Resnikoff’s Parting Shot: Why Kids Feel Stupid Paying for Music

Leave that guilty feeling to the adults.

Or, at least the ones that still care.  But during the course of discussions at the Bandwidth Music & Technology Conference in San Francisco, perhaps the most stinging comment came from left field.

Kids often feel stupid paying for music.

Certainly exceptions exist, especially among industry kids.  And this is not the type of thing that comes out of research surveys, which are notorious for drawing false information on touchy subjects like file-trading.  But break through the youth filter, get a dose of honesty, and $1.29 downloads start sounding like insanity.

Back at Bandwidth, the requisite discussions were happening over variable pricing, AmazonMP3 discount campaigns, and other discussions ultimately related to the buying fringe.  But a few alternative voices poked through.  One raised the unpopular corpse of AllofMP3, the highly-successful Russian site that peddled MP3s for 5-cents a pop (and upward for various quality and format configurations).  If this site was such a miss, why was high-level diplomatic pressure exerted to eventually bring it down – among other tactics?  A Russian guy selling knock-off CDs never got a call from the US Trade Representative.

Obvious answers exist for why a 5-cent download is unworkable.  Statutory publishing rates, for example.  But increasingly, more and more evidence is showing that downloads in the range of 69-cents to $1.29 are even less realistic for creating business growth.

Certainly unrealistic for the younger demographic, once the driving pulse of a thriving industry. Kids are lucky to get an iTunes allowance, especially these days.  The rest are swimming in free, and teaching one another the tricks for grabbing gratis content.  It’s reflected in the numbers, and the flattened download trajectory in the US (and eventually, the world if the trend plays out).

This is not just a major label problem.  Sure, emerging, unsigned artists can control their own copyrights, and name their own price (including free) through direct-to-fan channels.  But when on iTunes, artists must do as iTunes does, and that includes paying specific percentages on pre-set prices.  Sure, the noise floor is deafening, but maybe the pricing ecosystem is also hurting smaller artists as well.

Seems like the industry has a choice to make.  Battle for old-world revaluation, or radically revalue its product in the hopes of creating a paid culture.  Maybe getting smaller is just too unappealing to a once-lavish business, and for that matter, the grandiose dreams of many artists.  But there may be little choice left in the matter, at least for those that want to build a new industry.

Paul Resnikoff, Publisher. 

16 Responses

  1. @GregSax (via Twitter)

    My boys started school 2day but I’m the one learning “Why Kids Feel Stupid Paying for Music”

  2. trevor

    my gosh, what a huge generational shift. this basically happened overnight.

  3. http://twitter.com/DannyDee

    Greetings Paul!

    I just wanted to site the articles I had brought out per our discussion at BandwidthSF…

    Cheers!

    Snoop Is Top Dogg Of Virtual Goods Selling $200K+ http://bit.ly/cDAZJ1

    “5 Huge Trends in Social Media Right Now” –

    Facebook Acquires Social Checkin Service HotPotato –

    Groupon Smashes Sales Records with Nationwide Gap Deal –

  4. Bricks and Mortar Media

    Resnikoff testifies… (if you don’t have a subscription already you will want one after reading this).

  5. Jason S

    That’s an interesting side-effect of the recession that I hadn’t previously considered. Parents have less money –> Kids get less allowance –> Kids seek out more free downloads. Still, I don’t think anyone’s shocked by this revelation. Kids will always be stingy and subversive, two desires that fit nicely with “free” downloading (“freeloading”?). The trick, as with all bands, is to figure out what they WILL pay for, and then give it to ’em in such a cool, unique form that they’ll pay EXTRA for whatever it is.

  6. jbedbus

    Maybe kids feel stupid paying for music because the industry charges stupid money for it.

    From the beginning, a CD should never have cost more than $10. An mp3 album should never cost more than $5, and a single mp3 shhould never cost more than $0.50.

