In 1973 – $4.99 was then the going rate for a single LP. Then the prices slowly starting climbing over the years, despite Tom Petty’s very public efforts in the early 80s, and vinyl rose bit by bit until it was about $7.99 or $8.99.

When CDs came along in the late 80s, even though they were less expensive to produce, the list prices put them at $14.99 or more. Over the last 10-15 years, the street price has settled at about $11.99 or so, but of course lots of places sell them for more and less than that. Of course now CD prices are dropping in price to compete with digital downloads and they are often costing less than mp3s albums.

After the demise of the original Napster and the rise of iTunes, the $.99 a song model arose and somehow took hold. But in an era where many listen to music free from myspace.com or off of artists’ web sites and others file share, most working musicians are wondering how they will make a living making music when it’s clear you can’t rely on the sale of a physical product any longer.

Enter Amie Street.

Amie Street was started in Providence, Rhode Island on Amie Street on July 4, 2006 by Elliott Breece, Josh Boltuch and Elias Roman while at Brown University. They are now based in Long Island City, just across the river from Manhattan. Roman is the Director of Business Development and Operations, Breece is the Director of Product Development, and Boltuch is the Director Public Relations and Marketing.

The idea is that when a song is added, it starts free up to .98 and will go up in cost as demand rises up to a maximum of .98. Occasionally, shoppers who frequently recommend artists will also get credits from Amie Street, so it’s a bit of a buy back strategy.

The mp3 files are all free of digital rights management, or DRM.

Musicians receive 70% of the revenue from each sale.

Listen to the PodCast here.

“Alongside the explosive growth of online video over the last six years, time spent on social networks surpassed that for e-mail for the first time in February, signaling a paradigm shift in consumer engagement with the Internet.

According to a report released in April by Nielsen, Internet use for “short-tail” sites with large audience reach has evolved since 2003. The change is from portal-oriented sites, like shopping directories and Internet tools like Microsoft Passport, to social networks, YouTube and providers of niche content.

In November 2007, the video audience also exceeded the e-mail audience for the first time, and sites with long-form videos (averaging six to eight minutes) are showing much more growth and user time spent online than those with shorter videos.

Although Charles Buchwalter, senior vice president for research and analytics for Nielsen, said marketers had yet to master advertising on social media, he predicted that “over the next 12 months a model will emerge” that takes into account “the influence factor” of users who wield disproportionate power.”

From the New York Times.

Bruce Houghton posted a positive view about the music business at Midemnet that I think paints a realistic picture about our short-term future. Its a good read and uplifting.

“My greatest source of optimism for the music industry comes from the rising musical middle class – a middle class not just of artists who from Jill Sobule to Corey Smith and other artists are finding success on their own terms – but also of indie labels like Asthmatic Kitty, Park The Van, Suburban Home and ABB who are finding success by nurturing great music music and embracing music 2.0 instead of swimming against the rising tide. They are the future.”

More from Gerd Leonhard as he once again attempts to predict the future. While many people scoff at those who try and look ahead and light the paths for the rest of us, Gerd is actually quite good at it. Here is a glimpse into his mind and some trends he suggests for the rest of the decade.

1 — We will soon see the emergence of many different kinds of iPhone-influenced Netbook-like devices; some will be Apple-made but most will not. These devices may be 2-3 times the size of an iPhone and will connect to the Internet in every conceivable way, i.e. 3G/4G, LTE, Wimax, Wifi etc. They will be touchscreen, zoom-interface enabled, cloud-computing, speech-controlled, location-aware, mobile-money equipped, socially hyper-networked, always-everywhere-on, HD-camera equipped and possibly project images and audio or even support basic holography.

In addition to the high-end, fully-loaded and perhaps still rather expensive versions that many of us in the so-called developed countries will gobble up, low cost and more basic editions for the developing markets will be sold in the 100s of millions (think India, China, Indonesia…). These smart gadgets will have very low energy consumption and therefore extremely long battery life, may even sport basic solar-power options, and may ultimately cost less than 30 USD, or even be ‘free’ (why bother to sell the box if you can make a lot more $ with selling services…. Nokia?).

It is these mass-market yet very smart and networked devices, together with cheap or free wireless broadband that will really revolutionize reading, newspapers, books and education; not to mention our music, TV and film consumption habits. Content commerce will be completely redefined as a consequence. As BTO told us a loooong time ago: “You ain’t seen nothin’ yet”

2 — Very cheap or free wireless broadband – at fairly high speeds, i.e. at least 2MB / sec – will be available in most places, particularly in the booming new economies of Asia, India, Russia and South-America, and a bit later, in Africa. Funded by the likes of Google and by the future ‘telemedia’ conglomerates, governments, cities and states, wireless broadband will probably reach 3-4 out of 5 people on the globe within 5-8 years. User-generated & derived content (UGDC for those of you that must have an acronym ;), virtual co-production, mobile editing and instant network sharing will explode by a factor of 1000, making control of distribution a very distant concept of the past. UGC or UGDC may make up to 50% of the global content consumption by 2015. Consumers will be (co)-creators, marketers, sellers and buyers, and come in a hundred variations, from totally passive to totally active. Then, indeed, filtering, culling and curation will be the key to success.

3 — Collective blanket licenses that legalize and unlock legitimate access to basic content services via any digital network will emerge, and are likely to take over as the primary way of content consumption, around the world (but in Asia, first). Just like water or electricity which is readily available when moving into a new home, the basic access to content will be bundled into access to digital networks, i.e. via ISPs, operators, telecoms, portals etc. This shift is starting with music (as already done by TDC in Denmark, and Google in China), and will be quickly followed by films, TV, books and newspapers. Access may often – but in local variations – ‘feel like free’ to the user but will in fact generate 10s of Billions of $$ via blanket licensing fees (yes… those pools of money), next-generation advertising and branding, data-mining & sharing, up-selling, re-packaging and many other new generatives. This topic will, btw, be the gist of my RSA presentation tomorrow – if you can’t be there in person, you may want to listen to the live audio, via this link.

I think that governments around the world will call for and / or support the implementation of collective content licenses that wil finally legalize content usage on the Internet, similar to how governments pushed for the radio and broadcasting licenses approx. 100 years ago. Whether these blanket licenses will be voluntary or compulsory remains to be seen – in any case the only alternative is to perpetuate a severely dysfunctional telemedia ecosystem that criminalizes almost all users and stifles innovation while generating virtually zero new revenues for the creators.

4 — Fuel-cells and other next-generation mobile energy sources are a certainty. A serious increase in mobile device power (and therefore, its use) will be achieved by employing next-generation technologies such as fuel cells that could provide for up to 500x the usage time that we have today. This is likely to become a reality in 3-5 years and will revolutionize how we use – and how much we rely on – our mobile devices, especially in countries where there the fixed-line power infrastructure is much less developed or non-existent.

5 — Completely targeted and personalized advertising, delivered largely on totally customized mobile computing & communication devices, will turn the the $ 1 Trillion USD advertising and marketing services economy upside down. Behavioral targeting and user-controlled advertising will, of course, become an even hotter potato and a much discussed challenge, but the good old deal of ‘I give you attention & personal data and you give me value e.g. content’ will be even more pronounced on the Net. In fact, advertising as we knew it is already more or less outmoded and will, during the next 2-3 years, be completely reinvented. Privacy and Trust are the #1 issues here.

The implication is that if your data (within your specific sets of permissions and opt-ins) is used to bring you perfectly synchronized advertising, than advertising really becomes more like content, too. Watch this play out in the mobile advertising space, starting this year, and quite possible boost the global value of advertising-content by more than 100% by 2015. Google will be the main driver here, plus Facebook, Nokia and yes… Twitter (soon to be = Google).

6 — We will witness the more or less complete decline of most forms of physical media within 7-10 years. The very definition – and thus the core economic business models – of newspapers, magazines, CDs, DVDs and books will be completely re-written, and new forms of content packaging will rapidly emerge. We can already see a preview of how this may work in the current mobile applications boom: content as part of software packages; paying for the packaging, the curation, the bundling, the personalization – not just for the zeros and ones that are ‘the copy’. This trend is important not just because it will reflect the users’ (or better… followers’) new consumption habits but also because because of the increasing need to save energy and material costs – and moving from content products to content services will certainly go a long way in this regard. The total decline of printing in people’s homes, and for personal use, will commence, as well.

7 — Paying for privacy will become a distinct option. Today we pay to go online and connect; in the future we may end up paying for the luxury to go offline, disconnect, enjoy the quiet, and give our brain some rest. Maybe if we don’t want to share our click-trails and usage data, we will be able to make cash payments instead – and the more you pay, the more private you can be..?

8 — Travel 2.0: alternatives to ‘actually going there’ will explode: immersive, 3D video, virtual rooms, holography. This is a key development that will nurture new forms of entrepreneurship, education and group working.

Read more from Gerd Leonhard here.

Kevin Kelly has written extensively on the need to create value around digital copies in order to create the revenue opportunities that are falling away every day for digital media. Here is an excerpt from his great essay “Better Than Free”.

Eight Generatives Better Than Free

Immediacy — Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released — or even better, produced — by its creators is a generative asset. Many people go to movie theaters to see films on the opening night, where they will pay a hefty price to see a film that later will be available for free, or almost free, via rental or download. Hardcover books command a premium for their immediacy, disguised as a harder cover. First in line often commands an extra price for the same good. As a sellable quality, immediacy has many levels, including access to beta versions. Fans are brought into the generative process itself. Beta versions are often de-valued because they are incomplete, but they also possess generative qualities that can be sold. Immediacy is a relative term, which is why it is generative. It has to fit with the product and the audience. A blog has a different sense of time than a movie, or a car. But immediacy can be found in any media.

Personalization — A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room — as if it were preformed in your room — you may be willing to pay a lot. The free copy of a book can be custom edited by the publishers to reflect your own previous reading background. A free movie you buy may be cut to reflect the rating you desire (no violence, dirty language okay). Aspirin is free, but aspirin tailored to your DNA is very expensive. As many have noted, personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user. It is deeply generative because it is iterative and time consuming. You can’t copy the personalization that a relationship represents. Marketers call that “stickiness” because it means both sides of the relationship are stuck (invested) in this generative asset, and will be reluctant to switch and start over.

Interpretation — As the old joke goes: software, free. The manual, $10,000. But it’s no joke. A couple of high profile companies, like Red Hat, Apache, and others make their living doing exactly that. They provide paid support for free software. The copy of code, being mere bits, is free — and becomes valuable to you only through the support and guidance. I suspect a lot of genetic information will go this route. Right now getting your copy of your DNA is very expensive, but soon it won’t be. In fact, soon pharmaceutical companies will PAY you to get your genes sequence. So the copy of your sequence will be free, but the interpretation of what it means, what you can do about it, and how to use it — the manual for your genes so to speak — will be expensive.

Authenticity — You might be able to grab a key software application for free, but even if you don’t need a manual, you might like to be sure it is bug free, reliable, and warranted. You’ll pay for authenticity. There are nearly an infinite number of variations of the Grateful Dead jams around; buying an authentic version from the band itself will ensure you get the one you wanted. Or that it was indeed actually performed by the Dead. Artists have dealt with this problem for a long time. Graphic reproductions such as photographs and lithographs often come with the artist’s stamp of authenticity — a signature — to raise the price of the copy. Digital watermarks and other signature technology will not work as copy-protection schemes (copies are super-conducting liquids, remember?) but they can serve up the generative quality of authenticity for those who care.

Accessibility — Ownership often sucks. You have to keep your things tidy, up-to-date, and in the case of digital material, backed up. And in this mobile world, you have to carry it along with you. Many people, me included, will be happy to have others tend our “possessions” by subscribing to them. We’ll pay Acme Digital Warehouse to serve us any musical tune in the world, when and where we want it, as well as any movie, photo (ours or other photographers). Ditto for books and blogs. Acme backs everything up, pays the creators, and delivers us our desires. We can sip it from our phones, PDAs, laptops, big screens from where-ever. The fact that most of this material will be available free, if we want to tend it, back it up, keep adding to it, and organize it, will be less and less appealing as time goes on.

