The Debundling of the Album has Unintended Consequences on Profit: Part 3 of the Music Streaming Debate

July 20, 2016

Read Part 1 and Part 2

 

While prices went down for an overall album, over time, the music industry

transformed into a singles business. Much of the pricing structure of recorded music has always been related to the physical format and capacity in which music reaches the ears of fans. Two-sided vinyl singles and LPs determined the length of a recording. Marketing and distribution budgets were determined based on these capacities. As things shifted to digital, the concept and efficiencies presumed under the older model lost relevancy. The music industry unintentionally gave fans the option to only buy their favorite tracks. They no longer had to buy the album bundle. In other words, a fan could buy three tracks for three dollars, instead of buying an album for $12, even though they only liked three tracks from the album.

 

Does it make sense to spend the same amount of money on marketing for a $1 or $3 bundle as it does on a $12 bundle? Of course not. But it has taken some time to figure out that this debundling of the album is a huge shift for the industry. We are finally at a point where artists are recording and releasing one single at a time. But the effort to get the attention of a fan for a single is not much smaller than for an album.

 

 

 

The granularization of music recordings inherently reduces profit for creators and rights holders.

 

Few fans or people in the industry seem to acknowledge that this technological shift in how people get and listen to music is distinct from the concept of streaming as a model for getting music. Any digital ecosystem would have likely led to this debundling, which had a huge impact on pricing and profit of recorded music regardless of whether on-demand large streaming libraries had emerged.

 

Continued next week in Part 4: Streaming Emerges by Consumers Adopt Slowly

 

 

Dmitri Vietze is the founder and CEO of rock paper scissors, a music and tech public relations firm.

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The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. The podcast includes news roundups, interviews, and more. Our host is Dmitri Vietze, CEO of PR firm rock paper scissors.

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