Digital Audio Insider -- the economics of music and other digital content


  digital audio insider

home

about/contact
Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

Support
If you enjoy this site, please consider downloading a Layaways track or album from iTunes, Amazon MP3, Bandcamp, or eMusic. CDs are available from CD Baby and Amazon.

links

music/media/tech:
Analog Industries
Ars Technica
AppleInsider
Brad Sucks Blog
Broken Record
Digital Music News
Duke Listens
Future of Music Coalition Blog
Hypebot
LA Times Technology Blog
The ListeNerd
Medialoper
Mediashift
MP3 Insider
Music Ally
Music Machinery
Music Think Tank
MusicTank
The Music Void
New Music Strategies
Online Fandom
Pakman's Blog
RAIN
Rough Type
RoughlyDrafted
Swindleeeee
TuneTuzer
Virtual Economics

economics/markets:
The Big Picture
Core Economics
Freakonomics
The Long Tail
Marginal Revolution
The Undercover Economist

mp3/music:
17 Dots
3hive
Fingertips
Shake Your Fist
Sounds Like the 80s
Unleash the Love

archives
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
May 2010
June 2010
July 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
June 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
April 2012
May 2012
June 2012
August 2012
October 2012
November 2012
December 2012
January 2013
February 2013
March 2013
June 2013
August 2013
February 2014
March 2014
September 2014
December 2014
March 2015
October 2015
November 2015
December 2015
October 2016
May 2017

March 20, 2008

The Big Switch: Will It Happen for Music?
by David Harrell
I'm a big fan of Nick Carr's Rough Type blog and I'm about halfway through his new book, The Big Switch: Rewiring the World, from Edison to Google.

Carr begins with the history of power and the transition from water- and steam-based systems to electricity. The pre-electrical systems were, of course, all based on local production of power. And Thomas Edison originally thought electricity (at least for industrial usage) would be local as well -- that the business of electric power would be built around selling generators and dynamos to industrial users, who would them use to create their own energy. However, the grid model quickly supplanted this model, as it turned out that electrical power could be generated less expensively and with greater reliability by a remote supplier, and then delivered via a network of power lines.

The new "big switch" that's the thesis of the book is how businesses (and individuals) are now abandoning the idea of local-installed software in favor of Web-based applications. The same goes for storage and general computing, with the example of Amazon's S3 and EC2 services.

Carr doesn't directly address music consumption trends, but the idea clearly extends itself to digital music. Today, the majority of music listeners are still doing the equivalent of "generating their own power" by listening to digital files (either via CDs or purchased downloads) served up locally -- on home computers or portable devices. Although online music subscription services have existed for nearly seven years, they have so far failed to catch on with the general public.

Why the lack of success? In the big switch examples given by Carr, it appears that the network/grid versions needed to be both economically competitive AND as convenient and reliable as the older products/services they replaced.

On the surface, music subscriptions definitely have economics in their favor. A relatively low monthly fee gives listeners access to an amount of music that might -- literally -- cost millions of dollars to purchase outright. (Though the subscription services' line about "thousands of dollars to fill an iPod" line was always somewhat disingenuous, as it ignored the fact that most iPod purchasers can readily fill their devices with the thousands of songs they already own on CD.)

Yet Steve Jobs famously dismissed this appeal for subscription services, opining that listeners want to own their music instead of renting. The psychology of ownership -- the fear of "losing" your music should you ever stop your subscription -- no doubt influences consumer decisions. But I'd argue that the larger reason for the lack of enthusiasm for subscriptions is that they haven't yet sufficiently matched the "local" listening experience. My own experience with the paid subscription services is that even with an incredibly fast Internet connection, you still have to contend with buffering times, latency issues, system crashes, annoying forced software updates, etc. It's just not the same as skipping around your iTunes library on a PC or listening to an iPod. (To be fair, I've never tried the mobile devices such as the Sansa Connect, which can store files from Yahoo's Music Unlimited service and allows on-the-go updates.)

But just as the early power grid improved, we're seeing continual improvements in available bandwidth, streaming rates, and the storage capacities of mobile devices. Imagine a world in which streaming is instantaneous, updates take place behind the scenes, and there's no perceptible performance difference between streamed music and that stored on your device or hard drive.

I doubt Apple's rumored subscription service will do all (if any) of that just yet. But whatever Apple rolls out, I'm betting the user experience will be a step up over previous systems. And even without any improvements over the current services and devices, just having the manufacturer of the most-popular portable device embrace the concept is bound increase public acceptance of the idea of networked music. (The lack of iPod compatibility, along with P2P piracy, is often cited as the major reason for the relative failure of the subscription services.)

Assuming that the economics can also work for artists, labels, and publishers (Glenn at Coolfer recently noted some of the business challenges here, $20 per iPod probably isn't going to cut it) an eventual switch to networked music of some sort seems inevitable, at least for the generation of music consumers who are sufficiently wired.

tags:

link 3 comments e-mail listen to the Layaways on Spotify


More Digital Audio Insider: Newer Posts Older Posts



Subscribe:   RSS Feed



Add this blog to Del.icio.us, Digg, or Furl. Follow David Harrell on Google+.





The Digital Audio Insider Twitter feed:
    Apple stock analysis


    Digital music jobs: Looking to hire? Looking for a job? Check out the digital audio insider job board.



    Popular Posts

    A Long Tail Experiment
    By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
    Lala.com Owes Me Sixty Cents
    An Interview with Jonathan Segel of Camper Van Beethoven
    Price Elasticity of Demand for McCartney
    Sony and eMusic: What I Missed

    The Digital Pricing Conundrum series:
    Part One Part Two Part Three Part Four





    THE LAYAWAYS

    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="http://thelayaways.bandcamp.com/album/maybe-next-year">Joy To The World by The Layaways</a>

    "This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

    "Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs


    O Christmas Tree - free mp3 lyrics and song details
    Away In A Manger - free mp3

    Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.



    album cover art from The Space Between

    <a href="http://thelayaways.bandcamp.com/album/the-space-between">Keep It To Yourself by The Layaways</a>

    "...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

    "Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

    "...melodic, garage-influenced shoegaze." -- RCRD LBL

    Where The Conversation Ends - free mp3
    January - free mp3
    Keep It To Yourself - free mp3

    Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.



    album cover art from We've Been Lost

    <a href="http://thelayaways.bandcamp.com/album/weve-been-lost">Silence by The Layaways</a>

    "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

    "Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

    Silence - free mp3 lyrics and song details
    The Long Night - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.



    album cover art from More Than Happy

    "These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

    Let Me In - free mp3
    Ocean Blue - free mp3

    Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

    More Layaways downloads:

    download the Layaways at eMusic download the Layaways at iTunes

    the layaways website