The comparisons always come fast and hard. Since the popular music industry was first, it must always be the industry that all others are judged against when the Internet catches up with old business models. After popular music went down movies, TV shows, newspapers, and even bicycles followed soon after. Yes, even the bicycle industry is being hit hard, since local bike shops can only stock so many different kinds parts and EBay can stock an infinite number, cutting heavily into revenue for local bicycle shops. The common denominator in all of these situations is the Internet breaking old business models. Music and newspapers, for instance, have both come to find themselves in a place where the cost of producing content remains pretty high, but the cost of distribution and reproduction has gone to basically zero. Thus, money cannot be made in the distribution of music or newspapers in the quantity that it was made before by record companies and newspapers. But while there are similarities between the situations that these institutions find themselves in, there are major differences as well. Thus, the modest success those certain industries have had in tweaking their business models to fit this new Internet age cannot necessarily be transferred to another industry. There have, for example, been many words written about the need for newspapers to create their own iTunes, or their own Hulu, when many problems with these comparisons arise with some scrutiny. First, iTunes and Hulu are not exactly successes for their respective industries (both are successes for technology companies, however). Hulu may not survive without a paywall (which will eventually kill it), and iTunes has not come close to replacing the revenues that CDs used to bring in. Secondly, it is incredibly difficult to imagine exactly what a Hulu for newspapers would look like. There is no single model that the newspapers have rallied behind, but if (or when) it comes, it will not look like iTunes (unless the Apple iPad really is the savior of newspapers) or Hulu. It will look completely different, and the newspaper industry will wonder why it didn’t think of whatever that model is earlier.

The music industry is definitely the industry that has experienced decline for the longest, and has done the most to combat it. The business models are much different, though they are still based on the assumptions that got them into trouble in the first place. Consumer patterns changed with the technology, and the music industry has coped reasonably well. None of the major record companies have gone under, they have simply changed how they get their money. While digital music sales have risen, they have not been able fill the void left by drops in CD sales. In 2008, we discovered that “The latest recording industry statistics show digital music sales are rapidly increasing as a percentage of total industry sales, but not by enough to offset a dramatic fall in compact disc sales.”[1] So, digital sales have not been the reason that the music industry has coped with the Internet age, despite all the press that Apple gets for iTunes saving the music industry. No, instead, revenues from live music has actually increased substantially since recorded music revenues began to peak. Since 2006, recorded music revenue (from CDs, tapes, vinyl, and digital sales) has stayed stagnant at $12.6 billion (which is considered a drop adjusting for inflation), while live concert revenues have jumped from $7.3 billion to $9.1 billion in 2009.[2] And most importantly, the growth in live music revenue has happened in a way that is consistent with the social norms of the Internet age: the Top 100 tours have produced less revenue, but underneath the Top 100 there has been huge growth in smaller shows and in the festival market (lots of acts getting together to put on one big event). You can see the makings of a business model starting to take shape with these statistics: the money comes not from the sale of a single piece of music that can be copied a million times for free. Instead the money comes from live touring and merchandise like t-shirts. Thus, the recorded music becomes simply a marketing tool. Play a hit single on the radio not so the listener will like that song and buys the album, but so that the listener likes the song and attends a concert. The Internet is simply allowing the music industry to grow from the bottom up. There are more music choices, more ways to listen to them, and more ways for more artists to make more music available now than there ever has been. Thus the consumer has more of an ability to become attached to music that he or she will enjoy, and thus artists that aren’t backed by giant record companies have a better ability to make a living making music by recording on their own, giving away their recordings (or selling them through iTunes independently, which allows them to take a bigger percentage of each sale than if they had a record deal), and making money off ticket sales and merchandise. Thus more people listen to more kinds of music, go to more concerts, and spend more money – the industry does fine. The stories you hear about music’s slow death are from the record companies themselves, since they are the ones who will become irrelevant as this trend continues.

Unlike their partners in the newspaper industry, however, record companies have begun to change their ways somewhat. It may be too little, too late, but they have made enough moves into the live music arena that revenues can begin to trickle back in. The biggest moves, however, have come from live music promotion companies, such as LiveNation (which is a part of ClearChannel, a radio conglomerate). LiveNation has begun signing artists like Madonna to deals that replace and expand on what is traditionally a “record deal”. “This unique business model will address all of Madonna’s music ventures as a total entity for the first time in her career”[3]. The equivalent for the newspaper industry would be if a newspaper helped pay for journalists’ speaking tours but also took a cut of those engagements. This is something that one can’t really see with newspapers or journalists because journalists do not tend to become famous in the same way that musicians and entertainers do.

