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Digital Exploration

Douglas Merrill, formerly Google's CIO and now President of Digital Business at EMI Music, believes digital media can be deployed in more sophisticated ways to target individual groups of fans. For example, companies could send different promotional videos of the same song over the web to appeal to different viewers, depending on culture, age and other factors.

As Merrill points out, "Humans like multimedia interaction." Record labels now use the web to link up fans and artists in the remotest parts of the world. Digital media, and the range of possibilities it affords to address different groups, has come of age at the right time for the music industry as its market breaks down into smaller audience segments.

Ascertaining the needs of such new markets will be difficult, believes Merrill. For example, asking customers what they want via web forums could be missing the point. He quotes Henry Ford: "If I'd have asked my customers what they wanted, they would have told me 'a faster horse.'" iTunes is just one way that has helped people discover new music, he says. "The music industry must find ways to reach new market segments through digital content - and then monetize them."

The change to digital distribution methods does not happen with the flip of a switch. "It often looks simple, but there is a lot of art and science in being a good provider," Merrill says. The company's business model must change to match digital distribution - for example, shifting emphasis from logistics to content security and protection. Issues such as how and where controls should be placed and how royalties are paid need to be decided.