Can Netflix Serve As Model For The Music Business? Billboard vs. Black Rim Glasses

image from www.google.com Envy is a powerful drug and right now the music industry is suffering from Netflix envy. That's let to an interesting debate between those who believe Netflix' success is a model for the music industry, and those who see radical differences between consumer engagement with visual vs. audio content.

Supporting the Netflix model is Billboard's Glenn Peoples:

"With Netflix consumers have proven they will rent content – even re-run content – and stream it from the cloud. They will pay for digital content they could get for free through illegal means. They will pay if the service allows streaming through multiple devices – including mobile."

Not so says fromer Warner Bros. Records SVP Ethan Kaplan on his Blackrimglasses blog:

"With Netflix customers have not proven they will rent content. They have proven they will rent visual content."

"Visual media is intentionally not ubiquitous…it is still reliant on the singular mode of spectatorship rather than encompassing ubiquity of representation…."

"Audio media however is ubiquitous…It can be everywhere in your home, focused on only yourself through headphones, or background while driving, viewing things online, etc…Its very ubiquity lessens its value …less investment demands less return and hence, lower value."

People's writes:

"But much of what makes Netflix successful(is)… a strong product that's easy to use, with incredibly helpful recommendations and constant improvement based on customer feedback. Music services can do all these things, plus add features more unique to music such as social and sharing functions and a 'lean back' radio feature that requires little effort other than hitting the 'play' button."

Kaplan concludes:

"The moral of my outrage is thus:

Chasing business models in one media with business models of fundamentally different media is a recipe for disaster…

…The value of the ubiquitous is when it elevates above the din to become something transcendent for all senses. That is what we should aspire to when trying to create the concept of value in relation to content.

Transcendence is the great equalizer in the content hierarchy.

Just ask anyone that has been to an amazing concert."

I'll add two thoughts to the debate:

  • Renting a product that you use only once ( a movie) is far more attractive than renting a product that you 're likely to use over and over again ( favorite songs) .
  • Too many debates center around whether or not music subscription can return enough revenue.  The real debate chould center around what comsumers want to.  Ask Google and Facebook, in the digital era, revenue follows attention; and not the other way around

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  1. Netflix has a great product at a fair price. Period.
    I am not saying the Netflix model should be copied down to the last nut and bolt, or that Netflix’s success is guaranteed proof that people will rent music. Movies and music are obviously different. Don’t get caught up in those differences. I’m talking bigger picture stuff.
    What I am saying is people should examine how Netflix has built a better mouse trap and wonder why music has not been able to deliver? Is it a pricing problem? Is it a product problem? It is a distribution problem? It is all three?

  2. Thanks for commenting Glenn.
    But if the fundamental differences between the way people consume music vs. movies are too great, isn’t examining Netflix pointless?
    I can show someone how to sell a band, but most of those same techniques wouldn’t help them sell insurance.

  3. I know that we don’t want to stick on all the differences between music and movies but….
    I think one interesting point that gets left out is quality of the illegal option.
    When illegally downloading movies, many versions are filmed in the theater, many have bad color/picture quality, and so on.. People really care about that. They don’t want to wait around for 20 minutes while their file downloads just to get a lesser item. They’d rather use Netflix, and always get good HD picture.
    Most people can’t differentiate bad sound quality from good though (People use their awful laptop speakers or office computer speakers for their listening…).
    When you illegally download a song, not every time, but most of the time, you are going to get quality that the average music listener will enjoy fully. People listen to music through youtube
    I know that there are holes in what I just wrote and that it’s not a leading factor, but i still feel it’s worthwhile to look at.

  4. While I don’t think an exact carbon copy of Netflix will work for music, it is definitely in the right direction. I think the R’dio model is wonderful. The only problem is how they charge the customer and how much they have to charge in order to operate. Last I checked, it was $4.99 (per month) for the computer service, another $9.99 to link your smart phone. If they had iTunes catalog (at the moment, it’s a little spotty) and could bring the whole package down to $7.99 per month (like Netflix), their subscription numbers would shoot through the roof (like Netflix) and artists and labels would start earning money again (like studios are with Netflix).
    The irony is, the lower the licensing rate (up to a point), the more money you can make. Why? because music listening services can charge less for each subscription and create a larger volume of subscribers (remember, it’s digital). When you are “selling” digital, it’s 5 times more profitable to stream a song 1000 times at .005 cents per play than it is to sell one copy for .99 cents. And when the price is right for the consumer, “piracy” becomes a non-issue. It’s not worth the effort (for the average person) to download and store files of questionable quality on their hard drive just to save a few bucks a month. Also, a system like this would allow music to “go viral” (and have every play get tracked and payed for), which is something that can’t really happening easily with todays sharing options.
    It’s only a matter of time before this becomes clear to everyone, but it would be nice for us musicians if we could see it now and let the tech companies license our content at a reasonable rate so we can get back to a working business model.

  5. Aren’t subscription services essentially doing this with music right now? (MOG, Zune Pass, Rdio, etc.) We pay a monthly fee to access content.
    If this article was asking whether or not Netflix is evidence that these subscription models will prevail, it might not be.
    Apart from the points made in the article, I think context may be somewhat important here, too. We are coming out of a music age where we purchased physical media. We could hold it in our hands. It was ours. We owned it, at least that’s what it felt like. Subscription (renting?) is new to us.
    Netflix, on the other hand, arises out of an industry where we’ve been renting the whole time — Blockbuster, Family Video, etc. We rent movies that we might have no idea whether we’ll like it or not and may never watch it again. It’s a completely different experience.
    Not to mention, music takes up significantly less space than movies. I’ve got an iPad, the only device I can think of, off the top of my head, that seems like it offers a comparable way to experience movies as an mp3 player does with music. On the 16GB version, I can have 4000 songs or 12 movies. If I’ve got 2000 songs on there, I can only put 6 movies on it. If I want games and apps, I can’t have 6 movies on there anymore. Now, what if I don’t feel like watching the 4 I ended up getting on there? Netflix, here I come. Netflix can offer the kind of selection we normally get with our music libraries on a mobile device. Right now, it would be tough for the average consumer to do that, otherwise, wouldn’t it? Many may even have this issue with their home PCs. They might not have a PC sitting around with a few extra TB of space for a music library.
    The difference here, then, would be that the average consumer with a standard $350 PC from Best Buy would be growing in to the capability to steal movies from an age where he has been getting a massive library for $8 a month. Maybe he’ll be less likely to do all of the extra work of stealing, if this is the position he starts in.
    I’m not sure that the music industry is coming from the same kind of situation in technology and culture to ever be completely comparable to the music industry.

  6. I have been using netflix through an apple TV. It’s a dead ringer for appleTV’s iTunes UI. Since I can stream all the music in my iTunes library to my appleTV and output to stereo/sync it to phone etc once apple goes to the streaming cloud model nothing will change but the hard drive space needed. The buy button will disappear from the iTunes store and artists will get 0.000’s of a penny per stream. The subscription services will be great for those offering them. Not for those that create the music. Wether it’s netflix or itunes, Spotify, Rdio or google – they will race each other to the best streaming price to gain market share. They call themselves “discovery” tools that lead to buying but in the end what will there be to buy? How much “discovery” do you need to equal what a sale would be? Well rather allot as it happens…

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