Thursday, 30 August 2007

Morons and Youtube - Sept 06

Holway writing on Hotnews
29th Sept 06

"Only a moron would buy Youtube"

Reuters yesterday quoted billionaire tech investor Mark Cuban as saying that only a 'moron' would buy Youtube. He reckons Youtube will get 'sued to oblivion' because of copyright violations.

Comment: I wrote last week on the phenomenal rise in the popularity of social networking sites, such as Myspace, Youtube and Facebook, and the associated eye-watering valuations such sites now attracted. Although Mark Cuban's comments are both interesting and thought provoking, they might be based upon experience gained during a different, quieter, slower age.There was a time, just a few years ago, when TMT companies might be able to justify 'defensive' market strategies. When the pace of change and disruption was 'relatively' slow, defending your current modus operandi against 'the new' could buy you a number of years to milk the cash cow. If TMT companies do that now they risk the fate that befell Kodak - except it will happen considerably faster. The initial reaction of the record companies to file sharing (also initially illegal) was totally defensive - now digital downloads are mainstream. Exactly the same will happen (actually has already happened) to social networking. Copyright holders have far more to gain from embracing Youtube than in fighting it in the courts.

A few weeks back Robbie Williams appeared at Knebworth. Tickets cost up to £180 each. That £180 would buy every CD that Robbie has ever issued. He could have said 'Pay me £180 to come to my concert, and I'll give you all my music as a memento.' In other words, these groups now make all their money from concerts, TV appearances and merchandising. The music itself is a marketing tool to get that revenue - NOT the core revenue earning that it used to be. That is how the metrics have changed.Williams, like so many other old and new rock bands, has embraced the changes which have taken place in the metrics of making money in the new networked world.

Talk of suing either your customers or one of the best marketing channels around is so 'yesterday'.

1 comment:

Richard Holway said...

Alwyn Welch, Chief Executive, Parity Group plc, sent me the following interesting comments and agreed to me posting this on the site.


Thinking about your blog comments groups now make all their money from concerts, TV appearances and merchandising.

Whilst I agree that today there is a totally different business model for well established acts (as it is rather difficult to bootleg a live act itself!), I am not sure how a new act becomes a well established act in this new era.

Is it possible to get the wide, multi-national, audience without heavy promotion and touring? Distribution of recorded music via the internet will reach many people, by definition, but will it generate enough demand to sustain ticket prices of say £50+ each?? Will it create another Stones, or even (god forbid) Robbie Williams…?

It would be ironic however if the business of popular music completes the full circle….

· Originally a composer published sheet music (in the days when you had to copy by hand) and made money through sales of pieces of paper; but most musicians made all their livelihood by live performance.

· Then along came the days of recorded music for the masses, probably in the 20s, and the live performance (even by radio) evolved to be a means to generate publishing and recorded music sales (except for the niche interests – say Delta blues pre-1960s); and the performer started to dominate the industry (Sinatra, Miller, Armstrong et al)

· Then the popular music sheet music sales became less of business, as the song construction became simpler, and very guitar-oriented; and many composers were performers; and recorded music made all the money – touring generally was a loss-leader (late 50s, 60s, 70s, 80s)

· Now the live performance is the profitable vehicle, because you can easily and infinitely copy and distribute any recorded material, digital or analogue.

I had this debate the other evening with one of the Stones support musicians, a very talented jazz sax player called Tim Ries. He agreed that the business model for emerging or niche musicians is far from clear – and he is certainly one of the latter.

Look forwards to hearing you tomorrow