Will the Music Industry’s “Last Stand” be a music tax?

Techcrunch recently ran an article regarding the Music industry’s “last stand” as being a music tax. Coordinated via ISPs, NIN’s Trent Raznor puts it something like this:

“I think if there was an ISP tax of some sort, we can say to the consumer, ‘All music is now available and able to be downloaded and put in your car and put in your iPod and put up your a– if you want and it’s $5 on your cable bill.’”

Yeah, that pretty much sounds like a last stand to me. And it won’t be successful.

You could try that (and people have) for mobile phones and such, since access to free mobile content is offset by “convenient” access to for-pay premium content. But for the Internet as a whole that model won’t fly. Nor should it.

The business model for music has changed forever, and there’s no going back (although the industry will continue to try). Due to unlimited digital distribution of legal and pirated content, as Michael Arrington states in his article, the perceived value of recorded music will approach zero. File-sharing is not always convenient, so yeah–some people will pay retailers for quick access to their top acts. But that’s where the price is going–down, down, down. The market–i.e., the consumer–has spoken.

So where does that leave the performer, songwriter, recording engineer, agent, label executive, etc? Like so many industries before, they’re being affected by circumstances beyond their control. They can either stick their head in the sand and fight for their lost cause or look to the future (or look for a new career). It’s not a matter of being right or wrong anymore, it’s about looking for success within a new business model. Either way, it will be nearly impossible to sustain their previous lifestyle.

Unless, that is, they take advantage of these revolutionary changes and seize the moment. Unless they become innovators in an innovative time. You don’t have far to look–some acts, labels, and sites are doing just that. Successfully and legally.

Fortunately, the costs to record, distribute, and transact music have declined dramatically. These days it costs a couple hundred bucks for professional recording software, and anyone can put their music up and give it away or try to sell it. Furthermore, musicians and all content creators now have access to a global audience that was unimaginable just 10 years ago. Obviously, someone has to *want* your music (notice I didn’t say it had to be good), but the good news is that you don’t need a middle-man to be successful. You don’t need a middle-man to maintain your success. You need talent, along with business and marketing sense. You, the artist, can finally control your destiny. So stop complaining about piracy, copyright infringement and copy protection, and find a way to live and thrive by playing within a new set of rules. You may have an argument, but you don’t have a viable solution that won’t end up biting the hand that feeds you. It’s time to move on.

For aspiring musicians, a new world of opportunity lies ahead, and millions of them are taking advantage of it. For established musicians, they’ll have to work a little (harder)–those days of living high on the hog are over. I recently blogged about Paul McCartney and the Eagles finding new avenues for reaching their audience, which is the approach I’d take if I was an established artist trying to hold on to my listeners. They can still milk their (deserved) reputation for all its worth, even in this new paradigm.

For the rest of us, we can enjoy the advantages of this new marketplace, where more music is available than ever before, and for a price of next to nothing.

As we all know, listening to recorded music is only half the experience. Music is not a product, it’s a message. And the musician is the messenger. If I like the message I’ll engage the messenger–I’ll read his blog, I’ll buy his shirts, I’ll pay to see him/her in concert. I’ll pay extra to subscribe to his site and get behind the scenes access to videos, demo takes, or back-stage access. If he reaches and attracts enough people like me, he might just be able to squeak out a living doing what he loves. If not, he’ll have to pick up a day job to sustain his passion (it wouldn’t be the first time that’s happened).

As you know, I’m with an online publisher, and yes–the same is happening with books and video. Just look at the plummeting price of video downloads and the shortened life cycle of movies. All publishers that depended on assessing value based on restricted distribution means or non-market-based pricing of digital content are in for a surprise. The growing pains we’re in now with music recordings, due to radical industry-to-market non-equilibrium, are already touching these other content industries.

Either way, it’ll be an exciting ride.

Ning–A Community Site In A Box?

