Thanks to Liberty Games for this great graphic.
Thanks to Liberty Games for this great graphic.
Who will help you succeed in music? There is really nothing more important to your career than the RELATIONSHIPS you develop over time. It’s all about who you know and who knows you – and how big your network is.
Are people taking you seriously? Do you know how to approach them and get their attention? The next person you meet may be the one who will change your life forever. Are you prepared for that? You want to network your way to success.
In this final video of my Mini Series I reveal the secrets of Power Networking. I show you how to engage with people and get on their radar screen. Plain and simple, the reason that artists and writers get famous and develop huge fan followings is that they get out there and network effectively.
I have helped hundreds of musicians cut through the noise and get themselves into positions where they can be successful. Now let me help you.
In the Mini Series I revealed the proven strategies I have been teaching my members and clients including:
If you have not watched all 4 videos, I urge you to watch them soon – while they are still available.
PLEASE – If you know anyone else who might benefit from this Mini Series on the music business, please share this with them.
The health of the “music industry” has been in question since the rise of the internet and digital communication technologies, and finding a happy medium between all the parties involved has not been an easy task. Countless companies and artists have risen up with unique business models, but for the vast majority of musicians, their income from recorded music has diminished dramatically.
I have argued as have many others, including my friend Fred Goldring, that we need a plan for reform to create a healthy music industry in which all parties benefit. That means artists, songwriters, intermediaries and the tech companies that have seeming taken over the hen house. Reform in how the digital money gets split up, reform in how inexpensive these digital services can be for consumers and reform in our antiquated copyright law.
The debate continues and this piece below is well worth a careful read. I agree with most of what Fred proposes (not sure the album is dead yet.) Enjoy…
This article below is written by music industry veteran Fred Goldring of Music Aficionado. Fred is a media/tech entrepreneur, entertainment lawyer with Counsel LLP, an Emmy-winning Executive Producer and a Member of The President’s Committee on the Arts and the Humanities appointed by President Barack Obama. This post “Let’s Be Pigs Not Hogs: How to Thrive in the Age of Digital Music” originally ran on Hypebot:
In 2003 and 2005 after a wave of R.I.A.A. lawsuits, I wrote editorials in Billboard advocating an “eight-step recovery program” for a healthier music industry. Among other things, I proposed the “support [of] initiatives that will allow unlimited access to every piece of music in the MP3 format whenever and wherever someone wants it, with no conditions or restrictions in an easy-to-use interface [as] people will pay for this”.
As one of the first people in our industry to embrace the changes that became the digital music revolution, and in light of the public debate over streaming brought on by Taylor Swift’s decision to remove her catalog from Spotify, I thought it would be interesting to look back on my recommendations eleven years later to see how we’ve done – and offer some new suggestions about where we might go from here.
Let’s start with the obvious: streaming is our future. It will only grow and become more ubiquitous. The advent of on-demand streaming is making it clear to everyone that you don’t have to own something that you can get anywhere at anytime on demand on any device (how many of you have visited your CD collection lately?) How we deal with the financial ramifications of that adoption will determine the future health of our industry. In particular, we need to create a system in which all of the major stakeholders in the music business—artists, record labels, publishers, performing rights organizations, digital music services and consumers—are happy and thrive. And therein lies the problem.
Our industry is entangled in a Gordian knot. On the one hand, artists and songwriters complain they don’t make enough money from streaming. So they are demanding a bigger piece of the streaming pie before they will support it. On the other hand, streaming services protest that they already pay out too much of their revenues back to the labels and publishers (currently over 70%) and that if they had to pay out even more, they won’t be able to sustain their businesses long term (note: Spotify recently reported a 12% operating loss for 2013).
Next we have the record labels grumbling that artists have been overpaid by relying on the 50/50 split of “ancillary income” royalty provision in recording contracts for streaming income. The labels’ argue that since streaming is no longer “ancillary”, they should pay artists their regular contractual royalty rate for normal retail channel sales (translation: record companies would keep more of streaming income which they assert they need to sustain their business and continue to invest in developing and marketing artists as well as new required digital infrastructure).
To make matters even more knotty, Apple will soon to be entering the streaming business (along with YouTube which recently launched their Music Key service). This will inevitably result in more downward pressure on pricing for streaming subscriptions. Unlike the Spotify’s and Rdio’s of the world, companies like Apple (and Amazon and Google), don’t rely on streaming to pay their bills. For the tech giants, streaming is simply a consumer acquisition and marketing tool.
Finally, there’s our outdated copyright laws. They have not kept pace with the rapid change brought on by technology. The Digital Millennium Copyright Act (DMCA) has been in effect since 1998; and it’s pretty clear that, among other things, the Safe Harbor and Anti-Circumvention provisions of that Act need significant updating now that we have 16 years of actual experience to inform the discussion.
So as we approach 2015, here are a few concrete proposals for how we can make this business we all love work for everybody.
1. As my Dad always told me, “pigs get fat, hogs get slaughtered.” The 70% royalty paid out by streaming services to IP holders seems too high from the point of view of the payers and too low from the point of the recipients. In every negotiation I’ve ever been a part of, that’s a good sign it’s a fair deal. The streaming services should stop trying to lower that rate and the artists and labels should stop trying to raise it. Everyone seemed OK with that split on iTunes sales. Let’s just all shake hands and get on with making music.
2. The crux of the problem is not how much the streaming services pay to IP holders, but how that pool of money is divvied up and allocated. Currently, it is allocated like a parimutuel betting pool where all subscriptions are pooled and then allocated based on the number of streams listened to for each artist. This seems fair until you realize that it effectively means subscribers who don’t listen to a lot of music per month are subsidizing subscribers who do. For example, if a streaming service had two users, one who listened to 999 streams by Artist X and another user who listened to a single stream by Artist Y, 99.9% of that service’s royalty pool would go to Artist X even though both users paid the same $9.99. It doesn’t have to be this way. Streaming royalties could be accounted for on a “user-centric” basis: i.e., 70% of each subscriber’s revenue would be allocated amongst the artists that subscriber listened to in a given month. This small accounting change would make a substantial difference in the profitability of streaming for indie, up-and-coming and struggling artists: i.e., exactly those artists that we need to nurture if we are going to have a thriving music scene ten years from now.
1. Record labels need to earn their keep. The 70% payout to IP holders largely goes to labels who then pay each of their artists based on the intricacies and convoluted terms of their contracts with each artist. I should know. I negotiated many of those contracts for artists. It doesn’t really matter whether labels call it “ancillary income” or “development” or “digital gobbledygook.” What matters is that unless labels provide real and substantive value to musicians, musicians will take their business elsewhere. Every day there are more and more alternatives to the traditional big 3 labels for musicians to consider. And many of these alternatives are much more exciting and rewarding to deal with for musicians than a label’s lawyers. Labels need to return to their culture of being musicians’ champions and supporters. Or they shouldn’t be surprised if they get disintermediated, and nobody is crying at their funeral.
2. Digital copyright law is a mess. We need to craft and implement a comprehensive overhaul of the sound recording copyright law to include payment of performance royalties for sound recordings on par with musical compositions. And copyright protection for pre-1972 sound recordings should also become a federally mandated right, not just a state right. We also need to revamp the DMCA to bring it in line with the realties of a 2015 digital world, and make the restrictions, obligations and payments under the Act sensible for all sides.
3. It may be tough for the streaming services to acknowledge, but Taylor Swift was right: windowing works. The music business needs to adopt a windowed/tiered system for new releases similar to that implemented by the movie and television industries. CD’s and downloads should have the initial window, followed by the paid streaming subscription services and then ad-supported free streaming services. Each window should have a different pricing model so that the fans who are willing to pay a bit more can get access to new music they love first.
4. IP holders and streaming services need to agree on a higher per-stream minimum that applies across the board, both to subscription and ad-supported services. This per-stream minimum must be high enough to generate a fair income to IP holders while, at the same time, not being so high it kills off the ad-supported services (after all, this is provably the best channel for upselling consumers to paying for music).
5. The album is dead. Long live the song. Artists would be better served releasing a new recording monthly, weekly or in a batch rather than waiting until they have a complete album. (Remember: albums only became a format originally due to the physical limitations of vinyl). Consumers don’t have the attention span they once did to listen to an entire album. Web and mobile connectivity now allow for novel ways for musicians to connect directly with their fans and engage them in their creative process.
6. Neil Young is right: the quality of MP3 song files sucks. If we want music to thrive, it needs to sound good. The entire industry—streaming services, artists and labels—should support rapid adoption of lossless FLAC as the new audio standard for paid interactive streaming. Most young people have never known anything but compressed MP3 audio. Introducing them to music in all its sonic glory might make them more passionate about music (note the resurgence of vinyl among young music fans). Higher quality audio would also attract older music fans who can finally get the sound quality they grew up with in streaming format – leading to more paid subscriptions and sales of high fidelity hardware.
7. Finally and most importantly, let’s make great music. We are all in a business built on a passion for great music. Music isn’t great simply because it is automatically installed on 500 million phones without the users wanting it. Music is great when it is brilliant and original and makes everyone with ears want to rush out and listen to it. If we stop making great music, it won’t matter how we divvy up the revenues because nobody will be listening.
What will the music industry look like eleven years from now? I’m optimistic – as long as all stakeholders accept that compromise will be necessary and inevitable to sustain long-term growth and innovation. More people are listening to a greater and a wider variety of music than ever before. The barriers to entry are dropping, and improved curation approaches and filters are being introduced regularly. We can get to a place where all participants can feel good about zealously supporting the rapid growth of streaming. But this can only be achieved if all parties recognize that “pigs get fat, but hogs get slaughtered.”
Follow Fred Goldring on Twitter @fredgoldring.
Your copyrights are your business! So it makes sense to take the time to understand how it all works. Unfortunately, “copyright” and “law” tend to have pretty scary connotations. Just hearing the words is often enough to make our heads hurt.
This article from Digital Music News pretty much lays out everything you need to know about your copyrights, publishing, royalties, and licenses in a way that’s easy to understand. Here’s the copyright segment of the article.
I know it’s not the most exciting topic out there, but understanding your rights (and more importantly how you can monetize them) will unlock a lot of income opportunities for you in music. After you finish this article, check out this free ebook to learn how to take those rights and score awesome licensing deals.
We’re also hosting a free licensing webinar covering a surefire way to license your music. You’ll learn how to get your music on music libraries and how to make connections directly with music supervisors. Click here to register for free and choose the date and time that works best for you.
As a musician you are a creator. Whether you’re a composer, lyricist or performing artist, you create works. These works automatically become copyrighted once they are documented; for example through recording or writing.
Copyright is a form of intellectual property. The creator becomes the copyright owner. If there are multiple creators, this right is automatically split equally. Writers are free to deviate from this equal share through mutual agreement.
The duration of this copyright is generally until 70 years after the death of the last surviving author. It differs in some countries.
Copyright ownership rights give control over who can reproduce, distribute, perform publicly, display and create derivatives of a work. These ownership rights can be fully transferred and assigned to others. Others can also be granted licenses to use your music, typically in exchange for a payment. These payments are called royalties.
There are two types of musical copyright;
Musical Composition Copyright:
A musical composition is a piece of music, in part or in whole. The authors are typically the composer (writer of music) and the lyricist (writer of text, in case of lyrics). These authors are the owners of the musical composition copyright. Typically in equal share, as both the composer and lyricist of a track get assigned 50% of the composition’s copyright, unless they agreed on a different split. This can be done when one party contributed more than the other.
