Wrong Assumptions and Netflix
Today I was driven insane by an article implying that Netflix could serve as a model for the music industry. The article was written by Glenn Peoples, an otherwise upstanding journalist who fell for an associative fallacy that seems to befall everyone when thinking about media. For some reason, when it comes to the monetization of content, a half century or more of media theory discourse seems to not matter, and people feel comfortable applying strategies applicable to one modality of media to all others. Because the modes are similar, so must be the means of monetization.
Wrong.
I could go paragraph by paragraph and pick apart the argument, but that would be needlessly pedantic. I’ll quote one to exemplify what is wrong.
“With Netflix consumers have proven they will rent content – even re-run content – and stream it from the cloud. They will pay for digital content they could get for free through illegal means. They will pay if the service allows streaming through multiple devices – including mobile.”
With Netflix customers have not proven they will rent content. They have proven they will rent visual content. Visual content is a subset of the macro concept of content, and consumer behaviors in relation to such has no intrinsic corollary to aural, printed or other forms of content such as games. To put it another way, in the hierarchy of content, what applies to a sub-type does not necessarily apply to its siblings. This article uses this fallacy as a way to call for emulation of Netflix by music services.
Now, I’m not saying parts of this argument aren’t true. A lot of what Netflix does could be applied to music services. But the argument that because it worked for Netflix it should work for say, Spotify is completely wrong. This is implying that value is universal regardless of the mode of content, which is simply not the case. Value is inversely proportional to the affordance of ubiquity provided by a media.
Visual media is intentionally not ubiquitous. While it has certainly edged toward ambient in terms of its infiltration of the gaze, it is still reliant on the singular mode of spectatorship rather than encompassing ubiquity of representation which audio media can take on. Visual media is rooted firmly in the gaze, a screen lighter than ambient light forcing attention. Value is relational to its forced attraction, as visual media is reliant on the attraction of gaze to ascribe its meaning. By its nature it works through framing, editing, color, etc to maintain this attraction. Mise en scene in even basic forms which work — informed by the mode of representation — to hopefully impart value upon the time, money and/or effort you are putting into viewing.
Audio media however is ubiquitous. It is reliant on a sense which is inherently not dependent on directional attention. It can be everywhere in your home, focused on only yourself through headphones, or background while driving, viewing things online, etc. It is not reliant on the attraction of gaze, spectatorship or other forced concentration of attention. Its very ubiquity lessens its value as it does not monopolize the senses and thereby requires less investment in order to enjoy it. Requiring less investment demands less return and hence, lower value.
So, given the radically disparate notions of spectatorship between audio and visual content, to think that Netflix serves as a model for what an audio “Netflix like” service should be is absurd. It’s like saying Steam is the best model for the music industry to emulate. In fact though, Steam is probably a better model than Netflix, since it is rooted on content which is diachronic and can be valuable even with short duration but frequent investment. But I digress.
The moral of my outrage is thus:
Chasing business models in one media with business models of fundamentally different media is a recipe for disaster. I see this happening continually with newspapers and magazines and the iPad, and I see it happening with the music subscription services. It’s applying an associative fallacy to things that are disparate, and history is littered with the fatalities of these collisions.
Remember: the gaze is important in that it monopolizes attention and demands more return from the investment. It has more value than the ubiquitous. The value of the ubiquitous is when it elevates above the din to become something transcendent for all senses. That is what we should aspire to when trying to create the concept of value in relation to content.
Transcendence is the great equalizer in the content hierarchy.
Just ask anyone that has been to an amazing concert.
Sorry for driving you insane, Ethan. I agree with what you wrote. Netflix is video. Music is audio. And the record industry should not try to do exactly what Netflix is doing.
My point was simple: Netflix has created a great product that delivers a great experience at a fair price.
Can the same be said of music services? If not, then either the product or the price needs to change. If the price cannot change, then the product needs to change to create more value for the customer.
In that respect, the record business should use Netflix as in inspiration and figure out why it has succeeded. But it should not worry about duplicating its business model.
Bravo. Thank you for articulating a point that seems continually to be beyond the understanding of most people writing about digital music.
‘My point was simple: Netflix has created a great product that delivers a great experience at a fair price.
Can the same be said of music services?’
