heute:pop:blog.  

I went to the UK launch of Chris Anderson’s new book ‘FREE‘ last night which unsurprisingly was a very busy event since he is a bit of a digital media pop star. With being a celebrity come the critics that have to proof that your ideas are in fact rubbish and that try to find examples where “The Long Tail” does not work and where “FREE” destroyed jobs.

I’m not one of those guys. However I had to think of something when Chris was talking about some of his ideas last night. They gave out free copies of the book (an abridged version, not the full one) so I can even quote him now. He is writing:

“What the Internet does is combine all three, compounding the price declines with a triple play of technology: processors, bandwidth, and storage. As a result, the net annual deflation rate of the online World is nearly 50 percent, which is to say that whatever it costs YouTube to stream a video today will cost half as much in a year.”

Although I agree that the above applies to any technology costs this does not work for any licensing expenses. The licensing fees for content is already the biggest expense for many services that stream or otherwise deliver content to consumers. Although there is certain evidence that the cost of content is going down (the PRS has recently lowered they per stream royalty for music streaming services) I don’t believe that this trend will keep on going at a rate of 50% per year.

Nevertheless, Chris Anderson’s book ‘FREE’ looks like another must read for anyone who is interested in how technology changes moder day economics.

Those who listen to my show on a regular basis (and understand German) will see that Gerd Leonhard and myself share many ideas about the future of recorded music. He put together a brief overview on his thoughts in the YouTube video below.

It’s a great summary and there is a lot in those 10 mins – might be worth watching twice.

EDIT: as just pointed out by Chris, there is of course a second part to the above:

Hopefully I wasn’t talking too much about the potential future of ad supported music services this week. These are tricky time for anyone working in music, may it be music owners or services that want to bring music to the fans.

You can listen to my latest show here.

1. Jimi Hendrix ‘All Along The Watchtower’
2. Archive ‘Bullets’
3. Fredo Viola ‘The Turn (A Pagan Lament)
4. The Decemberists ‘The Rake’s Song’
5. Bonnie ‘Prince’ Billy ‘Afraid Ain’t Me’
6. Suicide ‘Ghost Rider’
7. Architecture In Helsinki ‘Hold Music’ (Max Tundra Mix)
8. Cazals ‘Somebody, Somewhere (Moulinex Remix)
9. MSTRKRFT ‘Fist Of God’
10. Passion Pit ‘I’ve Got Your Number’
11. The Wee Rogue ‘Into The Mist’

If you can get your hand on the latest copy of Billboard (10th January it says on the cover) make sure you read the Opinion piece on page 4. In addition to giving a good pitch, Lala.com’s Bill Nguyen wrote a short and well formulated article on listening to music online and business behind it. My favourite quote:

“The web is home to more new music each year than was released in many previous decades. Critics say the music is mostly junk – but the same could have been said for the Web before Google made the knowledge there accessible.”

I couldn’t agree more.

Don’t get me wrong: I’m always happy when I hear that new music services go live (or, like in this case, re-launch). I am fully supportive of of companies trying something new and different and it’s great that there are people out there taking risks. My cynical side however was looking at all the blog posts carefully when I was reading about lala’s new business model. And not just because this must be the fourth time that they have come up with a new one.

So you can pay 10 cents to ‘buy’ access to a track an unlimited amount of time however if you own the track already on your computer (and you let lala scan your library) you can listen to that track for free an unlimited amount of times. You can also buy full track downloads for 90 cents. Sounds all pretty complicated and I agree with what Bob Lefsetz was posting yesterday:

[...] With x number of people new to Google this year, what are the odds consumers are going to understand Lala’s business model?  Shit, I can’t understand their business model.  I rent the music online, but only online, I can use my own stuff online…what about the rarities, do those get uploaded too?  And, is it so complicated that I ultimately want to use this service? [...]

TechCrunch has got a different opinion and I get their point of view:

[...] Conversely, Lala wants you to listen to as much music as possible in the hopes that you’ll keep clicking that addictive 10 cent “web song” button, and is forgoing advertising entirely. The result is very refreshing. [...]

What I find refreshing is that those new ideas are coming out of a company that is party owned with Warner Music. There was never any doubt that there are very smart people working at Warner and it looks like we can now see some of that. It was always obvious that the big content owners should have been much more pro-active when it comes to new ways of monetizing their content. They missed out on that for years and are suffering because of that.

I can’t test out lala myself (as it’s only available in the US) but it sounds like it’s not very user friendly but makes sense in the end. Lets hope people out there are going to have the patience to figure all that out. And if not they can always come up with a new model.

A big thanks to David Porter who put the current issues the online radio industry is facing in very simple words in this blog post. In fact, based on this I will explain the problems to the listeners of my radio show in Hamburg tomorrow morning, which is really not a tech (and most certainly not a streaming licensing) savvy crowd.

More on this soon…