Just before I started this blog, I read a post by Mathew Ingram on Gigaom entitled “Why Clay Shirky is right and Warren Buffett is wrong”. In it, Ingram discusses Shirky’s argument that Berkshire Hathaway’s purchase of Media General’s newspapers showed a lack of understanding of the newspaper business.
I thought about this again after reading David Carr’s piece in the New York Times, “The Fissures Are Growing for Papers” (hat-tip @gleonhard). The difficulties for papers that Carr describes reminded me of Ingram’s piece.
These two articles gave me a better understanding of the current state of the newspaper business, which, in turn, gave me a greater understanding of the current state of the record business. They’re in similar positions.
Ingram quotes Shirky:
The reality is that newspapers have never sold the news to readers—readers pay for the distribution platform on which that news is printed, i.e. the paper itself and the packaging involved.
This is also a description of the record business. Artists don’t sell their music to fans—fans pay for the format on which that music is recorded, i.e. the 78, LP, 8-track, CD or download itself.
Buffett said that the problems newspapers were facing were in part a result of ‘giving away their product at the same time they are selling it.’
This is true for some music business models. Artists give away music in an effort to generate enough attention so that they can sell the very same music via a distribution platform.
But fans don’t want the distribution platform, they want a relationship with the artist.
For years, the best way for a fan to engage with the artist was to buy a recording. In fact, buying recordings has been such a major component of fan engagement that we’ve forgotten that it is actually a substitute for that engagement. If fans want to engage today, they can check out an artist’s Twitter feed or friend them on Facebook.
Current media models are problematic because fans no longer have to pay for a distribution platform simply to get the engagement that they crave. The price of a recording is now effectively zero. There are countless other ways to create engagement between artists and fans. Yet despite this, music itself has not lost any value and engagement remains priceless.
Shirky’s point is that the underlying facets of the newspaper business are far too often misunderstood. This is true of the music business as well, and I wonder if anything can be learned from this comparison.