Wednesday, February 27, 2008

When Humans are Removed

Ars Technica has an interesting report on a recent music industry conference. What struck me as interesting was an exec of a music label on a panel justifying their existence of labels by the work of "finding" music. To quote:

"anyone who has spent an hour or a day listening to demos understands the labels' place in the food chain"

The iLike CEO pointed out that this is no longer the case. That a label only need to look for musicians with 50,000 friends on MySpace.

What is interesting is how MySpace, iLike et al have turned finding new music from a costly human based activity to a software program. I'm not sure many people in the industry (whether the labels or companies like iLike) realise what is happening. The best analog is what Google did with advertising as Chris Anderson pointed out in his recent article in Wired:
"When Google turned advertising into a software application, a classic services business formerly based on human economics (things get more expensive each year) switched to software economics (things get cheaper)"

Did Google realise what would happen by turning advertising in a software application? Probably not. Just as Google unleashed value that was otherwise tied up as costs, so to will a software application(s) for finding new music unleash value otherwise tied up as costs. Music is going to shift back from being a package product to being an experience.

Tags: freenomics, Google, disruption, economics, iLike, chris+anderson, music