::B0red::
So yeah, slow news day, slow work day, wide awake, and bored to tears.
This whole RIAA thing is really starting to PISS ME OFF. I don't get it - seriously. Business in our society works on a very, very simple concept. Supply versus Demand.
Demand goes up, prices go up
Supply goes up, prices go down.
Demand goes up, prices rise temporarily while Supply catches up.
Demand goes down, prices drastically dip while Supply deflates, then rise back up.
Equilibrium. This is what the market naturally balances out to.
But, this is a very fixed system. Inversely proportional.
What happens when Supply reaches 0? You've got the real estate industry. There is X amount of land out there - no more, no less. The only variance that determines market value is the functionality of said plot of land. How useful is it? The more useful, the more expensive. Now, it's more of a demand for USE, the product is obscured, it's no loner a tangible thing - it's demand for USE of the item, not the item itself. The real estate market is an ever changing entity that fluctuates because of this. The USEFULNESS of the land fluctuates, THAT is what you are buying.
What happens when Supply reaches Infinite? Cost becomes virtually 0, without regard to demand. This is where the RIAA and media industries are struggling. How do you sell something legitimately that according to the basic model, should have no cost?
Yes, music has an initial investment.
It costs money to have a building, to have employees, to pay the artists reasonably for an album. And in the field of digital online distribution of music, it costs money in bandwidth, and a good IT staff and record keepers. All of these are recurring costs for the company. Lets toss a figure out there - 10 million a year for a medium sized label.
You want a 20% profit margin - that's your personal goal as a business owner. (Big margin.)
So - 12 million.
Now, you've paid the artists 100k for the album, you've paid the audio staff to digitize it, you've paid recording to tag it and process it, you've paid IT to put it up on the website. You've invested 150k in time and money to get this song up and available to download it. But now it's there - it's up there - and no matter if 4 people, or 400 million people download this album - it's only cost you 150k, plus some marginal fees in bandwidth if it gets real popular.
That has me worried. ~$0 in reproduction costs? Hmm... that defeats the model! Shit! now what.
Adapt or die. That's what.
The RIAA is fighting change, they are trying to force music down everyone's throat to keep their profit margins up, and restricting it's usage. It's making it painful to buy music. RIAA is NOT adapting - therefore - they are dying. And I'm glad for it.
iTunes is on it's way in the right direction - it recently started selling Songs and Albums for a little more ($1.30/song $10-12 album) for NON restricted music, that is even encoded at a higher quality (256kbit). They have realized that even tho the supply of real estate is fixed, and the supply of music is infinite - they fit all nice and tidy into the same model. How USEFUL is the music? The better it's made, the better it's categorized, and the easier it's accessed, and the more plentiful the collection - the more customers you will have. Just keep the price simple. Understand that some artists you are going to bank off of, like 'Fall out Boy' and 'JZ'. Other artists you just aren't going to make shit from because nobody is listening, or they just suck. So don't expect to make anything from them.
I propose the following model for the online Music Community.
1) Piracy is no longer a concern. It's going to happen, fighting it throwing money away.
2) Setup a store that is a combination of Digg and iTunes. Where the more popular a band becomes, the more publicity it gets - completely user driven.
4) Offer a pricing scheme that is not counter intuitive for the users. The FEWER times the song is downloaded, the CHEAPER it is. Offer song by Indi bands that the only person in the city that has heard of them is Fred from the local coffee shop. Like, $0.10 a song. That's cheaper than ANYTHING in the vending machine at work. This is tended to people purchasing MORE unpopular music and giving it try. Fred played 'Ladytron' at the Coffee Shop - now 30 people are interested in it - they download it - and pass it along - the more the people who buy it - the more expensive it gets because it's gaining in popularity. With a Ceiling - of $1.30 a song.
5) Be Your Own Label. I can't stress this enough. If 0.007% of your profit revenue was from people buying 'Ladytron'. Then scrape off 20% of that 0.007% for yourself (there is your %20 profit margin bitches!) and give the other 80% of that 0.007% to the artist.
6) If every band out there thought they were going to be the next big thing - they are delusional. If 90% of business costs are going towards an initial investment of a band - stop investing it. Get an initial clientèle of a thousand or so bands (Of which have a decent popularity already) - then just let bands offer up their music to you, for free - they GIVE it to - with license to TAKE IT AWAY from you if they don't like your business practices - but they still get 80% of the revenue.
7) Offer a $1.30 cap per song, or $12 per album, using a lossless codec such as FLAC or at the very least, 320kbit 48khz mp3. The songs themselves will have NO restrictions - play on PMP's, burn them to cd, share em with your friends, whatever. All the songs will have ALL their content, including album art, artist notes, lyrics (if provided), whatever.
8) An album encoded well can be upwards to 100megs. That's a decent chunk of bandwidth. Save yourself some headache - 10k/s download cap unless you use OUR download client. Sure, it's got a few adverts for some bands gaining in popularity - but other than that - it's not capped out. You download just as fast as the Intartubes will let you at the time - it's variable of course - because it's FUCKING BITTORRENT. The more popular a song is - the FASTER you can download it, and the less strain it will have on the business's network - they just have to provide 2 seeds for every song (redundancy). Done and Done.
7) Offer forum on each Album or Song - so people can make comments, maybe even - oh - the BAND will listen and make BETTER music.
In conclusion.
Don't offer a product. Offer a usefulness of an infinite product. Offer more usefulness than your neighbor... profit.
