Victor Keegan has a piece in today’s Guardian about Apple’s online music store, and he makes a good point about the disintermediation that’s about to happen. If the online distribution model takes off, then record stores had better watch out, hadn’t they? I find this a difficult one to judge - the death of the high street has been predicted before n1c on the w, and people are still going in Waterstones to buy books and Comet to buy electrical items. But both of those are physical items, and the gratification is delayed if you buy online - whereas for MP3s the delay is only as long as it takes to download. Perhaps the question is more about how much the tangible physical aspects of the product - sleeve notes, packaging etc - and the social aspect of buying instore count for making the trip down the high street worthwhile.
There are a couple of other points that he picks up that are interesting to consider - at the moment, the pricing is set at 99c per track, which is presumably based on the cost of a physical CD. Assume 10 or 12 tracks per CD, 99c per track, and you’ve got a retail price of $10 - $12. And you can bet your bottom dollar (pun intended) that we Brits will be paying 99p, rather than the 66p or so that the exchange rate would imply. How long is that pricing going to last, though? Apple are the only player in the market at the moment - I’m ignoring the braindead and crippled attempts at online stores by the music industry so far - and once competition kicks in, the chances are that the price will fall. There’s also an added degree of flexibility implied by the per-track nature of the downloading - if you can download tracks individually, it’s only a matter of time before the mix-and-match principle is applied and I can build my own greatest hits compilations for the appropriate payment.
But the most interesting question to look at is what the implications are for the music industry. I think this is a sign that finally - and oh so grudgingly - elements of the music biz have woken up to the realisation that their business model is dead and they’re going to have to deal with it. Apple haven’t gone it alone on this one - they’re licensing the music they’re selling from the record labels. Which means that the record labels have agreed to it. Which means that they’ve opened pandora’s box. How long before we see a situation where Apple - or someone else, because I’m damn sure there’ll be a “you only deal with us” clause in the licensing agreement - start dealing with the independent labels, or even artists directly? As soon as that happens, the hegemony of the music industry has been broken, and they’ve lost control over their supply chain. Why as an independent artist would I go to a major label, knowing that they’re only interesting in promoting boybands and Brittany clones, and paying me 1c on the dollar on the CDs I do manage to sell? Far better that I could be promoting myself through a channel that pays me say $5, and leaving me with control over both my back-catalogue and my destiny.
This could be the beginning of the end as far as the RIAA is concerned, and having managed to paint themselves into the bully’s corner there’s going to be precious little in the way of sympathy for them when they are finally up against the wall. I don’t expect them to go quietly, and I don’t expect that Apple’s progress (or anyone else’s for that matter) will be particularly smooth. But the fact that a large and respected corporation such as Apple has gone ahead and done this is an indication that although the RIAA might have won one or two battles, they’re a long way from winning the war.
