Recently, Google launched it’s music service called Music Beta. This got me thinking about how the music industry has changed drastically in the last 15 years, and as we can see in this article, change is still going on.
First, it was about MP3, a new electronic format that is very easy to distribute. Then it was about devices that could play MP3’s. Later came the legal distribution of digital music, through iTunes, Amazon and other players. Now it’s about having access to our digital music library 24 hours a day on any of the devices we own: phones, computers, ipad, etc. There is a need to have the information on all our devices synced. That includes music.
The biggest problem, in my opinion, is getting all the players in the act together. Record labels have lost power. Decreasing record sales has seen their revenue collapse. Plus, they are not that influential as they were before, with radio stations and retailers in the picture. The only card they hold is their copyrighted music catalog. Distributors like Apple and Amazon have focused in changing the business model. For example, they not only sell albums, but also singles. Also distribution of music is practically instant. Buy a single and in less than 5 minutes you can listen to it.
Because they are all part of the music industry's value chain, one can’t function well without the other. Even though there are artists who are becoming independent, the fact of the matter is that for music distribution the first thing you need is music. Something that record labels have a lot of.
I think there will be intense licensing negotiations and the record labels will finally give in. Why? They have no choice yet. Opening their own digital shops might be too costly, and there are not enough players in the industry yet to establish profitable alliances. Apple had an incredible head start in all this and they managed to control almost all of the value chain. Because of their streamlined process to deliver a song through iTunes to an incredible and new device like the iPod, competition barely stood a chance.
But now Google is stepping in. And with its mobile Android platform and appstore, it's going to become the first real threat to Apple. Why? There are more phones with Android OS than with iOS (iPhones). Google is big enough to sit down with Record Labels and negotiate better deals. And because of Apple’s dominance and its “my way or the highway” attitude, a lot of players are going to be happy to know they have different choices.
First, it was about MP3, a new electronic format that is very easy to distribute. Then it was about devices that could play MP3’s. Later came the legal distribution of digital music, through iTunes, Amazon and other players. Now it’s about having access to our digital music library 24 hours a day on any of the devices we own: phones, computers, ipad, etc. There is a need to have the information on all our devices synced. That includes music.
The biggest problem, in my opinion, is getting all the players in the act together. Record labels have lost power. Decreasing record sales has seen their revenue collapse. Plus, they are not that influential as they were before, with radio stations and retailers in the picture. The only card they hold is their copyrighted music catalog. Distributors like Apple and Amazon have focused in changing the business model. For example, they not only sell albums, but also singles. Also distribution of music is practically instant. Buy a single and in less than 5 minutes you can listen to it.
Because they are all part of the music industry's value chain, one can’t function well without the other. Even though there are artists who are becoming independent, the fact of the matter is that for music distribution the first thing you need is music. Something that record labels have a lot of.
I think there will be intense licensing negotiations and the record labels will finally give in. Why? They have no choice yet. Opening their own digital shops might be too costly, and there are not enough players in the industry yet to establish profitable alliances. Apple had an incredible head start in all this and they managed to control almost all of the value chain. Because of their streamlined process to deliver a song through iTunes to an incredible and new device like the iPod, competition barely stood a chance.
But now Google is stepping in. And with its mobile Android platform and appstore, it's going to become the first real threat to Apple. Why? There are more phones with Android OS than with iOS (iPhones). Google is big enough to sit down with Record Labels and negotiate better deals. And because of Apple’s dominance and its “my way or the highway” attitude, a lot of players are going to be happy to know they have different choices.
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