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Dave Kusek Podcast

Dave Kusek Podcast

I had a chat a couple of weeks ago with my friend Bobby Owsinski that he recorded for his Inner Circle Podcast. I I hope you enjoy it.

We talked about a lot of things in the Dave Kusek podcast including the early days of electronic and digital music, the creation of MIDI, the digital music revolution and the release of ProTools and the rise of online music education.

“Dave has been a pioneer in the digital space in many ways. Dave is the creator of Berklee Online, one of the first online education programs in the world, and now teaches music business at New Artist Model.”

You can listen to the full podcast at bobbyoinnercircle.com,  There is also some news about Spotify creating its own music label in an attempt to dominate certain playlists.

or via iTunesStitcher, Mixcloud or Google Play.

Read more here:
http://bobbyowsinskiblog.com/2016/09/06/dave-kusek-inner-circle-podcast/#ixzz4JamVjcPw

Learn more about the New Artist Model online music business school here.

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The Interdependency of Music and Technology

The music business has been utterly transformed by technology. New music apps such as Pandora, Spotify, Soundcloud, Shazam and Songza among hundreds of others are driving new music revenue and employment opportunities for technically oriented musicians.

Olivia Leonardi over at Online Computer Science Degree has written an article about the intersection of music and software development and describing the rich past of the impact of technology, specifically software on the music business.  It is excerpted here.  Lets go people, tool up for careers in the music industry of the future!

Computer Science and Music Technology

You’re a heavy-duty programming dude or computer grrl, but you also love music.  Is there any way to reconcile these two interests?  Unless you’ve been living under a rock, you know that computers and technology play a major role in the 21st century music scene. Audio sequencers, MIDI and associated laptops are standard operating equipment for performers like PrinceKraftwerk, OK Go, international deejay Paul Van Dyk or electronic music pioneer Thomas Dolby. Indeed, popular music today – from indie rock to hip-hop to house – would not be the same without innovations in computer science and technology. The following article is an exploration of the pioneering inventions and innovations in music technology that, through the use of computers, continue to define the musical experience of today.

Making Music in the 20th Century

1930 marks the year that the technological roots of modern popular music were formed. In that fateful year the world welcomed its first drum machine while the revolutionary electric guitar took the music scene by storm. Although the drum machine wouldn’t find its way into popular music for another 40 years, the electric guitar was seen as a brilliant invention and one immediately adopted by the jazz community and early blues artists. Perhaps more importantly, however, was that these two innovations inspired and challenged others to experiment with electric instruments and to test how technology could continue to enhance the musical experience. In the years following, the legendary Les Paul would lay down the first multi-track recording in 1947 and in ‘58 Link Wray, unsatisfied with the sound his amplifier was producing, would think to jam pencils into it to distort the sound of the guitar in the track “Rumble” – a technique The Kinks pushed into the mainstream with “You Really Got Me” in 1964.

Then, in 1966, producer George Martin was faced with a dilemma. The Beatles had recorded multiple takes of a John Lennon penned song called “Strawberry Fields Forever.” John had finally settled on not one, but two takes of the song that he liked best. The problem: the two takes, numbers 7 and 26, were recorded in different keys and played at different tempos. Without the technological innovations available today, Martin ingeniously solved the problem by mechanically slowing one take while speeding up the other, then spliced the two takes together to produce one of the most celebrated popular music recordings in history.

Enter Computer Technology

Computer technology has since incorporated innovations such as Martin’s and made them a routine part of music recording. Without major advancements in computer technology, however, such would not be the case. Once monolithic, the late 1970s and early 80s saw the size of computers greatly diminish while major improvements were being made in processing power. Personal computers were made accessible for the first time in history and, watching closely, the music industry quickly responded. As the Beatles were walking Abbey Road and the Rolling Stones were licking their way to chart toping heights, brilliant innovations on old technologies would surface simultaneously that – from sampling to the drum machine to the Musical Instrument Digital Interface (MIDI) – gave rise to whole new genres like hip-hop and electronic music while altering the trajectory of popular music itself. The following is a brief run-through of some of those major developments in computer technology.

Sampling

Sampling allows musicians to borrow snippets of past tracks and even entire recordings and incorporate them into original creations. Using synthesizer technology, artists can also alter the tone of the sample by speeding up or slowing down the track; later iterations of samplers would actually come in the form of synthesizers as synths became more sophisticated and were able to adopt sampling technology.

