Bundling the Future of Music

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What role within the entertainment experience does a music label play when the marketing equation is not meant to answer the question “what music should I buy,” but rather “what song should I listen to.”

Recent deals involving the bundling of music subscription systems with other services (Napster with Penn State University, Rhapsody with Comcast, iTunes with the iPod) should make music industry executives reflect further upon the future of their industry.

This future is temporarily delayed by the transitional market for downloadable singles. 99 cent singles, and their 79 cent brethren, essentially unbundle the album experience to meet the lower price points desired by consumers in the nearly fixed-price market for albums. But as the number of musical releases continues to rise, the distance between superstars and great musicians widens and the customer service issues associated with DRM-managed files mount, downloadable singles markets will likely shift to music services. Storefronts offering downloadable singles will simultaneously turn the faucet on full flow, no matter how apocolyptic this vision may now appear to proponents of the traditional music industry.

So what role will a music label play when the marketing equation is not meant to answer the question “what music should I buy,” but rather “what song should I listen to.”

Intelligent entertainment firms could very well shift from “investors” in talent to acquirers of catalogs. Megamergers are already in place, putting any one label in a better position to be the rights owner associated with any “listen now” click button hit by the random consumer. Should your label own 1/3 of the music in the system, 1/3 of the licensing revenues are likely yours to keep.

Music marketing departments shift their role to the much more agreeable task of artist awareness. With the openly flowing experience of bundled music services having removed the fear of post-purchase depression from consumers, buying radio play or handing out promotional singles will be a silly exercise for marketing departments. The goal is to get good music into the marketplace and let it flow.

An overture-like world of paid for links within services will likley evolve, much to the disappointment of users if not balanced. Playlists will become a more useful communication tool among fans. Word-of-mouth becomes a dominant marketing force, within a service holding millions of fans with opinions to share.

Perhaps more threatening, for the music retailing industry, is the business models already evolving around digital storefronts and services. To be discussed.