Music for the Price of a Text Message

Everyone seems to know the record business is dying except the people running it.

It's a business highly dependent on the sale of Compact Discs -- and CD's are not selling the way they used to before digital downloading arrived.

The stores they sell in -- record stores -- are in short pants.

New technology has come along and the labels are still overreacting to music piracy by leading a national jihad of lawsuits ordered by the ayatollahs of sound.

Yet in this new era music still consumes the minds and ears of young people buying iPods and opting less for free music on terrestrial radio.

Music is even driving the sale of Apple's iPhone. Without music, it would be, well -- just another Motorola.

Through all of this the decision makers at the labels still can't figure out what to do.

Maybe it's their age?

Maybe not.

Apple CEO Steve Jobs is about the same age as record execs and he knows exactly what to do to sell and promote music. In fact, Apple is a de facto indie record company -- with the emphasis on indie like in independent.

If Jobs had his way, he'd be selling legal downloads on his iTunes site for less than the industry standard he established at 99 cents a song. To do a recent deal with a major label Jobs had to concede to selling digital rights management (DRM) - free music for an additional 30 cents. He must have held his nose to get that deal done.

If the great Steve Jobs has called the shots right for his business, perhaps other music media companies ought to listen to him. True, his business is selling consumer devices, but his business is also selling music online by default. An important distinction, however, is that Apple makes its money from the former -- not the latter. Yet, selling music online gives Jobs power.

No one else could make it happen.

The labels had their heads up their Walkmen.

Radio stations were too arrogant to think hit music could be made without them.

Both were wrong.

So, back to Jobs.

He obviously sees a lower price point for online music and just mentioning this sends record executives into cardiac arrest. Hell, a 99 cent download is a giveaway to them. (Humor me here -- didn't labels used to sell "singles" for under a dollar and they had to actually manufacture them?).

At USC, one of my Music Media Labs hired a research company for an underwriting client's project to find the price point for selling tons more legal downloads. Let's just say the answer is well, well below 99 cents per tune.

So that got me thinking that as the music business kills itself, it may be missing the big fix. And it's not going to like my solution. I know the answer already.

Sue someone.

Just kidding.

Nonetheless, I believe music will be free or cost next to nothing in our mobile-enabled, WiFi covered, Internet-based world within the next ten years.

That's right. The days of selling music for traditional prices is as gone as -- well, radio influencing the youth market to buy music. (I have to shake my head when the labels look for ways to tax radio airplay -- it's murder-suicide). It doesn't matter. The next generation's head is elsewhere while the heads of record execs is -- well, you guess it.

There is one hope.

Here is the Del Colliano Solution -- love it or hate it. But dismiss it at your own peril.

Notice how much texting young people -- the ones who drive the music market -- do?

Each message costs only pennies -- some have service plans to handle the huge influx of text messaging on their cellphones each month. If they use too many texting minutes, they buy more or up their text messaging plan. A last resort as every parent knows is cutting back on texting.

In other words, if text messaging cost 99 cents -- or, say, even 15 cents a message -- young texters would text a lot less.

Texting is a big business for mobile phone companies and it is a big business for a lot of reasons including -- the price is right.

The record industry -- before it gets the lights on the way out the door -- might want to consider making the purchase of music virtually non-consequential financially.

Envision the youth market on their computers and cell phones buying -- I said buying -- music at will, on impulse, 24/7 -- like they use text messaging. In bulk.

So much for theft.

So much for needing DRM.

Sell volume and welcome to the new world of music.

This sticks in the craw of record labels and I understand that. They'd rather sell CDs at their 199o prices to a market that has moved on. They'd rather come up with unworkable ideas like getting Internet Service Providers (ISPs) to charge customers for carte blanche use of all music on their personal devices.

But young consumers don't want to pay for what they can get for free online.

Make it a few cents and there will be no argument.

Let me repeat that.

Few want to pay for what they can get for free and the labels can't stop online piracy. It gets more pervasive every year.

Several cents is next to nothing -- just as it is for text messaging -- but it adds up to big business.

Between that and what they'd save on lawyers, it would be the 60's all over again.

Music for the price of a text message.




Then reread this post and keep in mind that the conditions that would lead to such a strategy are inevitable.

Cooperate with the inevitable -- now that's a business plan.

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