Last week, Apple celebrated the one-billionth download of a
song via iTunes. A billion songs in
three years is a pretty big number. Apple hit the 100 million level in July, 2004, cleared 200 million by
December of that year and 500 million by summer of 2005. Today, nearly 100 million songs are downloaded
each month on iTunes.
Interestingly, this achievement comes the same week that the Artic Monkeys CD, “Whatever People Say I Am, That’s What I’m Not”, was released in theUnited States. For those who haven’t followed the story (or the band), when the CD was released in the UK about a month ago, it was the fastest-selling debut album in British charts history, with more than 360,000 CDs sold its first week.
There are two reasons why the CD achieved that goal. First, it’s simply a great CD. There’s not a bad song on it, and some of
them are great songs with staying power. But that alone won’t get you to #1. Instead, what the Arctic Monkeys did was release their music over the
Internet last year, before they even had a record contract (they eventually
signed with indy record label Domino Records). Word of mouth, club exposure and blogs helped build a buzz around this
hot new band, so when the CD came out, the cash registers rang.
The other interesting aspect of the music download market is
the so-called long tail. While the
Arctic Monkeys may sell 360,00 CDs their first week, the bulk of the revenues
from record companies come from sales of its existing catalog. The Internet has transformed this market as
physical inventory is not required, so even songs that only sell a few times
per month can be cost-effective to maintain. I find myself frequently using iTunes to purchase individual songs I may
have had only on vinyl from many years ago, where I would have been unlikely to
buy a full CD for just that song. Just
this week, I purchased individual songs from the New York Dolls, Sweet and Iggy
and the Stooges, simply to fill gaps in a playlist.
I believe that the transformation of the music industry has
ramifications for the b2b content market.
The iTunes model proves that people like to buy content
when, where and in the quantity they wish. Having a single storefront makes the process simple and eliminates the
challenges of micropayments, since users regularly purchase more songs, so
modest transactions are still profitable.
Today, b2b information users are demonstrating that they,
too, want flexibility in how they purchase content. While many traditional content providers
still cling to a subscription-only model, I’ve seen many begin to experiment
with pay-per-view and similar transactional models.
As with Apple’s iTunes, business content tends to sell more
when it is aggregated with similar information. Your core user, who knows your name and URL, is often already a
subscriber. The transactional market is
serving a customer who doesn’t know you or doesn’t immediately think of you as
a solution for their need. These users
are going to use search engines and also go to trusted sources to find the
content they need. That’s why marketers
head to a site like Marketing Sherpa, and researchers and business information
users come to the Alacra Store or Factiva. One-stop
shopping is important for these users and they would be no more likely to seek
out individual publisher sites than a music lover would be to seek individual
record label sites for purchasing songs.
The aftermarket for market and investment research can also
be very compelling. This is the long
tail of the content industry. Whether
for analysis, context or litigation support, many people have needs for
historical research or news. And, for
this market, there’s no markdown required. The value of “need to know” content remains high within this research
aftermarket.
The transformation of the music industry has been slow, painful and not very friendly to customers. Battles over DRM continue and the interests of the user remain secondary. While the business information market has a much lower presence than popular music, our industry has had similar tendencies. While there’s a gut reaction to call the lawyers whenever new business models emerge, smart content providers are seeing the opportunity to generate new revenues and open new markets by embracing these changes.
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