As I mentioned a couple days ago, there are several paths to take regarding community implementation and management for your online business. If you don’t want to subcontract out the work (we know building it yourself isn’t the way to go), then you might want to consider a hosted solution. One of the dominant players in this space is Ning. From their site:

Ning offers the latest social networking features, all infinitely customizable to meet your unique needs. The Ning Platform makes this possible. As a platform, you don’t have to appeal to Ning for the features you want. If you have the time and the inclination, you can build them yourself. It’s the software equivalent of Home Depot.

I tried it out, and I must admit it was fairly easy to set up and it seems pretty feature-rich. As an administrator, you have the ability to customize the look and feel, the layout of features, member management, registration questions, and a host of other community-centric items.

So what do you have? You’ve got blogs, forums, groups, photo uploading and sharing, video uploading and sharing, music uploading and sharing, online/offline member status, activity tracking, multiple language management, Flickr importing, site and member usage stats, CSS management and other cool “widgets” and services.

It really is a decent approach to building a basic community around your core online business.

Oh, and did I mention it’s FREE? They do have upgrades that will give you more storage space and bandwidth. When you create a free social network on Ning, you automatically get 5GB of storage for Public Content, 500MB for Private Content, and 100GB for bandwidth. You can also pay to run your own ads, or pay for your own URL or domain. The prices look reasonable if you’re serious about using community to drive traffic and stickiness to your site.

It’s better than relying on Google Adwords to do the same thing.

Furthermore, you have little, if anything, to lose. So yeah, start a community around your online business. Just remember that obtaining and implementing the features and functionality are the easiest part of building a community. Growing, managing, and sustaining a community is where the work is–which is a topic for another day.

Next up–Flux. As powerful as Ning? We’ll see.

The “Community Question” for Business–Build, Buy, or Join?

The “Community Question” haunts almost all companies with an online presence, and shapes both our day-to-day and strategic approaches to eventual success. Furthermore, there’s no doubt that online communities are the life-blood of today’s ecommerce sites–eBay, Amazon, and Lulu (where I work) depend on their communities for feedback, return traffic, repeat business, site stickiness, viral marketing and brand reinforcement. Your community is your strongest asset and staunchest ally. Be kind to your community because, in truth, it’s not your community. They own you, and will quickly turn on you if you slight them.

But, for better or worse, your online business definitely should have a community around it (see where community ranks in “Top 10 Things To Do As a Startup“) . A strong, dynamic, and exciting community is a significant competitive advantage and serves as a barrier to entry for others trying to gain traction in your space–especially in new markets.

On the other hand, building a successful enterprise requires focusing on your core strengths, i.e. those specific efforts that will deliver superior products or services for your market. Unless you’re like Flickr or YouTube–that is, depending on ad revenue or social network effects–your core strengths will not be community technology. As a matter of fact, companies (large or small) can easily get distracted by spending development cycles on important, yet non-critical, community platforms and infrastructure.

Avoid the temptation. There’s no need for you to build a better blog, a better profile management system, a better photo arranger, or a better widget. Why? For one, you’ll always be behind the curve because this isn’t your space. You didn’t hire your engineers to be experts in this field, and they’re not. Two, you’ll never know which one of the top 20 widget functionalities you’ll need–which will add the most value, and there’s a good chance you’ll pick the wrong one. Three, by the time you pick one to work on, and even if it is the right one, before you deploy it there will be 20 more newer cool applications to emulate. You’ll get distracted. In essence, you’ll catch yourself looking at every pretty girl (or every cool community app) that walks by while your competitors are focusing on the “one thing” (whatever that is) that brings success in your market.

So what’s a company to do to take advantage of the community phenomenon?

There are two paths, actually.

* Subcontract the development: If you can’t avoid the NIH (“If it’s Not Invented Here we won’t use it”) approach and decide to build your own community tools, then subcontract these efforts through an external engineering house to meet your specs. But don’t spend your key development resources on this project.

* Buy, Rent or Join “off the shelf” community platforms: This option was the primary reason for writing this post to begin with, but I caught myself needing to post the preamble above. But recently there have been several compelling “community in a box” hosted applications that have caught my attention–namely Ning, Flux, and Wetpaint, which I’ve been investigating. At this point each deserves it’s own separate post, so we’ll start with Ning tomorrow.