Live@ Digital Music Forum West: BigChampagne Says ‘Smaller Is Better’

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As part of its research-focused kickoff on Wednesday, the Digital Music Forum in Los Angeles featured an update from BigChampagne CEO Eric Garland.

“If I only had time for one slide, this would be the slide,” Garland opened, pointing to a simple picture of a CD with a $16.99 price tag next to it.  The picture spoke a thousand words, and offered Garland a nice runway to discuss the ‘dollars to dimes’ transition (to quote NBC Universal chief Jeff Zucker) currently embroiling the business.

So what’s the state of the disruptive union?  Garland noted that BitTorrent is the only place where albums are growing, a stark contrast to the physical collapse.  After just 30 days, BigChampagne data showed a total of 1.3 million BitTorrent downloads of U2’s No Line on the Horizon.  Even more surprising, the acceleration really took off once album was officially released.

What else?  Paid song downloads are plateauing, though on-demand streams continue to grow.  “The top songs sell a few hundred thousand weekly, less than 10 percent of free, legal streams,” Garland shared, while also pointing to the gargantuan role that YouTube plays in the on-demand space.

But the only problem is that most of that action is not being monetized – at least on any meaningful level.  “Increasingly, even in this world where we’ve gained some control, we still don’t have the per unit value to drive these businesses,” Garland continued.

But what about those huge price tags on YouTube, Bebo, Last.fm, and MySpace?  Those bonanzas made a lot of people rich, except for the media companies powering the content.  “None of this money traditionally makes it back to the content owners,” Garland relayed.

Suddenly, this is a business that needs to get smaller, just to get back into the game.  Actually, a well-timed opinion by ex-eMusic CEO and current venture capitalist David Pakman worked its way into the presentation, perhaps another pour of coffee for a business still bent on high-priced digital assets and higher cost structures.  “We’re going to have to get small,” Garland stated, while using Perez Hilton as the joking example (Perez lives in the modest Park La Brea apartment complex in Los Angeles).  “Last year, a lot of us drove here in SUVs; next year, a lot of us will be driving here in sub-compacts,” Garland analogized.

That sounds more like the ‘smaller market with inferior economics’ that Pakman described, ironically a reference to the book publishing industry – perhaps next on the disruptive line.

Report by publisher Paul Resnikoff in Los Angeles.