Embodiment — At its core the digital copy is without a body. You can take a free copy of a work and throw it on a screen. But perhaps you’d like to see it in hi-res on a huge screen? Maybe in 3D? PDFs are fine, but sometimes it is delicious to have the same words printed on bright white cottony paper, bound in leather. Feels so good. What about dwelling in your favorite (free) game with 35 others in the same room? There is no end to greater embodiment. Sure, the hi-res of today — which may draw ticket holders to a big theater — may migrate to your home theater tomorrow, but there will always be new insanely great display technology that consumers won’t have. Laser projection, holographic display, the holodeck itself! And nothing gets embodied as much as music in a live performance, with real bodies. The music is free; the bodily performance expensive. This formula is quickly becoming a common one for not only musicians, but even authors. The book is free; the bodily talk is expensive.

Patronage — It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators. Radiohead’s recent high-profile experiment in letting fans pay them whatever they wished for a free copy is an excellent illustration of the power of patronage. The elusive, intangible connection that flows between appreciative fans and the artist is worth something. In Radiohead’s case it was about $5 per download. There are many other examples of the audience paying simply because it feels good.

Findability — Where as the previous generative qualities reside within creative digital works, findability is an asset that occurs at a higher level in the aggregate of many works. A zero price does not help direct attention to a work, and in fact may sometimes hinder it. But no matter what its price, a work has no value unless it is seen; unfound masterpieces are worthless. When there are millions of books, millions of songs, millions of films, millions of applications, millions of everything requesting our attention — and most of it free — being found is valuable.

The giant aggregators such as Amazon and Netflix make their living in part by helping the audience find works they love. They bring out the good news of the “long tail” phenomenon, which we all know, connects niche audiences with niche productions. But sadly, the long tail is only good news for the giant aggregators, and larger mid-level aggregators such as publishers, studios, and labels. The “long tail” is only lukewarm news to creators themselves. But since findability can really only happen at the systems level, creators need aggregators. This is why publishers, studios, and labels (PSL)will never disappear. They are not needed for distribution of the copies (the internet machine does that). Rather the PSL are needed for the distribution of the users’ attention back to the works. From an ocean of possibilities the PSL find, nurture and refine the work of creators that they believe fans will connect with. Other intermediates such as critics and reviewers also channel attention. Fans rely on this multi-level apparatus of findability to discover the works of worth out of the zillions produced. There is money to be made (indirectly for the creatives) by finding talent. For many years the paper publication TV Guide made more money than all of the 3 major TV networks it “guided” combined. The magazine guided and pointed viewers to the good stuff on the tube that week. Stuff, it is worth noting, that was free to the viewers. There is little doubt that besides the mega-aggregators, in the world of the free many PDLs will make money selling findability — in addition to the other generative qualities.

These eight qualities require a new skill set. Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, these new eight generatives demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can’t be replicated with a click of the mouse.

In short, the money in this networked economy does not follow the path of the copies. Rather it follows the path of attention, and attention has its own circuits.

Read more from Kevin Kelly here.

Another post from my co-author Gerd Leonhard.

“What are the new, web-native, social & inter-connected business models that will power the future of content creators and their industries?

In 2008, the disruptive force of the Internet finally hit home, and – as is usually the case – it all came much later than we had estimated but the disruption was also much bigger than expected. A quick look at some trends in this context:

* Newspaper revenues are seriously down (25% in some cases); and magazines and other print media are severely challenged, as well
* Digital music revenues are still going up, overall, but very very very far from enough to stop the free-fall of the recorded music industry, in general (approx 20%, globally, would be my estimate for 2008) *pennies for $$, see below
* DVD sales are declining, worldwide, prices are falling, too – and this will only accelerate next year
* Online video views and audiences are up a lot – but so far pretty much everybody has trouble making any real money with online video

“My hunch is that the Internet may well – and soon – bring us an utterly scary reduction of traditional content models that is somewhere in the neighborhood of 1:5, i.e. if you keep relying on the old ‘disconnected’ content revenues models you may eventually see only 1/5th of the financial returns that you had before. This could vary by industry, location and context, of course, but I would dare say that if you stick to your old models the future will be bleak, either way – and this goes for the actual creators but even much more so for the businesses that are build around them.

To me, the bottom line is that most of what used to work just fine in a disconnected world of ‘totally segregated consumers and producers’ will simply not work in the future.

This is why I think 2009 will be year of:

* Totally exploding consumer / user / fan / listener / viewer empowerment (yes, you ain’t seen nothing yet – wait until 2 Billion + people are wirelessly connected via increasingly smart and easy-to-use mobile devices)
* Re-inventing content commerce (such as: charge for access… not just units, bundle content into access, freemium etc)
* Re-evaluating copyright as that sacrosanct, sole, principal, or even main driver of revenue – the solution for what I like to call ‘digital payment-refusal’ aka piracy is not a technological issue but a business problem
* Re-inventing advertising (since new kinds of advertising will no doubt be one of the future drivers of content commerce, as well)
* Getting the telecoms and network operators aboard – for they can’t make it work without content, either!

I do have a hunch that this old Chinese proverb holds a part of the solution: “Tell me and I’ll forget; show me and I may remember; involve me and I’ll understand.”

Read the whole thing from Gerd Leonhard here.

Here is an excellent post by Gerd Leonhard that is well worth repeating.

“We are indeed heading into a future of Attention Revenues exceeding Copy Revenues – and I am talking within 3-4 years here, and probably much sooner in Asia where ‘selling copies’ has never been the #1 money maker for content creators.

A Future where all kinds of attention-based revenues (i.e. not just advertising-as-we-knew-it but revenue sharing of flat-rate offerings, next-generation ‘2.0’ advertising, up-stream selling and marketing, sponsorships and branding, linking and referring, etc) will very likely surpass copy & unit-sales revenues. A Future where many content creators of all kinds, in all locations, and within all levels of accomplishment will make more money based on what their brand stands for, based on their fans aka users having real, meaningful experiences with or through them, and based on who pays attention to them, when and where.

Selling enough copies of one’s work (whether physical or digital, whether books, songs, movies, software or games) to make this the sole pillar of one’s livelihood has in reality always been reserved to those very few creators that are at the top of the heap (i.e. not in the so-called longtail or even the body). And of course, being hit-driven, the companies that have marketed those that can sell millions of copies globally are the ones who will have the most to lose in the short term and during this paradigm switch-over – Hollywood’s latest disaster movies are not going to be themost-watched movies in India, China and Brazil in the future, anymore.

In our immediate future as content creators and companies that serve them, it’s all about gathering and converting Attention – at least until the world is so well-served with feels-like-free content in return for attention that physical copies become desirable again (and they will).

Most musicians and songwriters will make more money with performance-related activities (i.e. concerts, web-casts, life-streams, on-demand and regular Radio, TV, synchronization, sound branding, music in public spaces, etc) then with selling copies of songs or albums. In fact, in less than 3-4 years it probably won’t matter anymore whether it’s deemed a copy or a stream since all content will be available in the network cloud, anyway, and it will be Access that counts, not if it’s a copy or copy – at least if you’re not a recording industry lawyer. We are already seeing this trend if we look at the steadily increasing revenues of public performance organizations (such as ASCAP, BMI, BUMA etc) while observing the rest of the recorded industry’s unit-selling revenues (and so-called mechanical revenues) heading for the vaporizer.

Of course, most book authors (and there are increasingly many – with an estimated 3000 new books published per day) already know that the real money in writing books is not in selling them. Instead – just like with free / open-source software creators – it’s in the increased reputation, in the bolstered credibility, in the enhanced public perception where the income is: book authors get hired to speak, ask to sit on boards of companies, join academic organizations, advise governments, provide input on film and TV productions, and so on. While nothing new, this is a nice example for the rising importance of the Attention Economy: a lot more people can now become their own publishers and can have a go at becoming Author-Brands; the gates are now wide open to either prove yourself or be demolished by your peers (yes… it does work both ways).

The likes of Twitter, Friendfeed, Google, Amazon and Youtube have now given all of us a fairly reliable way of checking what a writer’s reputation and buzz is – and faking it will become nearly impossible to do. The reality is, of course, that 99% of book authors have nowhere to go but up: their revenues from unit sales never did amount to a meaningful income, anyway, so if Attention Revenues are the way forward… it’s all up from here.

Film-makers and TV/Video producers have a lot to gain from this switch to attention-based revenues, as well, even though high production costs will be initially hard to justify for small, niche audience productions – as many web-based TV startups have found out, there is no real money in the long-tail TV/video market yet; mostly because only 3% of the world is on broadband at this time, and those that are are paying too much for it (imho). But let’s keep in mind that public performance (i.e. showings) of motion pictures, TV shows and videos have always generated a very large part of the cash that came in: box office revenues are, after all, nothing but performance i.e. converted attention-based revenues — selling the experience not the copy. And as this won’t change in the future, the movie industry still has a real leg up on the music business.

So let’s take a look how creators (and even their representatives) can turn attention into real cash:

* Public Performance (whether in person or through an increasing choice of media)
* Contributions to other productions (contract work, licenses, remixes etc)
* Endorsements by sponsors and brands (that’s pretty much how the music industry in China does it)
* Referring, linking and connecting to others (generating affiliate and referral fees)
* Lending Credibility and adding value by their participation (events, campaigns etc)
* Generating an increasing number of new up-stream revenues – once you have attention there are many ways to upsell your users to the next level of engagement!

Read the whole post from Gerd Leonhard here.

This guy is always so over the top, but he delivers the message.

“What happens when the labels stop paying an advance?

You know that’s gonna happen. With such limited revenue from recorded music, no one’s going to pay you a fortune to make it. There’s no incentive. Live Nation might pay you a fortune to TOUR, but who, in their right mind, is going to pay you a few hundred k when the only thing selling is singles? Hell, not one album released this year has yet gone PLATINUM! Do you expect Universal to be ponying up millions of dollars in the future?

Don’t be surprised if the major labels morph into management companies. In a way, they already have. That’s what a 360 deal is. That’s what the manager has ALWAYS had, a share in all revenue streams. You only get paid if there’s success. Are the majors going to follow this paradigm?

Of course, there could be a bidding war, generating large advances, but Live Nation/Ticketmaster is always going to win that one. Until the majors merge with a touring company, they’re fucked, they just don’t have enough to offer, their costs are too high, their margins too thin. If I were a major, I’d be calling Jerry and Arny, maybe even Seth right now. After calling Phil Anschutz, of course. In order to survive, labels have to play in the touring arena.

But the foregoing is all about money. Don’t you realize that’s what the album was about, money? That’s how you got paid, by delivering an album. Of course the public didn’t know this, but this was the game for eons. Sure, the Beatles made a STATEMENT with “Sgt. Pepper”, but Capitol was more interested in the revenue. Selling 33’s was much more profitable than selling 45’s. And the high-priced/low royalty CD was even more of a moneymaker than the LP record. That’s how we got here. Pure greed, not artistry.

If you want to record a full-length statement, be my guest. I see nothing wrong with that. But are you really interested in laying down ten tracks on wax if you’re not going to trigger a payment?

Please don’t be blinded by history. If your goal is to make money, and seemingly everybody e-mailing me is focused on bucks, how are you going to make money in the future? I’ll tell you. The public is your bank. And people don’t pay solely for recorded music, they may not pay for recorded music at all. How are you going to get paid?

By building an audience.

An album’s worth of material usually does not build an audience. A TRACK builds an audience. If you’re a career artist, people will want more tracks. But only if they’re good.

So the focus is no longer on cutting ten songs, but cutting GOOD songs! There’s an unlimited audience for GREAT songs. Still, how do you nurture your audience?

Playing every night in a single town is not going to build heat. You’ve got to go away for a while to increase demand. But you can’t go away for TOO LONG or you’ll be forgotten. Same deal with music. How do you deliver enough to keep people interested, but not too much to overload them?

DON’T tell me how much you love albums. That’s like labels saying no one will ever download music from the Internet. The album is history, you just don’t know it yet. STATEMENTS are not history, but are you really making a statement?

Innovate in the new sphere.

If U2 weren’t getting paid by Universal upon delivery of an album, they’d be better off releasing tracks in fits and starts. You get continuous publicity. AND, the way they just did it didn’t work, the album’s sales are small. Imagine going on Letterman EVERY MONTH, not for a week straight. BUILDING, instead of blowing your wad.

