ThinkPLANK - Convergence Insights

More on Content Strategies

Following up from my last post on Music and Content pricing and strategies, I discovered belatedly an excellent piece by David Byrne in the Wired Magazine - which really lays out the music industry out on the dissection table and points out how the economics work. Importantly, according to Byrne, the artist's share of the rakings in a label-published album or even one sold through iTunes is less than 15%. You really have to be sure of the bigger numbers for this to work, obviously. But to me this also points to the following:

First, the value of the album is therefore largely composed of retailing, marketing and other elements. Hence it might be argued through hard economics that the retailing and marketing are more critical components of the success of the album seen through a business-person's eyes and clearly the level of predictability of costs and performance is higher in this area. Almost makes you sympathise with labels!

Second, Byrne's logic could be extended to films and other forms of content as well and it would be interesting to see the kind of strategic alternatives which might arise for movies and games in future. When there's enough broadband connections of significant size to enable movie distribution, will any independent release a film with a pay as you want model a la Radiohead? Seems just beyond belief, but those horizons are shifting as we speak!

Content Value Strategies

I've argued before that the price of content is falling and will do so for a while. The latest example how this is taken on board by the industry is the recent example in the music industry. Guy Hands' plans for his prospective takeover of EMI includes getting albums sponsored by corporates, as reported in the FT. (Although the notion of Sudafed sponsoring cold play smells of a bad pun!). For some this may be blasphemous or patently implausible, but here's a couple of arguments for you. We all know the stories of decline in sales of CDs and recorded content with the growth of Youtube and P2P downloads.

So where then do content producers and owners go? Well, there's still value in News and live Sports, for example, and in evergreen shows which have an audience even after a decade of airing (Friends, Monty Python, etc.) but for the rest, there are some emerging alternative strategies.

The first is that people still pay for the experience, not the content. Of course we do, that's why movie halls still sell tickets at vastly higher prices than the best DVD rentals. Madonna's deal with Live Nation, away from Labels shows how this works. As this article in the Times points out (thanks Raja!), you can buy Madonna's entire output of recorded music for the price of seeing her live for two hours on stage. Still think it's all about content? Incidentally, the article also looks at why Tony Blair can charge £ 500,000 for a speech or why the Led Zep concert sold tickets on the web at an average of over £ 7,000.  Bottom line - bands used to do  concerts to sell their CDs, now they do CDs to sell their concerts. Is that change enough for you?

Other interesting fall-outs include examples such as this story in the Prospect Magazine which suggest that bands prefer to sell their T-shirts rather than their CDs. The t-shirts cost nothing and sell for $ 20. The CDs sell for half, but costs double of the t-shirt to make, and cannibalizes sales of t-shirts. Enough said.

Of course, when all else fails, there's always advertising. Doesn't seem all that implausible now, does it?