By: Leighanne Saltsman

News of Netflix’s (NASDAQ: NFLX) change in pricing has much of America abuzz this week, and even Hollywood is getting nervous. On July 12th the digital video streaming giant, which was established in 1997 and “went viral” in 2009 when it surpassed 10 million subscribers, altered its pricing plan options. The official press release states that their streaming-video option will now be separate from their DVD-subscription option with each one costing $7.99 (or $15.98 total, as opposed to their previous combined rate of $10.99? $12.99? We already forget!) and by effectively upping the price of receiving physical DVDs, Netflix encourages subscribers to opt for a streaming-only plan. It’s also producing original programming for the first time. The series “House of Cards” starring Kevin Spacey and produced by David Fincher is a project which “seems more suited to HBO than Netflix,” according to NPR’s Digital Culture correspondent Laura Sydell, and the word is that Netflix paid $100 million for this 26-episode series, outbidding HBO.

So will Netflix’s current monopoly-like hold on the streaming-video market combined with its venture into original programming drive consumers away from theatres? The jury is still out, but a recent study on visual vs. aural media consumption showed that while consumers spend billions of dollars on digital music annually 74% percent value photos or documents over music, and when asked which digital files were most important to them, 41% said photos, followed by 33% for documents, 19% for music and 8% for videos. (Study conducted by cloud storage provider MiMedia). This means that consumers are no longer so concerned about owning film, as they know they can get it online at any time of day or night. So Hollywood – better start cooperating with NFLX and its 23.6 million subscribers!

We don’t think the music industry should stop paying attention to Netflix either —- or to Hulu and even Napster, for that matter. Although Spotify – which finalized its deal with Warner last week and launched in the US on July 14th - is a new and powerful player in the US digital music subscription arena, US subscription statistics aren’t yet in. As a way of measuring potential, the service claimed only 750,000 paying subscribers in the countries where they have been available — the United Kingdom, Finland, France, Netherlands, Norway, Spain and Sweden – in December of 2010. In the meantime we think it might be prudent for music marketers to stop hoping that the magic of social media-enabled distribution will save their incomes and consider the option that no one label / artist / distribution service – regardless of the amount of clout or hype – is going to be able to corner the market in the next twelve months in the way Netflix has.

Indeed, much of what makes Netflix successful (is)… “a strong product that’s easy to use, with incredibly helpful recommendations and constant improvement based on customer feedback.” While music services are competing mightily to do these things and more, competition has rendered them so splintered and numerous we believe it will be impossible for the music industry to develop a cohesive pricing plan in the future that resonates with a mass audience outside the musicophiles.

So how can musical content delivery services stop being envious of Netflix and start using it to evolve (while waiting for the stats on Spotify?) There’s a good editorial here if you care to click through, but in the gist of what is said by Cedric Muhammad (business consultant, political strategist, monetary economist and former GM of Wu-Tang Management) is that “it not as much the movies and shows themselves that people value when subscribing to Netflix it is also the way the movies are 1) released and presented (listed by category and described clearly) 2) packaged and made available (through the mail as DVDs or instantly on your screen) 3) priced (the subscription options feel like an all-you-can eat buffet with the doggy bag!) and allow you to 4) ‘select’ the content (you don’t wait on the anonymous On Demand programmer to guess the right flicks each month) It is these four areas that Netflix excels at, which the music industry has collapsed under the weight of, the past 10 years.”

The part of this quote that resonates with us is “through the mail as DVDs or instantly on your screen”. This tells us that music distributors have two options right now: either make great efforts to reclaim and re-privatize the rights to their products in order to issue them as through the mail rentals (never gonna happen) or start concentrating on producing additional content that can be KEPT private. As per the MiMedia study above, people considered photos their most valued file types after written documents, and we think this proves that we as a globalized culture are really, really ready to assimilate the next generation of visual content.

Now, thinking as we always do about the application of marketing trends to musicians’ incomes, it’s our opinion that in order to be truly competitive in this market musicians must start considering visual component(s) an integral part of the sonic experience. So don’t drop the packaging just yet, kids. Of course the four major labels —- Warner, Universal, Sony and EMI —- have already adopted this 360-product policy on many levels, but indie musicians should take note: tracks are not the only product you must be passionate about producing! We need to stop offering free video downloads while we still can and focus on creating higher-quality live-streaming visual content. As for pre-produced static visual content, how many indie musicians do you know who host their album art on sites designed for graphic designers’ portfolios? There are so many high-quality options…

Which brings me to the conclusion of this piece… —- MTV is missing an amazing opportunity here!! By using Netflix as distribution mechanism while Spotify gets its sea legs and simultaneously re-incorporating the realm of the visual into its standard product (aka partnering with VEVO etc) MTV or a network like it might be able to bring the music industry back into the game. We know, we know —- monopolies are evil and society needs to stop misconstruing corporations as parental figures —— but in this case it might be the only way to re-monetize music in the next two years. After that, bring me my 1TB solid-state Hi-Def player and pocket 3D projector!