Since Wednesday’s interview with Gerd Leonhard, two major realizations have struck me. I think I’ve finally been able to put the first one into words for today’s post; tomorrow, you’ll see the second.
One of the big things that Gerd writes about (and which I omitted from my cost-analysis) is that a flat-rate, music-as-service (or “Music Like Water”) system might not even have to cost the user anything: it can be totally ad-supported.
This notion, of course, shifts the whole perspective from music-industry feasibility to marketing. And, of course, Seth Godin’s refrain of “effective marketing needs to get permission from the receiver, be targeted and be relevant” began to ring in my ears. The permission part is easy: either pay the flat-fee yourself, or let our advertisers pay it for you, your choice. But what about the targeting and relevance? That’s where Amazon comes in…
Bezos’ web-based store has the potential to make a killing in a world with legalized P2P: since 1995, Amazon has been collecting loads of information about consumers’ buying patterns across media. This information, of course, can help them build credibility as the choice ad-serving network for the all-music-is-free system.
Think about it: Google’s AdWords go for anywhere from 5 cents to $100; the actual costs are based on information from their giant data vaults. Amazon already has their recommendation service working pretty well… Why don’t Bezos & Co. start looking at individual users’ consumption patterns across media? I mean, if I’m downloading a lot of Britney Spears and Nelly Furtado, would I be likely to buy the new book from Dan Brown? I don’t know, but I’m sure they do.
Alex Mohr wrote a great piece the other day about the biggest problem with recommendation systems: their cold, hard, “fact-based” (read: not an actual recommendation) approach to what they suggest. Amazon, with their well-known and widely-used user-review system, even has the potential to integrate the social and personable recommendations, winning over the anti-logarithm crowd.
Let’s not stop here: while they’re hard at work developing these small changes, Amazon can sign on and be proponents of flat-fee music. That might do better for both their bottom line and their public image than their current approach to digital music: a simple wannabe iTunes-overthrower.
In any case, I’m reserving all rights to this business model I’ve developed for Amazon. Until flat-fee music becomes a reality, I’m expecting my royalty cheques every month, Jeff.