The creators have the exclusive right to determine who can produce copies of their song, for example to create records. This right can be granted to others by giving out a mechanical license, which is done in exchange for a monetary payment (mechanical royalties).
Whenever a record label or performing artist wants to record a song that they do not own, they have to get a mechanical license from the people that do. Always.
All decisions regarding the composition can only be made when agreed upon by all copyright owners. As mentioned before, the ownership and control of copyright can be transferred to others. Generally, songwriters get a specialized third party, namely a publisher, to control and manage their songs. In exchange, they get a cut of the royalty streams which they help generate with the repertoire.
Writer-publisher splits tend to range between 50%-50% and 70%-30%, depending on the clout of the artist and sometimes even on the relevant country’s regulations.
Sound Recording Copyright:
A sound recording is the actual final recording of a song, a fixation of sound. It often goes by the name of ‘master’ from the old ‘master tape’ expression. The authors are the performing artist and record producer, who in essence are therefore the owners. Producers typically get a small share of the master rights (up to 12.5%). However, recordings are typically made in assignment of record labels, whom have negotiated deals with both the artist and producer in which they transfer ownership of their copyright to the label in exchange for royalty payments.
Also, it’s increasingly more common and easy for performing artists to record independently. In these cases, the master ownership belongs to just them, or them together with the producer.
Royalty payments to performing artists are called artist royalties. Royalty payments to producers are called producer royalties.
Now that you know about the two different types of musical copyright, it is important that you grasp the difference between the ‘writers’ of a track and the owners of the actual ‘master recording’. The composition, made by the writers, is typically represented by a publisher. The sound recording, made by the performing artist and producer, is typically represented by a label.
To learn more about publishers, royalty calculations, and licenses, check out the full article over on Digital Music News.
One of the best ways to grow is to look at what’s worked for other indie musicians and adapt it to your own career. I’ve compiled 10 great strategies with 10 real examples to get you going. A lot of musicians I’ve talked to think they can’t start making strategies to move their career forward until they’re making money, until they take some business classes, or until they get a manager. The coolest thing about these strategies is that you can start using them TODAY.
Here’s strategies 6-10. (You can find part 1 right here.)
6. Find Your Niche as an Indie Musician
The best way to get a really dedicated fan base is to start small. Start local and move up from there. Just focus on your town or city and build up a strong following. Stay after your gigs to get to know your fans. Give them something really valuable and unique. Once you’ve conquered your local scene, move on to the next city. Its a long process, but in the end you’ll have a lot of people who are very excited about your music.
In the same way, you should really focus in on a niche. This can be anything you want – a genre, a attitude, a belief. Aligning with a niche creates the opportunity for a connection – chances are there’s a lot of other people out there who are just as excited about that niche as you are!
Eileen Quinn, is a songwriter, indie musician, and sailing enthusiast who combines her two passions into one by writing sailing songs. She targeted a market that isn’t already saturated with music – the sailing market – and was able to really be the star. It may seem like she limited themselves in terms of audience, but in the mainstream music industry they would have been just another artist. In their specific niche, however she was able to really stand out!
7. Get Your Fans Talking
As an indie musician today, you’re most likely in charge of your own marketing. Music promotion can seem like a completely daunting task if its just you trying to get the word out, but you actually have a whole team of marketers just waiting to share your music – your fans!
With the constant presence of social media and the internet, most music fans today are bombarded with more information than they can possibly process. As a result, most music fans look to recommendations from trusted sources for new music. These trusted sources could be a good music blog but more times than not it comes from a friend.
The Wild Feathers were a group of indie musicians out of Nashville, TN. In the week leading up to the release of their self-titled debut album, The Wild Feathers made the album available early at their live shows. On top of that, the band gave their concert-goers a little surprize. Every album sold included two CDs – one to keep and one to share with a friend. (Source) By selling the album early they are specifically targeting their superfans – the ones who would travel hours just to get their hands on the album before everyone else. Because they are so passionate about the music, superfans are also most likely to tell their friends about The Wild Feathers. Giving them an extra CD to do just that really empowered their superfans to share.
8. Develop a Brand Strategy
“Branding” and “artist image” aren’t new concepts at all. Since the beginning of music artists have been defined by genre and personality attributes. Especially today, there are so many people out there trying to make it as a musician that you really need to consider why people would buy your album or go to your show instead of someone else’s.
There are two common approaches when it comes to defining a brand. Some indie musicians like to list every single genre they draw influence from. On the other end of the spectrum, some artists are afraid to even approach the task of labeling themselves. No brand is just as bad as a confusing one.
You don’t have to confine your brand to just musical style. Weave in elements of your personality, your beliefs, and your attitudes. Before Sum 41 made it big, they had a hard time getting a record deal because many labels thought they were just another Blink 182 imitation band. The labels only heard one dimension of the band – their sound. It was their image, personality and attitude that really set them apart and got them the deal in the end. The band took camcorder footage of them goofing around and edited it into an audio-visual EPK. The resulting seven-minute hilarious video showed the labels that they were more than just punk music. They were characters and they were very good at projecting their character through media.
9. Find a Balance Between Free and Paid Content
Your music is valuable, and you can ask people to pay for your music in a variety of ways! Remember that money isn’t the only form of payment that has value. Information can be just as valuable or more than cash in many instances. Free music is one of the most effective ways to grow your fanbase. Even big-time musicians like Radiohead and Trent Reznor have used free music to their advantage. The key is to have a reason for free.
When trying to navigate the realm of paid content don’t let yourself be restricted to the typical music products like the CD and tshirt. Services like BandPage Experiences allow you to sell unique products and experiences to your fans. The sky’s the limit, and the more personal the products and experiences, the better. Rock Camp used a BandPage Experience to host a contest, allowing guitarists to purchase entries to win a spot at the Ultimate Musician’s Camp. Anberlin used a BandPage Experience to sell all access passes to their tours.
10. React to Opportunity
In music, opportunities pop up when you least expect them, and it’s your job to be ready! These opportunities could be anything from a pick up gig, to a publishing deal to a chance to collaborate with a local musician. Either way, the indie musicians that can react quickly are the ones who succeed. While you want to take the time to weigh your options, remember that overthinking an opportunity can be just as bad as under thinking. There comes a point where you need to just decide to take the leap or not!
Amanda Palmer made $11k in two hours by jumping on an opportunity. (Source) Palmer was tweeting with her followers about how she was once again alone on her computer on a Friday night. Fans joined in the conversation and a group was quickly formed – “The Losers of Friday Night on their Computers.” Amanda Palmer created the hashtag #LOFNOTC and thousands joined the conversation. When a fan suggested a t-shirt be made for the group Palmer ran with the idea, sketched out a quick shirt design and threw up a website that night. The shirts were available for $25 and two hours later Palmer had made $11,000!
One of the best ways to grow is to look at what’s worked for other indie musicians and adapt it to your own career. I’ve compiled 10 great strategies for indie musicians with 10 real examples to get you going. A lot of musicians I’ve talked to think they can’t start making strategies to move their career forward until they’re making money, until they take some business classes, or until they get a manager. The coolest thing about these strategies is that you can start using them TODAY.
Here’s strategies 1-5. (You can find part 2 right here).
Making a great plan is one of the best strategies for indie musicians, and a great way to get to that music success you deserve. Not only do concrete goals give you something to aim for, they also help you decide what your first step should be.
Try to make your goals as specific as possible. Instead of saying “I want to be rich and famous,” try something specific like “I want to be able to be a full time musician with a yearly salary of at least $75,000 and be able to tour outside my home state.” Break down your lofty goal into smaller tasks like “gather contact information for local venues,” “contact 5 venues this week,” and “connect with another band to share a gig.” Suddenly finding a way to reach that goal becomes more manageable.
From the start Karmin knew they wanted to be a pop duo targeting a young teen audience. Manager Nils Gums suggested the duo cover current popular songs to get in front of their target audience. They followed the charts and consistently covered the most popular songs every week. The important takeaway here is that Karmin knew their goal, they made a plan to get there, and they stuck with it. If they had given up on the cover strategy after only a few weeks, they would never have gotten to where they are today.
Your copyrights are your business. They are your assets and your products, so it makes sense to take some time to understand them. You don’t need to be on the same level as a big-shot entertainment attorney, but it helps to have a general understanding of copyright law.
There are two kinds of copyright: composition and sound recording. Copyright is created when a musical idea is put into tangible form. So when you write that song down (composition) or record it (sound recording) you own the rights! All those rights are exclusive, meaning you, and only you can leverage your song. Remember that copyrights are power! You own the copyrights, so you have the power. Think about it, without your copyrights would labels or publishers have anything to sell? Lots of musicians have been realizing this and have figured out cool ways to leverage their copyrights.
The Happen Ins were an Austin-based rock band that were featured in a catalog from the clothing company Free People, a corresponding video, many blog posts, and played at the catalog release party. In order to grow their fan base, the Happen Ins offered a free download to Free People’s customers. In many cases this exposure can be far more valuable than money.
Today’s indie musician plays the part of the artist, and the business professional, and as a result, many find themselves juggling entirely too many tasks. It’s great that artists today can be 100% in control of their career, the problem comes when you can no longer find enough time for what matters most – your music!
Here’s a great strategy for indie musicians: If there’s anything you are doing that’s not bringing you closer to your goals, stop or take a closer look. If you’re spending hours each day on tasks that don’t have much benefit, eliminate, simplify, postpone, or delegate to your team members. Try to prioritize the list. More urgent matters and tasks that you keep putting off and putting off should have a high priority. AND REMEMBER, make time for your music!
Michael Shoup is a musician and entrepreneur who turned his career around and started making profit with time management. After graduating college with a Bachelors degree in music, Shoup started his career as a musician and effectively gigged himself into $6,000 of high interest credit card debt. Time management has helped Michael Shoup become debt free. On top of that, he’s managed to self-fund an album, started a music marketing agency, 12SouthMusic, and created a social media app, Visualive.
DIY may not be the best strategy for indie musicians. There are a lot of artists out there with excellent business chops, but they’re still not experts. And that’s okay, because you have more important things to do like creating music! The key is to find a team who is motivated and passionate. Instead of DIY, move towards a do-it-with-others (DIWO) strategy.
Your team doesn’t even have to be seasoned pros. If you have a band you’re already way ahead of the game. Everyone has their own unique skills, so take advantage of that!
Pop singer/songwriter Betty Who was able to be really successful with a team made of college classmates. Producer Peter Thomas and manager Ethan Schiff attended Berklee College of Music with Betty Who. With Peter Thomas she was able to find and really latch onto her signature pop sound, and Schiff helped set her up on the business side of things. Betty Who’s “Somebody Loves You” began drawing the attention of the pop music world after the release of her first EP The Movement in spring of 2013. In September 2013 the song was featured in a viral gay marriage proposal video and just a few days later she was signed to RCA Records.
Networking is an essential strategy for indie musicians, but it’s easy to get overwhelmed with internal tasks and forget to take the time and introduce yourself. You don’t need a big speech or a prepared pitch. Just get into the habit of introducing yourself to one person at every show you play or at every studio you record in. Talk to the guy in charge of the soundboard, maybe he loved your show and wants to produce your next album.
Remember, networking is a two-way relationship, and collaboration is usually the best way to promote this win-win situation. If you collaborate on a show, a song, or a recording, both of you will be exposed to the other’s fanbase! Always remember to give before you ask. Do something for someone and they will remember you.
