The problems with digital.

In the same week that Apple’s CFO, Peter Oppenheimer, confirmed what we all knew – that the iTunes Store doesn’t make money – 7,200 music and technology executives headed to the South of France for the Midem convention to try to figure out once again how to make money out of digital music.
It’s not like it was the first time they have tried. “Monetising the new music experience” – as this year’s Midemnet conference was headlined – has been the key topic at Midem for at least the past 10 years.
And the bad news, which I am sure you have already guessed, is they didn’t solve it this time either.
It was once said that the only sure way to make money out of digital music was to sell tickets to a conference on how to make money out of digital music. Even that one isn’t looking so hot an idea these days.
Midem itself acknowledged attendance was down 10% despite their decision to throw in the previously separately-chargeable Midemnet conference for free. And that came on top of the previous year’s 12% decline.
In truth the Midem organisers did a very good job of showing how to approach structural decline in a customer-focused and innovative way. Not only did they effectively cut the price, they added value in all kinds of ways with the result that the word of mouth on the show was very positive indeed. All things being equal they may even see an increase in numbers next year.
But what of the Big Question – how to make money with digital?
What was depressing was the preponderance of empty buzzwords and sloganising – “we’re moving to music as service” or that old favourite “music like water” – rather than anything specific.
Five minutes listening to “media futurist” Gerd Leonhard is more than enough to realise that his music is more like snake oil and he knows no more and probably less than the rest of us.
Maybe they should have asked a retailer. Surprisingly of the 7,200 delegates at Midem, just 28 were listed as retailers and, as far as I could see, just one of them, Jason Legg, Live Manager of ERA member HMV UK was asked to speak on a panel.
Interestingly, it was Jason’s comments focusing on HMV’s now 1.2m-strong loyalty card database and its ability to cross-sell recorded music, merchandise and concert tickets which gave the most convincing example of how best to monetise music online right now.
Other than Jason, the most convincing speakers in the Midem programme were those from outside the music industry.
Former Sony Classical executive Peter Gelb, now general manager of New York’s Metropolitan Opera gave a fascinating account of how the company had extended its reach, broadened its appeal to younger people ands made money by relaying live performance to cinemas.
Kodak’s Chief Marketing Officer Jeffrey Hayzlett gave an insider’s view of the disruptive power of technology by describing how his company has coped with a collapse in sales of traditional photo film from a $15bn business five years ago to just $200m this year.
And Jonathan Klein, co-founder of the world’s biggest supplier of pictures, Getty Images, told how it has prospered by using the internet to make imagery more accessible than ever before.
Interestingly these “outsiders” all attracted smaller audiences at the conference than did the music industry insiders who delegates had likely heard speak a dozen or more times before.
And what all three had in common was a clear vision coupled to a ruthless commitment to execution. It would not be surprising if after 10 years of discussion, what is really holding back the music industry’s ability to make music online is an inability any longer to see the wood from the trees.
Back in the early days of Midemnet when it was still separate from the main exhibition, it was not uncommon to hear conference delegates congratulate themselves that they were the future, while the predominantly physical business types in the exhibition hall were the past.
Despite 10 years of talking about making money online, perhaps the real split at Midem is between the people in the conference halls talking about making money and not doing so, and those in the exhibition halls, in the hotels and in the bars, most of them in the “old business” who are still doing rather well indeed

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