This whole RIAA thing is really starting to PISS ME OFF. I don't get it - seriously. Business in our society works on a very, very simple concept. Supply versus Demand.
Demand goes up, prices go up
Supply goes up, prices go down.
Demand goes up, prices rise temporarily while Supply catches up.
Demand goes down, prices drastically dip while Supply deflates, then rise back up.
Equilibrium. This is what the market naturally balances out to.
But, this is a very fixed system. Inversely proportional.
What happens when Supply reaches 0? You've got the real estate industry. There is X amount of land out there - no more, no less. The only variance that determines market value is the functionality of said plot of land. How useful is it? The more useful, the more expensive. Now, it's more of a demand for USE, the product is obscured, it's no loner a tangible thing - it's demand for USE of the item, not the item itself. The real estate market is an ever changing entity that fluctuates because of this. The USEFULNESS of the land fluctuates, THAT is what you are buying.
What happens when Supply reaches Infinite? Cost becomes virtually 0, without regard to demand. This is where the RIAA and media industries are struggling. How do you sell something legitimately that according to the basic model, should have no cost?
Yes, music has an initial investment.
It costs money to have a building, to have employees, to pay the artists reasonably for an album. And in the field of digital online distribution of music, it costs money in bandwidth, and a good IT staff and record keepers. All of these are recurring costs for the company. Lets toss a figure out there - 10 million a year for a medium sized label.
You want a 20% profit margin - that's your personal goal as a business owner. (Big margin.)
So - 12 million.
Now, you've paid the artists 100k for the album, you've paid the audio staff to digitize it, you've paid recording to tag it and process it, you've paid IT to put it up on the website. You've invested 150k in time and money to get this song up and available to download it. But now it's there - it's up there - and no matter if 4 people, or 400 million people download this album - it's only cost you 150k, plus some marginal fees in bandwidth if it gets real popular.
That has me worried. ~$0 in reproduction costs? Hmm... that defeats the model! Shit! now what.
Adapt or die. That's what.
The RIAA is fighting change, they are trying to force music down everyone's throat to keep their profit margins up, and restricting it's usage. It's making it painful to buy music. RIAA is NOT adapting - therefore - they are dying. And I'm glad for it.
iTunes is on it's way in the right direction - it recently started selling Songs and Albums for a little more ($1.30/song $10-12 album) for NON restricted music, that is even encoded at a higher quality (256kbit). They have realized that even tho the supply of real estate is fixed, and the supply of music is infinite - they fit all nice and tidy into the same model. How USEFUL is the music? The better it's made, the better it's categorized, and the easier it's accessed, and the more plentiful the collection - the more customers you will have. Just keep the price simple. Understand that some artists you are going to bank off of, like 'Fall out Boy' and 'JZ'. Other artists you just aren't going to make shit from because nobody is listening, or they just suck. So don't expect to make anything from them.
I propose the following model for the online Music Community.
1) Piracy is no longer a concern. It's going to happen, fighting it throwing money away.
2) Setup a store that is a combination of Digg and iTunes. Where the more popular a band becomes, the more publicity it gets - completely user driven.
4) Offer a pricing scheme that is not counter intuitive for the users. The FEWER times the song is downloaded, the CHEAPER it is. Offer song by Indi bands that the only person in the city that has heard of them is Fred from the local coffee shop. Like, $0.10 a song. That's cheaper than ANYTHING in the vending machine at work. This is tended to people purchasing MORE unpopular music and giving it try. Fred played 'Ladytron' at the Coffee Shop - now 30 people are interested in it - they download it - and pass it along - the more the people who buy it - the more expensive it gets because it's gaining in popularity. With a Ceiling - of $1.30 a song.
5) Be Your Own Label. I can't stress this enough. If 0.007% of your profit revenue was from people buying 'Ladytron'. Then scrape off 20% of that 0.007% for yourself (there is your %20 profit margin bitches!) and give the other 80% of that 0.007% to the artist.
6) If every band out there thought they were going to be the next big thing - they are delusional. If 90% of business costs are going towards an initial investment of a band - stop investing it. Get an initial clientèle of a thousand or so bands (Of which have a decent popularity already) - then just let bands offer up their music to you, for free - they GIVE it to - with license to TAKE IT AWAY from you if they don't like your business practices - but they still get 80% of the revenue.
7) Offer a $1.30 cap per song, or $12 per album, using a lossless codec such as FLAC or at the very least, 320kbit 48khz mp3. The songs themselves will have NO restrictions - play on PMP's, burn them to cd, share em with your friends, whatever. All the songs will have ALL their content, including album art, artist notes, lyrics (if provided), whatever.
8) An album encoded well can be upwards to 100megs. That's a decent chunk of bandwidth. Save yourself some headache - 10k/s download cap unless you use OUR download client. Sure, it's got a few adverts for some bands gaining in popularity - but other than that - it's not capped out. You download just as fast as the Intartubes will let you at the time - it's variable of course - because it's FUCKING BITTORRENT. The more popular a song is - the FASTER you can download it, and the less strain it will have on the business's network - they just have to provide 2 seeds for every song (redundancy). Done and Done.
7) Offer forum on each Album or Song - so people can make comments, maybe even - oh - the BAND will listen and make BETTER music.
In conclusion.
Don't offer a product. Offer a usefulness of an infinite product. Offer more usefulness than your neighbor... profit.