Vinyl Thief used their extended network to find success. The band released their first EP, Control, in 2010 but were disappointed in the results. They called on a former high school classmate, now music marketing graduate, Wes Davenport who started working on improving their marketing efforts. Davenport helped them grow their fanbase through the digital releases of single, White Light, and second EP, Rebel Hill. (Source)
Most indie artist we’ve talked to face the same exact problem – they don’t know what the next steps for your career should be. You’re creative and smart. You can write, play, or perform amazing music that really connects people, but, as an indie artist, you might feel like you’re trying to fill a role you don’t understand. Especially today, indie musicians have to understand business, copyright, and marketing to grow their careers. You’re a creative trying to be a business person.
If you’re already out there in the music industry, you’re taking steps to grow your career but you may not know how effective your actions really are and whether they take you closer or further away from your goals. You might have a great group of fans but you don’t know how to get them to actually pay for your music. You might see an endless sea of possibility – from touring to publishing to recording – but now know which will take you to the success you want.
Can you relate to any of these problems? Check out this video to learn about the next steps for your career. By signing up for the mailing list you’ll also get access to free lessons from the New Artist Model course.
If you really want to grow your music career the next step isn’t to get a record deal or tour the country. The next step is to do a little soul searching. You need to ask yourself a few questions and really think on your answers. Here’s two of the key questions you need to ask yourself. To learn about the other two, check out the video.
1. What do you really love doing?
If you want to turn your music into a sustainable career you need to be doing something that you love. Maybe you’re a really passionate musician but you get debilitating stage fright. Don’t push yourself down a road you don’t want to go down! I know, everyone is saying that touring is the only way to be successful as a musician today, but in actuality the only way for you to be successful is your own way. You won’t attract dedicated fans by hiding behind your amplifier on stage, so maybe take the time and focus on your songwriting and connect with your fans on that front.
2. What does success look like to you?
We all want to “make it” in music. But that can mean different things for different people. Maybe you’re happy just playing weekend gigs in your home town. Maybe you want a major record deal. Maybe you want a publishing deal with a small indie publisher that gives you plenty of attention and creative freedom. Try to be as specific as you can. After all, how will you know when you’ve achieved success if you don’t even know what it looks like?
If you answer these questions you’ll be one step closer to really understanding your career. Knowing where you are and where you want to be will really help you make decisions along the way.
Opposition to online streaming has been intense this summer. Songwriters, performers, and various music companies have spoken out against the meager royalties the streaming giants Spotify and Pandora dish out to musicians. Many prominent and influential artists have taken their music off Spotify. It seems that these streaming companies are in the business of fixing and maintaining their reputation against the onslaught of musicians and have little time left over for developing and improving their core competency – streaming music.
This past week, Pandora won an important court case against ASCAP, which solidly reiterates what was already written in copyright law. Spotify is an “interactive streaming service,” meaning users can skip as many songs as they like and choose what song or artist they want to listen to at any given moment. Because of this function, it almost replaces the need to own music. Musicians therefore have the right to choose to license or not to license. Pandora, on the other hand, is a “non-interactive streaming service,” and functions similarly to terrestrial radio. Like terrestrial radio, there is a compulsory license in place, requiring artists to license their music if they are associated with a PRO like ASCAP. This is why you hear about artists taking their music off Spotify, but not Pandora.
So what does this court case actually mean? Basically it removes the possibility of getting through any loopholes to take music off Pandora. If an artist wants to boycott Pandora, their only option is to remove all their music from performing rights organizations like ASCAP, BMI, and SESAC. Publishers and songwriters are not allowed not allowed to make separate, market-driven deals with Pandora if they are also a member of a collecting society. Pandora had made private copyright deals with prominent publishers like Sony, EMI, Universal, and BMG, requiring the streaming company to pay a higher royalty rate to their artists. This court decision will most likely void those deals and prevent any similar deals from happening in the future.
While most artists wouldn’t dream of taking their music off their PRO, the possibilities for direct licensing are becoming easier with new technology. In a few years, big record labels and publishing companies may have these functions in-house.
With all this conflict in the streaming industry, there is little room for improvement and progression. Streaming companies are fighting rights holders and rights holders are speaking out against unfair royalties. Not to mention, the lawsuits are creating a further rift between modern artists and the copyright law, serving as a confirmation to many that copyright law is not caught up with modern society. This battle between the law, the streaming services, and the musicians does not equate to a healthy industry. Streaming companies will stagnate if they refuse to grow with artists, and artists will lose out on opportunity if they insist on shutting streaming services down their early in the game. Surely we can move forward and find a solution together?
What are your thoughts on music streaming? Should artists be concerned about taking their music down? Does the exposure make up for the small royalties? Can this ever be a healthy industry?
Your band name is one of the most important assets you have. It’s how fans identify you, it represents you and your music, and for some bands, like the Rolling Stones or Black Flag, it can become an iconic symbol representing a genre, attitude, or era. With the market saturated with small amateur bands, the likelihood that another shares your same name is increasing.
This interview with James Trigg and Ashford Tucker, lawyers specializing in copyright and trademark law, explains the importance of a unique trademark, the steps necessary to secure ownership of a trademark, and domain names.
A trademark serves to identify the source of goods or services. When we see marks like COCA-COLA, MICROSOFT, BUDWEISER and BMW, we instantly associate them with the products sold in conjunction with them, and we rely on these names to assist us in distinguishing one product or service from another. Thus, generally, trademark law seeks to prevent consumer confusion by allowing trademark owners to control the use of their marks so that consumers can rely on a trademark as an indication of a product or service’s unique characteristics.
The law of trademarks applies to the fields of music, film, literature and art just as readily as it does to soda, software, beer and cars. Of course, most of us do not like to think of the arts as a “commodity,” something that merely is bought and sold. Similarly,artists themselves at times may be reluctant to view their names or their creations as commercial trademarks that identify them to the public in exactly the same way that BUDWEISER identifies Anheuser-Busch. Nonetheless, by taking steps to protect their names, entertainers and artists can assume greater control of their identities and the way that those identities are perceived by the public.
To read the full interview, and learn more about trademark law and how it applies to your band and career, visit Digital Music News.
According to this article from Digital Music News, Maria Pallante, the US Register of Copyrights, is looking to move US law towards the full payment of performance rights. This means that radio broadcasters, who historically have not paid for their use of the sound recording, may be required to do so in the future. While this statement is certainly not a guarantee of action, the fact that the topic is being openly discussed by US officials represents progress for the issue.
US copyright law protects two separate copyrights – the composition and the sound recording. Additionally, copyright law grants exclusive rights in the public performance of the composition, and of the sound recording via digital transmission. Missing from this equation is the payment of the public performance royalties to the sound recording owner for non-digital performances. This means that if you hear your favorite song on Pandora, both the composition and sound recording owner will be compensated, but if you hear that same song on terrestrial radio, only the composition owner receives payment for the performance.
Similar to the US, most other developed countries do not specifically grant public performance rights to sound recording owners, but the rights are assumed via neighboring rights. This means the US is one of the few countries not paying their sound recording owners for public performances.
This illogical exclusion is perhaps one of the most frustrating and baffling aspects in US copyright law – it remains relevant in today’s society simply because it has always been. In the past, broadcasters avoided payment to the sound recording owner (usually the record company) by arguing that their services provided free promotion. This precedent has remained to this day despite terrestrial radio’s diminishing significance, especially regarding indie musicians.
The movement towards the full payment of sound recording owners most likely found its roots in Pandora’s recent litigation attempts to lower their public performance fees. Pandora argued that the disconnect between the fees paid by terrestrial radios and the fees required of Pandora put them at an unfair disadvantage.
While this is most likely not the outcome Pandora litigators wanted or expected, most would agree that it is necessary for the US to drop old, irrelevant precedence and enter the modern age of copyright law.
Gotta love it.
James Taylor is suing Warner Bros over digital royalties seeking $2m in compensatory damages from his former label for past MP3 sales.
The Guardian reports that singer-songwriter James Taylor has filed a multimillion-dollar lawsuit against his former label, Warner Bros, claiming they have underpaid millions in royalties on downloads of his songs. As in similar cases brought by Eminem and the Temptations, the principal issue is the royalty rate for downloads or ringtones among artists who signed record contracts prior to the advent of digital music sales.
I reported on this situation in the Huffington Post here a while ago with Musicians may be owed billions in unpaid digital music royalties.
All of this stems from a landmark ruling in 2010, when a company representing Eminem’s publishing rights won a case against Aftermath Records. The label was ordered to pay royalties on downloads and ringtones according to the rate for licensing, not sales. Since then, a wide range of acts have pursued their labels for compensation.
Lots more to come. The leveling of the playing field.
I was reviewing this fascinating data from Mary Meeker over the weekend again, and thought I would share it. Meeker, a partner at Kleiner Perkins Caufield & Byers describes what she calls “the re-imagination of nearly everything” powered by mobile and social. For example: News outlets are reimagined on Twitter, note-taking is reimagined on Evernote, scrapbooking is reimagined on Pinterest and music purchasing is reimagined as listening.
Meeker also traces out the story of the mismatch between mobile growth and mobile monetization, pulling together numbers and analysis of one of the biggest weaknesses in today’s Internet industry.
And she gives some context to the state of the global economy. Here’s the full slide presentation:
All markets are not the same. Most people in India have not had access to high-speed Internet or a PC. The wired broadband penetration of India stands at about 13 million subscriptions and there are only 50 million PCs in the country. Very few Indians have broadband or a PC of their own.
3G expands consumer audience by 100 million listeners
Despite the lack of broadband and PC penetration, there are currently 121 million Internet users in India. Guess where they are? Mobile. With the rollout of 3G in India, access to high-speed Internet has become cheaper and more widely available. People don’t need to own a desktop computer to get online or, most importantly, to participate in e-commerce — all they need is a mobile phone.
The mobile model — and by extension, the mobile music model — scales. It took broadband 7 years to reach 11.5 million wired subscribers. In less than half that time, 3G subscriptions in India topped 13 million, and that number is rapidly growing. There are 884 million mobile users in India, and as smartphones flood the market, more of them will be making the switch, becoming not just first-time smartphone users, but first-time Internet users as well.
Already, 59 percent of mobile web users access the Internet via mobile only. A study by the Boston Consulting Group predicts that the total number of mobile Internet users will balloon to 237 million by 2015. It is connectivity, now more than ever.
Advertisers, rather than end users, are footing the bill.
Brands are embarking on the biggest consumer grab of the century as China’s and India’s multi-billion audiences rise in economic status. Thousands of brands are competing to become the future soda, life insurance and auto brands of this part of the planet. That’s a major influx of ad dollars looking for a scalable way to engage consumers.
Asking consumers to shell out 15 to 25 rupees for a song online was unrealistic when pirated options were widely available for free. But as legal sites gain popularity and engagement numbers soar, major brands are ready to spend their advertising dollars on digital music Web sites and apps, so music services like Saavn, Smashhits and Ragga provide large catalogs of ad-supported music for free.
The benefits are abundant for the brand advertisers, end users and record labels; the end user gets something customizable and valuable for free, while major brands can finally capture the attention of one of the world’s largest emerging markets.
So what made advertisers change their minds? Piracy. Piracy is being addressed in India via the ISPs — in February, the High Court of Calcutta handed down the decision to ban the pirate site songs.pk on major ISPs. This is a move that many have hoped to see in other territories, and India is stepping up to address the issue directly via the ISPs.
