Why don’t record labels act as post-filters?

I’ve attended a few panels on the music industry in the past few weeks. I listened to David “Click” Cox speak and answer questions at Long & McQuade a few weeks back (as part of the Big Schmooze, I believe), and I sat through a few music panels at the Mesh Conference last week. I may write in more detail about that one later, but it’s a general sentiment that I wanted to comment on now. Techdirt picked up on it earlier today.

Why don’t record labels act as post-filters?

I read Chris Anderson’s book, The Long Tail, a few weeks ago. One of the themes in the book is the distinction between pre-filters and post-filters. In the 20th century, the focus of media companies was on hits (the “short tail”). Pre-filters were extremely important to determine what content would end up being commercially successful. Media companies were limited by the distribution methods, by things like shelf space. A CD store can only stock so many CDs, so it was very important for them to determine what would be successful before it got to market. The labels became very good at this, but there were still flops and surprise hits. The business of predicting what will be successful is not easy; it’s a business of predicting the future.

In the 21st century, digital distribution methods have virtually removed all of those barriers. With the essentially infinite shelf space of an online store or service, it’s now economically viable to stock everything, even those items which might only sell once or twice. (This is basically the “long tail”.) Anderon says that “the Long Tail without filters is just noise,” and notes that post-filters are now extremely important.

[Post-filters] find the best of what’s already out there in their area of interest, elevating the good (relevant, interesting, original, etc.) and ignoring or downplaying the bad. When I talk about throwing everything out there and letting the marketplace sort it out, these post-filters are the voice of the marketplace. They channel consumer behavior and amplify it, rather than trying to predict it.

In Long Tail markets, where distribution is cheap and shelf space is plentiful, the safe bet is to assume that everything is eventually going to be available. The role of filter then shifts from gatekeeper to advisor. Rather than predicting taste, post-filters such as Google measure it. Rather than lumping consumer into pre-determined demographic and psychographic categories, post-filters such as Amazon’s custom recommendations treat them like individuals who reveal their likes and dislikes through their behavior. Rather than keeping things off the market, post-filters such as MP3 blogs create a markets for things that are already available by stimulating demand for them.

Apple doesn’t spend time or money determining what iTunes should stock. It stocks everything; the effort goes into helping people find what they want. Google does the same for web pages (and the rest of the world’s information), Napster did the same for files, Last.fm and Pandora do the same for music.

A post-filter attempts to measure success after something goes to market, and to help people find it. This doesn’t make a post-filter inherently successful, but it sure eliminates a lot of the risk and uncertainty of predicting the future by instead analyzing the past and the present.

When I was listening to David “Click” Cox, I couldn’t help but notice that any attempts to adapt to the technology were still inhibited by this notion that record labels are supposed to act as pre-filters. They still expect to be the gatekeepers, to determine what will be successful before it goes to market and to make investments in that and take risks.

That still may be useful, but why not act as a post-filter as well?

Ian Rogers, former GM of Yahoo! Music, has written an open letter to Guy Hands, the head of EMI, suggesting just that. More specifically, Rogers suggests establishing “affinity labels” to group similar artists together. By putting some big name EMI artists on each label and associating them with lesser known but similar artists, such affinity labels would act as a post-filter, helping fans to find similar music.

The record labels won’t succeed by trying to be the gatekeepers after the gates have been flung open and the walls have been torn down. But they don’t need to remain ignorant of collective intelligence, to solely consider themselves as pre-filters and limit their market and potential.

Why can’t labels really take advantage of digital technology by monetizing niche markets? Why can’t labels help music fans to filter the vast amount of content that’s already on the market to find what they’re interested in? Why don’t labels act as post-filters?

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