Re:Variety is the enemy of profits... (Score 1)

Although I've also observed the trend of increasing diversity in musical listener's tastes, I wouldn't necessarily attribute it to Napster or MP3s. I could argue that this 'trend' has been evolving over the last 20 years or more. Of course, maybe I'm just extrapolating this trend from my own personal development as a music listener, and the fact that acquaintances around me have tended to age as well. Perhaps we need another "Entertainment Marketing Solution" to measure this trend as well, eh?

I disagree, however, with your premise that "variety is the enemy of profits." Note that:

• The recording industry already has a mechanism for controlling the costs of a diversifying industry: spend less (or in some cases, next to nothing) on the bands that you don't think will sell hot. I've seen several examples of bands that you'd think would have it made because they managed to sign with a major record label. Sadly, it just ain't so.
• Nothing is ever a sure deal in the recording industry (or, indeed, any industry). Even established bands can have a crappy run of it in the studio, and end up with a DOA album. So, it doesn't make sense for a record label to stack all its chips on one horse, even if it would superficially look like economies of scale were on their side.
• Increasing variety gives a record label an opportunity to differentiate itself and artists from competing record labels and artists. If record labels can find and exploit these emerging markets, then the record labels win.
• A wider, more diverse base of artists also gives a record label opportunities to do bundled promotions, antholgies, collections, mixes, and other ways to get you to buy more of their stuff.
• A wider, more diverse base of artists means that the listener never gets bored. As a record label, you definitely don't want to be on the receiving end of a bored consumer.

So, my take is that variety is good -- even for the big guys. Apparently, they have the same take too, as is evidenced by the large number of sublabels and spin-off subsidiaries that focus on a wide variety of stuff.

Getting back to Napster, it is definitely the case that online music exchange makes obtaining rarities and obscure music a heckuvalot easier. This can only help folks in our position, who crave exposure to music that we might never otherwise be able to hear -- and by extension, artists whose music might never otherwise be heard. I'm talking about studio droppings and out-of-print stuff from bands that never get to the box-set stage of their careers. However, these are the parts of the industry that the RIAA already conveniently overlooks (see the "big labels doesn't necessarily mean big money" spin above). So, I'd say that Goldmine and $30 bootleggers stand to lose more from Napster than the RIAA ever will.