    Rather than determine value, then create a plan to get there, the industry created a big, fat profit plan first, then priced product accordingly, no matter how out of practical line it was.

    The Industry bigwigs (and medium wigs) who made these horrible business decisions continue making hundreds of thousands, to millions of dollars per year. Dozens of white shirts sit in support of this failure between the artist and the market, getting paid before the artisit. Everyone knows the artist gets paid last, if at all.

    Sometimes I steal music too. Know why? Because I know my theft isn’t affecting the artist. She wasn’t getting paid anyway.

  7. jazztothebone

    I personally wonder if our recession is due in part to the lack of CD sales.

    I really wish that Rhapsody, grooveshark, etc. would market to parents of teenagers. Teens don’t have credit cards, so they CAN’T pay for music. FYE hardly carries anything they want. Parents don’t know they are downloading, so it all gets swept under the rug. I wish the lawmakers and the RIAA would do a PR campaign to educate people on the whole topic. I think parents would pay $10 a month if they knew that their kids were doing something illegal. Most kids don’t even know it’s illegal. And perhaps it won’t be illegal, for long, with all the things that are happening!

    The music industry needs to come up with a way to have a sustainable business model. Forget the riches and glory – it was all debt anyway, right? Just figure out a way to get a decent living without a million dollar bonus. It’s all about the music, right?

  8. CrowfeatheR

    This is CrowfeatheR

    I have the answer to this problem, but it will cause some great pain to many of the people who make their living off the content artists create and labels provide. It would turn much of the peripheral enterprises of the music industry upside down. My theory is to create demand, then control access, the simplest supply/demand market dynamics and right out of commerce 101. The bottom line though is if labels can’t make money then they can’t pay the artists to create which means no content anyways, which is where we are headed. The labels can’t keep downsizing as eventually there will be nothing left and they can’t keep milking artists with 360 deals either. As for the kids feeling stupid about not stealing…. think about that one for a second…. What kind of demon spawn are you baby bloomers raising? A generation of chew and screw, shoplifting, check bouncing, car jackers?

    A note to my young fans & potential young fans. If you’re my fan then, you want me to be rich, which means you want to buy my stuff and pay all that you can for it. I’m your friend, your idol. You don’t steal from friends and Idols. If you want to steal from me, don’t steal from CrowfeatheR, it’s wrong, rude and most of all, bad fucking kharma. You don’t want a tree to fall on your head do you? Bad juju for thieves, black magic dance.

    ~ CrowfeatheR

  9. christianyawma

    The mint-condition original pressing vinyl LP of your favorite record is a treasure. Bands and labels often pull out all of the stops for a 2-song 45rpm single, with deluxe packaging, color vinyl, inserts, download codes, etc. These products are works of art, expressions of culture, artifacts for specific generations or movements. The MP3 is none of the above. It is intangible, disposable, and disconnected from its creator. If no artists get creative enough to 1-up the MP3, what societal movement could possibly fundamentally change a new generation’s value of a 3MB digital MP3? Hat tip to the Arcade Fire and Digital Music News’ coverage of their interactive MP3 slideshow.

    Christian Blunda, Music Director

    YAWMA

    http://www.yawma.net

  10. John Loken

    Great piece, Paul.

    Unfortunately, post-Napster/Torrent, the value of recorded music will forever be anchored at free, especially in the minds of younger consumers — arguably the engine of future growth.

    The good news is, we sell a “purple cow” product that is capable of connecting on an emotional level with customers. Also, the recording industry’s massive fixed costs and relatively low marginal costs imply that any revenue which exceeds free — even $.05 for a download — reduces losses on a per unit basis.

    But rather than worry about battles we can’t win, at least for now (such as pricing), we should focus on the one we can: earning and managing the attention of fans.

    Until we win back the trust of our customers, nobody is going to pay for anything.

  11. @Musikparlament (via Twitter)

    Hvorfor unge føler sig dumme, når de betaler for musik