Wednesday, November 21, 2007

The future of the music industry

How many people still cling to CD playing at home when a coolly-styled mp3 player could be slid into the pocket and carried everywhere? What is the future for retail music stores when people could easily download music from the internet? What are the solutions to the decline of the music industry? Artists and music companies are obsessed with these questions and eagerly seeking a way out of the predicament. The answers swayed between utter despair and optimism.

Some people, especially the youngsters, who have easier access to the internet than their parents, believe the days of traditional music industry are counted. On the other hand, those skeptical to new technology are waiting for some effective control of online download to bring people back to retail shops. I find a touch of utopia in the second attitude. I take no doubt in the digitalization of music consumption as the inexorable destiny of future tide. The old model of music economy would not run well without modification.

Think Kodak for example. As we all know, Kodak used to be the tycoon in film selling and developing. But this market shrank at the rate of about 50% every year after the emergence of digital camera. Instead of waiting passively, Kodak took pre-emptive actions. It developed digital camera of its own brand. Its main business shifted quickly to photography printing, while it still sells films, but only to those advanced users. In this way, Kodak successfully transformed its industrial structure and keeps its lead place in the market.

We could make a parallel with the music industry. First of all, retail music stores should cater to the needs of advanced users of music, say enthusiastic fans, professionals and those who have a delicate palate. Without doubt, the timbre of CD recordings is finer than that of mp3 music. Though small in number, this group of people would make up of the bulk of future CD consumers.

For ordinary users, music companies should be reoriented to helping people better enjoy music. As Dave Kusek, a pioneer in this digital music revolution, pointed out, "It is going to become more about having access to music than actually owning it." Likewise, other than being merely a place selling albums, retail stores could become the centre of music and offer services from live show tickets booking to souvenir exhibition such as signed T-shirts, even to teaching those technophobes how to download music.

Last but not least, cross-field cooperation with some high-tech companies is greatly encouraged. With the quick development of technology, it is not difficult to imagine a mobile phone with Mp3 player and other up-to-date functions. Today, music is no longer merely a series of musical notes which happens to sound agreeable to your ear. It could also be a ring tone, a multimedia message, even a personal identification. In this newly discovered world, music industry could play a more positive role.

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Not about having access to music, about having access to fans, and how to manage the crowdsource necessary to build dedicated cores (think the Direct Marketing Association's 1 or 2% draw rule on mass mailers).

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