Adam Klein Cross Media Nyc 3 10 2010a

Adapt or Die!

-

The Music Industry CaseSlow to recognize and adapt to new industry value-chain

Adam KleinFounder / CEO

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March 10, 2010 - Cross Media, New York

www.medialeaderllc.com

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we know that the volume of music ‘consumed’continues to grow significantly

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the go

od ne

ws!

The Music Case Study




we know that the volume of music ‘consumed’continues to grow significantly

-

at the same time:

‘free’ remains the overwhelming payment method

&

despite significant increases in digital download sales,the total revenues earned by the industry continue to shrink

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the ba

d new

s!



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this was driven largely by unpaid content

the ba

d new

s!




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A value greater than ‘Free’ has not been readily perceived

Today90%+

not paid for




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938 mil 767 mil 385 mil - 18%

$13 bil $11.5 bil $5.5 bil

144 mil 1.07 bil 1.16 bil

$183 mil $1.6 bil

$14.6 bil $12.3 bil $8.4 bil - ? %

A snapshot of USA Music Sales

RIAA datanumbers rounded by this presenter

1999 2004 2008

CD Units sold

CD $ value

Digital Download tracks sold

Digital Download$ Value

Total value ($)

2009




this is ‘classic’ strategic “substitution”

-

any useful discussion must be around how to pay for the creators/artists

and legitimate marketing & delivery models

-

as opposed to protecting outmoded organizational structures

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how did this happen?

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Music - 15 years of sales growth driven by increased value of CD


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GermanyMusic Sales1961 - 2004

Peak in 1996

Driven by substitution- Tape for Vinyl- CD for Tape

Downloads




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Music - 1999 a new ‘value’ proposition

Get the track(s) you want Free

NAPSTER

www.sean.co.ukSean McManus - A short history of filesharin; Aug 2003



http://www.sean.co.uk



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Music - First line of defense

when you won’t add value, you must lower the price!




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Music - 2001 a new ‘value’ proposition -----

the iPod - ‘ultra -portable’ &

to rip in “entire CD collection - 1,000 songs” - fast!

http://www.youtube.com/watch?v=kN0SVBCJqLs

‘That’s where we want to be’

Steve Jobs






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Music - 2001 a new ‘value’ proposition

the iPod - ‘ultra -portable’ to rip in “entire CD collection - 1,000 songs” - fast!



Steve Jobs

April 26, 2003, iTunes starts sale

s online

200,000 tracks available

99c/track






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Music - Price alone not enough.A new consumer ‘value-paradigm’ had emerged

72%wanted tracks




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CollectionValued

Music - Where CD sales continuedthere was perceived value in owning ‘the collection’




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But the ‘industry’ chose not to hear ...

www.sean.co.ukSean McManus - A short history of filesharin; Aug 2003






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Steve Jobs

April 26, 2003, iTunes starts sale

s online

200,000 tracks available

99c/track

Cavalry to the rescue !



oops!

The iTunes math - Dollars to Dimes economics


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Apple: 99c/trackIndustry 70c/track

By 2010, 10 billion tracks $1+ bil gross $700 mil to music co’s

Equiv of 1 bil CDs (10/cd)

CD: $10:99Industry $ 6:00

Over same 10 years sales down from $14.6 bil to $8+ bill (incl digital)

analysis by presenter




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Is the strategic debate over paying for intellectual property?

or

Is it really over protecting an old perception of the value chain,and associated bloated business models?




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Artistsmakemusic

Music Co‘finds’ & ‘signs’

Music Coproduces &finances

Music ComanufacturesCDs

Music CodistributesCDs

Music ComarketsCDs

The Old Music Value Chain

Music Company’s ‘Soup-to-Nuts’ Value

Retailerssell toconsumer

A&R

Scale

Bank

Consumers




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Artistsmakemusic





The Emerging Music Value Chain

Digital Disruption

Music ComarketsCDs


Consumers

✖ ✖

☁☁

?

➥

+ISPsdistributesbroadband




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Artistsmakemusic





The Emerging Music Value Chain

Digital Disruption

Music ComarketsCDs


Consumers

✖ ✖

☁☁

?

➥

+ISPsdistributesbroadband

New opportunities abound- value/price -




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The organizational

change implications are

significant ..

Lessons to be learned - 2006




and this can be said for all entertainment media too ...

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“Being the coolest thing on television is a feat

but not one with a lot of future

when most of the coolest things no longer live there”




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Music

News

TV

Movies

90% Musicacquired

not paid for

but we know this ‘case’ is not only about music ...




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The newspaper says they may stop delivering

letters on Saturdays!

What’s a letter?

What’s a newspaper?Grandmother

grandsons

Scott Stantis - in NY Sunday Times 3/7/2010

teenager

tween



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Feb 10, 2010

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Music

News

TV

Movies

80% MediaGrad Students

NO TV set

District 912.5 mill downloads

BitTorrent

90% Musicacquired

not paid for

90% tell Murdoch to forget paywall

32+ bil videoswatched onlineJanuary -USA



‘When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based,

while employees who have the temerity to suggest that what seems to be happening is in fact happening

are herded into Innovation Departments, where they can be ignored en masse.’

Clay Shirky, NYU, March 2009


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A Leadership Development Platform for Media Leadersand all consumer facing companies are in media!

Leadership/Execs

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Established ConsumerFacing Companies

Digitally Enabled

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Working Conferences

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Proprietary Information Pushed 24/7

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☞32

A Leadership Development Platform for Media Leadersand all consumer facing companies are in media!

Leadership/Execs

Technology/Media Co’s- broken out already -

Established ConsumerFacing Companies

Digitally Enabled

Managerially Enabled

Constant

Innovation

Working Conferences

Skills, Frameworks, Tools

‘Hands-on’ Illustrations

Proprietary Information Pushed 24/7

Integrated ProgramPractical skills and knowledge

+

+

+

↵↵ ➯➯

Who weserve

Addressingwhat

challenges

Our value-addedintegrated program

Leadership, Innovation and Transformation of the Corporation in the Digital Age

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Adam Klein Cross Media Nyc 3 10 2010a

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Transcript of Adam Klein Cross Media Nyc 3 10 2010a