Friday, February 26, 2010

Ten billion reasons why the recording industry is stupid

Ten billion is a big number.

It's a one, followed by ten zeros or 10^10.

To get a better idea of that number here's an example of just how big it is.

If you took the name of a music recording and wrote it on a piece of regular copier paper then placed it on the floor -- it would be about 0.01mm high.

If you did that 10 billion times, and stacked all those pieces of paper on top of each other, you'd end up with a stack that was 100km tall.

The top part of the stack would reach the Karman line, the boundary where the earth's atmosphere ends and space begins.

So yes, 10 billion is a big, big number.

But what is so significant about the number 10 billion that I felt it necessary to provide such an elaborate example of its magnitude?

Well Apple has announced that iTunes has sold its 10 billionth song by way of download over the internet.

I bet the recording industry is kicking itself now -- or at least it would be kicking itself if it hadn't shot itself in the foot so many times that the tattered appendage must have been amputated years ago.

For years, the recording industry rallied against music downloads. It decried the level of piracy associated with illegal downloads but did nothing to sate the demands of an market that no longer needed or wanted the inconvenience and "all or nothing" option that was the CD album.

While the recording industry was doing this, Apple created the iTunes store and effectively took control of the now very lucrative legal music download market.

Instead of providing this service themselves, and reaping the bountiful profits, the music industry was so busy treating its customers like criminals and trying to unload CDs on a public that wanted downloads that they allowed Apple to create a market dominance.

Now the record labels are forced to pay Apple a commission on all those tracks sold through iTunes and that commission comes right out of the labels' bottom line.

The fact that the recording and movie industries still prefer to treat customers as criminals rather than valuable assets shows that they have learned nothing from this awful miscalculation.

Accusing your customers of crimes and unleasing your war-dog lawyers on them does not produce healthy profits and positive branding.

What builds healthy profits is creating a product that people want and delivering it to them in a format that they prefer -- at a price everyone thinks is fair.

Apple know this.

However, the labels and studios still have a long, long way to go before that penny drops.

In the meantime, still not willing to adapt to changing markets and technologies, both the recording and movie industries are now placing their hopes on being able to lobby governments into giving them even more legal protection by way of the ACTA agreement currently under construction.

Unfortunately for these myopic marketers, even tougher copyright laws won't help their slow spiral into oblivion. Unless they wake up and take advantage of the new opportunities that are presenting themselves they'll all be out of jobs within a decade as the internet empowers artists to deal directly with their fans.

Don't hold your breath -- it seems that the labels are incapable of learning a damned thing from the way Apple has leveraged iTunes into a money-spinner.

iTunes second 10 billion will come up much faster than the first one... where will the recording industry be then?

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