Digital Music Forum East Recap: The Race Against the Slow and Steady

At yesterday’s Digital Music Forum East (again, #DMFE), speed (or the lack thereof) was the unofficial theme that ran through most of the day’s panel discussions.

Over the past decade or so, cratering industry revenues compelled companies to become more nimble, more flexible, and more adaptable. And for the most part, they did: staffs were cut down to size; major labels diversified their income streams and expanded their services; publishers began marketing and pushing their catalogs more aggressively; bands and labels worked harder than ever to market themselves on the cheap.

But in their mad dash, it seems like the industry outran its customers. At a panel discussing cloud music services, which featured representatives from MOG, Rdio, mSpot, BitTorrent, and 7digital, an audience member began her question by admitting she had never heard of any of their companies. “Do you guys do marketing at all?” she asked.

Another panel, entitled State of the Digital Union, asked why music subscriptions have failed to gain traction amongst consumers. Amazingly, 10 years after the launch of Rhapsody, the first theory suggested was a lack of awareness.

Julie Lee, a business development EVP at VEVO, theorized that consumers have trouble imagining their music consumption in new, unfamiliar terms. “The biggest challenge to subscription models,” Lee suggested,” is the trial and valuation period.

“I’m not sure anybody’s valuated their [music listening] time at $12 per month.”

Indeed, in a later panel, Carter Adamson, the COO of Rdio, which offers unlimited, ad-free streams of eight million songs for under $5 per month, admitted that his company is still having trouble with the “consumer education” and funnel portions of his product’s pitch.

Some executives spoke optimistically about the success currently enjoyed by Netflix, which has thrived on its unlimited digital subscription model. But Clear Channel Radio President Gerrit Meier reminded his fellow panelists that parallels between the movie rental and music industries are limited. Thanks to companies like Blockbuster, film rental consumers are already accustomed to the concepts of membership and rentals. “Moving from ownership to access,” Meier explained, “is much harder.”

The fragmentation still plaguing most levels of the industry makes that especially true. Adamson announced that the $17 million Rdio recently raised from investors would mostly go toward expanding its compatibility to more devices.

But the benefits of business’s racing forward are beginning to emerge as well. BAM Group CEO John Boyle noted that the verticals which artists and labels need to pay attention to have finally set. Artists now know which platforms their music should go on, which sites will help them promote it, and how to communicate with their fans.

Of course, it will take time to reap the benefits of this development, too. “Thanks to their investors, most of these companies will be able to survive the year,” Boyle said. “But leaders are going to start to emerge. In 2012, we’re going to see winners and losers. In 2011, we’re going to see leaders.”

Provided, of course, the industry stays in one place long enough to take advantage.