HOW TO: Take the Music Business Back From Apple
Apple has the music business cornered. Or does it?
Chris Holmes has a radical idea that would help the music business free itself from Apple's stranglehold and reward the real influencers that distribute music. Apple might sell music, but it's the blogs and music pirates that distribute it. They're the ones that create the buzz that leads music fans to their storefront. Yet, while often viewed as parasites, these entities do produce enormous amounts of value. Rather than decry them, Holmes believes the business should reward them.
How would that work?
Change nothing and incentivize them. Parties will pursue their self-interests while still adding value to the whole. In what Homes calls the Privateer System, bloggers and music pirates are provided opportunities to make money while spreading music. Bloggers that laud an up-and-coming act would host their music and take a percentage of the sales. Fans too. Rather than sending readers and fans to Apple or Amazon, where they get a cut of the profits, the money would remain within the social ecology, help it grow, and gain new members.
The idea is that rather than allowing corporations to extract value from music communities, the value could be captured by the community. In the process, the ecology expands due the increased cash flow throughout. Homes has a very interesting idea, but, by all means, don't take my account as the final word.
"Privateer System could be a game-changer that frees music distribution from Apple's stranglehold.
If it is widely accepted, The Privateer System would not only expand the size of the digital music distribution market, but the 30% gross margin that Apple currently earns on digital music sales would instead be absorbed by more active participants – the tastemakers – that would invest more of their earnings into the industry.
Again, this is part of a natural evolution.
As more profits flow through the grassroots distribution system created by The Privateer System, there will be more tinkering and innovation that will ultimately benefit the music consumer.
Privateer model provides a mode where tastemakers and file-sharers are rewarded and their contribution is encouraged, rather than in the current model, where they are looked at as a cancer that is eroding the system. We take that system, legitimatize it, and help the people doing the heavy lifting in the spread of music make a profit, all while making a profit for artists.
As Privateers, we, as artists for the arts, can create a symbiotic system where fans can support the arts, and artists can blossom. We have taken a lose/lose scenario for the artist and the consumer and turned it in to a win/win: creativity can flow, and tastemakers can be rewarded and incentivized for turning people on to cool stuff. This model also works with film, books, music and any digital media. It is not a total solution, but it is a start." (Read on.)