Digital changes the dynamics of content consumption:
(1) Interconnectivity gives us access to more content than ever before.
(2) The value of any content we already own is diminished as we acquire more content (or the ability to access more online) – because we only have a fixed amount of time. Eg – if I have 500 CDs and 500 books, if I purchase another 500 of each, the value of my existing library (to me) gets diluted because I only have a fixed amount of time.
(3) In economic terms, digitised content = infinite supply. The RIAA etc attempt to impose market distorting mechanisms to create the appearance of scarcity to maintain pricing
(4) The total amount of information in the world is increasing exponentially. The real cost of content of any given quality should thus decrease.
(5) Fairer reumeration models for content could be:
(a) content creators paid from a persons income tax, measured by consumption + quality rating
(b) comprehensive subscription models founded on similar principles.
According to Mark Mulligan from Forrester Research in his article @ Mashable, the demise of the music industry has been long predicted, because digital technologies have changed the behavioural and economic underpinnings of how people think about and consume music.
This change in mindset is generational; and the generations of people who’ve grown up familiar with digital have embraced very different consumption patterns to their parents. He refers to this first digital generation as Millenials who made the transition to digital (think: the Napster/Kazaa generation, who rip CDs), and argues that, their younger siblings, Digital Natives, only know the digital way (they don’t think in CDs at all):
“Digital Natives don’t have that analog era baggage. All they’ve known is digital. Online video and mobile are their killer apps. These Digital Natives see music as the pervasive soundtrack to their interactive, immersive, social environments. Ownership matters less. Place of origin matters less. Context and experience is everything. In a world beyond content scarcity, experience is now everything. With “free” infecting everything, the content itself is no longer king. Experience now has the throne.” ( Source: http://mashable.com/2011/02/04/music-industry-digital-natives/ )
I think that Mark’s analysis is spot on, though what he fails to express in his article is that the music industry is out of touch with whats going to work in 2011 and beyond, because many of the decision makers in it are neither Digital Natives or Millenials, they are of older generation, who think in different ways..
Consequently, they have tried, unsuccessfully, to perpetuate what used to work for the music business in a pre-digital era, instead of embracing new opportunities to distribute and monetise music in a World where digital technologies have changed all the rules.