Disruptive business model for music, the iPhone app store
Michael Jacksons death got me thinking: Can his success be repeated in this day and age? Traditionally a musician reached his/her audience via music publishers. Producing music, printing CD's, marketing and other stuff is all taken care of or at least pre-financed by the music publisher. This allowed Michael Jackson to sell 750 million records. In this day and age artists can only dream of such sale numbers.
Apple created a similar ecosystem as the music publisher have done before, the iPhone app store. This time however the artists are not musicians but programmers. A programmer creates an application and sends it to Apple for acceptance. The programmer decides on the price of the application. Free or usually a small amount. On every sale Apple keeps 30% and the programmer receives 70% of the sale. Apple takes care of the distribution of the application by creating the medium (iPhone) and the store (iTunes App Store).
The iPhone app store is insanely successful. More than 50.000 application and more than a billion downloads. Some applications generate a lot of money. Flick Fishing for example is the first paid iPhone application to sell 1 million applications. The price of Flick Fishing is just 99 cents. Still, a million sales generates quite a lot of money.
But, what if I am a musician and want to sell my music? How can I get on iTunes? As a musician you cannot upload your song to iTunes yourself. You need to find some kind of distributor.
Apple however simply has to make the iPhone app store business model available for iTunes music, video's and podcasts to be completely disruptive to the entire music and also film industry. Allow everyone to upload songs and/or videos to iTunes. Let the artist decide on the price. Either free or a small amount. Apple takes 30% and the artists receives 70% of every sale. 30% of every sale generates enough money for Apple to do quality control on every song or video uploaded. And a lot of quality control can also be automated. This simple business model, already in place for iPhone applications, allows musicians and video artists to completely bypass publishers and other distributors. And it can also be applied to books as well.
Never mind DRM. All this can be done without DRM securing your sale. If the sale price is low enough people are prepared to pay for it. Certainly if it is more convenient to pay and download directly from iTunes then finding and downloading songs from somewhere else. And if your audience is large enough you can still earn a decent amount of money. You only need a 1000 true fans to make a living. Or a million fans who pay just 99 cents for your song.
I think it is only a matter of time before Apple applies the iPhone app store business model to iTunes music and video's. And eventually also books.
