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8 predictions for the Future of the Music Business
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by Gerd Leonhard
09 the future of Media & Entertainment
October 13, 2003
Music like water:
music is no longer a product but a SERVICE. Music became a product with the advent of recording (records, tapes, CDs) and the formation of an industry that quickly figured out that selling the bottle can make more a lot more money than only selling the wine. For the future, think of a 'record label' as a 'music utility company'.
A bigger pie, but cheaper slices:
today's music pricing schemes will be completely eroded by digital music services (legal and otherwise), and by stiff competition from other entertainment products. A 'liquid' pricing system will emerge, involving subscriptions, bundles of various content types, multi-channel and multi access charges, and countless added-value services. CD prices will end up at around 5-7 Euro per unit. But most importantly, the overall music consumption will steadily increase, and will eventually bring in $50-$90 Euro per person per year, with 75% of the population in the leading markets as active consumers - the pie will be 3 times as large.
Diverse and ubiquitous:
a wide range of music will be everywhere, and music will be part of everything that used to be 'images - only': from rich media advertising to interactive slideshows to car software to MMS and digital cameras, to advertising in magazines (!) - the audio-visual use of music will soar, and the licensing revenues will explode along with it.
Access to music will replace ownership.
Soon, consumers will have access to 'their' music anytime anywhere, and the physical possession of it will in fact be more of a handicap, or a knack of collectors. Music will feel (and act) like water.
Multi-point access to music
will be the default environment, allowing consumers to 'fill-up' their music devices at airports, train stations and in coffee shops and bars, using wireless as well as fixed-media and on-demand technologies.
major artists will exceedingly rely on their own 'brandability' and - via their managers - go direct to the consumers, using their own in-house marketing, branding and promotion teams.
The software PRO:
the (performing) right organizations (PROs) as we know them will likely fade away. Complete technology solutions comprised of watermarking and fingerprinting, DRM and CRM components, monitoring, admin / accounting and instant payment solutions will do the job quicker, cheaper and, of course, with complete transparency.
cell phones and other wireless devices will eventually utilize and suck up more 'content' than any Internet service or p2p client ever has. Real-music ring-tone offerings, Multi-Media SMS (MMS), java-based games, wireless streaming audio and video, I-Mode type applications and other cell-phone based offerings will proliferate very quickly, at first in Europe and Asia, followed by the U.S.
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