The Possible Future of the Music Industry

Yes this is a bold title, but with the what has been going on the past couple of months in the music industry it is definitely something that is worth looking at.
Rick Rubin signs as the co-chairman of Columbia Records.
iTunes becomes the number three music retailer in the U.S.
Radiohead releases their new album In Rainbows online, allowing the consumers to choose the price they pay.

Madonna opts to leave Warner Music Group and sign with Live Nation, becoming “the first major star to choose an all-in-one agreement with a tour company over a traditional record deal.”

What Does This All Mean?
So what does all of this mean? The answer is really quite simple: artists and the recording industry are doing what they can to salvage the declining music sales that have been going on for the past seven years. In order for the music industry to survive and halt the low sales of music they will need to reinvent their business model. Steve O’Hear from the last100 blog recently did a post detailing five alternative business models for the music industry. The models that S

teve presented are as follows:
Free - give music away for free.
Pay what you want - basically what Radiohead did with the In Rainbows album.
Pay by popularity - the more popular an album/song is, the more you pay for it.
Subscription - pay x dollars a month, and get access to thousands of songs.
A music tax - some type of tax, whether it be on cell phones, your internet, or through the government.

Why These Business Models Alone Won’t Work
Personally I see some flaws with each of these business models. The problem with the free and pay what you want, and music tax business models is that even if the music is used to promote tours/other advertising, it is still not going to pay all of the bills. A music tax could theoretically work, but I feel that adding a tax to our already exorbitantly priced internet plans isn’t going to go over so well with consumers.

Pay by popularity could possibly work, some iTunes album are already priced above the $9.99 standard. The only thing that is stopping this model from working is the record labels; they would rather see the price per song somewhere around the $2.50 per song mark, which would result in albums being a lot more expensive.

The subscription business model has the best chance of working on its own. Music services like Napster and Rhapsody already use this business model, and Universal Music is looking to compete with iTunes by forming their own $5 a month subscription service. I believe the reason this model is working is because people like the idea of having unlimited access to any music they want for a minimal monthly charge. The reason why this model alone will not reinvent the music industry is because a good portion of consumers (myself included) like having ownership of our music. As soon as you stop paying the monthly subscription fee, poof, no more music.

Conclusion
In the end I feel a hybrid of these five business models is what the music industry needs. Either that or they can tack on another year to the declining music sales.