Mark Cuban, at Blog Maverick, wanted to buy a song to work out to and was frustrated. His analysis of the situation and his prediction regarding the marketplace’s solution to his problem is cogent. Here’s what he comes to:
Loss leaders like Walmart and Best Buy can cut their music square footage by 90 pct and sell more music at lower prices. Their inventory carrying costs will go to zero. If someone wants the CD, they can go home and burn it after docking their MP3 player to their PC. Believe or not, the labels will make more money this way because they will make these big boys committ to minimum guarantees at levels they are at now, and all that money after the artist cut, will go to the bottomline.
Everything about the economics makes absolutely perfect sense for the music labels, the retailer and the customer. The only question is who will be the first label to crack and offer this and how soon will it be.
There’s still the RIAA to consider, of course. The fact that Cuban’s ideas make economic sense doesn’t mean that such sense will penetrate the narrow legalistic mindset of the current owners of Congress. And while it’s true that one very big label could start things moving, the only labels big enough to do that are the core members of the DRMA cadre; I can’t see any of them breaking rank. But I hope they do.
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