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Friday November 10, 2006

Distribution Model = New Markets

Hats off to OReilly for the name of this web 2.0 session: Pirate and the Suit. Eric Nicoi, Chairman of EMI, and Eric Kleptone on stage together. Given what has happened with the music industry through the IPOD business model, you’d think this issue of legal distribution and copyright management would have been handled by now. With video the new terrain, this topic of copyright “protection” continues.

Let’s face it. There are so many new opportunities with the web: for creation of new content, for the ability to get music and video out to the broad masses, and to generate the “long tail” of variety without the power and control of a few, select distribution houses. These guys have to get up and go or change. There’s an inherent arrogance to stay with their existing models. And it’s not as if others haven’t tried to accommodate their business models.

If the mainstream media companies wants to get off their high horse, and stop being in the police and traffic copy business, they need to change. They need to focus, instead, on reducing the transaction costs to allow people to get legal. Right now, there is no simple execution way to buy / license the rights to a piece or portion of music, or to pay the rights to showcase music or video in a “public venue”. With standard fees, would come a new market. And, I believe, many new consumers. This wouldn’t replace their existing business, but could be a complimentary new market.

Expanding distribution almost always expands business. If your market is rather niche, that’s not true. But the music industry is the broadest, with video surely following. So why oh why don’t these guys see that they need to get into new channels and new buying options. The Music industry needs to get it.

Technorati Tags:
Market Expansion, Web 2.0