While pirated music is still an issue in India, legitimate and fully legal music streaming Web sites and apps are restoring the faith of advertisers, meaning a huge new audience for advertisers, profits for the music labels from brands with deep pockets and top-notch quality for users.
Digital means data
Labels are excited that they can finally reach audiences who are passionate about their niche content, thanks to the kind of targeting that digital platforms make possible from user data. It’s especially great for indie labels, who now have fast entry to market and an opportunity to get in front of the right audience, despite not having the major-label marketing moolah.
Thanks to the wealth of data digital music supplies, the Indian music industry can get the right music to the right people at the right time. No need to make assumptions based on demographic information or guess what people will like. Data provides the ultimate customization tool for an industry in which customization and understanding the preferences and tastes of the end user is key.
This is the moment the music industry in India has been waiting for; it can finally focus on its core business — producing music — while advertisers happily foot the bill. And users get to sit back and enjoy, share and discover for free.
Sunday night at Coachella Festival Snoop Dog and Dr. Dre brought Tupac Shakur back from the dead to perform live with them onstage as a hologram. Holy Smokes. He appears on stage and greats the audience with “Yeah, you know what the fuck this is … What up Dre? … What up Snoop? … What the fuck is up Coachella.” The Tupac illusion aka “Holopac” was brought to life by James Cameron’s visual production house Digital Domain, and two hologram-imaging companies, AV Concepts and the U.K.-based Musion Systems at a price estimated at more than $200,000.
The holographic performance is spectacular and very eerie, and there are more shows planned. This is not the first time that holograms have been used in concerts, and these effects are in a way, natural extensions of the laser displays and light shows that have been part of live shows for decades. Madonna, the Black Eyed Peas and (notably) Gorillaz have all been projected as holograms on stage during the show. There is a laser light touring show of Pink Floyd featuring “none” of the band members. If this can be done with Tupac, it brings up very interesting questions about the future of live shows and exactly who or what we will be seeing.
Can you imaging the Rolling Stones 2050 “Skeletons in the Closet” Tour? The Beatles finally play Shea Stadium in high fidelity? “Elvis Comes Alive”? Will nothing be sacred?
I am not sure if this is science fiction or our worst nightmare, or both. Will live performers really even be needed in the future? If the wizards at visual production companies can create virtual artists in 3D that can strut on stage, engage the audience, and belt out their latest hits – who exactly will be entertaining us? If the music industry can strip out the artists and replace them with computer generated formulaic constructs that are programmed to entertain and mesmerize, what will live music become? Its already happend with the “Chipmunks” and “Gorillaz” and “Hatsume Miku” and “Dethklok”. “This is just the beginning,” Ed Ulbrich, chief creative officer at Digital Domain told the LA Times, “Dr. Dre has a massive vision for this.” Virtual artists are becoming a thing of the present.
Think about it. Is this really the Future of Music?
This came in my bi-annual Sony Music statement last week. It said “You may be Eligible for Increased iTunes Payments (or other permanent Digital Download or Ringtone royalties) as part of the Settlements of Class Action Lawsuits. Please see the enclosed notice for details.”
Congratulations to “Shropshire” and the “Youngbloods” (great band) in their pursuit of more fair treatment on how royalties are calculated for digital transactions. Even though this is a small settlement, it represents a step in the right direction of ending years of unfair accounting and payment practices.
Sources in the know infer that progress was indeed made but – still it ain’t anywhere near fair. David did not slay Goliath thus far, nor did David get completely slain. There is more to come.
I’ve written about this before as have many others. Lots of musicians are suing the labels over the claim of unfair payments on digital transactions. Here is the latest article about all of this from Variety.
And many, many more to come.
We have to be patient, and change will happen. Lots of people are jumping on this train.
The good news is that the powers that be seem willing, at last, to try new things and to negotiate. As my friend and co-author Gerd Leonhard has said, “when the pain gets great enough, they will compromise and negotiate.” We must be getting close.
From Billboard.biz yesterday, an agreement was reached between the music industry trade associations for record labels, music publishers and digital music providers. The Copyright Royalty Board, will create new rates and terms for five new digital music service categories.
It also creates new rate formulas for five new digital business models:
– For the paid locker services like the one iTunes offers consumers, music publishers will get a mechanical rate of 12% of revenue or 20.65% of total content cost or 17 cents per subscriber, which ever is greater.
– For digital lockers that provide free cloud storage with a download purchase, music publishers will get 12% of revenue or 22% of the total cost of content, which ever is greater.
– For the third category, called a mixed bundle such as when your cell phone services subscription rate comes with a music service, music publishers get 11.35% of revenue or 21% of total content cost, whichever is greater.
– The fourth new category, called limited interactive service such as when a subscription service can offer limited amounts of music to, say, one genre or playlists that the user can access at a lower price, music publishers will get 10.5% of revenue or 21% of total cost or 18 cents per subscriber, whichever is greater.
– Finally, for the fifth category, called a music bundles such as when a CD album comes with a download, music publishers will get 11.35% of revenue or 21% of total content cost.
Here is a guest post excerpt from my friend and artist MC Lars from the Huffington Post UK.
“In last week’s State of the Union, President Obama stressed the importance of creatively revitalising our nation’s economy. He called for “an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values,” the blueprint for lasting domestic prosperity. There are some parallels to this shift in thinking in today’s indie rap game, specifically in application of sustainable new media economics.”
“What this means then is that in order for artists like me to survive, I must be creative with how I let people hear my music. A primary means of distribution in 2011 was my USB robot, a two-gigabyte hard drive keychain that housed all of my albums digitally. I also sell t-shirts with cartoon characters I draw myself and I try to print on shirts manufactured domestically when I can. 47% of my income comes from merchandise, 40% from ticket sales, and 13% comes from iTunes, Spotify or other paid music services through the internet. I used a crowdsourced funding site called Kickstarter to produce my last album, with added bonuses of drawings and personalized songs to the highest contributors.
If the internet were compromised or regulated to the point where the 13% of my traditional digital income (from iTunes, Spotify, and others) were to disappear, it could likely mean that people would turn to getting my music for free, which would then mean that I would need more ticket and t-shirt sales in order to maintain my income level. (My income, by the way, covers my expenses, taxes, and health insurance, and that’s it.)
“Economically, we are living in an era that takes us back to the punk and indie roots of the 70s and 80s. Musicians must be able to go out and perform for years in small clubs to tiny crowds; it’s the way one perfects his or her craft and pays his or her dues. It’s how bands like Black Flag and Minor Threat became legendary, they had explosive, powerful shows and were willing to sacrifice everything to make their music heard. Henry Rollins of Black Flag tells his story in his classic book of journals, Get in the Van, an important read for any indie musician today.
We live in an era of innovative fusion of old and new. Being a musician no longer means simply being a songwriter and performer. One must also know a little bit about business, branding, t-shirt design, social networking, production, publicity, accounting and tour managing.
Ultimately, what this is means is that if you own and run your own business, no one can take that away from you. (The MPAA and RIAA exist to maintain the status quo of the entertainment industry, but I don’t need someone with a large salary lobbying for my interests as an artist when that person is disconnected from the reality of new media economics that I’ve described above.)
The internet in its current free and open format is important to me as an independent indie rap musician and artist. In fact the internet is essential to me and to all of the other artists who are like me. The government’s harnessing and regulating the internet and its free flow of information would be a dangerous thing in that it could lead to government control of a very important channel of a portion of the income that I earn – and through which I express myself freely, exercising my First Amendment rights as an artist.”
My friends at the Future of Music Coalition are conducting an online survey from Sept 6 – Oct 28th to determine the variety, depth and complexity of the ways that musicians are making money these days. Not theoretically, but actually. We are looking for performers, songwriters, composers, band members, session players, producers, MCs and anyone else making music to join in and take the survey.
A while ago, I posted this from my friend and Berkleemusic student David Sherbow showing a pretty comprehensive list of the different ways that musicians can make money. This might give you food for thought on taking the survey and planning your career…
The artist music business model has been in flux for years. The record deal dream that most artists sought is no longer the viable alternative that it once was. The leveling of the music distribution playing field by the Internet is virtually complete. Terrestrial radio is on a path towards destruction that even the major labels can’t compete with. People now access and download music from multiple sources, usually for free. D.I. Y solutions are everywhere, but for many artists hard to integrate into their daily lives.
Where does this leave the average independent artist? At the beginning. Every artist wants to know how they can make music, make money and survive to write and play another day. Here, in no particular order, is a list of possible income streams.
• Mechanical royalties
• Performance Royalties from ASCAP and BMI
• Digital Performance Royalties from Sound Exchange
• Synch rights TV, Commercials, Movies, Video Games
• Digital sales – Individual or by combination
• Music (studio & live) Album – Physical & Digital, Single – Digital, • Ringtone, Ringback, Podcasts
• Instant Post Gig Live Recording via download, mobile streaming or flash drives
• Video – Live, concept, personal, – Physical & Digital
• Video and Internet Games featuring or about the artist
• Graphics and art work, screen savers, wall paper
• Sheet music
• Merchandise – Clothes, USB packs, Posters, other things
• Live Performances
• Live Show – Gig
• Live Show – After Party
• Meet and Greet
• Personal Appearance
• Studio Session Work
• Sponsorships, and endorsements
• Artist newsletter emails
• Artist marketing and promotion materials
• Music Player
• Fan Clubs
• YouTube Subscription channel for more popular artists
• Artist programmed internet radio station or specialty playlist.
• Financial Contributions of Support – Tip Jar or direct donations, Sellaband or Kickstarter
• Patronage Model – Artist Fan Exclusives – e.g. paying to sing on a song in studio or have artist write a song for you
• Mobile Apps
• Artist Specific Revenue Stream – unique streams customized to the specific artist, e.g Amanda Palmer
• Music Teaching – Lessons and Workshops
• Music Employment – orchestras, etc, choir directors, ministers of music, etc.
• Music Production – Studio and Live
• Any job available to survive and keep making music
• Getting Help From Other Artists and Helping Them – Whatever goes around come around. – e.g. gig swapping, songwriting, marketing and promotion
The future of the profitability of the recorded music business is unquestionably in jeopardy. One might speculate that new “access based” services like Rdio and Spotify could re-start a failing record industry. I hope so.
But as sales have fallen to less that 1/2 their heights at the turn of the century, artists and their managers and attorney are looking to every means possible of generating revenue both now and in the future from their recorded works.
The New York Times published a great piece on the coming battles over song rights, excerpted here. This will be a very interesting fight to watch as it has the potential of forever driving the nail into the coffin of the traditional record labels, forcing a complete restart of the business if it is to survive at all.
“When copyright law was revised in the mid-1970s, musicians, like creators of other works of art, were granted “termination rights,” which allow them to regain control of their work after 35 years, so long as they apply at least two years in advance. Recordings from 1978 are the first to fall under the purview of the law, but in a matter of months, hits from 1979, like “The Long Run” by the Eagles and “Bad Girls” by Donna Summer, will be in the same situation — and then, as the calendar advances, every other master recording once it reaches the 35-year mark.”
“The provision also permits songwriters to reclaim ownership of qualifying songs. Bob Dylan has already filed to regain some of his compositions, as have other rock, pop and country performers like Tom Petty, Bryan Adams, Loretta Lynn, Kris Kristofferson, Tom Waits and Charlie Daniels, according to records on file at the United States Copyright Office.”
