Dec 14, 2009

Case Study - Successful ad supported streaming on a mobile device

In the late 70s and Early 80s, I remember my grandfather "Pop" Donnelly standing in his kitchen every morning, drinking instant coffee, smoking Kools and listening to a mobile music device that streamed his favorite songs all day long straight to him. When he loaded up and headed for work he had an in-dash version of the same device. He paid no fees, no subscription costs. The entire system was funded by sponsored advertisements. Record companies demanded no licensing fees or royalties from the providers of this mobile streaming service.
Of course I am being cheeky, it was his A.M. Radio beaming Frank Sinatra and Dean Martin straight to his kitchen, his car, and when he he got to work on the job site, a little transistor radio.

This is a proven business model, in place for 87 years. This is what the streaming service companies should be looking to as a way to move forward.
Of course with radio the labels demanded no payments or licensing. In fact they spent a tremendous amount of money on third party radio promoters to get their records placed on playlists (and of course in some cases resorted to straight bribery). This was the single best way for them to run up sales of their recorded releases. Make people aware of them so that they were compelled to purchase the recording after having it burned into their psyche through free streaming. Why the change in attitude by the record labels?
A few things: For one MTV. The sure fire way to success on the record charts in the 80s and into the 90s was through constant rotation on MTV. Then at the turn of the millennium the folks at MTV started to concentrate on reality programming instead constant music videos played 24/7. Their ad revenue spiked as people were drawn to the this new voyeuristic programming. Not too mention that by 1998 we had pretty much scene the music video drowning in its own cliches. So the record labels step back and somewhat rightfully say, "We spent Billions building your brand, supplying you with a free supply of pricey music videos and in exchange you change your format and cut off our supply to new fans".
This has caused them to look at any new opportunity with a wariness that they are not "exploited" this way again.
Another factor is fear. As revenues crashed downward there was an industrywide paranoia that any thing new and "digital" was robbing the labels of their proper place in the food chain.
So they start demanding upfront payments from new vendors that could help them find new fans for their artists. And of course they started suing music fans for sharing files. (This has been written about ad naseum so I won't spend time on how utterly stupid it is to take your most loyal customers to court...)

I think a look back to Pop crooning away with Frank might actually show us the path to the future.
• As an artist or Label (or whatever the new hybrid partnership develops is)use EVERY tool and EVERY Opportunity to introduce your music to new fans without expecting them to pay you first
• Look to sponsors to subsidize the cost of streaming. Keep ad rates reasonable.
• Publishing Royalties should be paid in accordance to a sliding scale depending on listenership, not number of plays. Or in the case of hobbyists that are playing music out of passion - no payments.
• Kill the subscription model. This is bad for fans, bad for labels and bad for the tech companies that have to pay exorbitant licensing fees to the labels.

No comments:

Post a Comment

Please think. I mean do you actually think I am going to let you post spam?