Timbaland and Verizon Innovating Together
There was a lot of buzz recently about a deal between superstar music producer Timbaland and Verizon in which Timbaland will produce one new song each month in 2008 to be released exclusively through Verizon’s content network. Verizon subscribers will be able to download the MP3, ringtone, or ringback just days after Timbaland completes each song. Verizon is also funding a tour bus outfitted as a recording studio as a promotional tool and to capture video footage for a “Making of” set of video content. Timbaland has been a sonic innovator since his first hit in the 90s and this deal takes that innovative energy beyond the studio into the business world.
Just how cutting edge is this deal? It has the potential to be just as groundbreaking as the deals by Madonna and Jay-Z which cut their record labels out altogether to turn production and marketing duties (and costs) over to concert business powerhouse Live Nation. In the end this is all about getting out of a dying business model and into the new world of music consumption.
The business of selling cds is one that all the experts say is on it’s last leg and about to give way to digital delivery methods with or without the labels. The cell phone sector still has huge growth potential and the rules are still being written for the most part. How will the millions of current and future cell phone users get content? Music or otherwise? How will the millions of CD buyers get their music when CDs finally become a thing of the past? Companies such as Verizon are learning how to best answer these questions and this deal highlights the fact that record companies are quickly becoming unnecessary middle men who aren’t adding much value to the relationship between artists and fans. In a rather bold move, Verizon has taken the biggest role of any cell phone company thus far to provide exclusive original content to it’s subscribers. Original being the key word to separate this from the many deals in place to bring music and video to cell phone users today. Could this be the new music business unfolding before us?
Record companies have traditionally fronted huge sums of money for music and video production, radio promotions, marketing, and tour support. Who’s to say Verizon couldn’t write those checks and release these singles as an album at the end of the year? It’s not like to record companies are doing much more than releasing droves of music hoping something hits. All of the traditional record company functions can be contracted out and your risk greatly reduced by betting on a proven track record like Timbalands. Then instead of taking semi random chances on songs and hoping for hits, Verizon could use its subscriber base as a pre-release test market that costs very little to engage. At the end of 2008, they’ll have revenue generated from the sales of these 12 singles but just as important, they’ll have data pointing to which songs are the strongest when they start to spend money on those old expensive marketing methods like radio and in store displays.
It’s a no-brainer that at some point music will be consumed primarily through digital channels. Deals like this bet on a new model built upon the hardware device most people are going to own and the data networks they subscribe to whether they’re music fans or not. I like the odds of that bet.
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[...] The Beat Business wrote an interesting post today on Timbaland and Verizon Innovating TogetherHere’s a quick excerptIt has the potential to be just as groundbreaking as the deals by Madonna and Jay-Z which cut their record labels out altogether to turn production and marketing d… [...]