A lot of people out there are quite juiced up about online music. MP3.com just IPOed at a market valuation of well over a billion dollars, Liquid Audio shot out of the gate for just short of $100m, Spinner and Nullsoft were acquired by America Online, SDMI is being rolled out, Madison is still getting whispers, Sony’s in bed with Microsoft, and Universal and BMI are suddenly making forays into the audio encryption business. Everybody’s making a music play, and tens of millions of people are “getting jiggy with it” on the Net.
And yet, like so many other industries in the new economy, nobody’s actually figured out how to turn much of a profit off of online music sales. Sure, some folks are making money off of advertising on music-related sites, and CDNOW and Amazon are making their fair share doing mail-order CDs, but nobody out there that I know of has bounded into the black based on sales of digital music files.
This should seem strange to you.
After all, don’t we all realize that it’s much better to have your music as universally available bits than scratchable, temporal, bulky platters of etched pits? And aren’t we already used to buying things online?
There are two sets of problems here, and both of them are more psychological than technical problems. The first is that of tangibility and value differentiation and the second deals with interactions with rich media.
Tangibility & Value
With the existing music sales infrastructure, one acquires a physical product that contains the music. I can hold each album of mine, look over in the corner proudly at my rack of disks, bring certain albums with me to the beach or my friend’s house, and resell my old disks that I don’t feel like listening to again. Additionally, the medium through which I acquire purchases (CDs/tapes/vinyl) is distinct from that in which I am freely introduced to the music (clubs/radio).
Internet audio lacks both attributes: not only can I not feel the unique carrier of my purchased music, but the medium in which I receive purchases, i.e., a downloaded file, is exactly the same as the medium in which I receive free samples of music. If Tower Records gave away loads upon loads of CDs and tapes for free, you might feel that a CD was on the whole a less valuable item: “Since Tower can give away so many, why do they cost so much?” But free audio CDs are a rare thing and a special gift. The value of a CD stays high.
It took me well over a year to understand that this is why the large record labels are not jumping on online promotions. One thing leads to another and the train of thought progresses something like this: “If you can get a free MP3 of one song from an artist, why can’t you pay to listen to the rest?” to “Hey, all of the MP3 files I’ve gotten to date didn’t cost anything. Who are you to try and charge for them?” Free distribution in a medium decreases perceived value, which is the last thing the labels, or artists, really want. Could a consumer really think about paying for web-based email these days, even $5/month? No. Could she have five years ago? Probably. The same thing goes for up-to-the minute news, realtime stock quotes, weather, and (soon) computers: while they certainly have value, competitive pressure has reduced their expected price to $0.00.
I do find the tangibility argument mildly non-sensical. At one point, I was teaching a high-school classroom about new media and I presented a Rio, demonstrating that it had no cartridges (not necessarily a good thing!) and no moving parts. A girl in the back of the classroom raised her hand and went on to tell me that she’d never use such a device, because it was unnatural and didn’t enable her to grasp her music like she could a CD or a tape. I realized later that this was folly: holding music at all is unnatural! Edison first scratched his voice onto a wax cylinder at the turn of the century; before that, there had not been a notion of being able to capture sound in a bottle, to play it back later or to carry it to another place. The notion of being able to contain music was a product of this century’s technological innovation.
But why did the girl claim it as natural? Because every piece of music she’s ever bought she had been able to hold. “Of course I can take this shiny plastic disk and put it in that box and hear music!” Such thoughts would have been ludicrous 200 years ago. It was the regular exposure of the idea that made it natural and intuitive.
Therefore, I think that there is a psychological barrier to the purchase of downloadable music in that is that it is new. But my high-schooler should not make one dismayed, but encouraged, for with time the new distribution mechanisms will be perceived as the only sensible thing, and it may be difficult to imagine why people wanted to grasp onto frail and imperfect physical copies of an artist’s performance.
Rich Media Interactions
But downloads are only one piece of the pie: there is also the question of streaming audio. Why aren’t people interacting with audio streams? What happens when you walk into a room with a television on? Despite my hatred of television’s content, I am captivated by the rapid succession of images. Our brains, designed to pay as much attention as possible to fast-moving things (since these might be spears and/or tigers coming our way), get us stuck on the television like a bad stain on one’s Sunday shirt. The intensity of the medium makes us forget all else, sit down, and watch.
And so we watch, but we do not interact, contenting ourselves to receive instead of participate, which is just as well since we can’t. A show is being put on for us; it would be rude to stand up during a play and shout out to the actors: “No, Ophelia, you must run out hanging your wrists and pull your hair! Hamlet, cross stage right!” While there may be some director-types who would be comfortable with and excited by such interactions, most of us would much rather enjoy the performance as-is. Direct interaction with rich media is uncomfortable.
The cunning reader may counter me here that rich media realtime interactions have already proven themselves to be psychologically comfortable in the forms of video games and hypertext. To that I respond that those media have designed themselves to be interactive and took time to become comfortable to the general public. Moving traditionally non-interactive media like radio, television, and movies to the interactive computer may result (initially) in the interactive features being underused. This should not be surprising; the public just needs time to adapt to the idea that it is not only possible, but it is socially acceptable to interact with these rich media streams; that the artist wants them to click on things during the playback of their music. People are used to wanting to know (“Oooh! I love that song! What CD is that on?”) but are not used to actually being able to ask and receive answers from the source providing the media. Just as CD jukeboxes and MP3 storage gave us non-linear access to our music and induced a shift in how we perceived our music, newly emerging music technology will give us interactive access to music and induce another shift, as great or greater.
The technology will gallop ever forwards, but we may have to hold the reins for a bit to wait for society to catch up psychologically to this breakneck pace of innovation. Patience, so rarely talked about in this industry, must be embraced as users get used to this new mode of entertainment. Digital music sales will probably have their day, but perhaps not until the major labels have had time to adjust and enter the market themselves…
But if this process takes too long, people will have become too used to receiving all of their music for free and record labels will have to think of new business models through which they can still maintain profitability (and pay artists) with only minimal revenue from actual music sales. Korn T-Shirt, anyone?