The digital disruption is generating high levels of uncertainty, and most businesses and entrepreneurs are charting a foggy course.
Attendees at the Digital Summit in Nashville on Tuesday were consumed with a contentious and unsettled body of rights and licensing procedures, a situation that prevails despite ever-ramping levels of illegal content acquisition. As formats mature, so will licensing arrangements, though bigger questions continue to cloud the prospects of paid music platforms. That includes the once-celebrated paid download, a format that is now nearing the three billion mark.
That sounds like a big number, though the cumulative tally took years to achieve, raising concerns that a broader, sustainable segment may never materialize. Discussing P2P-based file-sharing volumes, BigChampagne vice president of Sales and Marketing Joe Fleisher estimated that monthly swaps easily cross one billion. Quoting IFPI estimates of swapping levels across a number of different protocols, Fleisher also tossed a larger figure of three billion, a tally that surpasses the total number of purchased tracks since 2003.
According to Fleisher, the comparison is a critical one to make, and highlights a fundamental flaw with paid models: lack of scarcity. “Competing with free means you have lost,” Fleisher declared, a depressing possibility for many startups. Referencing basic supply-and-demand curves, the executive noted that the recording industry now lacks a way restrict access to its product, and that is marginalizing a number of paid concepts. Others disagreed, including PassAlong Networks cofounder Dave Jaworski. PassAlong offers backend digital music ecommerce services, including a platform that allows real-time price variation based on consumer demand. Surveying the landscape, Jaworski noted that digital formats are largely incompatible, a frustrating reality that could be dampening adoption. “The CD is easier to use than the digital file,” Jaworski said, a state of affairs that could change if labels shift away from DRM.
Story by editor Paul Resnikoff, on location in Nashville, TN.