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Music Lessons

The established music industry is trying to adjust to the consequences of a disruptive technology. Thanks to high bandwidth Internet service, compressed music files and file exchange software, the consumer can now choose what he/she wants, use it...


April 1, 2004
By Pulp & Paper Canada

Topics

The established music industry is trying to adjust to the consequences of a disruptive technology. Thanks to high bandwidth Internet service, compressed music files and file exchange software, the consumer can now choose what he/she wants, use it more conveniently and not be fed a packaged product that is being perceived as higher cost and lower quality

from the inclusion of unwanted content. It is also becoming easier and less costly for musicians to reach their audience directly. While new providers such as telephone companies [Telus], PC manufacturers [Dell, H-P, Apple], software developers [Microsoft] and even retailers [Wal-Mart, Amazon] are entering the music download business, many will find it to be a lost leader and best thought of in the context of driving sales of core products [Jupiter Research]. With dis-intermediation in the supply-chain, the established community of providers is scrambling to preserve their turf with legal suites and taxes on recording devices. Their problem is the inability to change quickly and accept that there is an emerging new business landscape.

The unfolding story of the music, and soon to be video business, is worth watching because the newspaper business is facing a similar exposure to Internet-based disruptive technologies. There are many parallels. The newspaper bundles content at the discretion of the editors for presentation to the consumer who has to swallow the whole bundle. Before high speed Internet, the only way for the consumer to select content segments for sharing, filing or editing was to clip the poor quality images and text and compromise any content on the reverse side of the paper. This situation has been changing over recent years and is now about to accelerate. There are now products like NewspaperDirect [see FutureViews column of August 2001], web-based content with search capability, and now complete full page electronic editions, with all of the ads, stock tables, sports statistics, classifieds in the familiar page layout and branded format. Anything can be clicked and saved or printed. The consumer can share and edit content. As with the music business, it is a consumer-choice model rather than the media push model.

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The continuing ease of information transmission and retrieval is the major trend that will drive the evolving business model[s] for the newspapers. The models will be different for different consumers, cultures, language and geographic locations. There are predictions that information will become a commodity and just like power and water, will be delivered with different quality features. Quality features for content will certainly be choice, but might also include such consumer values as integrity, timeliness, security, context, compression [remember Reader’s Digest Condensed Books], search, messaging, direct ad placement and community discussion. Will content from news-reporters and commentary creators be sought-after value just like the artists’ compositions in the music world? Quality features for delivery or carriage might be wireless, virus/spam-free, ad-free, media convergence utility, display options. On the topic of displays, wearable-computing devices such as the small screens in eyeglasses will have a longer-term impact. As with online music, brand awareness may be a key for the online newspaper.

WHY IS THIS IMPORTANT?

The big questions for the newsprint business is how far will the new consumer-choice business model go in substituting traditional newsprint consumption, how does the newspaper value-chain re-invent their business model and what new opportunities are there for the paper producer in the media supply chain? Serving the print-on-demand market would seem to be a good starting point. As with CDs, reading from a paper format has its conveniences; the equivalent of the MP3 player for a newspaper is a bit hard to see — but the new flexible displays may make this possible some time in the more distant future. In a future of wireless broadband Internet, the business model of pushing plastic may soon be obsolete for the music industry; pushing newsprint may not go so far but it is certain that it will have to share some portion of the consumer space currently reserved for the newspaper value-chain in the future.

Alan R. Procter provides strategic consulting services to organizations looking for new competitive capabilities. He can be reached through www.alanprocter.com