A friend of mine Geoff (@GeoffWherrett) brought this chart to my attention today. This has been one of those things that has been bothering me for a long time and even more so recently because of the shit that CRTC is trying to pull. Here I tell you what the story is and I urge you to do what you can if you love music and/or tv.
I know the attention span of an average blog reader is less than 2 paragraphs, but this post has a lot to say so bear with me, there are lots of points here.
The Death of the Music Industry:
This is the chart. An untrained eye looks at it and says the music industry is dead (just like the heading), but a trained eye looks and says, hell yes! Look at all the opportunities.
FACT: people haven’t stopped listening to music
The means to access our music has changed, not the number hours we listen to music per week. The environment and the technology have changed. The same business model that applied to physical tangible objects like CD’s and 8-tracks don’t apply in the digital world.
The music industry didn’t grasp this and didn’t look to see how the changing environment or advances in technology impacts their business. Even the first company who started selling digital music online was a computer manufacturer. While the music people were talking to their lawyers and going to courts, Apple figured people are likely to pay a buck to download a song.
Another example is lack of knowledge of the end users, for example what the music industry thought is important to “consumers” wasn’t the case. The assumption was that quality is important and CD’s have such great quality and are superior to mp3s. Where in reality, people didn’t care much about top quality and were ok with the youtube sound quality; instead of buying CD’s we started to make youtube playlists.
Rather than adjusting their business practice with the changing trend, technology and environment, the people in music industry, obviously hurt and desperate, tried to suit Shawn Fanning or put the teenagers who download music in jail. And as we see in this chart, that hasn’t worked either.
So what’s the solution? The solution is to get rid of the old CEO and hire a young team who understands the technology and loves music. Then we’ll see the innovative product manager who will do the research to show “how” people are listening to music and finds what value he can provide that we, the music consumers, are willing to pay for. Something like what the folks at Last.fm are doing, they seem to be on the right track, no?
Let’s draw parallel here with CRTC and the Usage Based Billing
For those who don’t know, CRTC (Canadian Ratio-television Telecommunication Commission) is trying to change the way they bill us for Internet to a per kilobyte model. Meaning, the more you use the more you pay. Sounds fair, right? NO
You gotta ask yourself why are they doing this? Are the telecommunication companies not profiting enough? Are we paying too little compared to other developed countries? No, they are showing profits and we, the average Canadian household, pay more compared to our neighbours down south. Then why?
The same chart that we saw above is happening now to the TV world. People are spending more and more entertainment time on the Internet and less and less watching TV. I guess we’re getting sick of irrelevant TV ads that for some reason are louder than the actual program itself and are going elsewhere for entertainment.
These people can be more innovative and build a proper entertainment unite that we see value in. But instead they want to force a habit on us by changing their price model. This will also fail same way the music industry’s efforts failed.
A proper entertainment unite is connected to the Internet and knows who I am. Therefore it tells me about TV shows or music and movies that I like and has targeted advertising for me. Rather than Tampax ads I get interrupted with Golf vacation package, everybody wins. But the old people who sit on the decision making chairs don’t like change, do they? What’s the saying? can’t teach an old dog new tricks.
What do we learn from this chart?
Lesson learnt for Product Managers: be aware of the changes in technology and environment. Instead of fighting it, look for opportunities to take advantage of the new market that’s being created. (Don’t be BlockBuster, be NetFlix)
And to all you music lovers and tv junkies: download away, let the business adjust itself with the technology and trend. And if you’re in Canada get involved with OpenMedia’s “Stop the Meter” campaign.