Yes. It was called the LP, it came on vinyl discs. Then there was the cd, on plastic discs. Then there were mp3s, which provided music files which the user could use forever, and experience a piece of artistic creation more or less exactly correlating to their desires, for a paltry fee.
Or was the ‘fair price’ you mentioned a euphemism for ‘what I deem to be a fair price, and, frankly, as low as is possible’?
BINGO! I can’t believe more people don’t recognise this.
Also…
I can’t play Spotify in my car. i can’t play Rdio on the CD-tape HiFi unit I still own.
These gaps make a wholesale conversion to any such service unlikely.
Good points Ethan, but there are lots of other factors that make a “Netflix for music” service such as Spotify or Rdio compelling…
You get access to a vast library of music for a (comparably) inexpensive monthly price, plus access in a range of ways — mobile, web, desktop. You offload the storage of local collections to reduce the burden of file management and backups. Also, these services help you find new music and share your activity your friends.
These are all features worth paying for (and this would be true regardless of the type of content.) Though we experience audio and video differently, many of these issues about how you access and manage the content you like are the same.
But I’m the kind of person who focuses my “gaze” on music — I listen to albums. I devote time and attention to it. Will people who are not die-hard listeners bother to pony up for a subscription service, or just buy a couple of tracks on iTunes and be done?
Music consumption habits are different than video, and I think you’re right when you say “Requiring less investment demands less return and hence, lower value” but video and music are both passive mediums that are often traded, transmitted, and downloaded illegally online.
I think you’re throwing the baby out with the bathwater here. To me, Netflix has proven that people are willing to pay for content if it’s presented in a convenient, and reasonably affordable fashion with a wide range of selections.
Even if I don’t use it all that often, I’m happy to pay $10 a month for the ability to boot up my XBox 360 and watch one of thousands of movies on Instant Streaming. Likewise, I’m happy to pay $5 a month to listen to any one of hundreds of thousands of songs on Rdio on my computer at home or at work.
If I want to listen to music on my iPod classic, in the car, or on my nice stereo, I’ll download the MP3 tracks, buy a CD, or buy the vinyl record. Likewise, if I want to watch a movie in high definition or at my friend’s house, I’ll buy a DVD or Blu-Ray disc.
> “Requiring less investment demands less return and hence, lower value.”
Exactly. But all what your blog post says is that “I don’t want to make less money”, it doesn’t say “yes, the Netflix all-you-can-eat model does deter piracy, and it creates a steady stream of profits, even if lower profits”. So you’re shooting down the model just because you want to make as much money as movie studios do. Sorry, but music — by your own admission — is less valuable to consumers than movies. And it’s WAY cheaper to produce than movies too. So why don’t you just accept the new model and be happy with less profit instead of seeing your whole industry crumble to bits?
I replied to your blog post on my own blog btw.
Read the post Eugenia: I’m not shooting down the model, I’m shooting down the rationale. The model works for Netflix, there is nothing to say it will ever work for music.
Read my linked blog post too then, because over there I explain exactly why it DOES work! Here in the Bay Area, anyone I know people who are subscribed to Netflix and RDIO and don’t do piracy (they don’t bother buying albums or DVDs either, of course). For $20 per month their whole entertainment is set. So if it works for a bunch of us, why wouldn’t it work for everyone else? We are a living proof that it works!
I think you are just trying to make a story out of nothing. I think you are a grown man and shouldn’t be getting “insanity” feelings because someone thinks that Netflix is a good model for audio consumption. Personally I would pay for an $8 monthly fee for on demand music to be on my iOS device, Android device, Windows device, tablet, computer, XBox, Playstation, Roku, Boxee, etc. But no you are just some shmuck with a dumb opinion and a vocabulary that sounds like you are trying to be articulate and your not. I could have summed up your opinion in one paragraph, if that.
Moral of the story: Write about something meaningful instead of wasting your readers time. Also, seek therapy if someone’s opinion makes you feel “insane”
You have just lost a potential reader.
Idiot.
iTunes changed the music industry
EBooks destroyed borders and Barnes & Nobles
Netflix and Amazon/iTunes will destroy cable once sports start to sell direct to the customer.
You used some great vocabulary but had no points, people would love subscription just as they like radio. Devices no longer come with FM antennas so this will replace it.
