The music biz: platform or application?

In technology, the difference between a platform and an application is well-understood.

A platform is an enabling technology. Companies that make what they perceive to be platforms want lots of other developers to use it, build on it, and extend it, so they offer hooks, tools, and incentives to do so.

An application, on the other hand, is a purpose-built piece of technology. Companies that make applications want lots of users to buy it, use it, and buy constant yearly updates to it. They don’t want competition with other applications, so they do what they can to close the garden and provide everything a user wants inside the fence.

It struck me as I read this article about the music’s industry’s recent attempt to squeeze more and more money out of what might previously have been seen as their one trick-pony.

They want money from the sale of iPods. They want money when music videos are shown. They want money when someone searches on an artist signed to their music label. They want money when someone downloads a ringtone. They want, they want, they want.

I think they – having so recently been caught flat-footed by the digital revolution – still don’t get it. In fact they are profoundly clueless.

In effect, they’re treating their business as an application. Use it, pay. See it, pay. Want it, pay. Pay, pay, pay. For an application, this makes sense.

But what if the music industry is actually a platform? What if instead of being a walled garden, it’s actually a foundation stone?

If that’s the case, then the music industry, by aggressively searching out every last graspable penny, is actually impeding their own progress. Because while applications generate value only through sales, platforms generate value through scale.

The iTunes-iPod empire is an obvious example of a platform … and the fact that it is a key reason why it frightens Microsoft. Platforms – or at least entrenched platforms – are hard to fight. They’re expensive to compete against. And it takes a long time to build a comprehesive enough solution to dethrone them.

But they also provide a lot of value to those who use them. Those who add some building blocks to them. And especially to those that build them.

And music itself is a platform too. Not as a technology, and not in the same sense as Windows or the MacOS. Instead, music is a business platform. It’s an ecosystem that can support a thriving diversity of applications and hardware, literally. And ecosystems, as everyone in the technology world understands, generate more value for all participants, over the long run.

Do music executives get that?

If they did, why would they be nickel-and-diming the iTunes relationship? And why would they have recently refused Microsoft’s attempt to license songs for a music subscription service?

They don’t grok this new opportunity. They are creatures of a different age, and a different reality. They’ve always been about maintaining control and accumulating power – while an ecosystem explicitly and implicitly shares control and distributes power. Music executives don’t speak that language – they just don’t get it.

There’s something else important about an ecosystem – it grows.

That’s something else that music execs are not getting a lot of lately.

 


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1 CommentLeave a comment

  • Well thought out argument!

    I agree with you that the music industry is being run on an outdated model, they are stuborn dinosaurs.

    It seems that you are approaching this from the point of view of a programmer though. Application versus platform. I like to think of them in terms of utilities companies.

    Think of it this way: They are not really providing a product – music is not a concrete object. They are providing a service – recording and publishing. This service is so ubiquitous that it has become a utility much like electricity, water, railroads. I like the railroad example, because the railroads had to be forced by governments to provide their service equally to all.

    I think music should be declared a utility and then regulated maybe even subsidized by governments. This way platform creators can grow the music industry the way it naturally wants to evolve, as a service for everyone. Recording companies can do what they were meant to do and record and publish music. And artist can get fairly compensated from a level well regulated system.

    Let Apple and anyone else fight it out in retail freely, without unfair gouging and withdrawl of vital utilities for their businesses.

    Happy Thanks Giving!

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