This is the first place where the music industry and the newspaper industry parallels diverge. The music industry’s failing are all in the inability to sell discreet creations (recordings), but unlike newspapers they have another product that they can sell in a different way: the artist/musician/entertainer. Newspapers do not really have this luxury. There is no backup plan after selling content. Unlike their media partners in TV – especially at Fox News – they don’t have personalities that they can sell. On TV the personalities, who these days are simply opinion personalities instead of straight news gatherers or reporters, get face time with an audience and usually can sell themselves in a way that newspaper writers (even opinion writers) can’t. They can’t at least in a way that allows their parent company to cash in on their personal image.

Thus, we come to the reason why newspapers cannot weather the Internet age storm the same way that music did – the only business model from the music industry’s experience that they can copy is the model that music now has for recorded music. In other words, the only option newspapers have (unless we completely rethink the idea of a newspaper or news organization) is the option that the music industry has shown doesn’t really work very well. Pay barriers for newspaper content has a very shaky track record, and those are only being considered because of lost ad revenue from both print and online newspaper ads. In the 1^st quarter of 2009, Internet advertising dropped across the board. “The biggest drop was in real-life newspaper ads with a 29.7 percent decline to $5.9 billion. Online newspapers ad sales also declined by 13.4 percent to just $696.3 million in the same period”[4]. So how can newspapers begin to make some of the money back?

There are a few answers to that question, and all of them have to work in conjunction with each other. First, no one disputes that newspapers were incredibly slow on the uptake when it came to taking advantage of the Internet, and thus still lag behind even many blogs when it comes to integration with new and emerging technologies like Twitter, social bookmarks, and the like. Newspapers have not taken a good hard look at what it means to be a newspaper in the 21^st century, and until they do publicly they will be seen as stuck in the glory days. Secondly, they need to start working together. Perhaps, as the argument of this paper goes, there is no clear correlation between the newspaper industry’s crisis now and the music industry’s crisis a few years ago, but perhaps there are better parallels when we look at the music industry of 50-60 years ago. Instead of looking at how the music industry has dealt with distribution problems, newspapers could look to how the music industry dealt with licensing and publishing issues. “Under the music industry model, a venue or media outlet that wants to use a songwriter’s work can purchase a yearly blanket license from the organizations that control the public performance rights to the compositions. The two largest organizations, the American Society of Composers, Authors and Publishers and Broadcast Music Incorporated, together represent the writers of millions of songs. ASCAP and BMI distribute the money to songwriters and music publishers based on a complicated formula designed to ensure that a major television network pays a higher fee than a bar in Texarkana”[5]. This model could absolutely work for articles in blogs the way that it works for the music industry and plays on the radio. This would make it cheaper for articles used in small blogs, but more expensive if a major newspaper quoted from a blog. The questions remain very big. Are there anti-trust implications? Since there is already a model with songwriters then an arrangement like this may hold muster in the courts. Should it be newspapers that band together or journalists themselves? After all, it was the songwriters, not record companies, who banded together to form ASCAP and BMI. If journalists banded together to form a similar situation then newspapers could still benefit – they have the famous names that will draw the best journalists who will get read the most, thus bringing in more money to the newspaper when those journalists’ articles get linked to or quoted in other websites. The technological and logistical hurdles would be immense, but so are all other options.

If one looks hard enough, parallels can be found between any media industry. Newspapers and the music industry are simply two of the simple parallels that people use. Pick two of music, the news, TV, and feature films, and contrast them with each other. There are lessons to be learned in every story, and some lessons can be applied to the situations facing other industries. But they are not analogous, and trying to save the newspaper industry by copying the music industry is basing your strategy on a failed premise. What is clear, however, is that the old way for all of these industries is over, and that new business models have to be in place. Some are farther along than others in the race to revamp themselves for the 21^st century. Time will only tell how far they get.

[1] Stein, Mark. Daily Brief. Porfolio.com. April 28^th, 2008.

[2] Grabstats.com, Music Industry Stats. Source: eMarketer

[3] “Madonna Joins Forces With LiveNation in Revolutionary Global Music Partnership”. PR Newswire. October 16, 2007.

[4] Parfeni, Lucian. “Internet Advertising Revenue Down in Q1 2009”. Softpedia News. June 5^th, 2009.

[5] Jones, Ashby. “Come Together! On Newspapers’ Big Antitrust Hurdle”. Wall Street Journal Law Blog. June 4, 2009. http://blogs.wsj.com/law/2009/06/04/come-together-on-newspapers-big-antitrust-hurdle/