Large Music Labels Still Dazed and Confused

Breaking news, breaking news: Universal Music plans to take on iTunes by getting other major labels together to create a service called Total Music.

What innovation! It’s a concept that I’ve touted since Napster arrived on the scene except my idea was that the music labels band purchase music.com (currently owned by Sony/BMG) to create a one-stop place for consumers to buy digital music. Of course, that would’ve been way too smart so for the past decade the music industry has been dazed and confused looking for the silver bullet to desperately save an outdated business model.

It took Steve Jobs and iTunes to convince the music industry that consumers would actually buy music online if it was convenient and reasonably-priced. But even with iTunes showing the way and selling one billion songs, the music industry has stumbled along trying to figure out whether it’s better to do business – and share revenue – with Apple or strike out on its own.

The biggest problem the major labels are blindly focused on the same business model: selling digital music by the track or album. This is just an extension of the old business model, which focused on selling 45s and albums. It’s what the music industry knows so why not extend it to the Web? Right? Wrong.

The problem is the old/new model is no longer effective because consumers have a growing number of options. They can use free P2P services such as Kazaa or Limewire (and risk being hunted down by the litigious RIAA); they can buy inexpensive music from rogues such as AllofMP3.com; and they can easily burn music from CDs owned by friends.

So what’s the poor music industry to do?

It’s time to get smarter, creative and flexible. It’s time to embrace new ways of selling, marketing and distributing music. Look at all the fuss caused by Radiohead’s decision to sell its new CD on a pay-what-you-can basis. Why is it a band rather than a label leading the charge? Look at what Spiralfrog is trying to do by offering free music supported by advertising. Why is a start-up showing the way rather than a major label?

There are plenty of other ways to offer music. last100 has a great post looking at five alternative business models, ranging from free and pay-what-you-want to pay-by-popularity and subscriptions. If music executives were smart, they would print last100’s post and carry a copy with them at all times.

If the music industry doesn’t changes its tune, it’s doomed because consumers will continue to look for new, easy and convenient ways to get music on the Web – regardless of whether the large music labels offer it or not.

Total Music is something that should have happened when Napster was alive and well. The fact it’s being considered in 2007 is sad.

Links: Mathew Ingram thinks Total Music is a “stupid idea”. TechDirt, which has written some excellent posts recently on the music industry, suggests Universal’s Doug Morris still has figured out the economics of music, while the ever-irascible Bob Lefsetz has a post with eight great points. Silicon Alley Insider says despite the success of Radiohead’s sales offer (1.3 million downloads), “conventional music labels” are still alive and well.