Technology continues to run riot over a variety of industries. Nowhere has that been felt as acutely as in the music industry. Apple’s ($AAPL) iTunes may have changed the distribution model (selling over $1B in the last financial quarter alone), basically unbundling CDs and selling individual songs a la carte.
Music, it is a changin’
But the migration from analog to digital has been accompanied by a much more profound change — the revenue model of the music industry is undergoing a transformation. Where the model was previously selling musical media (artists generally made lots of loot by selling records/tapes/CDs), the model is changing to charging for music experiences (see my recent piece on the business of Broadway and concerts).
Artists embracing this change have shifted their model to almost giving away music (or charging fans whatever they want to pay) in order to capture some funds at the next concert.
Fast Company has a very interesting rundown on Girl Talk, a biomedical-engineer-turned-DJ who makes music by mashing up others’ tunes. Simply, he takes hundreds of samples of music and weaves them together, creating cool sounds but even more enjoyable live shows. He’s putting butts in the seats because he’s providing great live value.
IPOs, Social Media and the Era of the Mashup
We’ve all read how Facebook, Twitter, and LinkedIn are gearing up to go public sometime soon. While these services seem novel, in essence, they’re all just mashups of technologies and platforms that existed before Zuck entered his first frat party (not to sound snobby, but there aren’t frats at Harvard).
Startups and traditional companies are making lots of money just copying Groupon’s model of group discount buying. Travelzoo , a decidedly Internet 1.0 company, has a Groupon-like clone that offers expiring travel deals to its email list of over 20m and that 4-month old business is rumored to be valued at $400M. Abe’s Market, an Etsy-like green marketplace founded by my friend, Richard Demb, is experimenting with live selling online with its Abe’s Live, combining the breadth of vendor-driven supply and the entertainment value of a QVC.
The future of business is the mashup. Those companies who can climb to the top of the value pyramid — by leveraging and riffing on the work done on by those along the way — will win and that’s where investors should be looking to place their bets, IPO or not.
More Resources
How Girl Talk Mashes Up the Music Biz (Fast Company)