Terry McBride, CEO of the Nettwerk Music Group, which manages such best-selling acts as Avril Lavigne, Barenaked Ladies and Dido, told the CES conference today that the music industry needs to "let go it's control and let consumers own their music" in order to survive.
The industry, McBride says, has been "hitting a glass ceiling" in terms of sales. It won't grow beyond that, he says, until the industry gets rid of Digital Rights Management and drastically drops the price of downloads.
"I believe there is a tipping point where price will compete with free," he said. "Right now our metric of measurement is iTunes at 99c [per track], but that represents only ten per cent of the marketplace. The other ninety per cent of the marketplace is [downloading music] free."
"I would say then have to say that the value of a song is not 99c but more like 10c," he said. "Imagine if we were to drop the price to 25c and capture 50 per cent of marketplace? With music and movies, the perception is that the cost is too high. It needs to come down."
The music industry needs to let go of control, he said, because "the concept of copyright law only exists to the music industry, not to the consumer."
McBride has good reason to believe that a loosening of controls can boost record sales. One of the bands his company manages, Barenaked Ladies, was signed to major label Warner for the release of six albums until 2003. Offered a "multi, multi-million dollar cheque" to re-sign with the label to produce more music through traditional channels, the band opted instead to go it alone and try a few alternative means of distributing music.
Barenaked Ladies now record every single concert they perform and allow fans to purchase the recorded tracks on a USB stick or via download within minutes of the concert ending. They even offer downloads of the band's studio bed tracks (individual multi-track recordings of each instrument) to those fans that might want to remix tracks or create mixes with instruments left out to jam along to.
The decision, McBride says, "paid off handsomely." Last year was the band's second biggest ever from a financial standpoint.
"They have made the same amount of money as they would have if they sold five million albums," he said. "The music industry has a real issue with control," he said. "All the band needed to do is let go of that control."