Saturday, March 27, 2010

The Price To Pay

There has been a fundamental difference between music and television. TV was a transient medium where a programme appeared once, and if it was shown again people complained (‘the BBC is full of repeats’). Music, on the other hand, was to be bought and listened to time and again.

But thanks to the ubiquity of content, music now has to follow some universal models, especially those being established for TV content online.

Apparently ‘Poker Face’ by Lady Gaga has been viewed 374,606,128 times on You Tube.

The economics of this are worth analysing.

Presuming that an ad could have been played next to the video each time, with a modest CPM of $20 (which if four times that an average TV channel would achieve for similar views), that’s around $7.5m of revenue.

Presuming that an absolute top hit historically sells around 10m copies at around 79c, that’s scarily close to the same revenue.

The trouble, of course, is that very few, if any, of those YouTube views were monetised (with Spotify plays probably being not much better).

Selling records was a very efficient model. Selling download is even more efficient (no wasted dupes). Advertising and payment collection revenues are, comparatively, a lottery.

The content industry is not going to be for the feint hearted in the coming years.