Social Shopping Strategies for Musicians

Exciting Commerce’s Jochen Krisch is preparing two guest lectures for the Popakademie Baden-Württemberg on the topics of “Social Shopping” and “Web Syndication”. For the music industry, this begs the particularly relevant question: Which products are actually significant to revenue?

The music industry must learn the difference between music and music products. While music itself must remain freely accessible, music products are where the money is to be made. This fact hasn’t really been changed by the Internet. It’s just that the music industry has so far not been able to find a successor for the vinyl record and CD which suits the age that we live in. It seems unlikely that downloads and ringtones are a lasting solution.

Mike Masnick, in his perennially worthwhile read,  "Grand Unified Theory On The Economics Of Free" describes how the music industry and the artists in it need to think and act in these digital times:

"So, the simple bulletpoint version:

1. Redefine the market based on the benefits
2. Break the benefits down into scarce and infinite components.
3. Set the infinite components free, syndicate them, make them easy to get -- all to increase the value of the scarce components
4. Charge for the scarce components that are tied to infinite components

You can apply this to almost any market (though, in some it's more complex than others). Since this post is already way too long, we'll just take an easy example of the recording industry:

1. Redefine the market: The benefit is musical enjoyment
2. Break the benefits down (not a complete list...): Infinite components: the music itself. Scarce components: access to the musicians, concert tickets, merchandise, creation of new songs, CDs, private concerts, backstage passes, time, anyone's attention, etc. etc. etc.
3. Set the infinite components free: Put them on websites, file sharing networks, BitTorrent, social network sites wherever you can, while promoting the free songs and getting more publicity for the band itself -- all of which increases the value for the final step
4. Charge for the scarce components: Concert tickets are more valuable. Access to the band is more valuable. Getting the band to write a special song (sponsorship?) is more valuable. Merchandise is more valuable."

Thankfully, in comparison to old style die-hards, nowadays there are some young artists who have seen the sign of the times and are on the right path.

Related posts:

• Good Business Models for the Digital Age
• Perfect Prices: Popcuts Rewards Early Buyers

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.