Wednesday, 3 October 2007

Record breakers

I have been out of touch for a couple of days and have only today found that Radiohead are letting people choose how much (if anything) to pay for their new album. I won't bore you with the fascination this causes from an economist's point of view because many, many others have already done that. I also won't do it because I'm not an economist. Let's just say that two noteworthy entries are The Economist and Vidico's piece too. It is really fascinating from an economics perspective, but I'll spare you that and just say that I hope that they publish the data on the average price paid as well as the distribution of prices.

What interests me most about this is how it might change the landscape for music publishing. Chris Anderson wrote in The Long Tail about technology democratizing the means of production, the internet democratizing the means of distribution and web 2.0 creating ways for content to find enthusiasts - meaning that people's tastes end up as niches of one. This has been possible for a number of obscure bands, and The Arctic Monkeys and Lily Allen are the two most obvious examples of how it is possible to become a big hit through this channel today.

If it becomes the norm for bands to publish music independently of record labels then the labels will be severely undermined - perhaps permanently. What is most interesting is that this will be a temporary state. In personal lines insurance, my current area, the move from brokers to direct insurers was significant. Now that there are so many direct insurers, shopping around becomes very labour intensive. Enter Money Supermarket, and a host of other aggregators that claim to simplify the job for you. There are so many aggregators doing this now that there is even speculation that there will be an aggregator of aggregators soon.

This is a demonstration of the theory that all markets end up intermediated. If musicians start to publish independently on a significant scale, that market will end up intermediated again. There would be a market for a music aggregator just to allow you to sift through the vast choice. iTunes and others would soon find their deals with record labels inadequate and would need to change their business model fundamentally.

I will be watching the Radiohead album launch with great interest.

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