Change is already here for music sales

The music industry should embrace the passion of fans for their tunes and find ways to encourage consumer tools like online playlists rather than fighting such innovations as yet another form of file-sharing, a new report says.

The report, co-authored by the Law School’s Berkman Center for the Internet & Society and by consultants Gartner Inc., describes an emerging music landscape where the traditional gatekeepers to musical taste – radio disc jockeys and music video channels – are losing power.

In their place is a burgeoning community of digital and online music fans who, by sharing their tastes and recommendations, are broadening other fans’ exposure to new music and to artists whose songs never make the top 40 lists.

The report focuses on one type of consumer music recommendation tool, the playlist. Playlists are today’s mixer tapes: personal musical compilations of one or several artists put together by fans and shared with others. Some music Web sites, such as Apple’s iTunes and Rhapsody, allow users to publish playlists, providing convenient links so those who like the playlist selections can purchase the songs themselves.

“At the end of the day, these are music fans. If we can find a way for them to do this lawfully, everybody wins,” said Harvard senior Derek Slater, a Berkman Center student fellow and co-author of the report.

The report predicts that by 2010 one in four online music purchases will be driven by consumer-to-consumer “taste-sharing applications,” such as playlists and ranking tools, built into online music stores and other music-related sites.

Slater, who worked on the report with Gartner Research Director Mike McGuire, drew the results from a survey of early adopters of online music conducted by Gartner. The survey showed that nearly 20 percent of online music listeners used playlists at least five days a week, and more than 25 percent listened to music via playlists one to four days per week.

Perhaps more importantly from a business point of view, one-tenth of respondents said they often make music purchases based on others’ recommendations. Also important were the nearly one in four who said the ability to share music with others in some way is important in their selection of an online music service.

Slater, a self-described music fan and “gadget freak,” said his interest in music copyright and licensing issues stems from those two passions. New technology has made the discovery of new music – not just the songs, albums, and artists heavily promoted by the music industry – more possible than ever. The music industry, he said, should look at these developments as opportunities to create new fans for lesser-known artists and to generate new sales of older work as they’re discovered by a new generation.

Gartner’s survey backs up this contention, with one-third of those surveyed saying that they’re interested in online music discovery and in recommendation technology that is powered by their musical tastes.

Slater cautioned, however, that because the survey’s sample sizes were small, their results should be viewed as indicators for future research rather than the last word on the subject. The report recommends that music labels and artists further investigate the dynamics of playlist sites and how they can be integrated into marketing and promotion strategies, and that licensing be more flexible to allow consumers to easily publish playlists on third-party sites or to include them in podcasts and blogs.

“Regardless of the debate over illegal downloading, we need to focus on ways for people to share musical tastes that are important and beneficial to business,” Slater said. “I want artists to get paid without music fans getting sued.”

In addition to the business considerations of the new music recommendation tools, Slater said there are important cultural aspects as well. Music has always enriched its host culture and anything that makes our appreciation of music more vibrant will be beneficial.

“People are interested in customizing their music experience,” Slater said. “We can turn to each other to learn about music.”