Back to the Stones' Age for the Music Industry

Reprinted from: The California Chronicle

Average revenue per user (ARPU) is a familiar concept in industries such as telecoms. It's less common in the world of content, but it's already finding favour in the music industry as a new way of charging.

I came across the approach when I interviewed Scott Cohen, the co- founder of US-based digital music distribution business The Orchard, last month at the Sensoria festival of film and music in Sheffield . His view is that the record industry has spent too long selling a single piece of product, the CD, to as Average revenue per user is finding favour in the music industry as a new way of chargingmany people as possible. Now download services, both legal and otherwise, have resulted in the quantum of music becoming the track rather than the album, and margins are being forced down. The only ways to boost revenue are either to charge more per transaction, tricky in a world where the price point has been set by someone who sells computers, or to drive more transactions.

Cohen argues instead that bands should work out how much their most avid fans have available to spend on their products, and then create enough material to soak up that spend. This pulls in the money from the highest spending part of the fan base, but also provides plenty for the less committed to choose from.

Disney is great at this, as any parent who has shelled out for all three High School Musical DVDs, plus the backpack, pyjamas, special edition of Twister and so on will confirm. But the concept is illustrated just as well by the reissue of The Rolling Stones' Exile On Main Street. There's the album on CD, the Deluxe CD edition, the vinyl edition and, of course, the Super Deluxe CD/DVD/ vinyl edition. Cohen's view would undoubtedly be that the Super Deluxe edition is the fountainhead from which all the others flow, separating, as it does, the die-hard Stones fan from pound 159.99 while creating the other versions to be monetised separately.

Since the early 1980s, the release schedule for bands has been an album every two or three years, allowing time for the band to tour all major markets and thus maximise sales of the latest album. The ARPU model would see a return to the days when the likes of the Stones would record two albums a year, and pause briefly in their touring to knock out a couple of singles that wouldn't appear on albums.

Other types of content have yet to feel the full effects of digitisation and illegal file-sharing, although the iPad has brought that day a lot closer for the book trade. One of those effects is to show that formats once thought immutable are just artefacts of technology and commerce.

The serialisation of novels, commonplace for Charles Dickens, died out early last century. But if the emphasis turns to increasing numbers of transactions on the internet, as Cohen says, then the hardback may be replaced by the pay-as-you-go serial, which is only later available as a collectors' edition, including interviews with the author and a documentary about its writing directed by Julien Temple.

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