September 5, 2007
Record Companies Consider the Weight of Word of Mouth on the Web
This Sunday The New York Times Magazine’s cover story asked whether Rick Rubin — the famous record producer who recently became co-head of Columbia Records — can “save the music business.” As part of an attempt to do just that, Mr. Rubin conducted an informal bit of market research, asking 20 college students about their classmates’ music-listening habits. A Columbia executive summed up the results:
The kids all said that a) no one listens to the radio anymore, b) they mostly steal music, but they don’t consider it stealing, and c) they get most of their music from iTunes on their iPod. They told us that MySpace is over, it’s just not cool anymore; Facebook is still cool, but that might not last much longer; and the biggest thing in their life is word of mouth.
Most campus-network administrators will find those admissions less than revelatory, but Columbia is taking the “word of mouth” thing pretty seriously: Mr. Rubin is planning to hire a group of college students and other twentysomethings to hit up online chat rooms and attempt to spread buzz about the label’s acts.
On one level, the plan makes a certain amount of sense. Robert LaRose, a professor at Michigan State University, has concluded that students who swap files online often do so to make personal connections, not just to score free music. So record labels that want to survive in the digital era would do well to stake out a role in the Web’s social marketplace.
But for the most part, the Internet street-team project feels pretty flimsy. Millennials who’ve spent time on Facebook and in chat rooms can often be pretty skilled at playing “spot the shill,” and a dearth of publicity doesn’t seem like the recording industry’s biggest problem anyway.
Piracy, on the other hand, is a more serious issue for the music business, and Mr. Rubin has a plan for that, too. He argues that record companies should band together to sell a subscription service that offers on-demand access to music from computers, cell phones, and car stereos. —Brock Read
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Twenty students? What a really shoddy population example. That’s hardly fitting.
The summary sounds like a bunch of speculation without any real accuracy.
As for using students to spread the word? Might be okay, perhaps. Word of Mouth is really the best way of finding out about more music, but perhaps they might want to try first by lowering the prices of their music.
I rather buy directly from a band’s concert, especially since I prefer live music as to studio.
— Crys D Sep 6, 12:03 PM #
I totally agree with Rick Rubin.
The study is absolutely correct; the results fit my description.
In response to Cry D, some music can’t be performed live. I agree, music prices are outrageous, but we need some other plan get artists/musicians money besides CDs and iTunes.
— Arabb Sep 6, 02:08 PM #
If the recording industry was truly interested in not only saving but vastly expanding its profits, it has to, like the monkey with its hand in the jar, let go of the banana. The unit cost of manufacturing and distributing recordings has consistently dropped over the last 40 years, but prices have doubled. A two-sided 45 rpm in 1967 cost $1; today one online single costs $1. Today’s online single or album (save for the miniscule unit-cost of servers and maintenance) is reproduced and distributed virtually costless. The unit-profit margin, post-artist overhead, is probably close to 100x cost, an outrageously inefficient way to market your product. Imagine a family sedan costing $12,000 per unit to build, and then being marketed for $1.2 million. How many would you sell? My own estimates calculate that individual online songs should be marketed for no more than 10 cents each, and albums for $2 or less. The volume will soar beyond the industry’s wildest dreams, as will the profits.
— marci Sep 7, 01:54 PM #
While I think it’s a good thing to put your “ear to the ground” as a record exec, putting too much faith in “College students” can be dangerous. These people are fickle at the best of times.
I think he might also listen to what a few older citizens have to say about music habits as well…the more “seasoned” individuals who take their listening very seriously. And also still make the purchases.
And I whole heartedly agree that prices must come down in a huge way for people to come back to buy instead of steal. Online is the new way to purchase music and so must compete with online free.
I would still miss the extensive packaging that a regular CD allows (still miss the LP covers!!), but I would scrafice that for a cheaper price.
And all this is coming from a guy who has over 2,000 CDs and 5,000 LPs.
— Ear to the ground Sep 10, 01:00 PM #