“In terms of all those big acts you name, the recording industry has made a gazillion dollars on those masters, more than the artists have,” said Don Henley, a founder both of the Eagles and the Recording Artists Coalition, which seeks to protect performers’ legal rights. “So there’s an issue of parity here, of fairness. This is a bone of contention, and it’s going to get more contentious in the next couple of years.”
“My gut feeling is that the issue could even make it to the Supreme Court,” said Lita Rosario, an entertainment lawyer specializing in soul, funk and rap artists who has filed termination claims on behalf of clients, whom she declined to name. “Some lawyers and managers see this as an opportunity to go in and renegotiate a new and better deal. But I think there are going to be some artists who feel so strongly about this that they are not going to want to settle, and will insist on getting all their rights back.”
“Given the potentially huge amounts of money at stake and the delicacy of the issues, both record companies, and recording artists and their managers have been reticent in talking about termination rights. The four major record companies either declined to discuss the issue or did not respond to requests for comment, referring the matter to the industry association.”
“But a recording industry executive involved in the issue, who spoke on condition of anonymity because he is not authorized to speak for the labels, said that significant differences of opinion exist not only between the majors and smaller independent companies, but also among the big four, which has prevented them from taking a unified position. Some of the major labels, he said, favor a court battle, no matter how long or costly it might be, while others worry that taking an unyielding position could backfire if the case is lost, since musicians and songwriters would be so deeply alienated that they would refuse to negotiate new deals and insist on total control of all their recordings.”
“Right now this is kind of like a game of chicken, but with a shot clock,” said Casey Rae-Hunter, deputy director of the Future of Music Coalition, which advocates for musicians and consumers. “Everyone is adopting a wait-and-see posture. But that can only be maintained for so long, because the clock is ticking.”
My friend Roger McNamee, a founding Partner and Managing Director of Elevation Partners has been getting some great press lately on his thoughts on the new music business, investing in technology, Apple, Google, Facebook and much more. Here is the transcript of a speech he gave at NARM earlier this summer, a must read.
“Our band – Moonalice – is inventing new opportunities in music. We would like you all to join us.
I have been a working musician for more than 30 years, and a technology investor for 29 years. I have played about 1000 concerts over the past 15 years, which means I have personally experienced everything in Spinal Tap except the exploding drummers. I also spent three years helping the Grateful Dead with technology and many more advising other bands, most notably U2.
My band is called Moonalice. We play 100 shows a year in clubs and small theaters, mostly on the coasts. Moonalice was the first band broken on social networks. What broke us was 845,000 downloads – and counting – of the single “It’s 4:20 Somewhere.” We’re the band that Mooncasts every show live, via satellite to thousands of fans on iPads, cell phones, and computers. We’re the band that has a unique psychedelic poster for every show. After four years, Moonalice has 371 poster images from the likes of Stanley Mouse, Wes Wilson, and David Singer. Licensing those images will eventually a big business for us. We’re the band that offers the EP of the Month for $5. And we’re the band that uses the latest technology to radically improve both the production cost and commercial value of the content we produce. Now I’m looking for people who want get on this bandwagon with me.
The first question I hope you ask is “Why now?” The world of technology is beginning a period of disruptive change. The old guard – represented in this case by Microsoft Windows and Google search – is under assault and hundreds of billions of dollars may become available for new and better ideas. I hope that gets your attention!!!
The biggest beneficiaries of this disruption should be the people who got the short end of Google’s business model, especially creators of differentiated content. For the past twelve years the technology of the internet has been static. Every tool commoditized content by eliminating differentiation. The most successful companies monetized content created by others. Google was king.
I believe Microsoft and Google are about to get a taste of what the music industry has been dealing with for a decade. Their world is going to change and they won’t be able to stop it. Not so long ago Microsoft’s Windows monopoly gave it control of 96% of internet connected devices. Thanks to smartphones and tables – especially the iPhone and iPad — Windows’ share of internet connected devices has fallen below 50% … and it will fall much further in the years ahead.
Consumers are abandoning Windows as fast as they can. I expect businesses to follow suit.
This is a HUGE deal. Businesses whose employees use smart phones and iPads instead of PCs will save up to $1000 per employee per year in support costs.If corporations buy fewer PCs, they will save tens, if not hundreds of billions per year.
This is happening because today’s strategic applications – email, Facebook, Twitter, LinkedIn, YouTube and other internet applications – don’t need a PC . . . in fact, they are far more useful on a phone.
Microsoft has been in trouble since it first missed the web in 1994. Then it was unable to prevent Google from taking charge in 1998. When Google showed up, the World Wide Web was a wild environment. No one was in charge. The prevailing philosophy was “open source” . . . and free software.
Google had a plan for organizing the web’s information that treated every piece of information as if all were equally valuable. To create order, Google ranked every page based on how many people linked to it.
What we all missed at the time is that by treating every piece of information the same, Google enforced a standard that permitted no differentiation. Every word on every Google page is in the same typeface. No brand images appear other than Google’s. This action essentially neutered the production values of every high end content creator. The Long Tail took off and the music industry got its ass kicked.
Google captured about 80% of the index search business, which gave it a huge percentage of total web advertising. Google’s success eventually filled the web with crap, so consumers began using other products to search: Wikipedia for facts, Facebook for matters of taste, time or money, Twitter for news, Yelp for restaurants, Realtor.com for places to live, LinkedIn for jobs. Over the past three years, these alternatives have gone from 10% of search volume to about half.
As if all this competition wasn’t bad enough for Google, then along came Apple with the iPhone and App Store. Apple offers a fundamentally different vision of the internet than Google. Google is about the long tail, open source, and free, but also had to remove 64 apps from the Android app store for stealing confidential information. Apple is about trusted brands, authority, security, copyright and the like. In Apple’s world, the web is just another app; it is called Safari.
People who have iPhones and iPads do far fewer Google searches than people on PCs. The reason is that Apple has branded, trustworthy apps for everything. If they want news, Apple customers use apps from the New York Times or Wall Street Journal. If they want to know which camera to buy, they ask friends on Facebook. If they want to go to dinner, they use the Yelp app. These searches have economic value and its not going to Google, even on Android.
When Apple and the app model win, Google’s search business loses. Like Microsoft, Google has plenty of business opportunities, but the era of Google controlling all content is over. Consumers compared Google’s open source web to Apple’s app model and they overwhelmingly prefer Apple’s model. Software development and innovation has shifted from “web first” to “iPad first” . . . which is a monster long term advantage. Get this: Apple may sell nearly 100 million internet connected devices this year!
Apple’s strength can be seen best in the iPhone vs. Android competition. There are many Android vendors. Together they sell more phones than Apple does. But Apple gets around $750 wholesale for an iPhone. The other guys get between $300 and $450. This means Apple’s gross margin on the iPhone is nearly as big as its competitors’ gross revenues. Game over.
The other thing that makes Apple amazing is the iPad. No electronic product in history – not even the DVD player – can match the adoption rate of the iPad. Apple may sell another 30 million this year. At this point, the competing products have not put a dent in the iPad. Image what happens if Apple’s share of the tablet market remains closer to the iPod (at 80%) than to the iPhone (20%)?
This sounds like, “Game Over, Apple wins” . . . but it’s not . . . at least, not yet. The open source World Wide Web has finally responded to Apple. A new programming language has come to market called HTML 5. HTML is the foundation of the World Wide Web. For the past decade, HTML has been static, which allowed Google to dominate.
HTML 5 is a new generation of HTML and it changes the game fundamentally. It allows web developers replicate the iPhone experience, but with many extra bells and whistles … and no App Store. One reason HTML 5 matters is because it eliminates Adobe Flash, which has been an inadvertent barrier to creativity
Creativity enables differentiation. Differentiation can be monetized. Huge differentiation can be monetized hugely. With HTML 5, creative people can now use the entire web page as a single canvas. For the first time in a dozen years, web pages will be limited only by the creativity of the people making them. They can create experiences that will be more engaging to consumers and more profitable for advertisers than network television.
New forms of entertainment will emerge. New forms of business. Companies the size of Facebook and Google will develop in categories I can’t guess at. Companies as important as Amazon, iTunes, and Netflix will emerge to support what new content comes to market.
Whether you view Apple as friend or foe, HTML 5 offers real opportunity. Why?
Because you can deliver a better experience than an app . . . without an app. HTML 5 is cheaper to build, cheaper to support, no 30% fee . . . oh, and the apps perform better, too.
I believe Apple’s best response would be to focus on selling hardware and accept that consumers will demand products that happen to bypass the app store. Based on the argument with Amazon, I sense Apple is not ready to concede the point. That’s ironic, because the only way Apple can get hurt would be if they try to force all commerce through the App Store. The would create a real reason for customers to buy a tablet other than iPad.
Let me review my key points so far:
Google and Microsoft will remain huge, but their influence is evaporating, which means we can ignore them
Apple is winning big, which means we have to support their platforms first
For people who make content, Apple is a better monopolist to deal with than Google.
HTML 5 will give you a better product than the Apple app model at a lower cost and with more value.
Now let’s figure out what we can do together. My band Moonalice exists because T Bone Burnett wanted to produce an album of new and original hippie music in the old school San Francisco style. We put together an all-star band with in late 2006 and recorded the album. T Bone was about to win the GRAMMY for the Alison Krauss/Robert Plant album, Raising Sand, so we thought we were made.
We had a budget
We had an A-list PR guy
We had a really fine manager
We had custom label deal with a nice budget
T Bone’s innovative sound technology would make the album cutting edge
Old school music is good. Old school marketing wasn’t going to work for us. About four months before release, I reviewed the media plan with our PR guy. He said, “Sorry, man, but nobody cares.”
A few moments of somber reflection followed. Then, with great regret, I let our manager go. I let our publicist go. I let our label go. For all intents and purposes, we wrote off an album everyone was extremely proud of and which accounted for half of T. Bone’s portfolio the following year when he was nominated for Producer of the Year.
But I freed up most of our operating budget. Real money. And I focused it all on Twitter and Facebook. Our goal was to build an audience of dedicated fans around a Moonalice lifestyle. Three years later, we have 57,000 fans on Facebook and 75,000 on Twitter. We learned a great truth: as hard as it is to get people to spend money, it is much harder to persuade them to spend enough time listening to you to become a long term fan. We traded our music for their time. We discovered we could build an audience by giving away stuff that costs nothing to produce and distribute. These are serious fans who engage with us dozens and often hundreds of times a year.
The first thing we invented was the Twittercast. Before us, no one had ever done a concert over Twitter. Now we have done 103. Our marginal cost is exactly zero. Next we created Moonalice Radio, which has broadcast one song every hour on Twitter for the past two years. Then our drum tech bought a video camera and started recording the shows. Then he bought more cameras, put them on mic stands and started doing live video mixes. About a year ago, he figured out how to mooncast our concerts over the net for free.
Nearly all of our past 100 shows have been mooncast live on MoonaliceTV and then archived. Because we play mostly late shows on the west coast, only 10% of the audience watches in real time. But approximately 3,000 people watch EVERY show on a time shifted basis. Fans like the Moonalice Couch tour because they can chat, make friends, and do things that are not permitted at a live venue. They even buy Couch Tour tee shirts. And they are helping us create a new ecosystem where most of the music is free, because Moonalice art and life style products have huge economic value.
Thanks to HTML 5 and a satellite dish, Mooncasts can now be viewed on a smart phone without an app. Our video quality competes favorably with the best you have seen on an iPhone, and the technology to do all this costs the equivalent of six months of our former manager. He was a really good guy, but a satellite-based tv network is more valuable.
