SXSWORLD

Better Late Th an Never: Consumers and F there's some common ground between what startup technology compa- nies, traditional content companies and even consumers all want," says Eric Garland, founder and CEO of BigChampagne Media Measurement. "In the middle of that Venn diagram of everyone's desires is the celestial- jukebox access model, this notion of 'Th e Cloud.' Th is took many more years than the good people at Rhapsody or Yahoo Music or the new Napster or countless others thought it would. Th is was supposed to be a signifi cant market many years ago. But better late than never." One reason this did not happen sooner was that both sides had obstacles to overcome, from the music industry's reluctance to embrace change to consumers' reluctance to give up ownership. But a few things have happened in recent years to nudge all parties toward a subscription model, most notably the rise of YouTube as a primary source for on-demand music despite its poor audio and video quality. In that lies opportunity, if labels and other content companies can deliver a better experience at a reasonable price. "Th e hope is that these subscription models will present a value Between this year's U.S. debut of Spotify and the rise of Google Music, the Amazon Cloud player and other services, there are suddenly more legal, legitimate, potentially revenue-gener- ating ways to consume music online than ever before. Th e question remains, however: will it be possible to break music con- sumers of the piracy habit and get them to pay for music they've been getting for free? "For the fi rst time, it seems like or the past decade, online music has been a wilderness that refused to be tamed. Record companies tried to assert control over consumer behavior with everything from impossible-to-share digital songs to lawsuits against downloaders. None of it worked, and unauthorized fi le- sharing grew bigger as label revenues plummeted. But that might fi nally be changing. Industry Finding Common Digital Ground by David Menconi bring real scale back into our business. Th e sky's the limit. We already have that scale because a huge amount of music is being consumed in various forms. We just haven't been getting paid for it." Not everyone is convinced the future Daniel Ek, CEO and co-founder, of Spotify store, technology in the music industry has traditionally been a winner-take-all proposition, with a single format dominating the market. Th is is no longer the case, which is a sea change that will only become more profound as time goes on. It would be a mistake to regard Spotify or anything else coming online now as the last word on music consumption. Th ere is also probably nothing that can bring back the old glory days of diamond-selling albums, because micro-niches now domi- nate. But all those tiny slivers might eventually add up to an industry that is bigger than ever, if labels can ever get ahead of the curve. "Th e record industry is betting on access," BigChampagne's is so rosy, however. Ethan Kaplan, the former head of technology for Warner Music Group, thinks it is too little, too late. If record companies are to survive at all, Kaplan thinks they will need to radically restructure themselves. "Labels are going to have to start thinking of themselves the way start- ups do, and measure themselves the same way every new company trying to become the next Facebook does," Kaplan says. "Th ey need to be super-hungry, super-lean and met- rics-driven. If you look at the money technology companies throw around, it is substantial and the odds are no worse than in trying to sign the next Green Day. Labels have to get more nimble and respond to changing tides a lot faster than they have been. You can't run top-down organizations that provide all the incentive at the top and none at the bottom. Th e compa- nies that are succeeding now do not operate that way." From compact discs to the iTunes proposition for the consumer, particularly if they're bundled with broader services," says Tom Corson, president and COO of RCA Music. "All these technologies are converging into what could be a great consumer experience. Now I don't know that we'll ever get the genie back in the bottle because everything has changed with track- buying and playlisting. But the opportunity to pay a reasonable cost for all the music you want, and use it in any way you want, could 30 SXSW ORLD / N OVEMBER 2011 Garland says. "Th e per-unit value of music is going down, and they get fewer pennies per song. But they're hoping for a more meaningful commitment to music as a category by more people over a longer period of time. Instead of worrying about the vast silent majority that doesn't buy CDs, (the industry should) try to get a little tariff out of virtually everyone. Th at seems like a more stable business, and sta- bility is what the business seeks now. In a lot of ways, fi le sharing has humbled the business. A lot of attitudes have changed. Now they're seeking real, sustainable relationships with fans." ■ OWEN ELA

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