Pin the Long Tail on the Donkey

Jeff Zucker, the 42 year-old president and chief executive of NBC Universal finally determined that "Apple has destroyed the music business".

So if you are one of those poor unfortunates who actually thought record labels unwilling to embrace the digital future and their partners in crime -- radio stations with their ultra-short playlists -- did it to themselves, then you would be wrong.

Lots of media types are gulping down Zucker's Kool-Aid.

Zucker has a horse in this race.

He thinks that "If we don't do something on the video side, they'll (Apple) do the same thing (there)". Could it be a way for Zucker to justify pulling NBC's content off of the iTunes store and going it alone. All because Apple would not allow NBC to impose variable pricing. NBC in partnership with News Corp. is launching Hulu (a stinker of a name at that) -- what Zucker calls a superstore --- to allow consumers to shirk iTunes and buy direct.

Of course, the inmates are running the asylum in video content.

The very thing Zucker should fear is Zucker himself.

Zucker is making decisions based on an assumption that the facts disprove. Chris Anderson of the Long Tail theory fame brings us back to reality. Zucker and other out-of-touch media executives may want to take note:

1. Digital tracks are up 46% (I know, I know -- the downloads are 99 cents and the profit on CDs used to be through the roof. And I know, I know -- all that piracy is still going on out there. Yet, 46% growth rate for digital tracks).

Not enough?

2. Ringtone sales up 86% last year although Anderson projects only single digit growth for this year. Still -- more growth.

3. Licensing of commercials, TV shows, movies and video games up with Warner Music licensing growing at the rate of $20 million in the last 12 months.

4. Concerts and merchandise up 4%.

5. Do you count iPods as part of the music industry? If so, chalk up another 31% growth rate this year.

6. Hell, even vinyl singles sales more than doubled in the UK according to Anderson.

So in one corner it's Zucker and the traditional media companies he epitomizes and in the other, the facts. One of these things is not like the other one.

Everything in the music business is up except the sale of the CD.

The CD -- that plastic throwback to the days of record label greed. Cheap to produce. Lots of profit. They made more than their share of money when baby boomers were forced to go out and replace their vinyl albums with jewel boxes. They made a fortune in the 90's when rap and hip-hop ruled. They were the kings of record manufacturing until...

Until they lost control of their delivery systems to the Internet and the generation that grew up with it.

In fact, Apple was late to the party.

Apple's iPod has only been around for five years or so but Napster and filesharing preceded Apple's entry into the field.

Apple CEO Steve Jobs was the one who went to the labels with a solution for the digital piracy that was starting to hurt record labels -- he called it the iPod. And all of the major labels signed on. Now they think they signed their own death warrants.

What did Jobs learn that traditional media executives still don't know?

1. Traditional media companies no longer control the delivery system. TV can't deal only with affiliates. Record labels can no longer choose to promote certain artists through their radio partners.

2. To make money in music media you have to cooperate with the inevitable. It's digital or bust. Make products and services for the digital/mobile future and you actually have a future.

3. Media companies are not that good at content. Don't believe me? In what other generation would user created content (YouTube, video clips, home music productions, etc) thrive? Only now and only on the Internet. Media conglomerates are no longer the sole producer of content.

So, there you have it.

A big NBC Universal executive with a you-know-what on him this big for Steve Jobs is rationalizing his way past the truth and making critical decisions on this false information.

When I was a student at Temple University in Philadelphia I had a professor named Harry Weinberg who taught General Semantics. One of the many benefits of this course in my youth was to discern the difference between fact and assumption. Professor Weinberg said a lot of our ills were caused by treating inferences as if they were fact.

Weinberg said facts can be observed and verified -- that's how you know the difference.

May I suggest to the troubled traditional media business that they learn the difference between what they infer (i.e., Apple destroyed the music business, downloading is killing music, the album is what artists and fans want, radio is the best way to hear new music) and what can be observed and verified.

Everything music is up except CD sales -- observed and verified.

That's a fact.

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