I want to finish up by recommending a course of action for you
Step 1: Remember that HTML 5 is just getting started, but the learning curve is less expensive and more profitable for those who commit to it from the beginning. The new business is going to emerge over a few years, not overnight
Step 2: Don’t wait for the labels to figure this out. Labels are not organized to get this right, which leaves a big hole in the new music market where labels used to be.
Step 3: Don’t wait for major artists to figure it out. The great new stuff is going to come from artists who have nothing to lose. Artists who come out of nowhere will create huge value for next to no cost.
Step 4: Make sure you are successful addressing the needs of next generation content creators … not just listeners. There are WAY more of content creators than you may realize. Thanks to Moore’s Law, Karl Marx is right at last: the means of production are in the hands of the proletariat. At the peak, there were 8 million bands registered on Myspace. They weren’t playing gigs, they were creating stuff, mostly for their own entertainment. Those people spent a lot more money creating the content they posted on Myspace than they did on recorded music. Thanks to Apple’s Garageband, the population of people capable of mixing something is now measured in tens of millions. Making these people successful is the key to creating new markets and new music products.
Step 5: Do everything in your power to encourage new product ideas and new forms of content. HTML 5 is a blank canvas and there is no telling what people will do with it. For all I know, HTML 5 may produce five or even ten amazing categories of product.
Contests, prizes and publicity will give you an opportunity to associate yourself with whoever creates the cool new stuff. If you have local stores, do local events. Think Alan Freed.
Step 6: Near term, focus your platform strategy on Apple.
Step 7: Long term, focus on HTML 5. The sooner you commit to HTML 5, the more likely you will produce something of economic value.
Step 8: Remember that HTML 5 will produce companies as important as Amazon, iTunes, and Netflix. It costs musicians practically nothing to create good digital video and fantastic audio, but they need distribution systems optimized for their content.
Step 9: Make music fun again”
And if that isn’t enough, Roger was kind enough to share with me his thoughts on investing in technology related businesses. TechInvestingHypotheses
Well, we finally have it. Music like water raining down from the sky. iCloud.
For slightly more than $2/mo everybody will soon have access to all the music they can find, steal, share, rip, produce, morph or buy using iTunes Match. Is this amnesty for all the music pirates? I hope so.
As we predicted in The Future of Music, the future is about access to music rather than ownership. With Apple iCloud and iTunes Match, Apple has once again set the bar for all music distributors, while again lining up all the major record labels for yet another lunch. The twist to all of this is – does iCloud grant you immunity from prosecution for copyright infringement for sharing or downloading music however you wish to? We shall see.
Fantasize with me as we did in 2005…
It’s the year 2015 and you wake to a familiar tune playing softly. It gets you out of bed and makes you feel good. As you walk into the bathroom, your Personal Media Minder activates the video display in the mirror, and you watch a bit of personalized news while you get ready for the day. You step into the shower and your personalized music program is ready for you, cued up with a new live version of a track that you downloaded the other day. It is even better than the original recording, so while you dress, you tell your “TasteMate” program to include the new track in your playlist rotation.
You put on your new eyeglasses, which contain a networked audio headset, letting tiny earbuds slip into your ears. You switch on the power, and the mix that your friend made for you starts to play. Music pours into your consciousness. It becomes yours.
During the day, your headset and other wireless devices help you communicate across the network, with your friends, associates, network buddies, and “digital peers.” The headset also keeps you connected to that hard rock collection that you really love to listen to. Meanwhile, a variety of new songs, new versions, and remixes of tracks you truly dig, along with your old favorites, continues to come your way. Using TasteMate, you access and trade playlists, and recommend a couple of songs to your friend in Seattle, and they get added to his rotation. Music propels you throughout the day.
This is the future of music– a future in which music will be like water: ubiquitous and free flowing. In this future, music will be ubiquitous, mobile, shareable, and as pervasive and diverse as the human cultures that create it. Many of the already ill-fitting definitions of copyright and intellectual property and patent laws will be adapted to fit the “music like water” model that we propose–in a way that ensures the enjoyment and benefit of society as a whole, and that allows all involved parties to prosper.
David Bowie encapsulated the current state of affairs in a June 2002 New York Times article:
“The absolute transformation of everything that we ever thought about music will take place within ten years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in ten years, and authorship and intellectual property is in for such a bashing. Music itself is going to become like running water or electricity. [ . . . ] So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen . . .”
Let’s run the numbers. As I outlined in Forbes, with hundreds of millions of people connected to digital networks, the potential annual revenue stream for this is enormous. At $25 per person, if 200 million people opted in for iTunes Match, the service would gross $5 billion a year just for the ability to provide access to any song on any device, and let you pirate all the music you want to at will. Add to that the money from new songs you purchase, premium access, increased storage, exclusive concerts and the recording industry may see a bottom to its revenue decline, and could begin to rebuild from there. Seem counter intuitive? The record business will never be the same again, but maybe (just maybe) it will not go extinct.
And it remains to be seen if iTunes Match will grant you complete immunity from prosecution for copyright infringement. Kind of like AppleCare for pirates. There are lots of moving parts to this story.
Welcome to the future.
This piece originally appeared in the Huffington Post.
Last Friday I was interviewed by Dr. Amy Vanderbilt @DrAmyVanderbilt from the Trend POV Show where we discussed the changing distribution in the music industry and what it means for businesses everywhere. Here you go:
Check out lots of great interviews on trends in business at Trend POV.
For the past 5 years I have been delivering presentations, in a wide variety of contexts including Digital Music Forum, AES, Billboard, IEBA, Music Hack Day, NAMM, Digital Hollywood and at many, many other private consulting gigs. The essence of the presentation I have been making since 2006 is shown below with a couple of updates, roughly based on the Top 10 Truths described in our Future of Music book. All along I have been advocating for artists, songwriters and publishers to challenge the way iTunes transactions were accounted for by the labels on the legitimacy of the splits. The way iTunes royalties have been distributed is just wrong, a scam and a holdover from the accounting practices of the record companies past.
Finally someone (Eminem’s production company), challenged Universal Music Group in the way that artists and labels split the money generated by iTunes transactions and won an initial ruling in their favor. Just this past week Universal Music Group’s inevitable appeal was rejected meaning that the industry giant may now have to split its digital music royalties from money earned from ringtone sales and iTunes.
San Francisco’s US 9th Circuit Court of Appeals decided last month that all royalties made by the record label from such sales must be shared in higher proportions with producers. The recent court rejection will result in this case proceeding in a lower level court which will then determine exactly how much Universal owes Eminem and his producers, taking into account both damages and royalties.
This could be a very significant development for the entire recorded music industry. When Steve Jobs and his team negotiated the original iTunes deal with the major labels, the economics of what iTunes would receive from transactions was roughly 35% of each download, a similar number as a distributor/retailer of CDs would receive and the remaining 65% would flow to the labels and be split as with a traditional CD sale.
This was a masterful negotiation by Apple, effectively granting itself amnesty from claims of copyright infringement or inducement to infringe copyright on the part of the major labels and publishers in exchange for the promise of digital cash flow, potentially reigniting the recorded music business for the labels. Even if most of the music contained on iPods was pirated, now the labels would have a new revenue stream and Apple would be safe from litigation. This move paved the way for Apple to become the dominant company in the music business and one of the most valuable brands on the planet. A transformational revenue shift was underway whereby Apple would effectively eat the labels lunch. The ultimate iCon.
But what artists and writers failed to question at the time, was the way the 65% label share would be split. The labels assumed that these downloads were “sales” of copies of the songs and that artists would receive their royalties based on traditional accounting practices. In the early days of payments from iTunes, labels often continued to deduct fees from the artists share for “packaging” and “marketing” and “coop” often when there were no actual costs being incurred. No one questioned whether iTunes downloads were “licenses” versus “sales” which would have tipped the accounting in favor of the artists. Indeed Steve Jobs himself referred to his deal with the labels as a “license” in his rare and open “Thoughts on Music” letter posted February 6, 2007.
Now fast forward to 2010. Although not directly listed in the UMG suit, Eminem could benefit from the results, as he could get a much larger share of the payments. The case is being touted as a landmark decision for the music industry as it could determine a precedent that could see 90 per cent of contracts signed before 2000 change for the benefit of the artists and songwriters. If this ruling holds up and is widely interpreted, it will destroy the traditional record labels.
The ruling will hinge on the standard record deal contract, which predates the digital era and changes that have come with it. New rulings will most likely govern how digital royalties will be accounted for.
In the most recent decision the court has defined record companies’ deals with such firms as Verizon and iTunes as ‘licensing’ contracts as opposed to music sales, meaning the 50/50 split would apply. This will be devastating for the labels and great for artists.
When I commented on this issue in an earlier post, one of my readers wrote “if Eminem eventually prevails it will be the end of discovering and nurturing new talent by record companies and will throw the music scene into more disarray that P2P ever did.” While this may be true, I am completely convinced that the old record company model must change, will change, and will eventually be replaced by something more clearly aligned with the times and the new digital reality. There is no doubt that these times are truly wrenching for the music industry – but music will prevail and the interests will realign into something sustainable.
Read more here and stay tuned to see how this all turns out.
WASHINGTON, D.C. — The wild, wild West of Internet anarchy that was the first decade of the new century has a new sheriff. And she paid a visit to the 10th annual Future of Music Policy Summit with a badge bearing a 33-point strategy for restoring law and order.
The summit concluded Tuesday after three days of presentations and spirited dialogue among tech heads, policy makers, artists and recored-label executives plotting a new future for the music industry. But it was a visit by President Barack Obama’s new copyright czar, Victoria Espinel, that was the talk of the conference.
The music industry’s implosion has become a cause that even the federal government can’t ignore because the same issue – unfettered exchange of Internet files – has bled into the movie and publishing industries. Now any intellectual property that can be digitized can also be shared/stolen/cannabalized within seconds of hitting the Internet, and multibillion-dollar businesses — most of them with roots firmly planted in the pre-digital 20th Century — are crying foul.
At the Future of Music summit, Espinel waxed rhapsodic about the artistic community, echoing the Obama adminstration line that American innovation and intellectual property are key to its economic recovery. But without directly indicting consumers, she outlined a strategy for containing file-sharing that suggested that many digital music fans will need to alter their behavior or else risk being cut off from the Internet at the very least.
Espinel noted that 95 percent of file-sharers consume music “illegally” — that is, they traffic in copyrighted music files that are readily available on the Internet. Does that mean tens of millions of Americans are technically “criminals” by federal standards? Espinel didn’t directly answer.
When questioned about the apparent disconnect between government policy and the way many American citizens behave when using their computers or cellphones, she merely insisted that there is “no inherent conflict” and that “the majority of consumers don’t want to engage in illegal content.”
She added that the administration would focus its crackdown on Web sites distributing illegal content, particularly those attempting to profit from it via advertising or subscriptions. But that’s a small percentage of the problem.
The rest of the conference took a more conciliatory approach, attempting to engage the way ordinary citizens/music consumers actually behave (regularly downloading music in their homes without checking into the nuances of copryight) and searching for ways to turn that behavior into a revenue stream that could eventually trickle down to artists.
“Everyone here is a file sharer,” said David Touve, a professor at Washington and Lee University. To restrict people from sharing files would compete against the basic design of the Internet — “and good luck with that,” he added.
“The last thing we need is more sticks” to beat down file sharers, said Eddie Schwartz, president of the Songwriters Association of Canada. “We need to find legal ways to file-share.”
