Guest Rebuttal: The Future Of Ad Supported Music
Last week we posted a guest commentary by Bill Houghton which concluded that ad-supported music is not scalable. Marc Cohen who blogs at Ad Supported Music Central disagrees and we invited him to share his thoughts.
The logic of Bill’s analysis is inherently sound. However, it proceeds from flawed fundamental assumptions that render his conclusion meaningless.
The first incorrect assumption is that the success of ad-supported music should be measured by whether it can “fully subsidize music”. No one who advocates ad-supported music believes that it will, or should, be the revenue strategy for all recorded music.
The new world of recorded music is one where the hegemony of the CD is gone. In its place will be many ways to obtain and pay for recorded music. Ad-supported music will be only one of those forms – albeit a significant one.
Bill Houghton’s second assumption error is the fatal one and illustrates the blinders that most…
…observers of ad-supported music wear. This assumption is that
ad-supported music is an Internet application and so will share on-line
ad inventory, valuation and revenue.
Ad-supported downloaded music is not an Internet application – it is a
new and distinct medium. Successful implementations of ad-supported
downloaded music will dynamically integrate ads into the audio stream
of music played from device memory. The Internet is merely the channel
for getting the music and ads into memory.
In this way, ad-supported downloaded music monetizes the time spent
listening to recorded music. This approach opens up a mother lode of
untapped ad inventory – tens of billions of hours in the United States
alone. This inventory, and how it is valued, has as much to do with
Internet advertising as outdoor has to do with direct mail.
Ad-supported downloaded music is not only scalable, but by monetizing
the huge, and growing, amount of time spent listening to recorded music
this new medium could propel recorded music revenue to new heights.
“Successful implementations of ad-supported downloaded music will dynamically integrate ads into the audio stream of music played from device memory.”
Wow. I can’t wait!
“No one who advocates ad-supported music believes that it will, or should, be the revenue strategy for all recorded music.”
And I doubt that there’s many people who believe that your model will contribute to any significant revenue whatsoever.
“The Internet is merely the channel for getting the music and ads into memory.”
That’s a pretty boring way of looking at exciting opportunities.
I agree with this. I don’t see what the big issue is anyway. Sites like Last.fm that do ad-supported music are just the Internet’s version of commercial radio, so obviously the system works.
I personally think the two biggest issues are distribution of royalty payments and possible payola problems, but otherwise, I don’t see the big issue here.
Myabe all those big words threw me off, but I still can’t see why it wouldn’t be sustainable as Mr. Houghton says. Plus, we’re all assuming the demise of the CD as a source of music income. I agree with the fact that CD sales are down (that’s obvious) but it’s definitely alarmist to say that we’ve GOT to replace that revenue stream NOW, or the industry is DOOMED.
CD sales are declining, not dead. I personally think that CD sales are just normalizing, since there are so many different distribution models available now.