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Digital NARM - The Digital Landscape 2008
Digital NARM conference is going on in San Francisco. Industry's attempt to invent scalable, win-win business model is still falling short. Bruce Houghton has this wonderful live blogging commentary on his blog:
Pricing - Everyone on the “Digital Landscape” panel agreed that consumers are sensitive to price. David Pakman and Rob Wetstone of eMusicThe Orchard was adamant that music is currently priced too high at $0.99/track, and that the industry will have to experiment to determine what the appropriate price point is.
stated that music prices are facing downward pressure in both the online and mobile spaces as the prices of other entertainment like video games and DVDs declines. Greg Scholl of
Finding sustainable business models - Brad Duea (Napster) explained that the a-la-carte download model doesn’t provide much margin for sellers and isn’t economically attractive to many buyers. Simon Renshaw of (Strategic Artist Management) and others suggested that subscription is the model of the future. However, Pat Rains (Patrick Rains & Associates) noted that we haven’t seen a subscription model yet that works financially for all parties.
Steve Jang spoke a bit about Imeem’s attempts to monetize attention and share ad revenue with artists and labels. But according to Duea, Napster’s…
ad-supported Free service is not yet economically attractive from a business standpoint, despite interest from consumers and advertisers.
Scholl, Pakman and Bill Carr (Amazon) all stressed that the industry must experiment with new models, see what consumers like, and then figure out the economics from there – and that it doesn’t work when content owners demand certain economic terms before the experiment begins.
Music discovery -
Discovery remains a challenge for consumers and retailers, particularly in mobile where search capabilities have been limited by handset designs. In the online space, there remains debate about which recommendation algorithms are most effective, and at what point promotional activities like free streams cannibalize sales (if at all). Matt Adell (Napster) also cautioned that different consumers prefer different amounts of discovery, and that it is possible to overwhelm certain users with too much recommendation.
The market will grow -Greg Scholl sees a lot of latent demand for digital music that is not being stimulated at the present. He believes music companies are still learning how to market to niche audiences, and once they do, revenues will go up. Trevor Madigan (Nokia) also pointed out that much of the world is still without the infrastructure (broadband, PCs, credit card penetration, etc.) to support digital music. As these populations come online, the market will expand.
Music discovery will improve -
The “Mobile Movement” panelists stated that mobile search will dramatically improve in the near future and that social networking applications for handsets are on their way. According to Jonas Woost, Last.fm’s experience with full-length streams is one example of how improvements in discovery can drive sales.
Got any advice for music industry? Chime in.
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