The most popular trend is to insist the Internet service providers become part of the solution. A number of European countries have enlisted service providers to police their customers; those who engage in illegal file-sharing have their Internet access restricted or cut off.
“You can’t get revenue until you get the ISP’s to the table, by force if necessary,” said David Basskin, president of the Canadian Musical Reproduction Rights Association. His agitation was palpable, reflecting the attitude of many license holders and content providers tiring of seeing certain technology companies profit from music without cutting in content providers on their profits. Among the many examples derisively cited were the Google search engine that leads consumers to an illegal music file, or the Apple iPod that stores countless music files of dubious origin.
“If you are making money off artist content you have to ask yourself whether you are helping that artist pay his mortgage,” said Jesse von Doom of CASH Music, a nonprofit that creates tech tools for artists.
Steve Marks of the Recording Industry Association of America, which represents the major labels, said, “It’s not a secret that all content holders are interested in pursuing deals with ISP’s that make sense.”
That could mean the imposition of additional fees on Internet users, which opens up another set of issues: Who would collect the fees and who would distribute them not only to license-holders but to the artists themselves — often the bottom of any revenue food chain? Those questions are crucial, said Jim Griffin, a longtime tech consultant.
“Until we know how to properly distribute the money, is it even worth doing?” he asked.
These reasonable doubts clamored for space with anxious content creators and license holders who want to see revenue streams open up as soon as possible. No one questioned that music still has considerable value — more people are listening to more music than at any time in history. But how to turn that stream into a river of green for artists remains unresolved.
Wading into the middle of this decade-long debate is Victoria Espinel, copyright czar. Though she wields considerable power, she has a daunting job ahead of her reconciling a legion of business interests all looking for a stake in the new digital money pool and a nation of consumers who are used to getting their music for free.
Espinel was appointed by Obama earlier this year as the nation’s first-ever U.S. intellectual property enforcement coordinator. A few months ago she introduced a strategy for dealing with Internet file-sharing (or “smash and grab” as it was described by Vice President Joe Biden), which has been linked to a 50 percent decline in music-industry revenue over the last decade.
Former Pink Floyd and T Rex manager Peter Jenner, now emeritus president of the International Music Managers’ Forum, talks online music, copyright and the future of the music industry. It is very satisfying to see the ideas expressed in our Future of Music book becoming mainstream concepts in the industry.
>As physical sales decrease, how should the music industry be monetising its content?
Record companies believe that music is about selling bits of stuff to people in a retail environment. They always looked on the internet as a potentially huge retail environment and it’s actually a service environment. The record companies should be working out what services they can provide.
They should also be talking to ISPs instead of fighting them. The key thing is people are going to want music as part of what they get on their digital connections. The ISPs are going to have to invest more and more to develop better services, and in that context they will have to start charging for content, whether they charge for content directly with a meter or whether they bundle it or use advertising or sponsorship.
Another way to go would be to look at statutory licensing for different types of usage. It would be incredibly bureaucratic but it would be one way. So let people access whatever music they like and pay a set rate. The same with commercial businesses.
>Do record labels still have a role to play in the music industry?
Yes absolutely, particularly for investment and promotion and marketing. And they could become very good at licensing, at helping artists to develop their website. But they have to get away from this idea of control and instead become partners of the artists. Many of the record and film companies are very enamoured with the idea of control because it’s how their model has always worked, with in-house lawyers and copyright advisors. There is huge inertia in the way the industry licenses and administers content. We have to fight this.
>How have the sources of revenue in the music industry changed?
Until the CD came along I think artists overall got a better deal and more control and a better bite of the money. After they invented the CD the record companies increasingly fought back, decreasing artists’ revenue share and increasing their control. That’s just got worse with the advent of the internet because there is less money available. You used to be able to sell 5,000 albums, now that is incredibly hard so the industry has to look at digital options, but a lot of web services don’t pay properly. Google will pay you a share of the revenue you generate for them, but if you don’t make them money you don’t get money.
>Has social media changed the way bands are marketed and content is discovered?
Yes, but it has huge potential to do more. At the moment, because it isn’t licensable, it isn’t doing the job that it ought to be doing. But what it can do is alter the value chain. With less money available in the music business we have to instead look at what we do have. And what we have is lots of data on music fans. Marketing has always traditionally been more expensive than recording but we can cut these costs by using social sites and viral links. And maybe we can cut out advertising costs because acts can just directly email their fans.
>Can music-streaming services support the music industry?
They are good, but they don’t have all the music. I manage Billy Bragg and there are a hundred versions of his tracks online. I can get a recorded version but a lot of the times on these services there are no live versions. And globally there are billions of tracks so the problem remains of how people find a particular piece of music or if they like something how they find similar bands. People aren’t just looking to buy the music, they are looking to buy a service which is personal and recommends music and enables discovery and which saves them time. I’m not sure anyone is really offering this yet.
>Is there a future for physical music?
Yes, but its role in the industry will become less. Probably physical music, like CDs, will become very expensive and luxurious and they will be like hardback coffee table books and people will only buy maybe one or two a year. The music industry’s job is to make as much money as it can from a track or album, and that includes physical sales alongside digital sales, access services and anything else they can come up with.
>What do you think the music industry will look like in 10 years?
Probably very similar. But what we might look on as broadcasting income will hugely increase. Most revenues will come from users paying to access the content. You won’t notice that you are paying for recorded music so much.
I think the artists ought to be much more powerful, whether they will get it together is another matter. There will be record labels, but whether they will be labels that own content or just be agents I don’t know. They might be more like the Performing Rights Society and less like Universal.
If you’ve ever felt grateful for the list of titles and track lengths that appear when you pop a CD into your player, David Hyman’s Gracenote is the company to thank. It enters all that data so you don’t have to. After Hyman helped expand Gracenote from a tiny metadata venture into the world’s largest database of CD titles and track lists, Sony bought the company for $250 million in 2008. That delivered nice returns for early investors, including Jones and Simon. “I showed them a good time. Then I brought them to Mog,” says Hyman.
Now Hyman has a new vision: fusing portability, social networking and unlimited music streaming at a single site. Mog will deliver this in a new music medium–the smartphone–expected to soon overtake PCs as the prime gateway to the Web. In March Hyman unveiled Mog’s mobile app at the South by Southwest music conference in Austin. With a couple of commands a phone user can segue to a screen offering access to 7 million songs spanning a century. All this to chase an elusive dream: technologically uniting a fractured music market.
His backers are betting Hyman, can succeed in a business that has ruined many a provider of capital. A decade ago a dozen labels dominated an industry drawing $40 billion in annual revenue. It is now half that. Streaming services with cryptic names like Spotify and Pandora now vie for users who listen to music not on CDs but PCs. And what happened to that $20 billion? Some of it was lost to music pirates; some of it to newcomers like iTunes, which takes in $2 billion a year.
Digital disruption of the music industry seemed to offer plenty of entree for new music distributors. Offering its own player and music store, iTunes thrived. But MTV, Yahoo and AOL all tried, then abandoned, selling music online (they now mostly stream it for free). Squeezing profits from online listeners turned out to be dicier than imagined. Smaller operators like Pandora carved out a niche following among “passive listeners.” Type the name of a song into Pandora’s search engine and it instantly produces an entire station around the track. It does this by mapping songs using 400 characteristics, from melodies to orchestration. This musical fingerprint associates one composition with another.
Hyman’s brainchild is a clever hybrid inspired by scrappy competitors. Like Pandora, Mog’s slider bar can be moved to add artists similar to ones you like, building your own playlist. Like Microsoft’s Zune player, it delivers ultrahigh fidelity. Hyman has taken a page from Twitter, too, running feeds from like-minded music fans, allowing users to find new music through “social discovery.”
Can Hyman triumph where bigger brands have failed? He has one edge: Mog’s blog network. Hyman built it by hiring the former top ad salesman at mtv.com, Alex Brough, who integrated content from other blogs with RSS feeds onto the Mog site. Hyman sold ads against this content and split the revenue with bloggers. The site now hosts 1,000 of the largest online music blogs in the U.S. Hyman will tap into this network, mostly using ad inventory, to build Mog’s brand.
To win, Mog will have to score a steep trajectory of subscriptions at $10 per month ($5 more than his PC-based subscription). Mog will also have to deliver “interoperability.” That’s the means by which music in disparate locations, say your laptop and home office, can be married and live together in Mog’s “cloud” (servers back at headquarters). “We’ll be able to add what’s on your hard drive to your Web-based library, grab your playlists and combine all of this legacy data in one place, along with new music from your Mog subscription,” he promises. The streaming service that delivers the best such interoperability should be a big selling point to music junkies.
Of course, if you stop paying, your cloud vanishes. How will that go down with music lovers? “The hard part for people to swallow will be that they won’t own the music they pay to hear,” says Kevin Burden, mobile device practice director at ABI Research. “It’s like leasing a car. You don’t have upfront costs, and you get a new model every two to three years. There’s value to that, but you don’t own it.”
Mog’s competitors think it’s worth the risk. Rhapsody, Catch Media and Spotify all have licensing agreements from music publishers for cloud-based streaming. So does digital music service Lala, bought by Apple last year. Apple recently announced plans to move every iTunes user’s music collection to Apple’s cloud this year. Death of the music download may be at hand.
One burden Hyman shares with his peers is the cost of content. The labels charge up to half a penny per stream per subscriber. European music giant Spotify, now with 320,000 paid subscribers, wants to bring its free service to the American market, but the labels want to be paid more than Spotify can likely afford. That won’t stop Mog’s coming showdown with its larger competitor. Watch for war clouds soon in Europe, as Hyman challenges Spotify on its own turf this summer.
Guest Post by MC Lars
Back in 2005, my former manager at Nettwerk, Tom Gates, gave me a copy of Kusek’s “Future of Music” book.
“Read it,” Gates said. “It might be interesting to you.”
I read the whole book in a weekend and was inspired to write a song detailing the changes Kusek proposed, many of which have come true. It seemed crazy then. Five years later, there has been an ideological shift made very apparent by the new generation of artists and consumers; music isn’t really a physical product anymore, it’s a service that artists provide that they are then paid for (if the service they provide has cultural and/or emotional value).
The song I wrote was called “Download This Song“, and it charted in Australia where I did TRL on MTV. The YouTube video received a half a million plays and the single was given press in the NME, the UK’s biggest music magazine. Afterwards, a girl in Texas who was being sued by the RIAA heard the song and contacted me. I forwarded it to Gates. Gates sent it to Terry McBride. Nettwerk paid for her legal fees because one of the songs in her collection was by an artist they managed. Clearly the ideas in the book and my song had reached a large audience.
It’s honestly somewhat eerie how much of what Kusek predicted came true. Gone is the ineffectual A&R I described in songs like “Signing Emo” who races to find “the next hit” to get their band on the radio and a $200,000 video that only recoups 10% of the time. WTF? Gone is the idea that record labels are necessary or even always helpful. Gone too is MTV’s agency as a music network, platinum albums, and commercial music retailers like Tower Records and Circuit City.
It might seem very bleak to the common music fan, but from an artist’s perfective, things have never been better. In the independent hip-hop community, thousands and thousands of regional pockets of talented artists working hard to perfect and distribute their material have all popped up across America and the world. No longer do artists aim to get $1,000,000 advances, a ridiculous and usually unrecoupable amount, but find themselves as part of an emerging middle-class that Kusek predicted would come to be.
