"Trading Analog Dollars for Digital Pennies"

That headline quote is from NBC Universal's Jeff Zucker and appears in an article about Atlantic Records in today's NY Times.  The article talks about how Atlantic is apparently the first record label to report that more than half their revenue comes from digital products.  Unfortunately though, as Zucker's quote alludes to, even if a player or two manage to get a larger slice of the pie, the pie itself is shrinking.

That phenomenon isn't unique to the music business.  I believe the same trend will appear (and in many respects already has) in other industries.  Think newspapers, magazines, and...dare I say...book publishing.  Experimenting with a variety of digital distribution services is vital, but not enough.  It's equally important to think about driving new revenue streams that may not be directly tied to the original content itself (e.g., sponsorships, partnerships, etc.)

Zucker's right that the pie will be smaller, but only if we limit ourselves to applying yesterday's solutions to tomorrow's challenges.

Comments

[Peyton Stafford]

Joe,

IMHO, the pie is shrinking because IT is reducing the cost of distribution of IP. This will continue to apply to all forms as it has since the beginning of the Gutenberg revolution. The creative costs may also be reduced as creative artists use technology to reduce their production costs, which will help stabilize the cost of publication and ROI for publishers, but nevertheless the total price that consumers pay (whether corporations, individuals, or special markets such as law firms) will inevitably decrease as content decreases in value.

On the practical level of earning a living by selling IP, this means that the markets that are most lively (young consumers) will only buy IP that they can ingest via their mobile devices. Publishers that want to stay in business in the future (tomorrow) need to address this as an ongoing issue and not an instant-fix problem.

At the other end, the deadest markets, such as public libraries and elderly persons who SPECIFICALLY lack computer skills, (my 89-year-old mother for instance, whom I visit every evening, who can view images on a computer screen but who has lost the ability to use a keyboard) will be the least affected.

However, as members of my mother's generation pass away, the market will shift to members of the Boomer Generation, which has not been well-addressed by publishers. Most publishers still treat Boomers as the next-in-line customers at a deli -- nice folk waiting to buy a pastrami on rye -- whereas, the boomers will want to continue reading the kinds of books they have always read. That is, they will not want pastrami. They may want braized tofu or edemame. For instance, someone who is a Niall Ferguson fan will not want to give up his brain and switch over to cozy mysteries and westerns just because his eyes can no longer read 6 or 8 pt fonts.

Bottom line: IT will continue reducing price that consumers pay for IP. Increasing global literacy will expand market. The chips will fall.

Just my opinion.

Peyton Stafford

[Joe Wikert]

Hi Peyton. That's a great way to summarize things ("IT continues reducing the price consumers pay for IP"). I also like your deli analogy -- well-said!

[Book Calendar]

Libraries have been affected more by digital distribution than most people think. The most successful digital products which we have are downloadable audiobooks which are extremely popular. This is the one area which is doing well in libraries. Ebooks aren't as popular as digital audio. I don't think this was expected.