Imagine rewarding a fan who buys all ten tracks over the course of months. Maybe buying all ten delivers a code that allows you to purchase guaranteed good seats at the pre-sale. Maybe there’s a quiz regarding the content that allows people to qualify.

Maybe when you do that commercial endorsement, the reward is someone can go to the company’s Website and download YOUR NEW SONG! The insta-collection of ten tracks is no longer the starting point, rather you dole out your tracks in drips and drabs, making each release a minor marketing event, that keeps people interested, that keeps them going to the show.

If you’re a star, maybe you announce that you’re going to play the new track at the top of every show. And maybe then not again for a YEAR! So you’ve got to download to be familiar, and come if you want to hear it live. Don’t you see? Giving up the album delivers FREEDOM!

No one says a fan can’t create a playlist of ten tracks that he plays ad infinitum. Maybe the fan creates the album, and posts it to your Website, delineating why he picked this running order, imploring you to play these tracks in this order live. Hell, if the album were such a defined success, how come almost no act plays their latest opus straight through at a gig? BECAUSE ALMOST NO ONE CARES!

People don’t know the music. They want to hear some old stuff too. Just like you do when you make an iTunes playlist. You mix it up. Why shouldn’t the artist mix it up?

As for Record Store Day… How laughable is that. If you’re salivating over this, you’re living in 1990, and hoping we go back to 1970. Record stores are dead. As dead as your Apple II. Some will survive, as dealers in antiquities and tchotchkes, but essentially everyone will buy online.

Point being, how can you lambaste Doug Morris for missing the digital revolution when you too are stuck in the past?

People only want to hear good music. On demand. This has decimated radio. But the album went first. We’re just feeling the full effect now. And it’s only going to get worse.

Newspapers saw a crisis coming. But they figured it was always in the future. That crisis is now. Newspapers will probably not survive. I get three a day. But I know the paradigm is history. I lament the loss, but look forward to the future, wherein more people report upon more stories in a constant 24 hour news cycle.

You too should look to the future. Not one in which you deliver product to get paid by a middleman, but one in which you and your handlers are all in it together, and you build an audience fan by fan, which lasts. Toyotas were a joke in 1970. Now GM is a joke. Toyota built its brand based on reliability, word of which was spread slowly from mouth to mouth. Toyota took decades to surpass GM as the largest automobile company in the world, but GM will never regain the crown.

So don’t tell me about ancient paradigms. Please look to the future. It’s coming. It’s about great. Fans want more music by the acts they adore. Release all the live stuff, all the alternative versions. They don’t taint the original, they allow fans to burrow deeper, the revealing of all your warts burnishes your image!

We live in an information society. That’s what your fans want, information. They don’t want a CD dropped every few years with canned hype, they want continuous info. Don’t get locked into the album syndrome. You’re missing the future.”

– From The Lefsetz Letter

By Dave Kusek

I actually think the possibilities of making a living in art today are as good, or perhaps better, than ever before primarily because of the communication tools that we have online and the ability to develop relationships with the audience. I think the juice is in the do-it-yourself area of a sole-proprietor musician or a band or a writer on their own or with a publishing company, trying to figure out how they can penetrate the market, make a living, and break through the noise without all the traditional trappings, because all of that is pretty much gone for most people. The opportunity is really in the redefinition of how you go to market with music on a much smaller scale and develop a user base. That’s really where the action is.

From the recorded music side, the reality of the past 50 or 70 years is that a few percent of the people involved in recording ever made any real money off the records. Just a few percent! And if you made any money at all, it was through your songwriting or your touring or your merchandise, or something else that you came up with to provide you with a living. So on one hand, things are not all that different than they’ve ever been, in that you’re not going to make a ton of money making recordings and you never were. The reality is nobody is going to take care of you—you have to do it yourself or you have to form a small team around you to help.

We’ve just begun to scratch the surface of live, interactive experiences enabled by communications technologies—the smart phone, the internet, the broadband connections that we have—where you can create musical experiences between you and a relatively small group of people. Everyone is saying that the concert can’t be digitized, so at the moment that remains a reasonable way for people to make a living where the majority of your income comes from touring. And if you think about interactive experiences that can be created—virtual living room tours, behind the scenes events, having people participate in writing parties or creating music on the fly to suit the audience that you happen to be connected to—I think there are a number of wildcards in there where people have begun to experiment with mapping the live experience onto a communications network. There’s a long way to go there and there’s a lot of opportunity, especially as you see the iPhone and the Google phone and some of the devices from Nokia and others that are giving you video-enabled computers connected to the internet in the palm of your hand. That allows for the distribution of content at a very high level and interaction with your audience that you really never had before, on that one-to-one level or one-to-a-few level. And by making it mobile, you’re getting away from your fan having to be sitting at a desk in front of a computer. As people begin to write for that platform and that potential, I think we’ll see a lot of innovation.

And you can monetize that. I think people will pay for access to artists that they enjoy, and they will help support artists that they respect if they know that most, if not all, of the money is going directly to the artist rather than to the combine. If you have 5,000 fans willing to pay $20 a year for access to your music and the ability to participate and interact with you, there’s a nice pool of money for you to make a living off of. If that blows up to 100,000 people, you’ve got tremendous potential there.

What is your definition of success? That definition tends to be all over the place, but what do you need to sustain yourself in order to focus on your art fulltime? Can you live on $60,000 or $80,000 or $100,000? Probably. Can you make that kind of income writing music, performing regionally, licensing your music into various outlets? Yes, you can. If you focus on creating a career at that level, it’s entirely possible and many people are doing it using the tools that we have today. Instead of chasing the brass ring, you’re just basically trying to be a middle class artist making a middle class income. If you’re realistic about your expectations, you can make a living and spend most of your time focused on your art, whether it’s writing or performing or recording or drawing or painting of photography. It’s certainly possible—way more possible than being famous was ever going to be. You need to think through that because it’s really probably the only opportunity that most people are going to have in this environment—keep reasonable expectations and build up a little business around yourself that’s not grand scale but human scale.

One of the things that I think is holding a lot of this back is it’s very difficult to license music for global consumption. You’ve got to figure out who the rights holders are at every country, there’s often a publishing side and a recorded master side, there may be multiple writers, and the control that has dominated the industry for so long is holding us back. I think it’s something that people need to pay attention to: How can copyright law better serve artists in the digital age and what the digital age will bring?

The record companies have felt the pain of the changes in the marketplace ahead of the publishers. And you can see that the record companies are beginning to change their approach and they’re more willing to experiment because their revenue is down 50% and they’re absolutely scared to death. The publishers are following behind that curve and in my opinion are the larger road block in making deals than the record companies are. So having publishers look at their record company friends and what they’ve gone through and avoiding that is really key to remaining relevant.

With all of these interaction opportunities and non-traditional distribution opportunities, if we had better licensing, easier licensing, more transparent licensing, a more global approach, potentially everyone could make more money. If we stick to the laws the way they are and the sort of country-by-country rights, people who are in that camp will have a disadvantage against new artists who decide to open up their rights with a Creative Commons approach or perhaps another blanket licensing approach. If it becomes easier to license new music from new composers than it is the old composers, guess who’s going to win?

This interview with Dave Kusek originally appeared in New Music Box.

Here is a rather lengthy presentation on Trent Reznor and NIN and how they represent the future of music from TechDirt’s Mike Masnick. This case study outlines the experiments and business models being explored by this forward thinking artist.

http://vimeo.com/moogaloop.swf?clip_id=4244922&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=&fullscreen=1

Leadership Music Digital Summit 2009 – Mike Masnick keynote address, 3/25/09 from Leadership Music Digital Summit on Vimeo.

Also here is a demo of the iPhone App that NIN has planned that Apple rejected today because it streams a song with profanity in it. Really Apple, get a life. This guy is one of the biggest innovators in music today and your process for getting Applications developed and approved for the iPhone need VAST improvement.

http://vimeo.com/moogaloop.swf?clip_id=4021499&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=&fullscreen=1

NIN: Access iPhone app walkthrough with Trent Reznor, Rob Sheridan, and special guest Kevin Rose from Nine Inch Nails on Vimeo.

Online journal, New Music Box just published a collections of essays on the future of music. Here are some excerpts:

Recording. Performance. Distribution. Copyright. Publishing. When the most basic terms of your field are in flux, it can be hard to see to next month, let alone into the next year, or to prepare for the next decade. Would you have expected music to be where it is today if you had been asked in 1999?

Amanda MacBlane writes, “In 1999, I was 19 and Napster had just launched. Computers, old midi devices, turntables and lots of samples were the building blocks of many of our dorm room compositions. I came early to the blogosphere and the social networks, and I jonesed for a giant iPod. I was a true believer in technology: new sounds, new ways of making music, new ways of hearing it, new ways of talking about it and new ways of getting it. I would proselytize anyone who would listen.

But as the technology became ubiquitous, my enthusiasm waned. Perhaps it was overkill or, as a proud non-conformist, it was painful to see my “originality” boiled down to some market research figures. Maybe it’s simply because I am getting fixed in my ways.

Don’t get me wrong. I do love the discovery aspect of the Internet. I love that technology has inspired so many people to make music and share it, even if I am not a huge fan of the mash-up. Most of all, I love the possibility of having access to every piece of music ever recorded or movie made from my apartment without having to have shelves specially built.

But I also think Twitter is stupid, that the Long Tail is bunk, and that Pandora has no idea about my musical taste (once it actually told me it had no more suggestions for me). As I spend more time in conference rooms, I am always disheartened by the buzz phrases: Brave New World, access vs. units, monetization and the worst one of all—content. Art is taboo in these places.

Yet having spent time with people on all sides of the situation, I have gained insight into where musical life is headed and had a chance to meditate on my own musical values. Here are just a few of the thoughts that have been floating around in my head:

1/ Music will always make money, but not always for the same people. Whether it’s the record companies or the Internet giants, we just need to make sure that the composer and the musician don’t get cut out of the deal. Of course touring and merchandise will help, but other companies whose business models are founded on music—selling it, streaming it, sharing it, storing it, copying it—need to share their profits with those that create it.

2/ We desperately need flexible, worldwide licenses for music. The Internet has no borders, so why do our licenses? Because as soon as anything becomes worldwide, it becomes as wonky as the UN. Rights holder organizations have been working to achieve this, but a 2004 decision by the European Commission’s Competition Directorate halted a first initiative for worldwide, blanket licenses for the entire world’s musical repertoire. Another anti-competition decision (2008) against European societies spurred by powerful broadcasters looking for cheaper royalties has forbid societies from working together. It’s hard to create a worldwide license for the world repertoire on a national basis. Until the EU is on board, this won’t be possible.

3/ Let’s not leave promotion or guidance to algorithms. Having access to every piece of music ever recorded is great but also very overwhelming. For musicians, how do you get noticed? As a listener without hours of free time, how do you find your next favorite piece? I don’t think a computer algorithm can ever replace the human promoter or guide. We need to facilitate journalism, web radio, podcasts and well-constructed multimedia blogs as well as any new ways of talking about music. This goes back to the licensing issue in part—some of these outlets won’t make much money at all and there need to be licenses available that do not make it impossible for them to operate.

4/ Technology can never replace the physical and social act of making music.
Even in my technology-loving heyday, my professor of Electronic Music, David Borden, insisted that our final piece include a live performance element. Listening to music is great and composing for the computer can certainly be exciting, but the music that means the most to me is that which I have physically performed and shared with others. No computer or killer app can match performing Bach’s B-minor Mass in Caracas with some of my best friends or playing 4-handed piano duets with my mom.

5/ Music education in our schools cannot be abandoned. We can’t democratize production and distribution while limiting access to musical training. Not only will music education help lots of talented kids move past the mash-up, it also helps people appreciate the value of music and the work it takes to do it well. Whatever happens, one thing is for sure: People will always make music and that is very comforting to me.

Read more from New Music Box. Welcome to the Future.

Props to Dave Allen founder of Gang of Four for these suggestions below. Well considered (and annotated). I recommend that you do what he says.

“Humans are subconsciously moved by the emotion of music, it provides a link to their ancestry and to their tribes, it stirs not only positive but sometimes negative feelings linked to moments in time and is often steeped in nostalgia and memories. No other art form is ‘consumed’ as broadly and passionately as music on a daily basis around the world.

