Here’s a great talk by Yahoo’s Ian Rogers:
Eight years later, Amazon’s finally done what was clearly the right solution in 1999. Music in the format that people actually want it in, with a Web-based experience that’s simple and works with any device. I bought tracks from Amazon (Kevin Drew and No Age), downloaded them, sync’d them to my new iPod Nano, and had them playing in my home audio system (Control 4) in less than five minutes. PRAISE JESUS. It only took 8 years. 8 years. How much opportunity have we lost in those 8 years? How much naivety and hubris did we have when we said, “if we build it they will come”? What did we spend? And what did we gain? We certainly didn’t gain mass user adoption or trust, two prerequisites to success on the Internet. Inconvenient experiences don’t have Web-scale potential, and platforms which monetize the gigantic scale of the Web is the only way to compete with the control you’ve lost, the only way to reclaim value in the music industry. If your consultants are telling you anything else, they are wrong. Yahoo! Music demonstrates this scale discrepancy perfectly. Yahoo! is the world’s #1 Internet destination. Hundreds of millions of people visit Yahoo! each month. Yahoo! Music is the #1 Music site on the Web, with tens of millions of monthly visitors. Between 10 and 20 million people watch music videos on Yahoo! Music every month. Between 5 and 10 million people listen to radio on Yahoo! Music every month. But the ENTIRE subscription music market (including Rhapsody, Napster, and Yahoo!) is in the low millions (sorry, we don’t release subscriber numbers, but the aggregate number proves the point), even after years of marketing by all three companies. When you compare the experiences on Yahoo! Music, the order of magnitude difference in opportunity shouldn’t be a surprise: Want radio? No problem. Click play, get radio. Want video? Awesome. Click play, get video. Want a track on-demand? Oh have we got a deal for you! If you’re on Windows XP or Vista, and you’re in North America, just download this 20MB application, go through these seven install screens, reboot your computer, go through these five setup screens, these six credit card screens, give us $160 dollars and POW! Now you can hear that song you wanted to hear…if you’re still with us. Yahoo! didn’t want to go through all these steps. The licensing dictated it. It’s a slippery slope from “a little control” to consumer unfriendliness and non-Web-scale products and services.
I’m frankly not as optimistic as Rogers that the labels will be able to pull out of the tailspin they’ve gotten themselves into. The music labels have decades of inertia pushing them in the wrong direction, and large, bureaucratic institutions rarely show the kind of agility needed to negotiate new technologies in any event. So while it’s great that they’ve finally started to realize what was obvious to some of us years ago, my guess is that they’re going to continue to be five years behind the curve for the foreseeable future, always playing catch-up to other firms who are pioneering new ways of distributing and promoting music.