"What do you mean people can use their computers to listen to music and copy things infinitely? There's no money in that! We should try and kill this Napster thing to protect selling CDs for $20 a pop and never support online distribution no matter the customer demand!" - The Music Industry (paraphrased for sarcastic effect)
That depends! Are you on the side of Cliff Burton era Metallica as a band that encouraged tape trading as an avenue for exposure, or are you on the side of Lars Ulrich era Metallica that feels people sharing music without paying money are enemies of the band?
If you believe in the latter, then that's a perfectly reasonable position for record labels and publishers who invest in "startup" acts hoping they get enough ROI to cover the failures, and then give the successful bands only what they're contractually owed after recouping. Sure, that's a business model. The only number that matters is the number of people paying for the recording.
If you're in the camp of the former, you might think that organic growth and demand for your supply means getting to hit as many ears as possible is a chance to broaden the base of people willing to pay for more. Just because somebody can get a recording for free doesn't mean they aren't interested in giving you money for a live show or a t-shirt or a sticker. The bigger the fan base, the better the income potential.
I'm going to assume you didn't live through the same era that I did, when Napster was more prevalent in dorm rooms than illegal booze. After that window got slammed shut, the industry narrative (backed by an ignorant Judge's opinion that "the computer is not an audio device") was that anybody who didn't buy retail was a criminal. Ever buy a used CD? That was another target.
There was a huge opportunity to embrace technological evolution. Not until Steve Jobs and iTunes worked out the mechanics of DRM and "buying a license" did the industry decide to get on board. It seemed like the industry had their cake and could eat it too...until Eminem looked at his contract and saw that digital downloads were being paid out at the "sale" rate of (est) $0.25 per track, but the words on the page said any "license" should be paid out at $0.50 per track. He took them to court, for himself, and also for clarity in the rules of business. He won. A lot of money. Other artists started to notice this...
There's an alternate reality where more forward people would've been thinking about consumers as audiences instead of wallets, but that didn't happen, and here we are, arguing over the table scraps that Sony/Warner/Universal leave for the independents.
> I'm going to assume you didn't live through the same era that I did
You're incorrect.
And... Jobs DID come along, iTunes DOES exit, it ate album sales without providing similar revenue, now Spotify et al are eating iTunes' market share while providing even less revenue, and it's a race to the bottom.
Everyone loves to talk about what would've happened if all the various content industries had been more forward looking, and it's all ridiculous. One of my favorite, quantifiable examples is the newspaper industry and the classifieds. Yes, I guess the newspaper companies could've been Craigslist instead of Craigslist being Craigslist. To what end, though? Look at Craigslist's revenues. Look at what the newspaper classifieds' revenue was before Craigslist came along. We're talking orders of magnitude difference. And that's Craigslist's business model, right? Low overhead, passes the savings onto the customer, skims a little cream off the top and it's more to pay their bills because they're not using their cut to subsidize journalism, they're just doing the whole Bezosian "your margin is my opportunity" thing and making money where they can. If you split all of Craigslist's revenue up among every newspaper in the country that lost classified revenue when Craigslist hit the market and they could afford to pay everyone a few dollars more in their severance packages as they keep laying off journalists.
The world changed. We think we've figured out where the world is landing, but we're pretty much just all sitting here in the post-apocalyptic wasteland scavenging -- all the big names we think of when it comes to new media -- iTunes, Spotify, Netflix, Hulu -- are just selling us media produced under the old business model at marginal cost. When Spotify and iTunes and all them finally do get around to killing the music industry we're going to be in a very, very different world. Maybe it's better! Maybe it's worse! I only really trust people who say they don't know.
>it ate album sales without providing similar revenue
Similar revenue for WHO? If you've studied the music industry then you know that artist compensation - whether a physical sale or digital sale - are equivalent from a practical standpoint. Of a $.99 sale on iTunes, Apple takes the first $.30 for their role, and the rest is at the mercy of label and artist agreements. Whether it was a CD or a digital sale, an artist was only entitled to a certain defined compensation.
It's kind of funny you mention Craigslist, because you're citing it as a reason that the predominant distributors - PRINT DISTRIBUTORS - should not have to compete with a technological innovation with less overhead. It's a middle man of the highest order. And you assert they should be propped up because why?
Craigslist exploited a loophole of eliminating the friction between seller and buyer without skimming a bunch of revenue in the process. Why are you trying to argue that systems which benefit sellers and buyers should compensate legacy entities which refused to adapt and change? In a digital realm where rights management matters, the only people who argue for additional payout layers are people I don't trust. I don't like the old business model, so that's why I refuse to buy in and push for a new one.
>Look at Craigslist's revenues. Look at what the newspaper classifieds' revenue was before Craigslist came along. We're talking orders of magnitude difference... they're not using their cut to subsidize journalism...
If you want to support a middleman business model, that's your prerogative. If I want to support a direct-to-customer-as-much-as-possible one, then that's mine. I don't want to support a label, I want to support myself.
Not sure I understand the Craiglist part correctly, but in my book a business that does something without trying to make as much money as possible is a better than the one that tries to monetize every single thing.
