With the major record labels on the brink of extinction, Warner Music Group CEO Edgar Bronfman has made a shocking confession. Bronfman told a group of mobile phone executives that the music industry was “wrong to go to war with consumers”.
From his remarks, it’s clear that Bronfman isn’t just talking about the RIAA’s plan to sue consumers into submission. He’s also talking about the opportunity the industry missed when it failed to embrace digital distribution and develop new business models in response to consumer demand:
“We used to fool ourselves,’ he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection, and file sharing was exploding. And of course, we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.”
Unfortunately, Bronfman’s epiphany comes a few years too late to be of use to anyone in the industry.
From the 78, to the LP, to the CD, history demonstrates that each new technological advancement has lead to an increase in profits for the music business. The transition to digital music distribution should have been the ultimate evolution of the business.
The advantages of digital distribution are many — zero manufacturing costs, a chance to develop a more direct relationship with consumers, elimination of the inefficiencies associated with manufacturing and shipping of physical media. It’s a recipe for a very profitable business. A profitable business that the major labels apparently wanted no part of.
For any number of reason, the recording industry chose to fight consumer demand and resist the march of progress (and profits). As Bronfman notes, the industry failed to see consumer interest in p2p file sharing as a proof of concept for digital distribution. Instead of working with tech companies to build a viable business model for the future, they called their lawyers and initiated a series of never ending lawsuits.
Sure, the labels had the moral high ground —
consumers pirates were clearly stealing music. The problem is, the moral high ground isn’t always worth much. Something tells me the average music business executive would rather be rich than morally superior. In this case, the moral high ground was an excuse to fight the uncertainty of the future.
Instead of fighting the inevitable, the labels should have embraced the opportunity to give consumers what they want: easy access to affordably priced DRM-free content, in a convenient format that plays on any platform.
If Bronfman’s remarks are representative of a changing perspective among his peers, there may be hope that the majors will change course and attempt to salvage their industry. The question is, is it too late?
Major recording artists are finally realizing that they don’t need major labels. While there’s no clear business model for the the future, mega-selling artists are likely to become increasingly willing to take chances and experiment with new forms of distribution. As it stands now, the major labels have nothing better to offer.