'Music is emotion.' Beware! Persuasion is everywhere! In this emotional state you are seduced to buy stuff! The ad-funded music business models are driving consumers crazy! Imagine you are in love with a beautiful girl. You would only think about this girl while listening to a great love song. But there are some other parties trying to get your attention. The artist is trying to sell his album to you, the brand which is supporting the artist is trying to create some goodwill, the platform is trying to upgrade your account to a premium service and if you go to MySpace you even get some great overlay advertisements while watching the music video.
Dave Kusek just blogged that we have to think of a different music model with respect to the artist-fan relationship. I am afraid the ad-funded business model doesn't fit this need. Too much parties trying to get your attention, a subject Gerd Leonhard blogged about today. Gerd writes it is all about participation, engagement and attention. I think Gerd is right, there will be much more advertisements around content the upcoming months and years. Why? Because the music industry isn't innovating! Technology changed the traditional value chain of the music business into a value network. A network where artists, consumers, record companies, music publishers and copyright societies are forced to work together to co-create a great customer experience. The music industry has just stopped the fight against technology and is now fighting with itself about margins. Still no focus on co-creation and innovation! If you would like to read about co-creation, "The future of competition" by C.K. Prahalad and Venkat Ramaswamy is a most read. Thanks for your attention! Let's start innovating!
A consortium of Dutch researchers published a report on 'filesharing and the economic impact on the Dutch creative industry'. One of the suggestions of the researchers is innovating business models. Earlier, I shared with you the presentation of Alex Osterwalder about business model innovation. Alex and the researchers are suggesting the same types of innovations. Innovation of value chains into value networks, innovation of distribution and markets. Page 136 of the report 'Ups and downs':
"The only way to cope with the impact of file sharing is to develop new connections and networks to support new products and services'. It seems like a strategy of lawsuits and DRM is not the right way to act. Next to this the market size of legal music downloads isn't generation the same amount of revenues as the decline of the music market." 'The industry is in a forced phase of transition"
Part of this transition is the entrance of new companies into the value network. Companies like Nokia and Apple are taking the lead in constructing new products, services and connections. It is really 'innovation time' for the traditional music companies. Otherwise the new entrants will take over their business.
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