online-mixing.com

Connect with Fans (CwF) +

Reason to Buy (RtB)       =

_____________________

The Business Model

from the a-thorough-look dept [by Mike Masnick] [via techdirt.com]

I’m at the Midem conference this week, and in preparing for it, Steven Masur asked me to write up a chapter for a book he was putting together of thoughts from various thinkers for a gathering of the International Association of Entertainment Lawyers (IAEL) here at Midem. Below is what I submitted. If you’re a regular reader of the blog, there’s little that will surprise you, but even so, it may be a good read, as it’s got a whole bunch of different things I’ve discussed about — things like “CwF+RtB” all summarized in one single place. Later, I’ll do another post on what I discussed this year at Midem, since it builds on what’s written below, and digs in much deeper on how to create compelling reasons to buy.

It’s no secret that there’s a lot of concern these days about what the music industry will look like going forward — especially from those who work on the label side of the business and have been around for a bit. A variety of things have caused rapid change in the market. Competition from other forms of entertainment, such as the internet, movies and video games, have put more pressure on the industry, as consumers have been presented with significantly more options for their entertainment attention and dollars. And, of course, there’s the ever-present specter of unauthorized file sharing — or, as the industry prefers to call it (accurately or not), “piracy.”

While the industry spent many years fighting the rise of the internet as a distribution and promotion method for music, it was eventually forced to recognize it. The labels eventually licensed music to Apple and iTunes (as well as some other stores). It took them way too long to recognize that people wanted DRM-free music, but they’ve finally come around to recognize that as well.

But the big new questions are all about licensing. New services are starting to show up on the scene, such as the industry’s new darling, Spotify. Then there are attempts, such as those by Choruss and Warner Music, to set up something that is somewhat akin to a blanket license. For the most part, the industry hasn’t shown much willingness to do these sorts of deals in manners that allow the underlying companies to survive, let alone profit. Numerous innovative startups have suffocated under burdensome licensing terms — and as each one fails, it just gives consumers fewer and fewer reasons to actually use these services, wondering how long each will last until it goes out of business.

However, there is another solution: stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement.

In simplest terms, the model can be defined as:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model

Sound simple? It is, if you understand the basics — and it can be incredibly lucrative. The problem, of course, is that very few seem to fully understand how this model works. However, let’s go through some examples.

Read a lot more here.