What is the Future of the Music Industry?

The invention of the Internet has forever changed media consumption (i.e. the way people watch film, TV programming, listen to music, etc.).  Power and control, regarding media consumption behaviors, have been transferred from the large content creating organizations (large record labels and television networks) to the content creators/consumers/end-users. Independent artists are increasingly taking power away from these large media companies.

The media industry (i.e. film, TV, news, etc.) is in the process of converting from an industrial information economy into a networked information economy.  An industrial information economy is a society that has its media produced by large corporations or media institutions.  A networked information economy is one in which information and media don't come from one large business entity, but rather from a network of the individuals within the society.  In this hybrid state that we are currently in (between networked and information economies) we are already afforded a taste of the greatest liberty of the networked information economy, individuals now have the ability to create content and mass distribute it at little to no cost!  This transition is a result of the internet and increased bandwidth capacity.  However, as with any change, there is always resistance.

In response to this phenomenon, large corporations and organizations like the RIAA have taken painstaking measures to restrict the power and agency (the freedom to act) of media users by restricting access and placing artificial gates to the very same media they are promoting/selling.  For instance, TV networks only stream their shows on their own sites and often only have a few episodes. They spend much effort finding and removing other people's uploads of their shows.  In doing this they put up artificial gates between the people uploading their shows and the people who want to consume or use their shows.  But the transition has already begun they are merely slowing down what is inevitable.

In order to meet the demand of unrestricted free media access in the new media marketplace, innovative companies (some legal, some illegal-like torrent sites) are springing up with the sole purpose of giving power and agency to users, artists, businesspeople, and entrepreneurs.  Where before, due to the structure of the media and music distribution channels, media companies could make cookie cutter products (i.e. commercial music, movies, and television programs) and herd consumers into very narrow consumption channels, now they cannot, because users now have the agency to choose between many unregulated media sources and manipulate and interact with their media however they choose.  As a result of the Internet, the consumer's choice is no longer restricted to the small number of products (i.e. musical acts, TV shows) that these companies are producing: they now can consume anything anyone  puts out.

Along with the new freedom derived from the emerging networked information economy comes the necessity for new business models, regarding media sales and consumption.  There is a high demand for new freedom to interact with media, so within the marketplace some new media companies will rise to supply this demand.  As a result, media companies, artists, businesspeople, and users are all going to have to adapt to new models if they want to stay afloat.  But nobody knows what the destination looks like yet.

This has lead several large forward-thinking companies to create open source platforms. For example, Google now gives its users free reign to build their own companies on top of their platforms (the new Droid phone and the attempted release of the collaboration and communication tool, Google wave).  But as with any uncertain environment some idea's will float and some will drown. However, cutting-edge businesspeople and entrepreneurs will have the foresight to identify the successful ones, and they will adapt to these new open-source platforms to create new businesses that will give greater agency to consumers and users.

The most recently emerging music business models have focused on both offering a free product that is streamed by consumers and a product that is portable.  Good examples of these businesses are those using subscription models, (think Rhapsody and Moog - though these aren't entirely free yet).  These streamed products would negate the need for physical and digital copies of music because of their wide accessibility and quick high-quality streams.  In the UK a company called Spotify has been able to offer free streaming of music paid for by advertising. And to combat holes in 3G networks, companies are even including offline modes, which allows their customers to make their playlists available when there is no Internet connectivity.

Because these new models represent a free substitute superior to tangible products (they don't even use hard drive space), media companies and artists will be hard pressed to generate the previous large scale profit the music industry was known for using traditional sales methods.  Why pay for something when you can get it for free?

Creative artists like Trent Reznor recognize that the need for ownership of music is dwindling and that traditional sales are down. These artists have developed imaginative ways to attach additional value to their music to entice fans and consumers to pay money.  Reznor embraces the hybrid economy by offering all of his works under a creative commons license.  Additionally he has embraced the hybrid economy by giving fans the stems to his recordings and intentionally making over 400 gigabytes worth of video footage available from a bittorrent tracker he set up.  He did all of this with the intent of creating a community centered around remixing his works and celebrating the amateur non-commercial information economy.

What Reznor has discovered and exploited is the knowledge that media in the networked information economy needs to be interactive.  Within this new economy, users will take productions from the antiquated information system and productions from the new networked system and remix them, splice them, and personalize them to create something entirely new.  There are already many examples of this (shred video's, overdubbing different comical dialogue on tv shows, music mash-ups, etc). 

Until we make the full transition to the networked information economy it will appear that professionalism no longer exists, especially in media streams like the news.  Everybody will be creating all of the media that everyone else is consuming and it will no longer come packaged the same way every time.  It should be noted that professionalism is just a societal construct, an idea that limits ones agency and individuality to originally create.  Professionalism is no more than a group consensus saying what is good, i.e. good journalism, or good music.  Therefore, it is important to see that this transition isn't actually a loss in quality or "professionalism", but rather is a loss of the uniformity and rigidity of a norm. We are simply translating to a networked economy, one where information flows freely and original creation is more prevalent.

Trent Reznor intentionally put the stems (the individual parts that make up a whole song, i.e. just the vocals, or just the guitar track, etc.) of his songs on his release Ghosts I-IV and 400 gigabytes of video footage on a torrent site so that they would be downloaded for free and remixed by media users.  Ghosts I-IV grossed $1.6 million in the first week alone solely from record sales. Reznor realized that the direction of our society's media consumption behaviors is moving towards the necessity for interactivity with media, personalization, and an artificial barrierless environment of media consumption.  
    
Amidst the sea of new independent music releases made possible by widely accessible affordable recording technologies and distribution, Reznor rose above the noise of the standard 11 song industrial information economy album. This is because although the mass of artists who remain unheard do utilize the advantages in connection and distribution afforded by the networked economy, they neglect the need for interactivity, remixing, personalization, and a barrier-free environment.

As media consumption trends skew further and further from radio, television, and newspapers, users will increasingly demand the ability to manipulate or interact with their media.  Interactive mediums like Rockband song downloads and blogs will either replace or substitute for their industrial information economy equivalents, MP3 downloads and newspapers.

The strongest media companies in the future will be the ones who will discover unthought-of interactive media distribution channels that capitalize on the foundation of open-source platforms (like google wave and android). They will be the ones who can create media or entice the non-commercial segment of the hybrid economy, and the whole of the networked economy, to create media that interactively engages its users.  

-Written by Ben Fillion  (Musician, Record producer, Music Industry Entrepreneur)

Feel free to email me with questions and comments.
benfillion@gmail.com