Richard Bergmair's Blog

==> I just discovered Wouter Groeneveld’s post on overlooked reasons to still buy physical media.

The thing I find noteworthy about physical media is that they yield a marketplace that is in many ways more “democratic” and more efficient than streaming media and SaaS subscription models.

For example, if you’re a hobbyist musician, it’s pretty favourable economics to put your songs on a CD, go out busking on the street, and sell the CD there. The CD is a perpetual licence to play the music as many times as you want, whenever you want, including the right to lend it to other people, pass it on to your children as part of an inheritance or otherwise, etc. etc.

So that’s just about the broadest possible legal right that the artist can give the listener, and, consequently, it should also command the highest possible price. You can charge, say, $10 for the CD, as opposed to $0.01 (I don’t know what the actual number would be) for each streaming play of one of your songs.

Dealing in the broader right is much more advantageous to the artist who is low on capital: They’ve had an up-front cost in creating the music and recording the CD, and selling CDs will amortize that investment quicker than selling streaming plays. Streaming plays may pay more dividends later if the music gets listened to a lot for a long time. However, redistributing that cash flow towards the earliest possible point is much more advantageous financially.

So, if you have listeners paying for streaming plays and artists requiring the largest possible payment at the earliest possible time, you require some moneybags intermediary to convert one kind of cash flow into another, and that opens the door to everyone getting ripped off in the process.

One could interject that this is about the buy vs. rent distinction rather than the physical vs. download/streaming distinction. You could imagine the artist selling MP3s from their website through a paywall and charging for it as if it were a CD. But that opens problems on the listener’s side. Looking after an MP3 collection creates work and comes at a cost.

So those two things are highly interdependent: Physical media is the technology that pretty much makes it the most frictionless on both sides of the transaction for customers to collect and use media over large time horizons. Once you walk down the path of download/streaming, you get into the territory where the thing you need to provide to the customer starts looking more like a service and less like a product, opening a whole can of worms and changing the economics fundamentally.

#computers   #business   |   Oct-14 2023