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Jay-Z Drops Some Knowledge on Business Models and Digital Innovation

· July 8, 2013

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In June, Jay-Z pontificated about the Internet in a widely circulated video:  “We don’t have any rules. Everyone’s trying to figure it out. That’s why the Internet is like the wild west. The wild wild west. We need to write the new rules.”

Today, Jay-Z spent hours responding to tweets from fans, demonstrating the democratizing features of the Internet and social media, which allow celebrities to reach their fans directly, and disintermediate the middlemen.

(Jay-Z agrees:)

Some more of Mr. Carter’s tweets are relevant to DisCo:

Jay-Z was asked why he felt it was time to release his new album Magna Carta… Holy Grail, and in response he mentioned disrupting a broken model.  In the past, DisCo has written about how “disrupt” is a term of art from Clayton Christensen’s theory of disruptive innovation.  Even if Jay is using “disrupt” in a different way than we do, it’s worth noting that he is interested in new business models and new types of content delivery (even if there are still some kinks getting worked out).

As Jay-Z mentioned in the video above, the Internet is new territory for creators, and “new rules” are necessary because of how different it is, and how much more is possible.  He seems to suggest that a lot of conventional music industry wisdom is not necessarily beneficial for creators, who now have a lot more tools available to them — some of which I discussed in this post.  It also confirms what the Sky Is Rising report found, that “the market is booming, with ever greater content choices for consumers, more options for creators, and many more opportunities for smart businesses & artists to make money.”

Last week, the RIAA changed its rules on how albums become platinum-eligible, which they described in a blog post, in which the RIAA displayed an interest in innovation and a recognition of the changes in the marketplace for music:

We think it’s time for the RIAA – and Gelfand, Rennert & Feldman – to align our digital song and album certification requirements.  That’s why today we are officially updating this rule in our G&P Program requirements.  Going forward, sales of albums in digital format will become eligible on the release date, while sales of albums in physical format will still become eligible for certification 30 days after the release date.

Not only do we believe it’s sensible and logical to align digital album rules with those we have maintained for digital singles since the program’s inception, we also consider today’s move in line with our larger efforts to modernize the G&P Program to reflect the new music marketplace.   In May we announced the integration of on-demand streams to the program to more broadly recognize online demand for songs.

The reality is that how fans consume music is changing, the music business is changing as labels and artists partner with a breathtaking array of new technology services, and the industry’s premier award recognizing artists’ commercial achievement should similarly keep pace.  In short, we’re continuing to move the 55-year-old program forward and it’s a good day when music sales diversification and innovative strategies meet the RIAA’s time-tested, gold standard requisites for certification.

Billboard did not change its rules, however, and won’t count Jay-Z’s first million sales on its chart, prompting Hov to tweet a few weeks ago in response:

The whole exercise shows that Jay-Z, already a successful businessman and music mogul, is taking advantage of all that the Internet has to offer to connect with fans to promote and disseminate his music.  It is likely that other artists will follow his lead, which will benefit consumers and industry stakeholders alike.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.