How music was delivered used to be in the hands of the few – bands, concert promoters, record companies and their retail distribution companies, radio, and video shows such as MTV. In tech-speak this system embraced ‘push’ – we the mighty and powerful will “provide you” [at a price determined by “us”] with access to our treasures when “we” feel like it. These days that system is rapidly breaking down as music fans now ‘pull’ what “they” want to listen to.

Control has moved from the few to the millions of many. Dull labels and dull bands offering dull, flat, non-experiential product – e.g. a CD, will go the way of the CD as it goes the way of the Dodo. Consider what Cirque Du Soleil provides as an experience compared to Barnum and Bailey’s circus. Or Burning Man compared to your average music festival. Even the Las Vegas Beatles-themed show ‘Across The Universe’ wipes the floor with most rock concerts these days.

Music fans are no longer patiently waiting for their favorite bands to deliver new music according to the old customary cycle – album, press release, video, radio, tour. No, the fan base has to be regularly and consistently engaged.

Some Ideas (for artists, managers and labels):

– First, communicate openly and ask your fans what they want from you

– Listen to what they have to say. Really listen

– Provide unique content such as early demos of new songs

– Never under estimate the power of a free MP3

– Forget completely the idea of an organizing principle (album). Invent a new one

– Use social media wisely. Twitter and Facebook Pages are best, MySpace is too cluttered

– Don’t push messages to your fans, have a two way interaction with them

– Invite them to share, join, support and build goodwill with you

– Scrap your web site and start a blog

– Remember to forget everything you know about the CD “business”

– Start to monetize the experience around your music

– Remember – the browser is the new iPod

Read more from Dave Allen here at his Pampelmoose Blog

From Eliot Van Buskirk and Wired:

To hear some tell it, file sharing gutted the music industry by encouraging people to gorge themselves on free, illegal content. Indeed, unless Friday’s landmark verdict against The Pirate Bay is overturned, four Swedes will spend a year in jail and owe millions of dollars to entertainment companies for operating a file sharing network.

Nonetheless, sites like The Pirate Bay taught — and continue to teach — valuable lessons to the content industry. Even as music labels and movie studios try to sue peer-to-peer networks out of existence, these same networks have been preparing music labels and movie studios for the emerging social-media world, in which sales form only a small slice of the revenue pie, and what really matters is who likes what, and who pays attention to them.

Facebook, MySpace, imeem, YouTube and other social media sites — which the labels now recognize as a major part of their revenue streams going forward — incorporate several aspects of Napster and other early, rogue file sharing networks: buddy lists, user uploads, filtering content by user, viral marketing, ad-supported content and the potential of mining valuable data. The complete DNA of social media was right there, from the very start of P2P.

And even in the early days, the labels were intrigued by the vast pools of user data available on networks like Napster and Kazaa, although they were reticent to take advantage of it.

“It was more than just stigmatized,” recalled Eric Garland, CEO of BigChampagne, which measures the popularity of media on file sharing networks. “They feared that to even look at or inquire about what was happening in the file sharing universe would somehow compromise their unflinching stance that this was unauthorized.”

But as the initial furor over P2P died down, labels began monitoring file sharing networks through BigChampagne and other services. The data they find there continues to help them in any number of ways, from choosing which leaked song to use as the single, to where a band should tour based on the IP addresses of its fans, to figuring out which artists should perform on the same bill.

The labels beat down Napster, Kazaa, Scour and other P2P networks, and if today’s Pirate Bay verdict stands, they will have beaten four Swedes too. Meanwhile, new ways to share files continue to surface, including private and encrypted networks. And The Pirate Bay developers say mirrors exist in other countries, so no matter what happens in Sweden their site will continue to operate. Besides, The Pirate Bay is only one bit-torrent tracker site.

For some, the offense committed by an enabler like The Pirate Bay — as opposed to the people who actually do upload and share copyright material — may be difficult to grasp. You can also find torrents on several other sites — even on Google’s search engine. And YouTube hosts pirated copyright material, until and unless it is asked to remove it by the owner, because it is unable to programmatically detect which video clips are pirated.

But the difference is that Google, Yahoo and MSN aspire to catalog everything indiscriminately, while services like The Pirate Bay explicitly cater to practitioners of digital piracy — and are proud of it, to boot.

Even as the content industry celebrates another false victory over file sharing, the world is moving on, to cloud-based, on-demand streaming services — some licensed — where you can hear music and watch videos faster and in a more social way than you can with bit torrent. And as content holders look to monetize those networks, P2P networks provide the only useful template, because they share so many characteristics with today’s social-media networks.

Garland, who was there, says tools designed to measure user behavior on file sharing networks led directly to tools that now mine licensed networks like Facebook, imeem, MySpace and YouTube.

When it comes to “where and how people stream, download, watch, listen to, blog about or otherwise make use of or interact with music,” said Garland, “file sharing ended up being the blueprint.”

And it’s a good thing that blueprint was there, from the labels’ and studios’ perspectives, because today’s social-media networks contain even more user data than P2P networks do, and that translates to a bigger opportunity to monetize them through advertising, recommendations and, yes, the occasional sale.

In addition to teaching them how to mine social networks for user data, file sharing taught the content industry that it’s often more efficient to address networks than users. On one hand, this sort of thinking led to The Pirate Bay lawsuit. On the other, we have Choruss, Warner Music Group adviser and digital music guru Jim Griffin’s plan to license universities, then ISPs, to allow subscribers to download and upload as much music as they want for an overall, royalty-like fee.

“Asserting property rights and attempts at control have cost the sound recording industry over a decade of licensing revenue [and trading] control for compensation,” said Griffin during his Digital Music Forum East keynote. “Monetizing friction-free access to music will require swinging to the next vine, and when we make that transition we’ll uncover a bigger music service business that’s been too-long trapped in the too-small body of an old product-based business of control.”

The Choruss plan and the RIAA’s official shift away from suing individuals are acknowledgments on the part of the music industry that file sharing will always be a factor, so it could be simpler — and even beneficial — to lump licensed and unlicensed services together under one monthly fee tacked onto users’ ISP bills. (ESPN and other video networks already do something similar.) Love Choruss or hate it, Griffin would never have come up with this efficient way of addressing social-media consumption if file sharing networks had never existed.

Finally, P2P accelerated the development of products that people want to purchase when free alternatives exist. Whether music sales are competing with The Pirate Bay or imeem, the answer is the same: Sell ads against free content, and try to sell people something they can’t access through the free alternative, be it bonus materials, instant access, concert tickets or whatever. Witness Radiohead’s infamous deluxe box set, the recently launched iTunes pass (essentially an album subscription), Josh Freese’s crazy album extras, or iPhone apps that deliver an artist’s latest creations in near-real time.

File sharing networks forced an industry notoriously set in its ways to acknowledge the enormous power of the internet to distribute music through social channels — if anything, increasing its odds of thriving during the inevitable social-media era.

Lawsuits like this one against The Pirate Bay make sense on the surface. On another level, they’re a funny way of saying, “Thanks.”

From Eliot Van Buskirk and Wired:

Trent Reznor gave this interview to Digg recently.

“I can give you free music, and in my opinion, it may contribute to more people showing up to a show,” he says. “It’s not up to me to give you free music, it’s free anyway, you know for anybody that wants to admit it. Pretty much any piece of music you want is free on the Internet anyway.”

“We’re in between business models,” he continued. “You know, the old record labels are dead, and the new thing hasn’t really come out yet. So, I’m hoping that whatever gets established puts a lot more power in the hands of artists and more revenue.”

“If you have nothing in common with American Idol, and you don’t want to be The Pussycat Dolls, then you really don’t want to be on, certainly a major record label,” he adds.

“At every fork in the road that (profits) will be what’s put first,” he comments.”Not your longevity, not your vision. How can we make money from you.”


Connect With Fans + Reason To Buy = Business Model ($$)

http://revision3.com/player-v2997

There is nothing new except what has been forgotten. Things have a way of cycling around, and if they are effective, becoming novel again when more recent methods of making progress fade away. Fan financing is picking up steam as a way of raising money to support artists in the face of falling label support. Like the patron model of old, artists are reaching out to their fans, offering incentives and various forms of access for fans that donate money in support of their artist’s work.

This model is not new, but is gaining steam once again. And why not, it works. In the 70’s Cris Williamson, who just spent a week in residence at Berklee used fan financing to raise money for her album projects which helped to start the women’s music movement. She started the first women’s music label, Olivia Records using fan financing as a strategy to fund numerous projects including the label itself. Now lots of artists are returning to this strategy to fund their careers. James Reed has a new story in the Boston Globe on the subject. Enjoy.

Lighters down, checkbooks up
A growing number of musicians are looking to fans, not record labels, to help fund their albums and tours. And giving has its perks.

By James Reed, Globe Staff | April 12, 2009

Ellis Paul, a veteran singer-songwriter who first made his name in New England’s folk clubs in the 1990s, found himself in a disconcerting position last year. He had decided not to renew his contract with Rounder Records, his longtime label, but wanted to make a new album.

With no immediate ideas for funding, Paul took a novel approach: He enlisted his fans, posting a letter on his website asking for donations. Since July they’ve surprised him by contributing more than $90,000 through a Framingham-based online service called Nimbit, along with checks sent in the mail.

“When you’re only selling 20,000 or 30,000 records, you don’t really need a label,” he says. “We figured we could do this in-house, but we just needed the money, and where was the money going to come from?”

In a growing trend reminiscent of the old-fashioned ways of artists and patrons, musicians around the country – including local singers Mieka Pauley, Mark Erelli, Kris Delmhorst, and former Throwing Muses singer-guitarist Kristin Hersh – are depending on their fans for unprecedented financial support. And it’s not just limited to American artists. In France, singer-songwriter Grégoire channeled fan funding through the website MyMajorCompany.com and released “Toi + Moi,” which peaked at No. 2 spot on the French album charts.

Even as the economy deflates and the record industry continues its downward spiral, indie artists are finding that their supporters are eager to help. In a sense, the fans are replacing – or at least augmenting – the traditional role of a label, which previously would have financed the album with a monetary advance and then taken care of the promotion and distribution.

Piano-playing songwriter Seth Glier, who lives in Western Massachusetts, is only 20 but has already built a fan base that supported him on a recent monthlong tour. Through online efforts, Glier raised $2,500, which came in handy as he and a bandmate zigzagged across the Northeast and had to pay for gas, tolls, and the occasional hotel room.

The initial goal was to raise $500, which Glier accomplished within two hours and then kept going. Glier admits it takes a certain caliber of artist to ask fans outright for money. “It was an idea I had a couple of years ago, but I have a really hard time asking for help,” he says. “When I was able to unclench my fist, it was great to realize how many people were there for me.”

The fans aren’t technically just giving money to these artists: They’re buying services.

To fund “The Day After Everything Changed,” his new album out in the fall, Paul allowed fans to buy different tiers of sponsorship, ranging from $100 (the “Antje Duvekot Level,” named after the local singer-songwriter) up to $10,000 (“the Woody Guthrie Level”).

The higher the contribution, the greater the goods. For $100, you got an advance copy of the album with a bonus disc of demos and outtakes, along with tickets to one of Paul’s shows. For the top-level contributions, of which Paul received a few, fans got several perks – everything from a one-year membership to Club Passim to a signed acoustic guitar to a credit as an executive producer of the album.

One $10,000 contributor, a Boston-based fan who wished to remain anonymous (“People are losing their jobs and homes right now. I don’t think it feels sensitive,” she explains), says she and her husband couldn’t pass up the opportunity to have him write a song for them, one of the perks at their donation level. They even visited Paul in the studio.

“We left feeling that our donation – as well as everybody else’s – is in very good hands,” she says. “In this day and age, to pull out your pocketbook, it’s got to be something pretty compelling.”

Karen Zundel, a librarian in Pennsylvania who’s been a devoted Ellis Paul fan for 12 years, says she even saved up for her contribution because it held more importance than your typical splurge. “The arts are what sustain us and bring individuals and communities together and help us to connect with our innermost beings,” Zundel says. “A new car won’t do that. When you buy a new car or a new outfit, you get that little thrill that lasts very temporarily, and then it’s gone. But I think art really sustains me. It lasts.”

