Future of the music industry

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.