The Three Future Models Of The Music Industry

I’ve said it before, I’ll say it again. There are only three music industry business models you need to worry about in future. These are:

1. Free to consumer
2. Subscription
3. Direct to fan

Free to consumer is either going to be ad or brand funded. For example, mobile handsets may pay for it to decrease churn. A car manufacturer may pay for it as an add-on. Or an ISP like Virgin may bundle it in to their monthly subscription price.

Subscription is, for example, Spotify Premium or eMusic. Passionate music fans will pay extra to get functions like shared playlists, editorial, discovery & recommendations.

Direct to fan is Topsin, Bandzoogle & Bandcamp. Artists and labels selling high quality or exclusive tracks to their most valuable fans.

What about download stores, like iTunes? Simple – it’s an aberration. A freak of business that is explained  in this book – The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. In summary, large companies are very quick to jump on new technologies that reaffirm their business models, but very bad at adopting technology that disrupts it. Example 1? Kodak. Example 2? The Major record labels. So, we have a situation where the dominant business model is iTunes – single pay downloads – because that is closest to the established model. But the three models that everyone wants, and where the greatest opportunities are, are free, subscription and D2C.

So, it’s interesting to read this article from the World Mobile Congress in Barcelona. Titled, “The future of the music industry is mobile“, it quotes Ceci Kurzman (manager of Shakira) and Matt Drouin (manager of Metric). The title is wrong of course, since I’ve just  explained what the three future models will be. But it shows that industries outside of the music industry are beginning to recognise that free and subscription are the way forward.

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About Neil

Neil Cartwright founded Million Media in 2006 with the aim to help people understand digital marketing and use it to their advantage. The vision hasn't changed but the technology has.

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