But the way that art gets to the consumer is changing. Dave Kusek, vice president of Berklee College of Music who co-authored the book “The Future of Music: Manifesto for the Digital Music Revolution,” says the role of record labels is declining.

“I personally think unless you need massive radio airplay, there’s very little reason for record labels to engage with artists anymore,” he says. “It’s a relic of the past in that artists today can find other ways to get to the market, to get money, to distribute their product in a way where they have a lot more control.”

Kusek acknowledges there are pitfalls to blazing a new trail with fan funding, though. “I do think there’s some risk if you don’t deliver,” he says. “Essentially, you are relying on people’s trust in you. They’re effectively loaning you money in the hopes that they’ll get something in return. So if you don’t come through, you’re running the risk of alienating your fans and eliminating those relationships.”

Jill Sobule, who rose to fame in the mid-1990s with the ubiquitous hit “I Kissed a Girl” (long before Katy Perry swiped the topic), recorded “California Years,” set for release on Tuesday, with the help of $80,000 from fans after establishing a website, www.jillsnextrecord.com, specifically for the project.

“I know some people say that’s a lot to record a record,” she says, “but it’s also for everything a big label is supposed to do: publicists, marketing, promotions, distribution. I’ve pretty much used all of it.”

Like Paul, Sobule offered various services at different price points. For $10,000 one lucky contributor got to sing on a new song. Sobule says she vetted the idea with her fans first. “That’s really important: You leave out the middleman and go directly to the fans and talk to them,” she says.

The one thing she hadn’t counted on was the level of freedom fan funding brought her, both financially and creatively. “In the old model, you’d have to sell 150,000 albums for people to think you were successful,” she says, “and now you don’t have to.”

“It definitely is humbling,” she says of asking fans for money. “I feel like I better do the job for my fans. I better bow down to them more than a record label. They’re the ones in control now, in a way.”

James Reed can be reached at jreed@globe.com.

By Gillian Shaw, Vancouver Sun

“Music CD sales have dropped by half from their peak a decade ago, but unlike the decline of vinyl records and 8-track tapes, the current shift is bringing with it a wholesale transformation in the delivery and distribution of music.

The format change started with MP3 files, but digital music also brings multiple distribution channels — from the free sharing of music, to iTunes and other paid download services, to more futuristic channels that could see us making micro-payments to call up songs on the refrigerator while we cook dinner.

The recording industry, which failed to adapt in the early days and instead sought to hold back the change, is now paying the price. But for artists and consumers, the shift is opening up opportunities in accessibility, and lowering barriers to entry for a music career.

“CDs are being replaced by MP3 files, and the only problem is the record labels never figured out a way to charge for MP3 files until it was too late,” says Dave Kusek.

Kusek is vice-president at Berklee College of Music, a co-developer of the Musical Instrument Digital Interface (MIDI); co-inventor of the first electronic drums at Synare; founder of Passport Designs, the first music software company; and co-author of the book The Future of Music: Manifesto for the Digital Music Revolution.

“It is a format change, and the record industry had its chance when Napster first came out. They had the chance to license Napster for all their music,” he said. “If they had done that, I believe the recorded music industry would be in a much more healthy state than it is today, or ever will be again.”

Instead, the recording industry decided to sue Napster. And while it may have won that battle, it turned out to be just one skirmish in a war that would see the free exchange of music only increase.

In the U.S., the industry took consumers who were sharing music files to court, but it has since abandoned that tactic.

Most recently in B.C., a Vancouver company is taking on the recording industry in a B.C. Supreme Court case, asking the court to confirm that it is not infringing copyright with websites that allow users to search BitTorrent files on the Internet to find movies, music and other content.

Apple cashed in on the digital music craze with its iPods, picking up much of the revenue that CDs would have generated. But paid services such as Apple’s iTunes, Amazon and others still account for only a small portion of the music people listen to on their computers and other devices.

“If you look at the several billion tracks that have been sold on iTunes, that is a couple of months worth of file-sharing traffic in MP3 files,” said Kusek, who runs a consulting business, Digital Cowboys that has clients such as Nokia, Pepsi, BMG, EMI and others. Kusek also blogs at futureofmusicbook.com.

“The entire history of iTunes is [equivalent to] a couple of months of downloaded shared music,” he said.

Kusek sees a future in a type of blanket licence approach, similar to cable television’s.

“I think if it is going to happen, it is going to happen in the mobile space rather than in the computer space, although those two will merge,” he said. “The idea of selling a recording for a dollar-plus per song or $15 to $20 per disk has probably gone, or will be gone in the not-too-distant future.”

While hundreds of millions of CDs are still being purchased, sales are in steep decline. Sales of digital music in the United States grew almost 30 per cent last year, but sales of CDs dropped, with the forecast for 2009 putting them at half the level of their peak during the CD boom in the late 1990s.

According to a report by Forrester Research, U.S. digital music sales — downloads and subscriptions — will grow at a compound annual growth rate of 17 per cent over the next five years, putting digital music on track to make up 41 per cent of the music market in 2013.

The growth in these purhcases won’t compensate for the decline in CD sales, leaving the overall music market shrinking by a compound annual growth rate of 0.8 per cent, to $9.8 billion US in 2013.

“I think it will become more of a utility, a service that you subscribe to that is bundled into your bill, and you get your music that way,” Kusek said.

While CDs can be played in a variety of devices, from a car to a living room stereo to a boom box on the beach, there are far more variations for digital music.

“I have a pair of sunglasses I can play music in,” Kusek points out with a laugh.”

Read more from Vancouver Sun article.

Terry McBride gave a lecture at Berklee College of Music earlier this month. Here is a synopsis from Ariel Publicity.

A song is an emotion

They stopped releasing music they thought would sell and began releasing music they loved and felt emotionally connected to. The old school music business views a song as a copyright. McBride coaches that the music business is simply “the monetization of emotions” and that copyright as we know it will soon become irrelevant. Emotions move and are transferred freely. Nettwerk practices something called “collapsed copyright”. Nettwerk encourages its artists to record under their own label. Nettwerk will represent these artists, but the bands retain ownership of all intellectual property. The bands can expect to earn considerably more money and in turn can give away more free downloads. McBride calls this “cosmic karma” as studies show that albums containing songs that were offered free sell more than those with no free downloads. The free downloads allow fans to connect with a song as well as the artist as an emotional brand and are more likely to purchase the album.

Fans connect to a particular song because it evokes a certain emotion. That emotion grows an importance and eventually becomes a bookmark in their lives. We’ve all experienced a time when we heard a song from our past that we once played over and over and over again. We built an emotional connection with that song that instantly takes us back to the summer before junior year, or whenever. It’s that emotional connection that makes you feel the need to rave to a friend about a song or drag them to a concert. The emotional connection makes Nettwerk truly believe in their artists as an emotional brand and that millions of others will love their music as much as they do. Like it or not, love is contagious.

Music is social

Gatherings used to be centered around food and music but for a while music became somewhat elitist. You had to be some musical genius that was too cool and cared about nothing but the music or a wealthy socialite who could afford all the luxuries. Video games like Guitar Hero and the growing affordability of recoding programs and equipment have made music for everyone again. Remember that friend you dragged with you to a concert to show them how amazing that band was? As it turns out they loved them too and raved to their 20 friends who raved to their 20 friends and so on. Well now with the evolution of social media thanks to sites like Facebook, Myspace, Twitter, etc., the circle of friends has grown to 200 plus and by the end of the day with just the ease of a status update thousands of people have been reached.

Digital 2.0

As music returns to its emotional and social roots, McBride predicts a rapid change as we move from what he calls the “Digital 1.0” era into the “Digital 2.0” era where the accessibility of music and social media has grown legs and is now traveling with us on the train and down the street in the form of smartphones such as the iPhone. But the iPhone is just a dieter’s slice of the pie. Different models of RIM Blackberry smartphones ranked #1, #3 and #5 in best selling phones in North America. Plus the Palm Pre and the anticipation of Dell launching a new smartphone means that mobile social networking in America will soon catch up to the estimated 12.1 million users in Western Europe.

In this “Digital 2.0” era McBride points to the success of Apple “Apps” store, which has over 15,000 original applications and over 500 million downloads.

“Apple has allowed us, [the consumers] to be the world’s largest developer and create apps based on our needs,” McBride explains, “And the explosion of imaginative apps like Shazham and Slacker has just started.”

McBride throws the idea out of a digital maid application that would clean and organize your digital library, saving you the time of having to dig through files. He also requests a digital valet that drives new music to you based on your preferences or a friend’s library and parks it in a suggested music garage. He anticipates that in the next 18 months there will be “apps to help create apps for those of us who are not programmers but have a great idea.” RIM plans to open up their app store this March to reach 150 countries and over 450 providers. Add the Google Android store, Google “Hero”, Microsoft “Skymarket” and Nokia “Opera” and you’ve got yourself a full-blown application revolution.

Context is King

McBride points us in a new direction from what was previously a “content is king” mindset to “context is king”. Meaning that our emotional connection to music is all based on the value of how we perceive something versus the actual content. The smartphone replacing the PC (or Mac if you will) is a foreseeable prophesy of McBride’s and could possibly leading to the demise of even, yes… your precious mp3 player. He explains how new apps will shift behavioral patterns of consumers in the same way CDs and online media ushered in the on-demand generation. Smartphones have already begun creating models that temporarily store the music files in the “cache” instead of the hard drive. McBride describes this process as “a gradual download, it’s not permanent because your Valet/Maid app is changing the selection based on your needs, thus helping solve issues such as memory, choppy streaming and draining of batteries.”

This means that the music business must create rich meta data behind our music files to work with apps in order to keep up with this new form of consumption. McBride highlights the opportunity to raise the value of music then, he says, “Context will be king.”

Future of Music Book

I was recently interviewed by Carter Smith of Rollo & Grady on The Future of Music.

R&G: What was the reason behind writing “The Future of Music?”

Dave: Gerd [Leonhard; co-author] and I became friends at Berklee. He did a few projects with the music business department, which is how we got to know each other. We started talking and found that we had a lot of common ideas about what was happening in the music business. I ran Berklee Press, so I had a way to publish the book. We just started putting ideas down on paper. There wasn’t as much blog action then as there is today. It was probably 2002 or 2003 when we really started to write the book, so we figured, ‘Okay, we’ll publish it in book form.’ Our motivation was, ‘How can we help people understand what we think is going to happen?’ Both Gerd and I had done lots of panels and music shows – South by Southwest, all the digital music ones, Billboard and many gigs like that. We thought, ‘How can we pick some of these ideas and package them in a form that would be digestible and widely available to people at a reasonable price point?’ That was the genesis of it all. Honestly, it all happened so quickly that I kind of wish we could do it all over again. It was fun. It was a very condensed period of time. There were a lot of things that obviously were changing and happening, and there were a lot of things that weren’t so obvious. For example, I don’t think there was an iPod when we first wrote the book. That happened during the publishing and editing process. There was no iTunes music store, no MP3 blogs to speak of and no Amazon.com selling downloads. eMusic might have been there. It was all so early. Everything was happening so rapidly. We just tried to gather up as much as we could that was obvious and make some stabs as to what might happen.

R&G: Can you discuss the process of writing the book?

Dave: I learned a lot from Gerd during the process. I was more on the ground with the musicians. My whole career has been helping musicians and artists create their art, take their art to market and most recently teaching them about it. Gerd was more in the consulting end of things, talking to the likes of Nokia, Apple and Sony. I learned a lot about what was going on in the corporate world that I hadn’t been exposed to. I think we pushed each other because I would often argue that, ‘Man, we’ve got to talk to the artists and writers and managers, not to your consulting clients, because most of these people aren’t going to understand what the hell you’re talking about.’

R&G: “Music Like Water” the David Bowie quote meaning music becoming a utility. Do you still believe in that?

Dave: I think it’s inevitable. Music has always been free. It started off as a live performance. You’d go to a party, to a friend’s house, to a show, to the theatre or an event and music would be there. You’d be dancing and laughing and happy and singing. There was no idea of a business other than maybe the performers wanting to get paid. Throughout the technological phase of the last seventy or eighty years, there was always a free form of music, such as radio. The single most influential technological phenomenon in music was radio. It brought music to everybody, and it was free. Now we have gone through this pre-packaged, packaged phase of music, with vinyl, cassettes and CDs. That was a way for labels to control distribution and squeeze profits out of people wanting copies of the stuff they heard on radio. But once that leapt into the Internet, music became free again.

