By Seth Godin
Bertelsmann is right: The record companies should welcome Napster.
A long time ago, radio was considered a threat to the music industry. The logic then was that once people had radios -- and could hear music for free -- they'd stop buying records. Obviously, this turned out not to be the case. Eventually, the record business became so obsessed with radio airplay that it started paying stations to play its music for free. When MTV came along, the same cycle repeated itself -- the labels were aghast that they were expected to pay to make expensive videos, which MTV then got to play for free. Wrong again. They learned their lesson and now compete heavily and sometimes pay for airplay.
Napster is just another sampling opportunity. This time, though, it takes advantage of peer networks. What a headache for the labels. Problem #1: you can't buy your way to success. Money (and navel-exposing videos) are no substitute for a great riff or intense lyrics. Problem #2: once the fidelity and user-interface get a little better, the computer may eliminate the need for a CD player.
Now, if you're a record label and you realize that 90 percent of your income comes from selling overpriced polycarbonate discs in jewel boxes, you're undoubtedly nervous about your future. But instead of fighting, perhaps there's a way to make more money and have more fun.
What happens if, following Bertelsmann's lead, you cut a deal with Napster or a Napster successor that makes it easy for listeners to subscribe to groups they like? Instead of trying to burn down the bridge that now exists between users and musicians (and their labels), why not use that bridge to create, say, a list of all the people who loved the lastest Dido album? Then you can talk with them when it comes time to sell her next one.
What's that worth? Well, let's see: you can sell way more copies of her next album. You can drop an e-mail to all her fans with a link to Amazon and, bam, bestseller status. You can sell digital versions of new songs to people who want to hear them first. Dido can say, ''If I can find 200,000 fans willing to pay me $10 to go to the recording studio and do an album with Eminem, I'm in.'' Now listeners who choose to pay can get first dibs on the new record.
Or you can tell fans about events based on their zip codes. Imagine being able to tell the 57,000 Dido fans in the New York area that she's coming over from England to play at Roseland. Think it will be hard to sell 3,000 tickets?
Is this going to be as comfortable and as predictable as the business you have now? No way. But you can either embrace the new monopoly (permission to talk to fans) or lose.