k wrote:
] ] Forget squeezing millions from a few megahits at the top
] ] of the charts. The future of entertainment is in the
] ] millions of niche markets at the shallow end of the
] ] bitstream.
]
] [ The editor of Wired takes a stab at redefining the business
] model that entertainment companies should be looking at.
]
] There are some compelling statistics in the article, and a lot
] of arguments similar to those made by myself and others around
] here in the past few years. Leveraging the power of
] collaborative filtering and network effects inherently,
] flexible pricing based on popularity metrics, modified cost
] structures and the removal of locality as a parameter for the
] customer base.
]
] If his numbers are accurate, anywhere between 20 and 50% of
] existing potential markets may be untapped because there's
] simply no way to get people to the product efficiently in the
] physical space. That's an awful lot of money and more
] importantly, an awful lot of diverse cultural media that could
] be available to the greater audience. -k]

I need to go back and re-read this article, but on re-reading this meme and on first blush, this isn't how the market will work. Hits are hits because they receive marketing dollars, and those dollars need to be repaid. Unless I'm missing something, there will always be a need for those services (and that's actually what record companies do really really well) and so that has to be reflected in the cost. All that's really happening is that the distribution mechanism goes to something that's much much more cost effective. That's it. It's as if it was buying software or fonts or something. It doesn't take 3 ceedees and a bunch of printed shrink wrap packaging and the associated trucking to get it into my hands exists anymore. But the fundamental JOBS that the industry does remain the same. Just the price point has changed.

The second part of this is that the industry has known and talked about this for 15 years. They've known that this was going to happen. I can dig out issues of Wired and Mondo 2000 and NAB and a bunch of other rags that extolled the virtues of VoD and other content on demand models. Fer chrissakes, Time Warner did a trial with SGI in Orlando back in 1993. This isn't a secret and they've calculated how long they could withhold the current model of distribution before this would happen. That being said, I think there's plenty of knowledge about what models will work and what won't. It's the WILLINGNESS of the market to pursue those models that's lacking.

Decius wrote:
] This article underlines why Apple's "99 cents a song" model
] will go the way of the 8 track. Micropayments only make sense
] to accountants.

A few years into both, I can report that cumulative expenditures on my Rhapsody subscription far outweigh my purchases at the iTunes Music Store. In terms of value proposition, there can be no comparison; Rhapsody comes out leaps and bounds ahead.

Decius wrote:
] Probably required skimming for people interested in things
] like MemeStreams.
]
] This article underlines why Apple's "99 cents a song" model
] will go the way of the 8 track. Micropayments only make sense
] to accountants.
]
] The price of the content that you want will be low, because
] you won't want the lowest common denominator "pop"
] information. You'll want the niche stuff with low demand. As
] price approaches zero the cost of music begins to look a bit
] like cellphone airtime. It will varry greatly depending on
] what new tracks you are checking out and how popular they are.
] Customers in this world will demand some way to make costs
] predictable, as they do with other metered services. And so
] the flat rate music service wins.

[ I was hoping people would finally get around to this... I found it very compelling when i memed it back in oct, but it slipped under the radar i guess.

I think your analysis is probably correct if the kind of services grow that are predicted here. Micropayments are an ok idea without an infrastructure, but at the moment, the infrastructure necessary to exploit the niche markets isn't really there either. As it happens, I agree that the latter will happen sooner, and probably illegitimize the former for the most part. Still, some people have to knock out some pretty fabulous collaborative filtering and reputation systems for tunes, because there is an ocean of crap out there, and unless finding decent stuff becomes almost trivial, it'll be too daunting for most people. It's like going to used shops... you can find great stuff, but you need to have the knowledge and the inclination to flip through thousands of items to get to it.

For the moment, of course, I disagree that flat rate services are superior, primarily because I don't think the studios are interested in granting me the kind of licence to the work that I think they ought to. Neither does Apple, really, but it's closer. Maybe I'm just a pack rat, but I hate the concept of losing access to a piece of music just because I've stopped paying my monthly fee. -k]