March 16, 2008


Reading Chris Anderson’s article from wired.com, shed a lot of insight onto how different businesses are developing a 0$ business plan, by offering many services and products for practically nothing. This has a lot to say regarding how different companies and markets are evolving to capture consumers minds everywhere.

After reading the article, there was one thing that stood out in my mind. From my marketing class that I took last semester we talked about pricing strategies. Not saying that companies GLOBALLY have adopted an experience pricing strategy (Where the longer you make a product you find cheaper/efficient ways of producing that product, thus forwarding the savings onto the consumer), although I believe this plays a role in why things are being able to be sold cheaper almost to the point of being free. Competitiveness. Companies are becoming more and more competitive to grab consumers from other companies, and because several aspects of their company (in storage, and other products that can be produced in mass quantity) have become cheaper to create, maintain, and obtain.

Webmail has been around since you first got your computer. Only once you signed up you were given a limited amount of memory in which to store your emails. Of course you were always given the opportunity to PURCHASE extra space at a monthy/or annual fee. This was how the companies gained a profit. However, with the ability to create more storage for less money, companies are now offering UNLIMITED storage for emails for free. How will they survive if they no longer charge for extra storage you ask? Take Yahoo! For example. If you have an email account with yahoo, you are more likely to use their other offerings such as search, IM, etc…. With more people drawn to their free unlimited storage, this would also increase the usage of their search engine etc… where other companies would be drawn to this customer base to advertise.

Cell phones are becoming more and more popular. Everyone goes through the hassle of researching monthly plans, phones that come with a plan etc… There are two things to discuss here. The cost of cell phone plans have stayed relatively the same over years, with phone companies gaining a lot of their income from users that go over their monthly limit on minutes, text messages etc… What has changed though is the number of calls you can make monthly. Each phone call you make has relatively no cost to the phone companies, therefore to stay competitive, they continue to increase the amount of minutes and/or text messages. For my first cell phone I was charged 25$ a month for 80 minutes. That’s right 80 minutes. That seems ridiculous if they offered a plan like that now. For the same price one can get a plan that has at least 100+ minutes. Again cell phone companies like to stay competitive.
With the ability to stay within your limit of phone calls and/or text messages how to cell phone companies gain income? If you’re unable to get a “free” phone with your plan, you’re looking at 80$ plus to have a decent phone, and if you don’t have a plan, you are looking at over 200$ for the phone of your choice.

Fred Wilson created a great term “Freemium”. This ties in with webmail, but applies largely to free applications. Many free applications are funded by advertisements, or restrictions on what you are able to do unless you purchase the “Pro” version. With this, companies that offer these such applications are able to make profits from other companies advertisements, especially if the application is powered by other users (ie Limewire, Kazaa etc..), and also make a profit from selling the “non-advertised” version.

The cost of music CDs has declined over time (I remember paying 20$ for a CD, when you can get CDs now for 12$ or even less). This could be attributed to many factors: rising demand of CDs over cassettes, the lower cost of producing a CD, or competition from downloads. The music industry is finally understanding that lowering the cost for music (for downloads mostly), is a great way to effectively reach many more people, and thus increasing the amount of sales for any given song.
In the future I KNOW we will see many more services, and products be offered for basically free of charge, even those services or products that we may have not been introduced to yet.

Free Music Isn’t All Bad

February 29, 2008

Well RIAA doesn’t agree with that statement, but music that is freely available for download does create some perks for music artists. Take what South by Southwest (SXSW) has done. SXSW is a music and film festival in Texas which started out as a battle of the bands and eventually grew into one of the largest music festival events in the US. After the festival is over, SXSW offers a large MP3 file over Bittorrent for free of most of the artists which participated in the events. More than 1,400 this year.  This is especially convenient for those of us who can’t make it down to Texas for the week.

Scobleizer brought the availability of the torrent file to my attention from one of his posts. I knew about SXSW going on this month, but I didn’t know that there was a file for download. I definitely agree with Scoble saying this isn’t “stolen” music, but a gift from the artists. Freely available music is great for start-up indie bands, to become better known; look at Feist, for example. Bittorrent is a great way to distribute large files (even full seasons of television shows) across the internet. Although it is always associated with controversial downloading issues and recent malware issues.

SXSW is just trying to help out startup bands. Almost reminds me of Robin Williams helping out the boys at the TED conference yesterday with some comic relief.

I hope that new music breakthroughs keep happening on the web, like Hypemachine now being able to upload tracks from Lastfm.com accounts. Sweet!

Tasia

Mashups

February 28, 2008

After reading a post by Fred (A VC) about Mashups, I thought it was fairly appropriate as our last class was about mashups. I find this particular mashup to be funny.

I think that mashups will become really popular in years to come. The first mashup that I had ever heard was Elvis vs. JXL – Little Less Conversation. I think it’s the video I love more so than the song. Anyway, i’m beginning to hear mashups more and more as I get older and to be honest, I had never realized that this song was actually called a “mashup”. To my amazement, mashups are not neccessarily music.

I think it’s a great way for people to play with sounds and rhythms. Some mashups sound great when others sound…well..not so great but it’s the fact that people are trying to figure out what sounds the best. You never know, these people might be your next “hot” artist. Some of the best mashups make the best dance music! I hope that people will be able to continue making mashups and that these mashups continue to be popular.

With that said, I don’t see how the music industry feels that home made mashups are “taking money away from them”. As if they don’t have enough money as it is.. Anyway, I guess that’s another debate for another time.

Music in China

January 18, 2008

From last week last week reading Seth Godin’s blog “Music Lessons” and while navigating Chris Anderson blog I found “China: the future of free? “ Which kind of ties to Seth ‘s post.

Some add-ons we forgot to talk about during our discussion last week on “Music Lessons” how the new music industry is reforming? Here are few facts about music in China today:

Sale of music is via ringtone market, which generated $1.5 billion in revenues for China Mobile this year.

http://www.gordonchoi.com/blog/images/baidu-new-home-page.jpg

 

The other big winner in digital music is Baidu, the search engine that has defeated Google in China. Baidu is the place to go for free music search!

There is very little Long Tail effect in Chinese music.

The indie music scene is also very small.

So how musicians make money in China?

Musicians in China get a small cut from their ringtone sales and mostly from corporate and promotional appearances, few concerts, and some endorsements for advertisement and the Day Job.

In near future, the CD business will no longer exist so I ask my fellow musiciansartists to wake-up and start looking at investing their music in similar ideas to China Mobile and Baidu, as a fact they are making around $2 billion a year indirectly from music but will it reach all artist? And makes wonder if musicians in North America get a cut off ringtones sales from phone providers (Rogers Communication, TELUS and Bell)?