Newspapers in the ’10s…Same as Record Companies in the ’00s?

The music industry has tirelessly worked to eradicate online file-sharing services.

~CNet, April 22, 2003

Stop me when you’ve heard this one.

Growing networks of access, ease of dissemination, and generously compressed forms of the medium create a monumental rise in the way content is passed from one person to another. The people who produced (note: not created) the original content get upset and start pointing fingers everywhere but themselves for failing to develop the system first.

It was early this decade, and while I won’t dive into a historical recount of the last ten years, there are certainly many similarities between the battle faced by the music industry in the beginning of the decade and the print conflict of today. It isn’t a perfect symmetry, but there is a line that can be drawn that involves the way Internet users have become accustomed to receiving content and the reluctance for the purveyors of that information to try and fit it into that model.

This may be fodder for both sides of the equation, so I’ll tread it carefully: the stigma of Peer-to-Peer music sharing was that of piracy, and even if the method is not that fundamentally different, written content does not have the same issue. However, it’s not that different, and that proof may actually be in history. Look at both media and their archaic counterparts: what’s the difference between taping tunes off the radio and photocopying that story in the Sunday edition?

The anti-establishment in the case of print is in fact part of the establishment. Google is not Napster, and you aren’t going to see the WSJ going after college students for sums of money after downloading a few of its articles (at least I hope not – think of the message you send to the few kids left trying to read a newspaper!). But why not?

We don’t hear much about record companies these days, maybe because they found a way to turn it around. If the system is in fact decently parallel, what is there to learn?

The Music Solution

“We were able to negotiate landmark deals with all of the major labels,” [Apple CEO Steve Jobs] said of the company’s newly launched iTunes Music Store. “There is no legal alternative that’s worth beans.”

~CNet, April 28, 2003

Six and a half years later, there is no doubt that the model developed by iTunes to manage digital music (and later video content) was a success. The numbers speak for themselves when it comes to both revenues and the sheer volume – 70 million songs sold in the first year, 8.5 billion sold as of September 2009. It’s worth noting the growth of the entire vertical of digital music in the last five years, as evidenced by IFPI’s  annual study on the market:

The solution for music producers was to move towards the single-serve model, with basically a laterally tiered warehouse for them to move copy. This isn’t the perfect fit, necessarily, for print content, and the fundamental difference is that business model for music sales was not an ad-supported loss-leader. However, that doesn’t mean that there can’t be some reinvention of the method, and unit-by-unit sales is not something that has to be limited to CD tracks or episodes of sitcoms. 99 cents may not be the price point, but the innovation is the lesson here, not the recipe.

The recorded music industry is reinventing itself and its business models. Our world in 2009 looks fundamentally different from how it looked five years ago. Record companies have changed their whole approach to doing business, reshaped their operations and responded to the dramatic transformation in the way music is distributed and consumed.

~John Kennedy, chairman, and chief executive, IF PI, January 2009