Music industry is missing a big opportunity with nightclubs

Umair Haque talked about how connecting music with offline distribution creates new opportunities way back in 2005. In making these connections, new networks emerge. These networks are powerful because they enable people to connect to music in a physical context where it is enjoyed most. For example, in locations such as nightclubs, music are sampled through dance floors and people can buy the music which they just sampled.

The opportunity hence is to enable music sharing and commerce to be easily conducted in these locations. Let locations be the new CD stores. Let the physical environment and mood be the context where music can be enjoyed. Add to that the ability for people in the same locations to be connected through music and a new value chain can be constructed.

Unfortunately, music industry is taking the wrong path. The NYtimes reports that labels and publishers are increasing the royalities that nightclubs have to pay for the rights to play music:

To pump music out to their dance floors, Australian clubs used to have to pay record companies and artists a nominal 7 Australian cents in royalties per guest, per night. Under a recent copyright settlement, that rate has risen to 50 cents per customer, and it is set to jump to 1.05 dollars, or 84 U.S. cents, in a few years.

This is rather sad. Instead of exploring new possibilities, labels have resorted to imposing old models on new economics. The end result will probably not be very pleasant.

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