R&G: By free, do you mean file-sharing and uploading CDs onto your computer hard drives?

Dave: Both. People have been trading files for years. It started out on Usenet, which predated Napster. You remember Apple’s “Rip, Mix, Burn” campaign? It was really all about enabling the digitalization of music and unlocking it from the plastic that it was bound to. I don’t see it as a big deal that music is free again and in a higher quality format that is randomly accessible to the file-sharing networks or the services that we have now, some of which are “legitimate” and some aren’t. It’s not a very big deal to me. It just seems normal. The utility idea already exists on your TV. I have Comcast service here on the East Coast. We have Music Choice, which is essentially digital radio on your TV. There are 30 or 50 channels of music that are programmed and streamed to my house constantly that I pay for on my cable bill every month. I’ve been doing that for fifteen years. I have no choice about it. I just do it. It comes with HBO and the basic cable service. So there already is a music utility that millions of consumers in the U.S. have paid for many years. Why can’t that service just get a little bit better? If you add a random access mechanism where I can select what I listen to at a finer level than just picking the channel that Music Choice gives me, the service becomes better. I think it’s inevitable. I don’t understand what all the teeth gnashing is about. That’s a personal opinion.

R&G: What role will labels play in the future business models?

Dave: The major labels are going to be able to sign new artists, so they will have influence. But I think the indie labels and the no-labels that artists are forming – their personal labels – are going to be just as influential. If you get a super-hot band that decides they’re going to help pioneer a new format or a new distribution vehicle, and people love the band, they’re going to pick that up. They’re going to inherit that into their life. If enough new bands do that and connect with their fans, that will matter way more than what the four big record labels do. Eventually, they’re going to come around and say, ‘Oh man, we’ve got to get on this bandwagon,’ as opposed to doing it deliberately. You can see in the last four or five years, and particularly in the last two years, that labels are willing to abandon DRM, experiment and take a little bit more of a risk in how their music is put out there, which they absolutely, categorically refused to do four or five years ago. The rest of the music world is pulling them along. The fans and the new music are pulling the bigger labels into the future, as opposed to the big labels setting the pace. I think those days are over.

R&G: The majority of people I talk to feel that the next killer app is a filter that will enable users to find music they enjoy.

Dave: I think that’s certainly a critical element of whatever system of music delivery we evolve into. Findability, discovery are going to be critical features. I don’t know that there’s going to be a technological solution to that problem. Again, various forms of word-of-mouth have driven the popularity of all music through the years. So, to the extent that we can supercharge that word-of-mouth that’s happening in blogs like yours and services like Last.fm and Pandora that are kind of aggregating the opinions of others, uncovering and making those available, I think that’s going to be very important. But again, I don’t see how that’s any different than my telling friends in 1963 that I heard this cool band on the Ed Sullivan Show. It’s the same thing.

R&G: What do you think of blog aggregators such as The Hype Machine and Elbows?

Dave: I frequent The Hype Machine. Elbows, I’ve looked at a couple times. I think it’s a great thing. The more somebody can make it easier for people to find music they’re going to like, the more value that entity will gather. I don’t know that a computer-based search is going to be the ultimate winner. I tend to doubt it. I think it’s going to be more in the mobile space. It still blows my mind that people sit in front of their computers and listen to music on these absolutely shitty little speakers. They’re listening to crappy files in an uncomfortable chair. When I grew up, having a killer stereo was all that mattered, other than a car and a girlfriend. The stereo/audio business has completely gone away and been replaced by shitty ear-buds from Apple and MP3 files. It blows my mind that people tolerate that. I think it’s impacted the experience of listening to music, how you listen to it, how you enjoy it. So I’m not sure that a computer-based model is going to get enough traction to supplant other ways of acquiring, listening to and finding out about music. I think it needs to be easier, better sounding, portable and more integrated into your life. It needs to get outside of your bedroom or den.

R&G: I read on your blog that Douglas Merrill, President of EMI Digital, said he agreed with data that suggested file-sharing is good for the music industry. I found that interesting, but he also came from Google and didn’t have any experience in the music business. Do you see a trend in technology guys coming to the labels and figuring out how they can make this work; a technology guy versus the old-school music guy?

Dave: Not necessarily. I think the great labels of the past were run by music people who understood what the artists were all about and how to create great product, great songs and how to put great people together. I don’t think we can wave a wand and put a bunch of techies in the driver’s seat, and everything will suddenly be good. You need educated people that understand the technology, the music, the creative process, the marketing and the relationships with fans. As those skill sets get implanted in the people running the companies that matter – not just labels, but publishers, touring companies, marketing companies and distribution companies – then things will get better. I’m pretty confident of that, but I don’t see technology solving the music industry’s problem.

Read more great interviews here at Rollo & Grady

“In a digital world there’s no up-front cost to have infinite inventory that replicates itself on demand as a perfect digital copy and it only does that after it’s been authorized to do so, which is usually with a purchase. It has really been a shift from having infrastructure and access to distribution to just having access to distribution.” -Jeff Price

My friend Charlie McEnerney recently interviewed Jeff Price of Tunecore. Here is an excerpt. Listen to the complete interview here.

“As anyone who buys music knows, the way we are finding it and buying it has changed radically over the last 15 years.

For musicians, it used to be that if you wanted someone to release your music, you’d have to get the attention and approval of an artist and repertoire (or A&R person) at a label, work to sign a deal either big or small so that the label would then press up your product and work with distributors to get your vinyl or 8-track or cassette or CD to ship them out to record stores where the music fan could have access to them.

Now, all you have to do it is get some audio files online and instantly be able to have your music available to the current online global audience of 1.5 billion people, which is still just about 23% of the world’s population, so the potential for reaching new audiences continues to grow. As mobile devices get smarter, it’s inevitable that consumers will be downloading more music and playing it without a desktop or laptop computer even being involved, too.

As a result of the rise of digital download stores such as iTunes and Amazon mp3, the need has come for new companies to aggregate songs and distribute them out to all these growing online stores.

That’s where TuneCore comes in.

After SpinArt, Price went on to work with eMusic.com, first as a consultant, then as interim VP of Content Acquisition, and finally as the Senior Director of Music/Business Development. He contributed towards the creation of eMusic’s initial business model and created and implemented the first subscription-based music sales and distribution structure.

In 2005 Price started TuneCore, which is an aggregator which helps get digital music into online stores such as iTunes, Amazon mp3, eMusic, Rhapsody, Napster, Amie Street, Groupie Tunes, ShockHound.com, and lala.

TuneCore has also been in the news in recent months as some very mainstream acts have used the service to get their music direct to consumers, including Nine Inch Nails and Paul Westerberg. Just a few weeks back, it was announced that Aretha Franklin would be using TuneCore to distribute her version of My Country Tis Thee that she performed at the Obama inauguration.

TuneCore’s competitors are services such as IODA, The Orchard, and CD Baby and I discuss with Price about what makes TuneCore different from these services.

This episode includes music from a variety of independent music that has been submitted to be for Well-Rounded Radio.

Listen to the interview here along with some great new music.

My friend Terry McBride was recently interviewed by Carter Smith of Rollo & Grady. Talk about the Future of Music, Nettwerk is doing it now. Here is the interview:

R&G: What made you decide to focus your business on digital products versus physical ones in 2002?

Terry: It was an intuitive thing for me. Obviously, digital had been seeping into our world for about three years and the Napster effect was apparent. Being a small company and working directly with artists, we could really hear and see what was starting to happen. It was a realization that fighting it wouldn’t work; understanding it and being able to grow it was what was going to work. It was a psychological shift for us. It took a few years to get the rest of the company and analysts focused towards that, but that was the psychological shift for me, which means that the company shifts.

R&G: About 80% of your business is from digital sales now, right?

Terry: Yes, that’s correct.

R&G: Why did you drop DRM in 2003?

Terry: I didn’t see any purpose in locking down files; it made no sense to me. People have always been sharing music. Why would I want to stop them? Why would I want to tell them what to do? The way to win was to get them to support my artists, not to force them to do it a certain way. I know I wouldn’t like anyone telling me that.

R&G: You recently spoke about cloud-based servers, mobile applications and smartphones being the future of the music business.

Terry: What’s happened in the last ten years is kind of moot. The next 18 months will determine the future of the music business. It’s a situation where the turnover on phones by the average consumer – now I’m being generous here – is every two years. It’s probably shorter. The smartphones that are starting to dominate the marketplace are specific platforms now open to applications that are being developed outside of the R&D departments of all of the various carriers. Apple, when they opened up their App Store, I think they sold, what, 150 million apps in maybe 9 months. It stunned the world, and Apple is a small player. They might be a noisy player, but they’re a small player within the mobile space. Research In Motion launches their store this month, Nokia is launching Ovi in April and Google has already launched their Android site. You’re going to see millions of applications come onto the marketplace. You’re going to see social filtering of the really good ones, and what’s going to be in there are applications that change the behavioral habits of how you consume music. The need to download music will no longer exist. If anything, it will be a hassle. You’ll have smartphones that can probably handle two to three hundred songs. That’s a gradual download; you’re actually not streaming it. It’s actually on your phone but it’s pulled from some sort of server, whether it’s your own server or a cloud server. To make all of these applications work, you have to have really good metadata, which means that business has to focus its efforts on really good metadata. Rich metadata is going to work with all of these applications. You’re going to see digital maids, digital valets. You’re going to see applications for maybe five bucks a month where you can access all the music that you want, how you want it, when you want it, imported to any device. So why would you want to download? Why would you want to go online to try to find it for free? Besides, something you find free might not work with these smartphone apps. Five bucks is no big deal to have unlimited access. That’s where everything’s going. All of the current arguments and debates are moot. I would even say that the ticker has now started on when the iPod goes away. I think Apple saw that.

R&G: So their primary focus will be to promote the iPhone?

Terry: They’ve been pushing the iPhone more than anything, and when they opened up their App Store, their intuitions were proven right. It is the App Store that has driven iPhone sales.

R&G: Do you think the major labels will sign off on these applications?

Terry: I don’t think they have any choice in the matter. It’s really just a subscription model, but it’s the application. A subscription model has never worked to date because it’s always been a hassle. It only works on your laptop, you can’t port it between devices, and it’s always streaming and always a pain in the ass. Last.fm and Pandora have been nice, but transferring that around has been really difficult. The applications coming with these smartphones will change all that and make it a hassle not to use them. Downloading will seem like a hassle two years from now. It will be like, ‘Download something? Are you nuts? Here, I can instantly access it. Watch, I’ll just type it in and my valet will go find it for me.’

R&G: Your valet, meaning your filter?

Terry: It’s an app. You’ll program your valet to look at what your 20 closest peers are listening to and create something for you to listen to. Maybe you’re a Led Zeppelin fan and all you want to hear is Led Zeppelin today. Maybe something bad happened and you want to listen to Sarah McLachlan today. Your valet will do that for you, and your digital maid will clean up your library for you.

R&G: That will be huge. It will make music consumption easier for the end user.

Terry: I always call it the hassle factor. It’s a hassle right now to be part of a subscription model. It’s even a hassle to download. These smartphones are radically going to change that. I mean, with Shazam you go, ‘What is that song?’ and you can instantly know what it is and instantly buy it, if that’s what you want to do. Slacker is the first one that comes close to being a digital valet. It’s only going to get better. Anyone with a really good idea can actually make it happen. You’re going to see this coming out of garages and university dorms, not Apple and Blackberry campuses.

R&G: You’re a member of the RIAA. What are your thoughts of them monitoring ISP usage?

Terry: Here’s my whole view of this, and this hasn’t changed for quite a long time. Out of all of the sharing of music, who’s making an economic return? Whoever is should then share that with all the people that allowed it to happen, creating a nice alignment of interests to grow any business. A lot of the providers have viewed music as free content, while at the same time paying for the cable content to grow their networks. They’ve been making money off the backs of the artists without any compensation for the artists at all. I think that’s fundamentally wrong. I’ve also said it’s fundamentally wrong to go after the consumers that are using that opportunity. That’s not the right approach either. The phone companies and the cable providers have gotten away with murder in this whole situation.

