The title of this was accurate, but incomplete in my opinion.  This panel really focused on the dynamics between the needs of consumers regarding music and the needs of artists and record labels.  The panel featured an executive of business development from Vivo (an online media player that is used in combination with youtube and many other media sites), a member of the National Association of Music Providers, head of ad sales for all Sony websites, and a technical expert from Atlantic Records.  These individuals all have the goal of matching the needs of the consumer with the needs of the artist and labels.  The consumer wants their music as conveniently as possible and for as cheap as possible.  The record label is interested in making money from the consumers.  The artists want to make money, but also are concerned with image.  Because of piracy, many consumers (although it is illegal) have the ability to get any media they want for free.  This causes an obvious major problem for artists and record labels and this is the primary focus that these panel members were faced with around 5 years ago when piracy was at its peak.

The creation of Hulu, Vivo and other media players that pair with and support advertisement allows consumers to get their media for free without legal implications or the risk of receiving viruses from bogus files on piracy websites. Vivo focuses on making sure that videos are high quality, secure from piracy and convenient for the consumer.  By delivering music videos to consumers for free, this technology has diminished piracy significantly and has replenished part of the cash stream lost to piracy.  Instead of consumers paying for the entertainment, advertising agencies buy space and pay rights that end up in the hands of the record labels and artists.

This is not the end to the issues being faced by the music industry.  The panel is convinced that they are not even close to where they need to be so that everybody is happy.  Globally things are worse.  The media platforms are simply not capable of being supported in many countries because of loose intellectual property laws.  Because of this, people in these regions simply can’t be exposed to many of the great music and media that is happening around the world.  The panel suggested that highly protected subscription sites may be a possible answer for these regions versus what we have in the United States with YouTube.

The ultimate conclusion is that the business model for the music industry has become EXPONENTIALLY more difficult over the past 20 years with the inception of the internet.  PepsiCo could learn a lot from this industry with many of the challenges we face, in both the beverage and snack industries.  Carbonated beverages have a free alternative, which is tap water.  For snacking, we have competitors that are catching up (not quite there of course … ) in terms of quality, but with reduced prices.  These aren’t exact analogies to getting the identical product for free like pirating music for free versus buying it.  However, going forward in this tough economy we may want to look to the music industry for inspiration in meeting the challenges in this industry.