Rap crews like Twiztid and the Psychopathic collective have used their underground and independent acumen to build empires and continue to bring tens of thousands of kids to their annual midwest hip-hop festival. Upstate New York’s Weerd Science have become a credible and influential voice in the hip-hop underground on the strength of their 2005 debut – an impressive feet for a group with no strong label backing or touring history. Records and regional tours have directly translated to lucrative career music for some of these artists.
The Peter Principal states that in the workplace, “each employee tends to rise to his level of incompetence”. Basically this means that you will keep getting promoted and promoted until you are unable to do the next job and that there is a subjectively manifested glass ceiling based on one’s ability to do their job. This is reflected in the music scene because artists now get to become as famous as they care to be or deserve. If the music is good, it sticks with people.
And this meritocracy is the future Kusek predicted – catalyzed, in part, by the broadband technological improvements made in the last few years. HD YouTube videos are a click away, downloading speeds have increased and you can get any artist’s discography for free within a few clicks. I listen to most of my new albums on Rhapsody because it’s easier than keeping track of the stacks hard drives full of mp3s I’ve collected over the years. There’s a Zen to music consumption now, one of the new simplicity of it all.
And for the record, I’m living proof that downloading doesn’t hurt artists. Without the advent of torrents, kids can quickly get any of my albums for free at any time from basically anywhere. And that’s awesome! Kids have my albums, even the rare out-of-print ones, because they’ve found them for free online. Some of them decide to help support me in other ways by buying t-shirts or getting the occasional track from iTunes, which adds up if the net is wide enough. I then pay my bills with digital sales, college gigs, and international touring.
I can’t buy a mansion in Hollywood, but that was never the goal. I get by comfortably and will keep making music until I die. High five! What more could I ask for? The 14 year old version of myself would be very proud of how I turned out at 27.
“Music was a product, now it is a service”.
Check out a new favorite crew of mine from South Africa, Die Antwoord, luminaries in the Johannesburg “zef-rap” scene. In a truly viral word-of-mouth fashion, another artist I’d worked with (Tina Root from Switchblade Symphony) sent me the YouTube link.
“You’ll like this,” she said. “It’s different.” She was right.
I checked out their “Enter the Ninja” video – the raps were tight, the chorus was very catchy, the visuals were unique, and the editing was dope! I then researched zef-rap and learned that it is an international postmodern culture that takes every regional hip-hop tradition I could imagine and amalgamates it into one thing. It’s hip-hop of the future that I had found by the web from a colleague.
This is how it “zef” a uniquely postmodern hip-hop form: In one video, a rapper named Jack Parow “ghostrides” his car, dancing along side of it. This is a hip-hop tradition that was popularized in the Bay Area in the last decade, a reflection of the car culture being so integral to “hyphy” rappers like E-40 and Mac Dre. Zef-rap incorporates many regional hip-hop movements into one genre, which is why I’m so in love with it these days! Would I have heard of this genre otherwise? Probably not. It’s all because of this viral video my friend sent. Now I can’t stop talking about them.
When kids ask me how I got into music, I always tell them this; if you want to have a career in indie hip-hop or any other genre of music these days, you need to be dedicated, come original, and work on building your brand as something real and human that people can relate to. Don’t expect to make money on albums, labels are essentially just banks that help promote artists as brands, with CDs being their main promotional tool.
Kusek gave me hope when I was starting out that the playing field would be leveled if you believe in your art. The punk rock ethics that I grew up with as a teenager in the late 90s are very conducive to the new culture of music listening and consumption.
I’d also like to thank Dave for his support through the years and also for getting me into classes at the Berklee College of Music in 2007 – I’ve learned a lot from him and trust you all can too.
Much respect to anyone working to make a career in music.
Welcome to the future!
I was hanging out with my friend Charlie McEnerney last night and asked him about his interview with Larry Lessig. Here is his post and a link to the complete interview from Well Rounded Radio. Check it out.
In many music and entertainment circles, the name Lawrence Lessig needs no introduction, but for those who don’t know his work, here’s some background.
Lessig is a lawyer and activist whose interests are mostly in intellectual property, copyright, technology, and political reform. He’s has written five influential books, including Code and Other Laws of Cyberspace (2000), The Future of Ideas (2001), Free Culture (2004), Code: Version 2.0 (2006), and Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008).
Over the past 10 years, Lessig has worked for both Harvard Law School and Stanford Law School. He is currently a lawyer at Harvard Law School and director of the Edmond J. Safra Foundation Center for Ethics at Harvard University.
Lessig talks about Creative Commons during the interview, but in a nutshell it’s an organization with copyright tools that allows content creators to give various levels of freedom to others for them to remix and build upon the original work.
The idea behind remix culture is how an artist can take a work that a pervious artist has produced and build upon it to create something new. The term has become more commonplace in the last decade, but in fact the concept has been in use for decades, most notably in rap music starting 30 years ago.
Growing up in Queens, New York, I was lucky enough to hear the rap bands of the first era pretty early on (granted, thanks to bands like Blondie and The Clash and college radio putting Grandmaster Flash, The Sugar Hill Gang, Kurtis Blow, and Afrika Bambaattaa on my radar) which usually utilized sampling techniques when creating their music.
I have long been a fan of the groups who fine tuned the ideas behind audio sampling to perfection, in Long Island’s Public Enemy and De La Soul. I’ve always thought both groups pushed the ideas behind sampling in ways that few others did before or since, albeit in very different directions.
With Public Enemy’s 1988 album It Takes a Nation of Millions to Hold Us Back and De La Soul’s 1989 album 3 Feet High and Rising, at the moment it seemed like the idea of what music “is” was being reinvented.
But, after a series of lawsuits for a variety of musicians and labels, the art of sampling and remixing was largely hobbled, in either using others work with or without their consent.
Twenty years later, it is still mostly the domain of those willing to tread in dangerous waters or for artists who want to engage their own fans by allowing them to remix work as part of the growing participatory culture community. For remix artists who might be looking to push their ideas further, it’s unlikely they can put their work into the public without a sizable budget.
Having read all of Lessig’s work and seen two recent documentaries about the remix culture (Brett Gaylor’s RIP: A Remix Manifesto and Benjamin Franzen’s Copyright Criminals), I wanted to speak with Lessig about how current musicians could utilize Creative Commons and share with their own audience as well as look at how we music fans can better understand this era of shared creativity, which dramatically changes the idea of those performers vs. us in the audience.
In addition to these films and Lessig’s Remix book, some good reads on the subject include DJ Spooky’s book Sound Unbound (2008) and Matt Mason’s The Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism (2009).
The show includes music from the earlier era of sampling as well as some recent examples of mainstream musicians offering up their work for remixing, including David Byrne and Brian Eno, Nine Inch Nails, Radiohead, and Bjork.
I sat down with Lessig at his office at Harvard Law School to discuss:
* why it’s unlikely the current copyright system will change
* why Greg Gillis, also known as Girl Talk, has not been sued
* how Creative Commons works and how musicians can use it to engage their fans even more
Songs included in the interview include:
1) Public Enemy: Welcome to the Terrordome (Welcome to the Terrordome) (in preview)
2) Grandmaster Flash: The Adventures of Grandmaster Flash on the Wheels of Steel
3) De La Soul: Me Myself and I (3 Feet High and Rising)
4) Public Enemy: Night of the Living Baseheads
5) DJ Moule: Black Sabotage remix of Beastie Boys‘s Sabotage
6) Radiohead: Reckoner (In Rainbows)
7) Nick Olivetti: Nasty Fish remix of Radiohead‘s Reckoner
8) David Byrne + Brian Eno: Help Me Somebody (My Life in the Bush of Ghosts)
9) Owl Garden: Secret Somebody remix of David Byrne + Brian Eno‘s Help Me Somebody
10) Mr. Briggs Hit me somebody remix of David Byrne + Brian Eno‘s Help Me Somebody
11) Girl Talk: No Pause (Feed the Animals)
12) Girl Talk: In Step (Feed the Animals)
13) Danger Mouse: Encore (The Gray Album)
14) The Album Leaf‘s remix of Nina Simone‘s Lilac Wine from Verve Remixed
15) Vind‘s remix of Bjork‘s Venus as a Boy
16) Fatboy Slim: Praise You (You’ve Come a Long Way, Baby)
17) Amplive‘s remix of Radiohead‘s Weird Fishes
On my way to the TED conference last week, I devoured Jay Frank’s book Futurehit.dna on the plane. Jay has some great insights into the past, present and future of songwriting and hit making that we can all learn from. This is a must read if you are composing for the digital age and trying to gain an edge and find exposure opportunities for listeners.
Jay breaks it down for us on the impact of technology on songwriting and how hits of the past have been carefully crafted to fit into radio airplay on to the iPod, Pandora and streaming era. His insights into how song form, intros, chord changes, repeats, hooks and other techniques connect a good song with a listener are invaluable.
With today’s digital music is it crucial to catch your listeners attention in the first seven seconds of the song. After that, repeats are key as well as how the complexity of the song changes over time. Some of this is old news, but the way he relates it to the technology platforms is interesting and valuable.
How you release music and in what form will determine your chances that your songs will be listened to and remembered enough to make an impact.
Technical, detailed, clear and concise Futurehit.dna will get you thinking about how to create a competitive advantage for you and your music in the days ahead. Highly recommended food for though.
Here’s a great post by Mike Masnick.
“As you look through all of these, some patterns emerge. They’re not about getting a fee on every transaction or every listen or every stream. They’re not about licensing. They’re not about DRM or lawsuits or copyright. They’re about better connecting with the fans and then offering them a real, scarce, unique reason to buy — such that in the end, everyone is happy. Fans get what they want at a price they want, and the musicians and labels make money as well. It’s about recognizing that the music itself can enhance the value of everything else, whether it’s shows, access or merchandise, and that letting fans share music can help increase the market and create more fans willing to buy compelling offerings. It’s about recognizing that even when the music is shared freely, there are business models that work wonders, without copyright or licensing issues even coming into play.
Adding in new licensing schemes only serves to distort this kind of market. Fans and artists are connecting directly and doing so in a way that works and makes money. Putting in place middlemen only takes a cut away from the musicians and serves to make the markets less efficient. They need to deal with overhead and bureaucracy. They need to deal with collections and allocation. They make it less likely for fans to support bands directly, because the money is going elsewhere. Even when licensing fees are officially paid further up the line, those costs are passed on to the end users, and the money might not actually go to supporting the music they really like.
Instead, let’s let the magic of the market continue to work. New technologies are making it easier than ever for musicians to create, distribute and promote music — and also to make money doing so. In the past, the music business was a “lottery,” where only a very small number made any money at all. With these models, more musicians than ever before are making money today, and they’re not doing it by worrying about copyright or licensing. They’re embracing what the tools allow. A recent study from Harvard showed how much more music is being produced today than at any time in history, and the overall music ecosystem — the amount of money paid in support of music — is at an all time high, even if less and less of it is going to the purchase of plastic discs.
This is a business model that’s working now and it will work better and better in the future as more people understand the mechanisms and improve on them. Worrying about new copyright laws or new licensing schemes or new DRM or new lawsuits or new ways to shut down file sharing is counterproductive, unnecessary and dangerous. Focusing on what’s working and encouraging more of that is the way to go. It’s a model that works for musicians, works for enablers and works for fans. It is the future and we should be thrilled with what it’s producing.”
The music industry is being reinvented before our very eyes. Learn how it is developing from today’s entrepreneurs including Ian Rogers from TopSpin, Steve Schnur from EA, and Derek Sivers and how you can capitalize on the changing opportunities.
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