I’m not buying this argument. I’ve been a Rhapsody subscriber for about a year, and I love it. I spend far less on music now than I did when I bought music on iTunes or Amazon, and there is zero risk to listen to music by new or unfamiliar artists. And Rhapsody is portable – I have the Rhapsody app on my iPhone, which I can plug into my vehicle’s audio system. From an industry perspective, Rhapsody makes it impossible to make copies of the music, and beyond that I have no interest in or incentive to make copies for friends, because they, too, are Rhapsody subscribers, so there’s no need.
Bottom line: in the past consumers bought CDs or downloaded files as a means of insuring access to the music they wanted. Same goes for video. With streaming media services that access is no longer an issue. Yes, access requires internet access, but that access is ubiquitous.
I don’t think ubiquity is the correct term. I think you mean portability, and I agree that music has challenges that the netflix model struggles with when you consider that. Movies degrade when made portable, losing impact that for many doesn’t equal the benefits to watch anywhere. The experience of music doesn’t degrade as much, giving more incentive to portability.
There are other issues. I disagree with Bob Rhubart: Bandwidth is not as ubiquitous as he thinks for portable music uses, and the need to incorporate it into devices adds a lot of cost. You can dock your Ipod into a cheap boombox, and play music offline while washing your car. With a streaming service it gets more complex. Bandwidth caps on devices also are a problem. Rdio lets you use your mobile to listen, but heavy users will soon have to pay twice due to hitting cell phone data caps.
If portability isn’t a factor however, the streaming services can’t be beat. If my main listening is done in the home, Rdio is an insane deal in terms of selection and value. I think many people commenting consume music primarily in this style, and streaming services work well when targeting heavy home users who have light portability needs.
A streaming service that made a 3G device similar to a Kindle might satisfy both markets.
Dave D., you’re forgetting one thing: the offline mode.
Both RDIO and MOG offer an offline mode, so you don’t have to stream when problems like internet connection, data caps, and battery life come into play. You simply sync-in the albums you want, and you play them offline. So portability is NOT really a problem as you presented it.
BTW, a bit off topic, last night we setup our Roku box ($60, even cheaper than the AppleTV) that has an RDIO app in it, and we connected it to our big speakers via our Yamaha amplifier. It was a great experience in our living room. And it would be even better if RDIO was to release a “remote” functionality in its mobile apps to control the Roku app (so we don’t have to have our TV ON to listen to music). Once small things like these are worked up, the whole experience overall is what everyone is probably craving right now. No CDs, no iTunes PC usage, no finding files, no downloading from shady sites etc. One service to rule them all.
I think Glenn’s point is right on the money (and one that Bob hit on as well) – the music services as they exist today aren’t providing the type of access that Netflix has delivered, and it’s likely why they are suffering. When Netflix widgets started showing up on every connected TV and BD player (and Roku etc.) their subscriber growth exploded, because people could get the content where they wanted it (and the apps worked very well).
Using a personal example, I was ready to cancel my Rhapsody subscription until I got a Sonos and I had easy access throughout my house. Now I use it constantly. MOG is solving another pain point by getting embedded in car stereos, which is a very important listening environment for most people, but until it’s everywhere (and offline mode doesn’t cut it, imho) those services are in trouble.
RB, this is correct. Netflix has device penetration. But both MOG and RDIO are solving these issues as time goes by too. Both have a Roku version, mobile versions, tablet versions, desktop versions, Sonos versions. And when GoogleTV and AppleTV get “apps” (according to announcements or rumors, sometime this year), they will undoubtedly be there too. Only about the Wii, PS3, and XBoX360 I heard nothing about native apps.
And as you mentioned, these services can easily partner with receiver manufacturer, like Pioneer or Yamaha or Denon etc, to built their service into. As for cars, it will take a few years before we have built-in internet access on all cars. Until then, offline syncing might be the only way to get content on them via RDIO/MOG. Unless, we get cars with Airplay/UPnP support, in which case we don’t need RDIO/MOG built-in to the cars or receivers, we just need such a speaker-output protocol support. This way, as these devices/cars get older and probably stop getting API updates to continue support RDIO/MOG, we can still use them to listen to music through their wireless speaker support.
The possibilities are endless, and we have the technology. It just takes time for companies like MOG/RDIO to build support for all that. Netflix already has a headstart and it had no major competition. RDIO/MOG compete with each other, along Rhapsody, Napster, iTunes, Amazon, etc.