Saturday, April 11, 2009

The Monetization Conundrum

The music industry has been, for quite a while, exhibiting the head-stuck-in-sand syndrome. Despite the continuous fall in CD sales [pdf] music labels still love to go around suing individuals and trying to sign up more and more artists in their restrictive agreements. Labels refuse to recognize the fact that physical music is in a state of irreversible decline. Advent of platforms such as iTunes that encouraged uptake of snacking appear to have done little to wake up the labels out of their stupor. On the contrary, the recent price rise, to put it properly-the introduction of variable pricing, in the iTunes store reflects the desperation of the labels to try and make up for "lost" revenue. The spate of announcements that major labels have been doing on collaborating with all and the sundry reflect their attempts at trying to milk the last penny out of all their content repertoire. However, the sad part is that most labels are still trying to outrun the pace of evolution of digital music. In doing so, they have been focussed on monetizing new media in a classic old media format, only difference being they now tend to do it with more partners and in more geographies. This is the easy way out that they are taking due to their reticence to adopt to digital media in its truest form and create innovative business models that ensure they gain a fair value for what is undeniably their copyright. 

This problem of monetizing content in the digital media space is something that is coming to haunt content owners of all hues and types. However, there do appear to be early signs of content owners working with partners to create innovative business models. The Amazon Kindle, of course, represents an emerging and successful way of monetizing and creating newer markets for content that was increasingly being seen as dying. Similarly, Vodafone Spain, along with Real Networks has come up with a reasonably priced flat-rate data plan which allows consumers to download unlimited tracks, from all the major labels limited by DRM though. Rising penetration of mobile devices, coupled with high speed mobile networks, offer a compelling proposition for bundled offerings such as these. With mobile operators as well looking for newer revenue streams, given their declining voice revenues, partnerships are waiting to be frozen. 

Content owners will have to look beyond existing ways of monetizing their assets if they are to truly participate and profit from the digital wave. However, in their short-sightedness in looking only at the next quarter's result, they are increasingly getting further and further away from their core consumer. And this is a void that is now up for grabs from players across the spectrum !
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