Friday, August 22, 2014

Why the Pay TV Model Won’t Work for the Music Business

Bob Lefsetz/Variety

You’ve got to stop e-mailing me Ted Gioia’s article in the Daily Beast about lessons the music industry can learn from TV.

This is what drives me crazy about America, people glom onto something that squares with their worldview, and they trumpet it to high heaven, even though this writer’s got no basis in reality, and the whole missive leaves the consumer and business realities out of the equation.

We had a high-quality carrier in the music business; it was known as the CD. Hell, we even improved it, with the SACD and DVD-A. But the truth, is no one wanted this high-end tech. It hit the market like the DeLorean, too late and too expensive — and out of touch with the times.

Yup, the music industry was there first. The CD was an improvement to most people’s ears. They already had scratched vinyl and high-speed duplicated cassettes. To hear pristine sound was a revelation. The fact that it was tinny and not remastered for the format initially … Well, change takes time. Was every show in HD when you bought your flat panel TV?

And your flat panel is enough for television; the price cratered seemingly overnight. Whereas in music, you need an amplifier and speakers, and it’s all very expensive, while people are notoriously cheap.

Technologically speaking, audio innovation has happened faster than video. We got the iPod back in 2001. We didn’t get video on hand-held devices until the advent of iPhones and broadband streaming. And still most video content is unavailable. You’ve got to steal it.

The barrier to entry in music is almost nonexistent. You know how much money it costs to make those TV shows? Far in excess of what it does an album. And despite endless uploads to YouTube, few have gravitated to network or cable from that platform, because the shows just aren’t good enough.

The truth is, the music business was the canary in the coal mine. The reason files sounded so bad has got to do with bandwidth — the ability to send over thin pipes. The movie and TV industries were laughing, believing their content was unstealable, not realizing that as soon as we got fat pipes, they’d be in trouble. And what have these visual content companies done? Lobby against the high-speed pipes of South Korea and other leading-edge technical nations. Yup, blame TV and movie studios for holding our whole nation back, because the truth is, faster broadband falls straight to the bottom line.

As a consumer, you can listen to music for one low price, all in one place. Try doing that with television. You’ve got to pay everywhere, and it’s only getting worse. You’ve got to have a Hulu subscription, an Amazon one and a Netflix one, and you still can’t see everything, which is why when you delve into P2P statistics, you see that most piracy now occurs in video; in music, we’ve gone a long way toward solving the problem of fair and legal distribution.

The Daily Beast says we can solve our problems by getting people to pay for tracks, by stiffening our backs and telling the public to do it our way. Hasn’t happened yet. Didn’t we try that? Didn’t the RIAA sue people? Did that make revenue jump? Of course not.

The great thing about music is how the constant flow of material renders indelible hits that could not be predicted a moment before their arrival. Like Lorde’s “Royals,” which is so infectious listeners can’t stop playing it. But the truth is, the music game is in the hands of the consumers. The business just follows the trends. And now we’ve got some guy saying we should go back to the old era, where content was behind bars and the gates were controlled by the few.


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