Internet Music – Morphing business models
A microcosm of this transition is described in a great article in today's WSJ (subscription required) about WOXY – an independent radio station in Ohio – the article is titled "Can an Ohio Radio Station Reinvent Itself Yet Again?"
The article describes how WOXY's business model has morphed over time to deal with changing market and regulatory dynamics – the latest being the recent ruling by the Copyright Review Board on royalty rates for streaming Internet radio.
The long-term consequences of this ruling could be damaging to content owners – for example, this quote from Sue Busch who heads up radio promotions at an independent record company called Sub Pop Records:
Sue Busch, head of radio promotions at Seattle's Sub Pop Records, says most radio executives she knows rarely play new, independent music, relying on business consultants to tell them which songs are likely to be most popular. The WOXY DJs, she says, play songs they enjoy themselves.
"There aren't too many radio people who will just chit-chat about music they like," she says. "We're pretty big on taking care of people who have taken care of us."
Internet Radio has provided exposure for a lot of artists whether independent or mainstream which has led to revenue via CD or online music sales. This indirect revenue will vanish if businesses cannot adapt to the higher rates for streaming.
There are echoes of this promotional element of the Internet buried in the mass of coverage on the Viacom/Google lawsuit over copyright infringement in this quote from today's New York Times:
Executives at other television networks, who spoke on condition of anonymity because they did not want to be quoted on the record about the litigation, said they remained torn between the promotional power of YouTube, which they appreciate and even seek out in some cases, and the knowledge that YouTube's audience and revenue are built at least partially on their content.
The Internet provides almost unmatched distribution in reach and low cost – the key question (and business opportunity for new companies!) is how to harness this power yet protect the rights and interests of the content owner.