The Digital Music News has a post today quoting the CEO of Netwerk Records as saying, "Once the price goes down, the P2P market starts to disintegrate." First, let me say that I'm glad to see record executives taking a new look at how to stop piracy. You guys were about as well respected as used-car dealers when you decided to sue thousands of your own customers, and that reputation has only managed to slide ever-lower since. It takes a lot of guts to abandon a losing strategy and begin to adopt a new one, and I applaud you for taking even the tiny-est steps in that direction.
However, cut-rate prices on digital files aren't the answer. The musicians aren't getting enough revenue from digital sales as it is, and we can't possibly expect you to take a smaller cut of a smaller number and remain happy.
So what is the answer? Here are my three simple rules for re-invigorating the music industry and managing the transition to a digital panacea for all.
- Fingerprints are fine. DRM is not. Drop your flat-earth thinking about how to protect your content before it's too late. I can tell you from experience that DRM doesn't work. It only keeps valid customers from having a seamless experience with your product, and it does absolutely nothing to protect your product from a would be thief. It's the digital equivalent of hiring Barney Fife to guard your store. He annoys the paying customers, and the shoplifters just laugh behind his back as they walk away with your merchandise.
- Apple is right, 99 cents is fair. A buck a track is a simple price point that allows consumers to equate something with something else. One dollar equals one song. Steve Jobs isn't always right, but he's got the lock on this issue. Besides, your credibility is weak at the moment which causes any attempt to raise your prices to be seen as an attempt to shake down your customers. Let's fix your image before we start thinking about price increases.
- Quality. I can't stress this enough. The digital files on offer from major online stores are encoded in 128-192kbs quality which prevents full adoption by your most stalwart fans. "Ripped" albums on p2p networks are often available in lossless formats or 320kbps compression. You will never be able to compete with higher quality for less money, that's just a fact of the times. If I hear one consistent complaint about the army of online music stores it is that the music you offer for sale is inferior to the music available through piracy.
1. You are absolutely correct. Most people surveyed said they will download songs from pirates even if songs go down to a 25 cents. Anything lower and you might as well give them away for free. So if 25 cents is too low and 99 cents is just right what is the industry to do? Well the fact of the matter is that "YOU CANNOT COMPETE WITH FREE". With Fiber rolling into homes and more bandwidth then ever for priates to use as bots, I can't see how this situation is going to get better using lawsuits and DRM. I think there are a lot of companies that can help. Companies mailing notices out are lame, that includes BAYTSP and company. Companies that go after the piracy groups that produce the content, otherwise known as organized piracy, are in. These companies include Divinity Assets and gang. If you look at the budgets, they are non-existant for these types of companies. These companies believe in going after producers while protecting consumers. After all these consumers can be your future or current customers, don't sue them away. Wake up quickly Hollywood. Embrace new business models and become smarter in fighting piracy. Fix your supply chain holes and mass producers of illegal content.
Posted at 11:02PM on Aug 21st 2006 by Max Keiffer