The future of music industry is uncertain. At the time when record industries were suffering huge losses on the account of file sharing networks and proliferation of Internet, Apple introduced iTunes which confused the industry to a fair extent about whether to consider the Internet as a saint or a devil for the industry. Thankfully, the concert business kept them alive even as disc sales dropped drastically. But a few hundred million dollars of iTunes revenue is just a tiny share of the huge market it could have been.
To say that the efforts of the music industry towards reducing piracy were misguided is no overstatement. Much like every successful engineering project, success lies in the design of the solution rather than imposing legal restrictions and spending a fortune to attempt their enforcement. With the amount of cash the industry had, the failure of the industry to innovate was stupid but typical of incumbents fate. However, what is even more amazing is the restrictions placed on entrepreneurs who are trying to innovate the way music is consumed – with obvious and humongous benefits for the industry. To put this in perspective, just imagine having to pay Google some money for every search you performed. How about a $50 monthly package? Sound ridiculous, doesn’t it?! No doubt, such parallels are not easy to come by to those who hold the reins of the industry.
Advertisement based models which reduce or eliminate the cost of the users have shown a lot of promise. Services, such as Pandora, which have what I consider less than a perfect business model have been growing with such pace that the potential of a better business model would easily be in billions of dollars. Much of this innovation must be sourced from the users – but little research has been done on what the users really want from their music experience. Perhaps, even parts of what is really required are spread across different start-up’s today. We don’t need just social networking based on media, neither do we need to listen only to songs with similar music – throw me some variety and throw some choice! User experience is the king.
The future is undoubtedly in the mobile. While phones that can run the smart connected apps of today form a limited percentage of the mobile phone market, the segment is growing rapidly. As data costs reduce and faster technologies come up in emerging markets like India, the hurdle that stands in the way – the mobile service providers – will soon be less relevant. Once that layer of the ecosystem stops acting bossy, a few record labels with outward thinking management can easily change the face of the industry and their bank accounts. Till then, mobile service providers will continue to spend millions of dollars asking people to dial a number to listen to songs! Is user experience only understood by Apple!? The time is now, services like Pandora and Last.fm are already up there and maturing. Let us see how soon will they innovate or die in the face of smarter business models.