R&G: What’s your opinion on music blogs?

Terry: I love music blogs because they’re music fans. They’re authentic and passionate about music. They’re no different than me. All they’re doing is spreading the word about stuff they like. The authentic will rise to the top, which is why I like aggregators like The Hype Machine. I think it’s brilliant. It’s a great way of seeing what music fans are talking about versus some other filter. I’d rather the filter be a social filter, and then you can go into niches. Maybe it’s a bluegrass filter or a country filter or a hard rock filter or an ambient filter. Whatever. Those people are really passionate about that music. You know what? That’s what it’s about. Songs are not copyright. Songs are emotions.

Read more great interviews at Rollo & Grady here.

From SPIN.COM

MC Lars, a self-proclaimed “post-punk laptop rapper,” may be best-known for his fast-talking rhymes about Hot Topic stores and hipster girls, but the Bay Area musician is notably literary, and therefore a fitting participant in our ongoing series of musicians talking about their favorite books. Not only has MC Lars penned songs about Moby Dick, Edgar Allen Poe’s “The Raven,” and Hamlet, he’s also published a book of his own poetry called Bukowski In Love.

For his SPIN.com Book Club pick, Lars veers away from iconic works of literature, instead choosing a practical tome for anyone making music these days: The Future of Music: Manifesto for the Digital Music Revolution, authored by two veterans of pop music who outline the music industry’s digital future.

SPIN: Why did you pick this book?
MC Lars: I studied English literature in college, but in a few years I want to do a PhD in media studies, so I’m always reading books about music technology and the digital music revolution and the evolution of content and new media economics. I read this book because one of the authors, Dave Kusek, is a professor at Berklee College of Music and he’s a really smart guy [who actually was one of the co-developers of MIDI technology, a revolutionary development in electronic music]. It’s really influenced my philosophies on technology and media and it’s also really influenced my business model as a guy with a label.

How many times have you read it?
Three times. It’s a good one.

Do you reread the whole thing or do you just have sections you go back to?

What happened was I read it casually and then I read closely and then I read it again because I wrote a song that was inspired by it. I took some of his philosophies and made it into lyrics. It’s called “Download This Song.” The author heard my song, and on the website for the book they did a little piece about how the song reinforced those philosophies. It was really cool to have this author I really love like the song I wrote about his book.

Read the Spin Article here.

My friend Bruce Burch teaches at UGA and recently had musician Corey Smith in to guest lecture. I have written about Corey before. Here are three clips from the class where Corey talks about his life, his music, his career choices, the influence of The Future of Music book on his business and more. Enjoy.

Corey Smith – Part One

Corey Smith – Part Two

Corey Smith – Part Three

Here’s a Song

Here is a very interesting study of how Netflix took on the better financed and entrenched players of the day, and took over. This is a true digital revolution and a cash machine to boot. There is a lot to be learned here from studying this model. I invite your comments below.

Netflix is a solid example of the Long Tail concept.

“Customers have flocked to Netflix in part because of the firm’s staggering selection. A traditional video store (and Blockbuster has some 7,800 of them) stocks roughly 3,000 DVD titles on its shelves. For comparison, Netflix is able to offer its customers a selection of over 100,000 DVDs, and rising! At traditional brick and mortar retailers, shelf space is the biggest constraint limiting a firm’s ability to offer customers what they want when they want it. Just which films, documentaries, concerts, cartoons, TV shows, and other fare make it inside the four walls of a Blockbuster store is dictated by what the average consumer is most likely to be interested in. To put it simply, Blockbuster stocks blockbusters.

Finding the right product mix and store size can be tricky. Offer too many titles in a bigger storefront and there may not be enough paying customers to justify stocking less popular titles (remember, it’s not just the cost of the DVD – firms also pay for the real-estate of a larger store, the workers, the energy to power the facility, etc.). You get the picture – there’s a breakeven point that is arrived at by considering the geographic constraint of the number of customers that can reach a location, factored in with store size, store inventory, the payback from that inventory, and the cost to own and operate the store. Anyone who has visited a video store only to find a title out-of-stock has run up against the limits of the physical store model.

But many online businesses are able to run around these limits of geography and shelf space. Internet firms that ship products can get away with having just a few highly-automated warehouses, each stocking just about all the products in a particular category. And for firms that distribute products digitally (think songs on iTunes), the efficiencies are even greater because there’s no warehouse or physical product at all (more on that later).

Offer a nearly limitless selection and something interesting happens: there’s actually more money to be made selling the obscure stuff than the hits. Music service Rhapsody makes more from songs outside of the top 10,000 than it does from songs ranked 10,000 and above. At Amazon.com, roughly 60 percent of books sold are titles that aren’t available in even the biggest Borders or Barnes & Noble Superstores4. And at Netflix, over two-thirds of DVDs shipped are from back-catalog titles, not new releases (Blockbuster outlets do about 70 percent of their business in new releases). Consider that Netflix sends out 45,000 different titles each day. That’s fifteen times the selection available at your average video store! Each quarter, roughly 95 percent of titles are viewed – that means that every few weeks Netflix is able to find a customer for nearly every DVD that has ever been commercially released.”

From John Gallaugher David becomes Goliath – Netflix case study

There are many lessons in here for the music business to pay attention to.

(Friday Feb 6th, 2009) the digital distributor to college campuses Rukus shuttered its doors with this notice: “Unfortunately the Ruckus service will no longer be provided. Thank you,” That means lights out for a number of colleges, universities and students who had signed up for “free” ad supported music.

Ruckus, first hatched in 2003, was acquired by TotalMusic, a collaboration between Universal Music Group and Sony Music Entertainment.

TotalMusic itself (reported on here in 2008) is also now being shuttered, at least according to details shared by Vice President of Product Management Jason Herskowitz in Digital Music News.

“I regret that we didn’t get to show you guys more about what we built – but in these extremely hard economic times it’s hard to blame them for pulling the plug on a still-highly-speculative offering,” Herskowitz offered. “I only hope that someone else figures out how to crack this music-on-the-web nut in a way that is a win for everyone in the value chain,” Herskowitz continued. “The problem is that to make a music service a win for everyone, all of the famished participants have to sit at the table – and be content to let all the others have a little bit to eat, even though they are still hungry themselves.”

It is clear that protected music locked up in a highly controlled service is just simply not what the consumers want anymore, if ever. Continued pursuit of a rights-managed solution that attempts to preserve the status-quo of copyright holders controlling the distribution of music is futile. No more money needs to be wasted on looking backwards.

Instead, lets all come together and help to create systems that embrace frictionless distribution of music and respect the desire of the music consumer to select what they want to listen to. If we make it easy for them to find what they want, more will come. If we make it cheap enough so that the music appears to be free, move will come. If we make it possible for people to spread the word on a new service that suits their needs, more will come. We need to look forward, not backwards and admit that the old game is over and a new game has begun.

I met with Derek Sivers this past weekend (founder of CD-Baby) and asked him what he thought about the recorded music business and the decline in CD sales. He said “well I’m not quite sure what you mean Dave, as sales of indie music at CD Baby have increase at least 30% in 2008 over 2007.” What CD Baby does is provide a way for indie artists to sell their music online in CD form, to sell their music online in digital form and to provide distribution for artists who had none. Many of these artists are thriving now because Derek was willing to think different.

TuneCore is another service that lets artists put their music online for distribution through iTunes, Rhapsody, Amazon, eMusic and other services for a small up-front fee. This is a radical business model that looks forward, not backward, and pushes indies artists ahead on their journey.

New companies such as Lala, iLike, TopSpin, ReverbNation, SonicBids, Nimbit and many, many others are taking radical new approaches to indie artist promotion and distribution that will change the way that the music business functions. Connecting artists directly with their fans in a meaningful way that respects that relationship and lets it thrive is the way of the future.

Artists need to band together to assemble the knowledge and power that is required to propel them into the future. Watch this space for much more on this subject in the coming months. It is time for a revolution in thinking about music commerce and sustainable models for artists and their fans to connect and engage and prosper and interact. This is what the future of music is all about.

Listen to this episode of “With A Voice Like This” where I am speaking with Jim Goodrich about the future of music.

It’s been four years since The Future of Music book came out and this radio interview starts with what has changed and what has stayed the same since the book was published. But there’s a twist. At the beginning of the show Jim asked that we not focus on the technology itself, since the book had so much more to offer than just a discussion of technology. Among other things we talk about what’s going on in China currently, the Universal Mobile Device (UMD) and of course, the Music like Water concept.

Listen to the interview here.

Download the MP3 file here.

If you are into music as a career, you got to watch this.

Narrated by Forest Whitaker, BEFORE THE MUSIC DIES is an unsettling and inspiring look at today’s popular music industry featuring interviews and performances by Erykah Badu, Eric Clapton, Dave Matthews, Branford Marsalis and a wide variety of others. The documentary film has built a passionate following as “the most important film a music fan will ever see” (XM Radio) by providing “a balanced overview of the state of the rock scene of America” (WSJ) and adding “passion to the eternal debate about the industry” (NYTimes).

Since its release in November 2006, the film has screened over 200 times in over 130 North American markets with hundreds of additional events anticipated worldwide during 2007. (I wonder how many times this is going to be watched now?)

Use this site to learn more about the film, where you can see it, ways you can own it, and – most importantly – how you can get involved in sharing it with others.

Before the Music Dies

I have know Terry McBride for many years now and have had the privilege of working with the entire Nettwerk team on overall strategy a while ago. I am very proud to see some of what we worked on taking shape. What I love about Terry is his ability to act on ideas very quickly and make things happen one way or another. He is not afraid to experiment. He is also not afraid to take risks and transition his revenue model to something that makes more sense and is sustainable.

He got out front very early on in forming a “network” of companies to manage artists, promote tours (remember LillethFest), create merchandise, distribute both physically and digitally, publish writers and integrate the marketing. He tried memory sticks, free downloads, free stems for people to mash up, artist-owned labels, viral and crowd-based marketing.

I met with him in Vancouver a month ago and am preparing a video interview. In the meantime, here are some excerpts from a fine piece by Mark Glaser at PBS.

“At the vanguard of the movement of crowdsourcing music and putting the fans in control is Nettwerk Music, a record label and band management service in Vancouver, BC, that has become synonymous with digital music and alternative revenue streams. The label completely revamped itself in 2002, putting digital music and Internet promotion at the forefront and downplaying physical CD sales. Fans have been able to remix albums by Barenaked Ladies and rapper K-OS — even before his new album comes out — and Avril Lavigne has racked up millions of plays and possibly millions in revenues on YouTube.

The driving force behind the digital makeover of Nettwerk is CEO Terry McBride, a man who has helped pay legal fees for people sued by the RIAA for sharing music online. After McBride took such a strong stance for digital music — and away from CD sales — he started speaking more at conferences and talking to the media to spread his vision for a “digital valet” service. He thinks we will all end up paying $5 to $10 per month for access to all music, TV and movies, with a digital valet that knows our tastes and finds media for us.

While most music labels have been squeezed by the shift to digital music, Nettwerk has had growing revenues, McBride told me, and he expects 80% of the company’s 2008 income to be from digital and alternative revenues — and not CD sales.

“In 2007, about 70% of our sales on intellectual property was all digital, and this year it will be around 80%,” he said. “A lot of physical sales comes from our bigger artists and we do print-on-demand for our smaller artists, for their mail order or for touring…My stance on file-sharing did not match what my brethren in the music industry believed. I remember giving a keynote speech three or four years ago, and having a lot of pissed off people.”

When did you realize how important digital music would be vs. physical music and CDs?

Terry McBride: We started our whole change internally in spring or summer of 2002. We did it really quietly. We had one of these executive team summits. We looked at where everything was going. We looked at the fact that 25 million [CD] sellers would be 5 million sellers. The fact that million sellers would be quarter-million sellers. And how our existing model would work within that. Would we take the same stance, to protect the castle and fight, or was there a different way of doing it?

The interesting thing then was that we had the initial digital data to look at. We saw a lot of what was happening. And we said, ‘Where will all this be in five years, and will we be ready for it?’ There was a conscious decision made at that meeting to get out of the physical music business. So we decided to retool our whole company and over the next two years, that’s what we did. For a company that had had an attrition rate of 1% or 2%, a company of 120 or 150 people, over the next three years we had a turnover of almost 25% a year as we changed almost everything.

