As I said earlier, Tennessee got me thinking a lot last week, in particular about music as the canary in the coal mine of the entire Internet economy. I started imagining a major event in the business, and I wrote the below (entirely fiction) just to see how it felt. In fact, I wrote 2600 words of fiction last week. I’m finding it a really interesting way to work out some of the knottier issues in this industry. I might start doing more of it.
Here’s a piece of it:
October 17, 2007 (San Francisco/Dow Jones) In a surprise move today that has the entertainment industry buzzing, Sony Chairman Howard Stringer announced that his company was encouraging its entire stable of musical acts to release their music freely on the Internet, effectively immediately. The company said it would release the masters, or original recordings of the artists’ work, back to the creator, and ask only that the artists work in good faith to find the best method for freely sharing the newly unencumbered work.
Once a crown jewel in a company now struggling to find its footing in a new economic regime, Sony’s music business has languished recently, and executives increasingly have blamed the Internet for the decline. Stringer’s announcement marks an about face for the media giant, and potentially a harbinger of things to come in the film, publishing, and other intellectual property-driven media businesses.
Stringer’s announcement follows that of EMI Chairman Eric Nicoli, who in the Spring announced all EMI music would be sold without DRM, or digital rights management software, which effectively controlled distribution of music in the new medium and slowed the natural discovery of music by potential fans.
“We have to find new models, it’s clear the old ones are not working,” Stringer announced. “And the only way we’ll find them is to let the music find them for us.”
Asked by reporters what models Stringer thought might develop, he pointed to marketing partnerships, advertising, touring, and merchandise. “We didn’t do this without studying the landscape,” he said. “We noticed the bands that shared their music had much higher alternative revenues. In fact, we realized many of them didn’t need a record label at all. The question becomes, then, what do they need, and how can we be of service to them?”
“Sony is now artist-driven,” he declared.
Sony’s stock dropped sharply on the announcement, but then picked up and closed even for the day. Analysts were uncertain about the impact of Stringer’s move, as the recording division had not been a significant addition to margin for several years. In fact, unders Stringer the division became “sort of like a bag of rocks bumping against the company’s flanks,” said Josh Keegan, an analyst for JP Morgan Securities. “Everyone was noticing it.”