The 1990s were the recorded music industry’s high-water mark, with the CD at its height as a product. The CD now finds itself in terminal decline and with no heir apparent. Instead music fans have fallen out of love with the CD and struck up a whirlwind romance with free music. This is an affair that has changed forever how people perceive music as a product.
The contagion of free music infects everything. (But file sharing is just the symptom, not the cause.)We are in the midst of a painful period of transition from the distribution paradigm of selling units of music to the consumption era where music fans expect music to be on tap, unlimited and whenever and wherever they want it. It’s hard too fight free when it is riding on the wave of inevitable change. Instead it must be beaten at its own game: a big fat carrot needs to accompany the stick.
A storm has been brewing at The New York Times for a while now. Ever since TimesSelect -- the paid digital version of the Times -- was cancelled back in 2007, the "content wants to be free" crowd has danced around its proverbial grave, singing the equivalent of "ding, dong, paid media is dead."
It's hard to argue against that viewpoint given the reality we're seeing: long-time newspapers closing their print editions entirely (see Seattle Post-Intelligencer), august magazines such as Gourmet shutting their doors, newspaper subscriptions at unprecedented lows, not to mention the power that Google has over the traffic that newspapers and magazines generate. Worse, our consumer surveys show us that 80% of US adults will choose not to pay for online newspaper or magazine content if they can't get it for free (see my colleague Sarah Rotman Epps' post on this for more).
It is amidst this maelstrom that nytimes.com is reportedly considering erecting a new pay wall -- one presumes a shiner, prettier one than the last wall, but a pay wall nonetheless. Read New York mag's take on the situation here. Not to put too fine a point on it, but this is a bad idea whose time has unfortunately come.
The fundamentals of media business are toppling as their 20th century foundations crumble. Consumers are falling out of love with paying for media and striking up illicit affairs with free content, not just because it is free, but also because it is on their terms. YouTube, BitTorrent and Spotify don’t dictate when audiences watch and listen, they let them take control. This is great news for consumers but terrible news for media businesses that have spent years building revenues upon near-monopolistic control of supply of content. This is the Media Meltdown.
Why all this matters to brands is because the tectonic shifts in media value chains are creating exciting new opportunities for non-media companies to become media companies themselves. Just as Apple transformed from hardware company to media services company with the launch of the iTunes Store, so too are brands such as Procter and Gamble with BeingGirl.com, Tommy Hilfiger with Tommy TV and Audi with its UK TV channel.
Why are brands such as these choosing to become media companies? Because communicating with audiences can be so much more valuable a relationship than a cold, hard sell to potential customers. Engaging young girl readers on BeingGirl.com with articles about what it means to be a young girl on the verge of womanhood means so much more to that audience than an old fashioned TV ad by P&G’s Tampax (one of the brands behind the site).
Parochialism aside, there is a major flaw in the logic here: if these large companies are deemed responsible in part for illegal content consumption, then so are the ISPs (arguably more so). And indeed the French Hadopi (Three Strikes) bill which this study is intended to complement, expressly apportions responsibility to the ISPs, making them partners in anti-piracy enforcement. So if they are deemed responsible under French law, shouldn’t they also be subject to a levy, if one is implemented?
The so called ‘Google Tax’ proposals also suggest that the tax should be paid regardless of whether the publishers have offices in France, based instead on whether French consumers view the ads. So this would mean, for example, that Google would have to make payment to support the French media industries if a French consumer clicked on a sponsored link, say, for washing machines in Seattle.