Bigger pie

In this article in Techdirt the point is made that because of file sharing musicians at the long end of the tail are better off because they now have a chance to make a living by addressing worldwide niches. Agree on that one. The point is also made that big record companies are opposed to enhancing the pie because they are used to focus on the big hit wonders and don’t realize the opportunity of the Longtail. I don’t think that is really the case. I think the real issue is that they aren’t focussed on this tail because their current business model isn’t suited for serving these niches. With their extensive national marketing and sales organizations serving traditional distribution channels this would be too costly and they wouldn’t be able to handle all these new musical acts. But their opposition to file sharing is another thing. Their problem lies in illegal file sharing and the fact that their margins are better for traditional CD’s than for a song sold through for example iTunes. This explains their attitude in trying to defend their CD business as opposed to going for webbased distribution models. Eventually, they will have to innovate because the customer demands webbased models. Period.

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