Posted by: gaiusc | 14 April, 2009

The music industry: “intelligent” design as a business model

Every now and then you get reminded just how out of touch the music industry actually is. I’m not talking about the artists but rather the business people behind them and how their paranoid approach to information technology and greed is killing them.

In the April 6th edition of Hot Press, there is a piece on the passing of SpiralFrog, who tried to find a way to make money out of downloading music. For an analysis of what happened, they went to Paul McGuinness, manager of U2. He’s bang on with the specifics of why SpiralFrog failed but then he extrapolates to the problems facing the wider music industry and his gross generalisation is breath-taking.

But I think in terms of the future of the record industry, the real question for the record business is, ‘Who has got our money?’ Ha, ha! And I think we all know who has got the money. The money is in the hands of the phone companies and the ISPs. And the reason why somebody buys Broadband at $20 a month or whatever is not particularly to chat with their friends or read the Irish Times. It’s got a lot more to do with getting free downloads of movies and music. So that’s where the money is.

Firstly, there is the blithe and insulting assumption that anybody using broadband is only interested in pirating copyrighted materials.
Secondly, there is the assumption (“our money”) that they have the god-given right to charge what they like for their goods. In free-market terms, they do have the right to charge what they like and we, the consumers, also have the right to turn our noses and do something more worthwhile with our money but then again, Paul seems to think that it’s actually his money.
Thirdly, there is the assumption that because their business model is ludicrously out-of-date, they can compensate by strong-arming ISP’s and stealing their money instead.

Let’s deal with these one by one. I’m a broadband user and I do quite a lot with my connection. Let me list a few of them below:

  • Play games online
  • Adminster three gaming fansites, 1, 2 and 3
  • Browse other forums like the propertypin and planetrugby
  • Send emails and chat to people
  • General information & research

No downloading gigabytes of music!

The music industry ran into trouble in the first place because of the exorbitant prices they charged. The movie industry faces similar challenges with piracy and responded by making dvd’s cheap and actively exploring the possibilities of using broadband to stream movies directly to peoples’ houses. As well as that, the quality of the extras you get with modern DVD’s encourages people to buy legal copies instead of getting poor quality illegal copies. Instead of acknowledging that their monopoly was over and that it was time to stop charging €20 for CD’s that cost 20c to produce, they attempted to strangle anything that allowed consumers to purchase cheaper music legally. Witness the court case against CDWow forcing them to charge more for music CD’s because the music industry wanted to charge the maximum that they could get away with in each market sector.

Lastly, what exactly have the ISP’s and phone companies done to warrant the beady eyes of music execs looking their way? You may as well sue car manufacturers for criminals using their cars as getaway vehicles after bank robberies!

Instead of blaming everybody else for the eventual failure of their business model and attempting to turn back the evolutionary clock, the music industry would be better advised to look for new ways to market their products.



  1. Hiya

    Sorry, I’ve meme’d you…


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