The Music Industry's Failed Approach

This post is in response to a comment by Marc Cohen on the post The Best Things in Life are Ad-Supported.

Firstly I'd like to clarify that I was most definitely being facetious with that post title. I did some casual research into the ad-supported media model, and my gut reaction was similar to that of one of my favorite authors:

When Kurt Vonnegut learned that users downloading his novel Slaughterhouse-Five on the new e-book retailer WOWIO will have to flip through ads like one for Verizon Communications Inc.'s (VZ ) "Chocolate" mobile phone, the 83-year-old author snapped, "This is just tasteless," and hung up the phone. [link]

As a consumer, the saturation of advertisements now present in music and video games is already at a truly distasteful level. The idea of hearing an advertisement pop up while listening to my iPod would constitute a violation of my private listening space; it's the #1 reason why I don't listen to FM radio anymore. Furthermore, it seems to follow the same path that the failing-DRM system has: taking control of how to enjoy music away from the end-user.

That being said, it's easy for me to criticize the ad-supported model without providing any sort of alternative. It's clear that the current system is starting to crack. People who have grown up with the Internet have become accustomed to free music on demand, and your model certainly does a great job of catering to this demographic. I certainly don't agree with music piracy; no matter how anyone tries to justify it, it comes down to absolute greed. I'm simply being pragmatic: how can ad-laced DRM-restricted music can seriously compete with restrictionless pirated mp3s with virtually no consequences? The ad-supported model's fundamental flaw, in my view, is that it sustains the record company's paradigm that making users pay for music, whether with money, time or convenience, is still a viable business option. They can litigate all they want, but the high demand combined with the ingenuity of freeware programmers is such that piracy will find a way to resurface every time.

My guess would be that, in the long term, a major paradigm shift will have to occur. Today's industry struggle is akin to the tug-of-war in the 30's and 40's, when live musicians feared becoming obsolete with the advent of radio technology. How would live bands be profitable if recordings were played for free over the airwaves, they clamored. In the end, the local live bands were largely replaced by country-wide superstars like Elvis, and the industry evolved. Similarly, perhaps we are soon approaching a time when an mp3 will no longer become something that is bought and sold, and the recording industry will inevitably find some other way to turn a profit.

Counter arguments are welcome, so feel free to comment if you have a different point of view.