Rather than have a marketing team with marketing meetings, and promotion team with promotion meetings and sales team with sales meetings, we got rid of all that and created silos. We created three teams that had everything from Internet to traditional marketing to sales to IT to promotion — all in one group, and got rid of the meetings. So everything you needed for an artist was in that group. There was no heads of marketing. We shifted from 12 traditional marketing people to 3 traditional marketing people and 8 or 9 Internet marketing people.

Then we aggressively went after every DSP [digital service provider] that was interested in music that we had, and we set up a team to deal with the programming of metadata behind what we were actually doing…All of our marketing is not around albums but around bands and brands. Our marketing is about understanding the social elements of songs, of music, of emotions.

Fortunately we’re a growing business right now. We didn’t protect the castle. We also made the switch at a very good time to make the switch. Avril had broken, Coldplay had broken, Dido was doing amazing, Sarah [McLaughlin] was doing amazing. The Barenaked Ladies were doing amazing. We were flush with cash. If we made those changes now, it would be very very difficult because money is much more tight.

You have been pushing many bands to start their own labels. How did that start?

McBride: That came from a point of view of how do we get collapsed copyright. How do we get an authentic relationship between the artist and the fan? How can we remove everything that we possibly can from the relationship — or between the relationship — of the artist and the fan. Artists owning their own copyrights and being able to be in direct communication is a far more authentic relationship.

There’s a risk and reward to that. If an artist is signed to a major label, then the manager has no risk, but then you’re only getting a commission from publishing and master royalties combined, maybe a maximum of $2 [per CD sale]. With an artist [label], we had to finance it, but we were commissioning off a $5 or $6 net [per sale]. So obviously we get a much better commission, but it’s a much higher risk. With these artist imprints, it takes two to three albums for them to work.

We’ve found in the digital space, that you will sell anywhere between 25% to 50% of your volume from your catalog upon release of any new albums. So you are layering intellectual property. In the digital space, where you don’t need to buy shelf space, if you create the right metadata behind what you’re doing, and market it in an effective way — you’re not marketing the new album, you’re marketing the brand. By the time you make it to album three, you are selling as much of the catalog as the new album, but you don’t have the cost with the catalog and everything starts to make sense.

So I had to get people here to believe in this, and stop people from having a heart attack over the equity we were tying up, which we had no ownership in. But proving the model that you have have an artist like State Radio, which is a great example of an artist who makes a couple hundred thousand dollars a year from intellectual property, which will help finance the next album.

Chad [Urmston of State Radio] just played to 2,800 people with a $25 ticket price in New York on the weekend. He’s marketing a brand, he’s not just marketing intellectual property. Now it all makes sense. He’s happy, he owns his future, his audience has grown with him really well. Now everything makes sense to him, where initially he was unknown and had to work from the ground up.

The Internet marketing team and his manager did a spectacular job of understanding who his tribe is and would be. Out of the eight artist imprints that we launched, seven of them are very profitable, but it took time and selling the managers on the fact that there were no commissions to be made to a certain point. If they signed an artist to a major label there was instant commissions. And it took the lawyers years to get their heads around it because they just didn’t believe in it. It’s taken time, but now the managers are looking at a very steady cash flow, and the artists aren’t fighting for their creative freedom but actually using their imagination — and those are two very different things.

For the marketers of music these days, how has their job changed? It used to be about talking to radio and retailers. Now is it about search engine optimization (SEO)?

McBride: Search engine optimization, the ability to write basic code, understanding how social networks and blogs work together, how to connect that interaction back to the sale of music or monetization of behavior or crowdsourcing music. It’s understanding all of those things, and having a very imaginative marketing plan around the artist vs. around a product. It’s really brand marketing. What are the artists’ causes? Are there cause alignments? Are there other brands we can hook up with to align our causes? And if the other brand is bigger, can we give them free music and get exposure to their audience because it’s like-minded tribes?

It’s basically social marketing. It’s understanding social tribes and peer-to-peer interaction that the social networks have taken from a small group of 20 of your peers to 250 of your peers. And not focused on recommendation engines, but the social aspect of recommendations. So it’s not a computer making the recommendation, but social groups doing it. Looking at the technology but not using it for what it was meant for. That’s what the creative arts do. The technologists build something with a certain purpose in mind, and then the creative people take what the nerds have done and take it in a completely different direction than what people saw coming.

You’re doing a lot of crowdsourcing of music, where you put out pieces of music and let people remix them. Is that about engagement and interaction more than business?

McBride: Well it’s both. We started initially with T-shirts. We found out that the T-shirts that the fans designed — even if the artists didn’t like them — the people who went to shows liked them more than the ones that the artists designed. That was consistent whether it was Barenaked Ladies, or Avril or Sarah — the fans’ T-shirts always sold more. The fans would do the designs and vote up the ones they liked, and filter them to the top, and we would take the top 3 voted designs and put them in production. And they were consistently the top sellers out there.

In 2005, we took it a step further by releasing Barenaked Ladies songs in stems [pieces of the music tracks]. That sparked the idea for the guys who created Rock Band. That was more of a remix. Now I’m more about the mix; to hell with the remix! We have an artist named K-OS, and we released all of the stems two weeks ago, and the fans have not heard the album. It’s not due out until March, so they are actually mixing the album. So we will release physically and digitally the artist version and the fan version. And when we go to radio, we will service the artist version and fan version. So we are taking it the rest of the way.

You can even take it beyond that. With K-OS, we’re thinking about having the audience vote on which 10 to 12 cities he plays in Canada. We might even take it one step further: pay as you go not as you enter. And maybe when you leave you get a copy of the fan mix for your donation, so there’s karma pricing on the exit. Let’s take this whole tribal/social interaction the whole way. Everyone including Nettwerk has dabbled with it. We have probably dabbled more than any company with a wide assortment of artists, so we have a good idea of what works and what doesn’t work. But with K-OS it’s the first time we’ve gone all the way with it.

Read the whole PBS Interview here.

Most of this is old news, but you got to love this line:

“You can’t roll a joint on an iPod,” the singer-songwriter Shelby Lynne told The New York Times Magazine early last year. And, O.K., I suppose that’s among the iPod’s drawbacks. But it’s hard to think of an electronic device released in recent decades that’s brought more pleasure to more people.

Should anyone care that in the process, the iPod has all but killed the music industry as we’ve known it? Maybe not, Steve Knopper writes in “Appetite for Self-Destruction – The Spectacular Crash of the Record Industry in the Digital Age,” his stark accounting of the mistakes major record labels have made since the end of the LP era and the arrival of digital music. These dinosaurs, he suggests, are largely responsible for their own demise.

Mr. Knopper, a contributing editor at Rolling Stone, provides a wide-angled, morally complicated view of the current state of the music business. He doesn’t let those rippers and burners among us — that is, those who download digital songs without paying for them, and you know who you are — entirely off the hook. But he suggests that with even a little foresight, record companies could have adapted to the Internet’s brutish and quizzical new realities and thrived.

“The CD boom lasted from 1984 to 2000,” Mr. Knopper writes. Then the residue of old mistakes and a wave of new realities began hammering the music industry from all sides.

One of the first things the labels got wrong, Mr. Knopper says, was the elimination of the single. It got young people out of the habit of regularly visiting record stores and forced them to buy an entire CD to get the one song they craved. In the short term this was good business practice. In the long term it built up animosity. It was suicidal.

When Napster and other music-sharing Web sites showed up, the single came back with a vengeance. Before long MP3 — the commonly used term for digitally compressed and easily traded audio files — had replaced sex as the most searched-for term on sites like Yahoo! and AltaVista.

The record industry bungled the coming of Napster. Instead of striking a deal with a service that had more than 26 million users, labels sued, forcing it to close. A result, Mr. Knopper writes, was that users simply splintered, fleeing to many other file-sharing sites. “That was the last chance,” he declares, “for the record industry as we know it to stave off certain ruin.”

Read more of this book review from the New York Times.

PARIS, (BUSINESS WIRE) — Music Ally, the leading digital music strategy and research company, and MIDEM, organizers of MidemNet, the international forum dedicated to reflection on the music business in the digital age, are delighted to announce the winners of the second Music Ally/MidemNet “New Business Showcase.” The winners presented their ideas at MidemNet’s 10th annual conference in Cannes in January 2009.

About the Winners

Instinctiv Shuffle
Ever thought random shuffling of music was too, well, random? Instinctiv has had that thought too, and has come up with Instinctiv Shuffle. It’s an iPhone / iPod Touch application that aims to provide a smarter shuffle feature, guessing the user’s mood by what songs they listen to and what ones they skip. The app has so far only been available on jailbroken iPhones, but has been causing a stir.

MPTrax
MPTrax is focused on bringing Web 2.0 connectivity to the live music arena, connecting bands, rappers and DJs to venues, clubs and party planners – including people arranging house parties and other small events. Currently in beta, it offers a dedicated booking platform, complete with a feedback/rating system, invitation tools, sample contracts and social networking features. It could be a crucial tool for bands looking off the beaten track for their live revenues.

Mustik
Mustik is an interactive musical instrument which allows non musicians to play music. The way you interact with the Mustik alters the way that the musical track plays back. It’s a kind of Guitar Hero on acid. Conceived from a University project on embodied interaction, this is one product you have to see to believe.

Passionato
Launched earlier this year, Passionato is a website targeting classical music fans with higher quality downloads, selling DRM-free music as 320kbps MP3 files, or lossless FLAC files for proper audiophiles. The store also builds in reviews, user ratings and community features, as well as the obligatory Facebook and MySpace widgets.

Play Anywhere
Catch Media’s Play Anywhere scheme is certainly ambitious, aiming to offer a grand solution to interoperability. It’s about allowing users to playback music that they own, or which they’re legally entitled to access, across all possible devices. The company has already obtained new Play Anywhere licences from two major labels, and is ultimately hoping to entice all players within the digital value chain, including retailers, mobile operators and ISPs.

Soundcloud
It’s been described as “a Google Docs for audio” and a “Flickr for music,” so Soundcloud has solid Web 2.0 credentials. It’s an online audio platform designed to let people move music quickly and easily, whether they’re artists, labels, producers or other professionals. It’s attracted more than 2,000 labels and 50,000 users so far without splashing the cash. It’s been winning praise for its flexibility and featureset from early users this year.

The Echo Nest
Founded at the prestigious MIT Media Lab, The Echo Nest claims to be “the software equivalent of a hardware store for music developers.” In other words, it offers open APIs covering artist information, music search, recommendation, remix applications, mash-ups and analytic tools. The idea is that clever developers tap into these APIs to build innovative new music services. Early proof of concepts have showed how powerful these tools can be.

Music gaming is a huge growth area for the games industry. Started by Harmonix with Guitar Hero quickly selling 1.5 million copies. Then came the sequels, Guitar Hero II and III, and a string of successful stand-alone titles such as Guitar Hero: Aerosmith.

Then came Rock Band (also from Harmonix) via Electronic Arts. Launched late last year in America, the game received widespread acclaim and sold four million copies, with global revenues of $600 million – and since its release, players have downloaded more than 28 million songs via the game. It has a guitar, a bass, a drum kit and mic, and you can play in single- or multi-player mode, or battle it out online against rock fans worldwide. Following its chart-topping success, Rock Band 2 was released this fall.

With CD sales in free fall and authorized digital downloads not expected to make up the shortfall, the combination of video gaming and music looks promising for the future for the music business. “Industry insiders are learning that video games are the radio and distribution channel for the music industry of the 21st century – and they’re learning quickly,” says Tommy Tallarico, a game composer who has scored more than 275 video games – a world record.

In 2007, Guitar Hero and Rock Band made more than all digital music sales from services such as iTunes. The Aerosmith single “Same Old Song and Dance” was featured in Guitar Hero III. And according to Nielsen SoundScan, which tracks digital and retail music, sales of the song jumped by 136 per cent the week after the game was released in late 2007, and by 400 per cent a week after Christmas that year. Even the most successful groups are getting in on the act. Rock Band has secured the rights to release a stand-alone video game featuring The Beatles, scheduled for release next year.

Read more from Jimmy Lee Shreeve and The Independent here.