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Posted by Mark Mulligan on January 26, 2011
There’s been a lot of buzz (some positive and not so positive!) about comments I have made about the current state of the digital music market in The New York Times and at Midem.
The quote that really grabbed the attention was “As Things Stand Now, Digital Music Has Failed.”
The problem with a quote like that, of course, is that it can mean many things to many people without further context, so here’s the additional context I gave around this in my Midem speech:
Digital music is at an impasse. Digital music has failed to reach its three key objectives:
1 – To offset the impact of declining CD sales.
2 – To generate a format replacement cycle.
3 - To compete effectively with piracy.
With music’s first digital decade behind us, we’re still trying to define a role for mobile; we’re still waiting for a 99-cent download market to emerge outside of iTunes; we’re still waiting for 9.99 subscriptions to break out of a niche; we’re still trying to work out how to make the economics of ad-supported add up; we’re still waiting for piracy to decline; we’re still watching recorded music revenues decline; and we’ve still got CDs as the bedrock of music sales.
The simple fact is that current music products do not meet consumer demand, and the divergence between emerging consumer behavior and legitimate music products is widening at an alarming rate.
Current digital music products are essentially transition technologies that were useful for bridging the gap between the analogue and digital worlds, but now it’s time to start the digital journey in earnest. The current portfolio of digital products will not get us there. Consumer behavior, as disruptive as it may be, is rapidly outpacing the evolution of digital music products. This means a complete new wave of music products that embrace access and experience, instead of trying to replicate analogue-era distribution business models in a digital context.
Selling units of "stuff" is not the future. The slowdown in digital music growth is rock- solid evidence of this fact.
Music products must harness disruption; that isn’t in question. What is in question is whether they will do so quickly enough to prevent another massive chunk of the marketplace disappearing for good.