Nov 20, 2007

Music is like the online ad business 10 years ago

I've written about my love affair with Amie St., so its obvious that I am intrigued by different ways to deliver audio content.

My friend David, who has been at the epicenter of the online ad business for the past 10 years, and I were talking last night while checking out Songkick.

We discussed how the changes undergoing the music business today are amazingly similar to the changes that occurred to the (online) ad business 7 or 8 years ago, to wit:

* it's moving from a seller-driven to a buyer-driven industry;

* it's moving from a volume model (CPM) to a transactional (CPC) one;

* we are witnessing the commoditization of the middle man;

* there is now a real lack of analytics, showing for example how to value different forms of consumption; and

* delivery is moving from a fixed/set flight to an always on (platform agnostic) structure for distribution.

If these are in fact the case (and I think they are), there could be real value to be had by looking at the successes of the ad model, and then porting them over.


hirschgoogle said...

wouldnt say volume to transactional as music is actually moving away from pure transaction (unit sales) to other creative ways to value the consumption. what is a file transfer worth by two 13 year olds? what is the lifetime value? the marketer and brand connection point? how do we value non traqnsactional metrics? this is the parrallel i see. Similiar to online ads moving from pure play direct response to other ad formats and marketing goals (branding, time spent, retention, consideration,etc).
I would say the mediums intersect in the cpm/cpc discussion around the fundamental change in consumption , distrabution and discovery.......seller driven to user/buyer driven. Think big record label "manufactering" hits vs American Idol (users) participating in that discovery. This does remind me of ads being priced and pushed w/out the user feedback loop that online ads allows us to appreciate......dlh