After 14 years, the music industry has finally got it right. For the first time since 1999, music industry revenues are up.Lessons learned here should be shared by other entertainment businesses, like TV industry: There can be light at the end of the tunnel -- miles long, in a lot of darkness -- even when you mess up.
Truth is, the music industry gains are minimal -- just 0.3% to $16.5 billion in 2012 over 2011. A big part of rise -- digital downloads, subscription and advertising-supported music ventures -- improved 9% to $5.6 billion in 2012.
Perhaps it comes as no surprise that the last time the music industry gained in revenue was 1999. That was the year Napster was launched, the controversial file-sharing music service that built its platform to some 50 million users.
The TV industry didn't and doesn't have that problem. In part it took away that illicit intention when launching Hulu, and when figuring out the Netflix might not be so bad in selling some shows, as well as coming up with its own apps.
Traditional TV revenues are still growing -- though at a small 2% or so per year -- at around $70 billion. Retransmission fees and cable operating carriage fees help. Digital video revenues continue to climb at a double-digit percentage pace, now at $3 billion, with premium video (TV shows and movies, primarily) a hefty piece of the puzzle.
We all know the music industry messed things up at the dawn of the Internet age -- letting illegal downloads and piracy getting out of hand. But now, the NPD group says there has been a 26% decline in illegally downloaded music. That's pretty good news.
Still, TV and movies do have their own issues with piracy -- but on the surface it doesn't seem to have an adverse effect on TV's overall business formula. Yet. Major TV owners are still rushing out a hodgepodge of digital apps and other digital entertainment platforms -- including TV Everywhere efforts -- that don't mesh with one another.
TV networks are still going slowly, in part because of different TV distributor programming deals.
Digital-related business is now about a third of all music business now. What kind of business formulas will TV networks have when it gets a third of all its revenue from digital platforms?
The successful business formula for TV networks is using digital platforms to create--and more importantly, enforce--new distribution windows for its content. Not all windows will be created alike: some may act as hedges against risk, for example, similar to the role now played by direct-to-DVD. But the widely-held belief in an a la carte world is increasingly being discredited as big data fuels better insights.