Digital DistributionCause and Effect

WARNING :: Some of this presentation is MY OPINION...

Barriers to Entry

History

It Started With Music

✤ The music industry used to need an “OFFICIAL DISTRIBUTION CHANNEL” We used to call these folks, Labels.!

✤ With the advent of DIGITAL we no longer needed to get the music into a “brick and mortar” store.

This led to DIGITAL distribution channels

differences listed here...

1998 - 2002 File Sharing

Napster was the first widely!known “peer-to-peer” file!

sharing network

.....and on and on

You can’t stop file sharing unless you propose a valuable alternative

Age of the Lawsuits

✤ The industry went for blood, labels suing technology companies, the RIAA targeting fans. The goal was to put toothpaste back in the tube !

✤ 35,000 individuals were targeted by the RIAA for “illegal file sharing”!

✤ RIAA later modified to “Three Strikes You’re Out” policy!

✤ This strategy effectively made CONSUMERS the enemy and further strained the relationship with the fan

2003 Apple Saves the Day

DRM (digital rights management)!!

Music as a loss leader for a device!Margins Squeezed!

... but sales are up again

The A-La-Carte Download Store

2003 - 2008 Mimic what works

✤ Amazon!

✤ eMusic!

✤ Wal-Mart!

✤ 7Digital!

✤ TuneTribe

A-La-Carte Download Stores

... This didn’t fix P2P

✤ Peer to Peer sites continued to pop up. !

✤ BitTorrent became a phenomenon that helped to protect the identity of the file sharer (multiple people sharing “bits” of songs)!

✤ The major labels / RIAA continued to file lawsuit after lawsuit to

As ISP Connections Improved This became a Movie and TV Problem… not just a Music Problem

Piracy Flourished

New Models Popped Up

Advertisement Based Services

The music is free, !but you’re going to have to sit through ads!(hey, this sounds like something we’ve got already)

AOL Music | Yahoo! Music

Network TV Began Streaming Shows with Commercials!Cable Providers began “OnDemand” Services

New Models Popped Up

Subscription - All U Can Eat (free or for a monthly fee)

What if we streamed the data over the Internet?

Lets do that with DOWNLOADS!!!

For a monthly fee you can have all the music you like!

.... or your cellular network

New Models Popped Up

Subscription - All U Can Eat (free or for a monthly fee)

For a monthly fee you can have all the video you like!

I prefer subscription....

✤ Social Sharing Component!

✤ Both INSIDE the App!

✤ And OUTSIDE the App (www.facebook.com/music)!

✤ Apps!

✤ Mobile Streaming / Save Lists Locally

AND THEN PEOPLE COMPLAINED THAT THERE WAS!LESS MONEY IN THIS SYSTEM

"There isn’t some God-given right to make millions from playing a guitar, it’s just lucky that there’s been a supply-and-demand thing for 50 years and now the supply is changing. The demand is still there, but you don’t have a right to get paid for every song you create. I value music very highly and come from a generation that’s used to paying £15 for an album, which seems like a fair price - £1 a song. But it’s a random amount in the first place. This generation is getting used to paying 70p for a song, or nothing. It’s a terrible shame, but it’s technology moving forward, as it does in every business. You can’t stop it."

- Tim Rice-Oxley, Keane

Where do we go from here?

✤ The Major Labels (all THREE of them) have equity in Spotify!

✤ There is an added element of “SHARING” that traditional Digital Distribution does not.!

✤ It serves both MEDIA-FILES (who want the entire album) and CASUAL FANS (who want singles here and there)

What Are Users Looking For?

✤ In the decade since Napster’s launch, digital music consumers have demonstrated their interest in five kinds of “free” selling points: !

✤ 1. Cost (zero or approaching zero),!

✤ 2. Portability (to any device),!

✤ 3. Mobility (wireless access to music),!

✤ 4. Choice (access to any song ever recorded) and!

✤ 5. Remixability (freedom to remix and mashup music)