industry, yesterday told delegates to Midem, the music industry’s international trade show being staged in France, that they had concerned themselves for too long with the small fries who organised illegal peer-to-peer file-sharing on the internet.

Mr McGuinness, who has managed U2 for 30 years, said: “I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multibillion dollar industries that benefit from these countless tiny crimes. The ISPs [internet service providers] the telcos [telecoms companies], the device makers.”

I’m sure that Paul forgotten more about the music industry than I will ever know, but I have to disagree with him here. In his vision of the future ISPs and telcos will bundle music subscriptions with internet access and take a cut of the revenues.

To say that, I think, is to misunderstand the nature of the internet.

We expect services we subscribe to on the internet to be available anywhere, therefore to me it doesn’t make sense that access, which is tied to geography, is bundled with services.

Moreover, whilst ISP’s will I’m sure be happy to add music offerings to their product catalogue they won’t want to alienate all their customers who use P2P services in the way that McGuinness envisages. To do so would be commercial suicide.

Instead, the solution for the music industry is to find a way to make money by building services which people want to use – i.e. which are better from a cost+convenience+quality perspective than the P2P alternative.

I think that ad supported streaming services will be the answer. LastFM recently took a step in this direction, and when Fred Wilson blogged their announcement he said the following:

I’ve been saying for as long as anyone would listen to me that one day all the music ever recorded is going to be on the Internet and we are going to have sufficient bandwidth and connections on every possible listening device and at that point file based music is going to be history. I’d go back and find all the posts I’ve written on this topic but it would fill up the whole front page of this blog. I believe this with all my mind, heart, and soul.

I believe it too.

And it might not be that far away.

There are a number of companies making moves in this direction. As well as LastFM there is QTrax, We7 and Spotify, which some are describing as the Joost of music.

  • It’s “Paul McGuinness”

    Martin McGuinness is a totally different kettle of fish http://en.wikipedia.org/wiki/Martin_McGuinness

  • It’s “Paul McGuinness”

    Martin McGuinness is a totally different kettle of fish http://en.wikipedia.org/wiki/Martin_McGuinness

  • Nice one re Martin, funny. Paul McG is surely a success given U2 (by the way besides U2 I can think of PJ Harvey, but no one else), but go to the Music Managers Forum if you really want to see to what extent these guys have no clue… This is a dumb comment from a great man that is in may ways “back to the future” (reminds me of early days of the RIAA — let’s focus on device based protection huh ?). So dumb, so predictable, so much more for our startups to do !

  • Nice one re Martin, funny. Paul McG is surely a success given U2 (by the way besides U2 I can think of PJ Harvey, but no one else), but go to the Music Managers Forum if you really want to see to what extent these guys have no clue… This is a dumb comment from a great man that is in may ways “back to the future” (reminds me of early days of the RIAA — let’s focus on device based protection huh ?). So dumb, so predictable, so much more for our startups to do !

  • Interesting post on a potential new model http://radar.oreilly.com/archives/2008/01/a_rare_post_abo.html

  • Henry

    Interesting post on a potential new model http://radar.oreilly.com/archives/2008/01/a_rare_post_abo.html

  • Joe T.

    Good post, Nic. I think there’s something else going on with the music industry, and it’s very sad. It’s the passing of a very long era that has existed since the beginning of recorded music. Whether we continue with the present “file-based” system, or evolve to a system where “music is like water” pouring endlessly out of the pipes of the internet — universal access to every track ever recorded — something much more fundamental is happening. It used to be that the music industry “found” the best music and “pushed” it out to the public. Promoters would actually find the most talented and interesting artists and labels would promote those artists. Think of all the cool artists Malcolm McLaren found in the 70s and 80s, for example. Who would have known about them if it weren’t for someone like Malcolm?

    Today, by contrast, all the work of finding great new artists is on the individual listener. True, it’s a much more “libertarian” and “decentralized” system, but it’s also much harder for the average music consumer these days to sift through millions of tracks and new artists, and locate the best.

    The only artists who have any real promotional money spent on them these days are the ones who don’t need it — like Britney Spears. The truly talented gems get little or no promotional investments now, and are never heard from.

  • Joe T.

    Good post, Nic. I think there’s something else going on with the music industry, and it’s very sad. It’s the passing of a very long era that has existed since the beginning of recorded music. Whether we continue with the present “file-based” system, or evolve to a system where “music is like water” pouring endlessly out of the pipes of the internet — universal access to every track ever recorded — something much more fundamental is happening. It used to be that the music industry “found” the best music and “pushed” it out to the public. Promoters would actually find the most talented and interesting artists and labels would promote those artists. Think of all the cool artists Malcolm McLaren found in the 70s and 80s, for example. Who would have known about them if it weren’t for someone like Malcolm?

    Today, by contrast, all the work of finding great new artists is on the individual listener. True, it’s a much more “libertarian” and “decentralized” system, but it’s also much harder for the average music consumer these days to sift through millions of tracks and new artists, and locate the best.

    The only artists who have any real promotional money spent on them these days are the ones who don’t need it — like Britney Spears. The truly talented gems get little or no promotional investments now, and are never heard from.

  • Robert Gordon

    Last.fm’s announcement is only big news if you’ve never used imeem.com – they’ve been doing the ‘free, on demand, high quality, major label streaming’ for over six months

    Furthermore a scientific comparison finds that imeem has a catalog twice the size.

    http://youngstv.imeem.com/blogs/2008/01/31/_v6jwLC7/a_comparison_of_lastfm_vs_imeem_vs_deezer

  • Robert Gordon

    Last.fm’s announcement is only big news if you’ve never used imeem.com – they’ve been doing the ‘free, on demand, high quality, major label streaming’ for over six months

    Furthermore a scientific comparison finds that imeem has a catalog twice the size.

    http://youngstv.imeem.com/blogs/2008/01/31/_v6jwLC7/a_comparison_of_lastfm_vs_imeem_vs_deezer

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