NOISE GATE: 6 Tenets for a New Music Industry, Part Five

Although piracy is undeniably bad for the music industry, there are plenty of ways around it. The sue-em-all solution hasn’t worked, so what else can record companies do to slow the problem down? In this instalment, I’ll share some of my ideas on how the industry can be creative in tackling the pirates. Hint: It’s all about carrots.

1. Music must be sharable – word of mouth is more important than ever
2. Revenue must come from multiple sources – if one bit of the industry becomes obsolete, it shouldn’t sink the whole ship
3. New technologies are to be welcomed and understood, not feared and litigated against
4. A&R can be crowdsourced, but remember the long tail
5. “Added value” is key – give people a reason not to pirate things
6. Your artists are your most important spokespeople

Added value is key

Piracy has got to a stage where it’s the default option for the vast majority of people. The IFPI reckons that just 5% of music consumed in the world is ‘legal’. To me, that suggests one thing – that we need to redefine ‘legal’ – but in the meantime, the best weapon in the fight against piracy is to give people a good reason to legally buy the product.

Let’s start with download platforms. Most of them are rubbish and immensely user-unfriendly. iTunes, top of the pile, resembles a spreadsheet. Not only should your download platform be as straightforward, convenient and easy-to-use as the best piracy option, it should also give people MORE than is available on peer-to-peer networks.

People happily pay more (in shops and online), for a ‘special edition’ of a game or DVD – why not use a ‘special edition’ of your album to include more than just a crappy paper slipcase? Why not add a commentary track from the band, or animations made by fans for all the songs, or a voucher for a free gig ticket for the band’s next tour?

How about a unique registration code that allows you access to a locked ‘fan club’ website with priority gig tickets, a message board, a basic social network, a log of the rarities and b-sides that you’ve got (fan ‘achievements’ like on Xbox 360?), as well as links to content related to the band across the web. You could even sell crappy merchandise, mugs, keyrings, underwear, etc – fans will love it. Basically, you just need to provide a reason to buy the thing that actually benefits the fan.

Before I go too much further, I want to explain a couple of quick concepts – those of infinite and scarce goods. Infinite goods are things, like MP3 files for example, that can be replicated as many times as you like with near-zero cost and with no loss in quality. Their monetary value, in basic economic theory, is essentially zero. If you’re in a band, you won’t be pleased to hear that. Sorry.

Scarce goods, on the other hand, are ones that can’t be replicated digitally and easily. A concert is a great example of a scarce good – because you can’t recreate that experience very easily. Even a t-shirt is a scarce good – because it takes time, money and effort to copy it, and the results aren’t usually perfect. This is where you make your money.

In a perfect world, a company would be able to give away the infinite goods – the songs themselves – and sell the scarce ones. In the same way that music videos are viewed as essentially just adverts for the album, and ‘given’ away on MTV etc, so will songs be viewed in the future – just promotion for the ‘live’ experience, or the tshirt, or the products that your band is endorsing (and getting cash from).

But we’re not quite there yet. The ‘music as a service’ concept has legs, and we’re getting there, with the proliferation of radio and MTV to everywhere we go. But we’re not quite there yet. Be prepared for a change but whatever happens keep stocking those scarce goods – the special edition album, the gig tickets, and the tshirts.

More Noise Gate: Tenet 4: Let everyone else pick your new favourite band | Tenet 3: Don’t be afraid of the robot