Monday, October 01, 2007

Music Industry Winces at Free Album

This is off topic, I know, but it does have implications for those of us who have entertainment companies in our portfolio. Today, the Independent ran a story explaining that the band 'The Charlatans' are to give away their new album for free on the Internet. Guess what? The music industry is none too happy about it.

"You Cross My Path" will be free to anyone who wishes to download it from the web site of the indie music station Xfm. The music industry is not entirely blameless, however, as the band decided to give the album away after receiving an offer that was considered 'less than satisfactory'. Their manager, Alan McGee said "I thought, 'well nobody buys CDs anyway'. If you talk to a 19-year-old kid, they don't buy CDs. In eastern Europe, nobody buys a CD – everything is digitally downloaded from the Internet for nothing. I came to the conclusion, 'Why don't we just give it away for nothing'."

Predictably, the music industry has condemned the move with Kim Bailey, the director general of the Entertainment Retailers Association saying that it will "Narrow the spectrum" of British music by denying new bands, who are unable to attract large live audiences, the chance to make money from selling their music. "This model is fine if you are a band that has already made it but our worry as an association would be whether it takes away that ability of new bands to get their foot on the first rung of the ladder."

This approach will, in our opinion become more widespread. The Internet has change many business models and the music industry, with the exception of backing iTunes, perhaps, has tried all it can, including suing a 12 year old girl to make a point, to stop the inevitable change from buying music to downloading it.

It is time the industry realised that downloading of music is the only future for the industry. My son is 13, he was horrified when I bought a Police CD recently and questioned me at length as to why I was 'wasting my money' when music is free on the Internet. My argument about downloading being copyright left fell on deaf ears. Just as when I was young we used to swap cassettes at school and record each others albums, the reality is that kids are still doing it the only thing that has changed is the technology.

What is the value of music anyway? After all it is only around eighteen songs of 3 minutes each, should we be paying £20 for such work? I am not sure that this is so. Yes the Beatles were genius and Oasis, in my opinion are rock gods, but every product has its ups and downs. Think of the time when phones cost a zillion pounds and weighed a ton, now they are practically disposable being so cheap, that is market forces. Phones calls have come down in price because of competition, stockbroking on the web is virtually free (remember when you used to pay 1% or a fixed fee?) and air travel cost has plummeted because of low cost airlines.

I am afraid that the music industry, and the artists, have to recognise that there is not the money in music as there was, at least not in the traditional business model sense. The Internet has made producing it cheaper, marketing it is cheaper and distributing it cheaper. Any businessman will tell you that when that happens margins get less...simple economics.

With kids out there mystified at their parents paying for CD's that clutter up their rooms and get scratched and lost when they could simply download music onto the latest gizmo, is it any wonder that some, like The Charlatans have realised this and are going with the flow.

As for not allowing new bands to get started, the Internet can take care of that too.. take a look at you can invest in the next 'Beatles'.

Come in The Music Industry... Your Time is Up....

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