At the first day of DEMMX, Antony Bruno of Billboard gamely herded a gaggle of digital music startups. Amidst the many conversation threads, one theme stood out: despite their renegade personas, these guys don't agree on who benefits most from the next generation of music distribution.
Bill Nguyen of La La colorfully explained why digital music distribution would eventually become dominated by traditional music publishers: "User-generated context sucks! I hate television, I hate reading books. All I want to do is listen to music. And as a music fan, you should listen to music that you know you like." Michael Robertson from MP3tunes lends support to this by noting that while most music is purchased (or consumed) based on a recommendation from someone that you know, most average music fans aren't looking to discover the next big band. They're waiting for their friend to.
Nettwerk's Terry McBride, on the other hand, believes that small, independent creators will have an edge. Since the major labels are catalog purveyors, their corporate structures don't allow them to be profitable upon low-unit products. Nettwerk, however, does well at 30,000 units per release since "it's making a living instead of needing to make a killing." They've found that 25 cents is the tipping point at which consumers find it better to purchase known-quality files of their favorite independents, rather than risk viruses or waste time on poor-quality downloads. Jonathan Schreiber from Xingtone joins this side as well, noting that the Internet allows listeners to choose widely, making musical choices from a global perspective that isn't available just from the majors.
Surprisingly, the panel did concur on one thing: from 2006 to 2007, music sales will again show a drop. Which means that someone will lose market share. Toss a coin.
