By Jackson DeMos
Market researcher and entrepreneur Eric Garland (pictured) told USC Annenberg students and faculty that media companies can look at the music industry's decline for warnings about what to avoid (watch the full video).
Garland visited USC Annenberg as part of this semester’s M{2e} — Media, Economics and Entrepreneurship — speaker series. M{2e} is a USC Annenberg initiative designed to spark innovation in media industries by increasing understanding of how economics impact communication and journalism. There are six more talks planned for this spring.
"One of the main thrusts of the M{2e} initiative is to give students and faculty members alike more exposure to some of the leading-edge issues pertaining to all kinds of traditional and new media businesses," said communication professor Christopher Holmes Smith, who introduced Garland.
Garland said the music industry provides a case study for other media businesses.
"Many of the big factors that have acted so cruelly on traditional music businesses are going to provide challenges to – and are already providing challenges to – all of those other media verticals," said Garland, founder and CEO of BigChampagne Media Measurement. "I think there’s so much to learn. Music has so much to teach us as people who are interested in or dependent on traditional media businesses."
He said during his presentation, “Everything for Everyone, Everywhere, All the Time," that three major factors have contributed to the music industry's decline:
- Losing control over broadcast (the one-to-many communication platform)
- Losing the "forced" bundle of selling albums instead of singles
- Shifting from music as a product to something people merely access
"The first difficult thing that happened to the music industry is that they started to lose control over broadcast," said Garland, adding that people now have choice to listen to free Internet radio or view music recommendations on a friend's Facebook page."
As those influences start to creep in and steal mind share from traditional broadcast, he said, the platforms that helped Michael Jackson sell tens of millions of records sold are still quite powerful. "But you don’t see tens of millions of anything sold because the reach and influence has already been diminished," he said.
Promotion and marketing was expensive, powerful, and available to big media alone in the 20th century.
"Reaching people used to be easy and only a few could do it," he added.
His second warning was that record companies were most profitable when they could sell a forced bundle in the form of a record or CD instead of individual songs.
"More people are consuming more music than ever before in the history of recorded music by every measure," said Garland. "There’s only one measure in which music is at an all-time low – dollars. So, the problem is, there was in that bundle a leverage so powerful that when we were kids, if we loved a song, the price of loving that song was $12, $13, $14, $15, $16. To many of you in this room I’m speaking Greek, you don’t even know what I’m talking about. The price of being a super fan is zero. The price of being a super fan is going to the YouTube page 10 times a day and pushing 'refresh.'"
His third warning, that there was a shift from music as a product to something people access, means that people are less frequently owning any music.
"We may not be opening our wallets and purchasing any of it," he said. "We may merely be accessing it as music flows like water. And with that has come a perceived degradation in the per-unit value of music."
He said a song is worth at most $1 to many people under 35 years old.
"So a song and your relationship with that song over the course of your life is worth a lot less than a cup of coffee at Starbucks," he said. "That's changed dramatically."
The next event in the M{2e} speaker series will be Feb. 8, when DailyMe.com CEO Eduardo Hauser joins journalism professor Gabriel Kahn for a discussion on the changing relationship between news providers and their audiences, and how sites can develop winning strategies for the future.
Full Video
M{2e} Speaker Series
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