Thursday, 24 July 2008

Who are the real thieves?

It was announced last week that further steps are being taken in order to curb the volume of illegal file sharing online. Whilst I do not in any way condone file sharing, I do believe that the entertainment industry is getting a certain degree of payback for years of mistreating it's customers.

Here are three reasons why:

As I have discussed in previous posts, I am an early adopter. I invest in the latest technology as soon as it comes out. I upgraded all my cassettes to CD, my VHS tapes to DVD, my CD's to minidisc, purchased a Sony Atrac player, an iPod etc.

Every time a new format arrives, the previous format becomes second-best. For example, I own a number of classic movies on DVD. Now that Blu-Ray is on the scene, am I expected to purchase them again in the newer format?

Surely, a discount should be awarded to customers that own an existing format and are looking to upgrade. This strategy could be employed in order to grow the Blu-Ray market that currently represents only 2% of video-disc sales in the UK.

2. The price of a CD in a high street retailer has remained consistent over the past decade. Despite increasing royalties to artists and ever increasing overheads, production costs have lowered. The price of a recordable CD can be used as a guide for this, you can now buy 100 for as little as £10.00

In order to compete with digital markets and the illegal download community, the price of CDS & DVDs should be reduced. Perhaps if the latest music CD was priced at £4.99 in the shops, then the retailers would not suffer as much.

3. I hate purchasing a CD to find that it is only 45 minutes long, or there are a number of tracks that are clearly album fillers. I am sure a number of people have purchased an album based on the strength of one good track. Is this fair on the consumer?

Downloading digital files has somewhat resolved this problem. It is frightening simple to purchase music on iTunes. You can purchase individual tracks and preview tracks before you buy.

Some artists are embracing digital. Radiohead launched their album, In Rainbows, online before releasing it on the high street. They also allowed customers to suggest how much they believed the album to be worth. If this was the case for all artists, the good ones would still be profitable. Radiohead made over $2M in revenue from the release of their album, even though 62% of customers paid nothing. The volume of free illegal downloading was of course far less.

Other artists are less welcoming of digital markets, although they don't mind charging over £100 for a concert ticket!

Music and film industries needs to start looking at digital as an opportunity rather than a threat. There are plenty of new revenue opportunities available via digital channels. Here's a few for starters:

1. Charging for online showings of concerts or backstage,
2. Paid memberships for access to exclusive online content,
3. Offering priority downloads of trailers, interviews or outtakes,

The entertainment industry must face up to the fact that in the
future the majority of revenue will not come from traditional sources. The cash cow that was traditional CD & DVD sales is rapidly deteriorating.

They can be criticised for becoming too complacent with the revenue attained from their captive market. They have failed to innovate and are only now that their market share is dwindling, starting to embrace new opportunities.

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