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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