A music business veteran named Chris Holmes has come up with an interesting business idea for helping the music industry. Called the Privateer Model, Holmes envisions a future where the myriad networks of tastemakers and influencers that spread music online are financially compensated for the role they play in music's spread.
On its surface, the idea looks very appealing. But would the Privateer Model actually help the industry, or hasten its decline?
Holmes goes into great detail explaining the cultural factors which lead him to believe his system would work. But here, at a glance, is how it's supposed to work.
In many respects, the Privateer Model is an update of some other ideas that are already floating around online: Webceleb rewards fans who purchase music and encourages their friends to do the same; mFlow gives 20% of its users' sales back to the people who recommended the music purchased.
The point of this model, as Holmes sees it, is to stress the valuable role that bloggers play in the musical ecosystem. “Blogs and tastemakers," Holmes writes, “have replaced record stores, radio, print media, and physical distribution," and monetizing this new class of curators would be hugely beneficial to the industry. It tacitly reminds everybody that artists must be compensated, and it creates a scenario where a wide range of curatorial voices can be supported, the same line of thinking that girds MOG's ad network.
The Privateer Model does invite devaluation, as several commenters on The Daily Swarm's site have already pointed out. As the system grows in popularity, most savvy fans will simply find the lowest possible price (either by themselves, or by using some kind of app), thereby driving the price of albums or songs well below the current 99 cents per song or $8-9 per album.
But even if people are eventually buying albums for pennies (and there's nothing that prevents the Privateer service from instituting a basement price), that's already exponentially better than the royalties offered by YouTube, Spotify, Last.fm, or any other digital subscription service.
At the end of the day, as Holmes himself has said, the Privateer Model is not meant to change everything. “This is not THE SOLUTION," Holmes clarifies. It's an attempt at a solution."
Does it strike you as either?
On its surface, the idea looks very appealing. But would the Privateer Model actually help the industry, or hasten its decline?
Holmes goes into great detail explaining the cultural factors which lead him to believe his system would work. But here, at a glance, is how it's supposed to work.
1) An artist/label sells its record directly to the public through a The Privateer System website for $10.00.
2) Any party that buys the record directly from the artist/label we will call a “primary buyer." The primary buyer receives a license and a Java widget with their purchase, enabling them to sell digital copies of the record for $7.50; $5.00 of that sale price goes to the artist/label, while $2.50 is profit for the primary buyer.
3) A party that buys the record directly from the primary buyer we will call a “secondary buyer." The secondary buyer receives a sublicense with their purchase to sell digital copies of the record for $6.75. $5.25 of that sale price goes to the artist/label, with $0.75 as profit for the secondary buyer, while the primary buyer sees $0.75 of profit. (The party that buys the record from a secondary seller we will call a tertiary buyer.)
In many respects, the Privateer Model is an update of some other ideas that are already floating around online: Webceleb rewards fans who purchase music and encourages their friends to do the same; mFlow gives 20% of its users' sales back to the people who recommended the music purchased.
The point of this model, as Holmes sees it, is to stress the valuable role that bloggers play in the musical ecosystem. “Blogs and tastemakers," Holmes writes, “have replaced record stores, radio, print media, and physical distribution," and monetizing this new class of curators would be hugely beneficial to the industry. It tacitly reminds everybody that artists must be compensated, and it creates a scenario where a wide range of curatorial voices can be supported, the same line of thinking that girds MOG's ad network.
The Privateer Model does invite devaluation, as several commenters on The Daily Swarm's site have already pointed out. As the system grows in popularity, most savvy fans will simply find the lowest possible price (either by themselves, or by using some kind of app), thereby driving the price of albums or songs well below the current 99 cents per song or $8-9 per album.
But even if people are eventually buying albums for pennies (and there's nothing that prevents the Privateer service from instituting a basement price), that's already exponentially better than the royalties offered by YouTube, Spotify, Last.fm, or any other digital subscription service.
At the end of the day, as Holmes himself has said, the Privateer Model is not meant to change everything. “This is not THE SOLUTION," Holmes clarifies. It's an attempt at a solution."
Does it strike you as either?