The first sampler – the Mellatron – appeared in the late 60s and early 70s and was a tape replay keyboard that stored recordings on analog tape. Although its genius was widely recognized, it was soon improved upon with the emergence of the memory-based digital sampler. Developed by a trio of computer scientists and software engineers, the first digital sampler – the EMS Musys system – ran on two mini computers (PDP-8s), giving birth to the first digital music studio. As musicians began realizing the need and benefit of sound synthesis for sampling purposes, sampling synthesizers soon emerged. Surfacing in the late 70s, these sampling synthesizers would enable the use of percussion samples and techniques such as the crossfade and “time stretching” and are credited with advancing hip-hop away from the drum machine sound of its youth.

Today, sampling technology is either software-based or appears as part of the music workstation.

Digital Drum Machine

Beginning with the Rythmicon – the father of all drum machines, first produced in 1930 – the drum machine has had a strong impact on music through the years. The first “modern” drum machine – in the form of a programmable drum machine — emerged in the 70s with the Roland CR-78 machine and a few year later, the legendary Roland TR-808 (1980) and Roland TR-909 (1984). Both machines are icons of the early hip-hop, underground dance and techno genres. Indeed, Marvin Gaye’s classic “Sexual Healing” wouldn’t be the same without use of the Roland TR-909.

Digital drum machines, otherwise known as drum computers, also figure heavily in the development of pop music in the 80s. Starting with the Linn LM-1, digital samples of drum sounds and drum sound synthesis were both used with increasing frequency, appearing in works from the soundtrack ofScarface to Prince.

In music today the physical drum machine is a rare sight, whose use was rendered obsolete by MIDI and digital music workstations.

Digital Synthesizer

The digital synthesizer produces a stream of numbers at a certain rate that is then converted to analog form, allowing speakers to produce sound. Synthesizer aided music is some of the most identifiable of the 70s and 80s. No only did the Beatles and Rolling Stones utilize its capacity to produce unique and spacy sounds, but a whole new genre arose from its use: synthpop. Today, the synthesizer is a major element of the music workstation.

    • Forms of Sound Synthesis
    • Additive Synthesis
    • Subtractive Synthesis
    • FM Synthesis
    • Phase Distortion Synthesis
    • Granular Synthesis
    • Physical Modelling Synthesis
    • Sample-Based Synthesis
    • Analysis/Resynthesis

Sequencers

Of all music technology, the sequencer has arguably benefited the most from computer science, giving birth to the very genre termed “computer music.” In modern days, a sequencer is a piece of music software that can record, edit, and play back music. The first digital sequencer emerged in 1971 from Electronic Music Studios while the first microcomputer based digital sequencer, the MC-8 Microcomposer or “computer music composer”, appeared in 1977 using a keypad to enter notes in numeric codes.

As the personal computer’s capabilities progressed, software sequencers soon emerged. The New England Digital ABLE (1973) computer and its brother the Synclavier 1 (1977) are two of the most notable with the latter being used by such artists as Michael Jackson. These two advancements were also two of the first iterations of the modern music workstations. In the current day and age, however, most sequencing is done via software through the use of MIDI.

Musical Instrument Digital Interface (MIDI)

The development of Musical Instrument Digital Interface (MIDI) was a remarkable innovation in the history of music. The MIDI made it possible for anyone with a computer, a modicum of talent and a measure of determination to become his or her own performer and producer. MIDI originated as a means to link keyboards with synthesizers, but has since evolved to become a computer software application used to edit all aspects of music recordings. MIDI allows for the interaction of many different instruments at once through a central transceiver that the instruments are plugged into. With their memory, processing power and interactivity, computers became the central brain that all electronic instruments were connected to. From this point on, the computer became irreplaceable in music production. Sequencing software was developed to piece together the disparate musical elements received on the computer through MIDI connections in addition to the development of software synthesizers, drum machines and samplers (often coalesced into one program).

Prior to MIDI, the recording process required a sound booth, session musicians, mixers and other expensive features. Since the development of MIDI, a single musician can sing, play accompaniment and mix multiple tracks together to produce a polished, sophisticated recording using only a computer, a mike and digital recording software.

From Olivia Leonardi at Online Computer Science Degree.

Side note – this is the 30 year anniversary of MIDI.  I will be writing more about that in the weeks ahead.

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The Sad Truth about the Music Business

Music_Evolution_lowres1

Music is a much smaller and less significant part of many people’s lives than 10-20 years ago.  There is more competition for our attention and the value of music has declined precipitously. This graphic shows the rise of digital against physical music, and the overall impact of piracy, widespread distribution and digital media on the music industry. The sad story is that overall the music business is shrinking. That is a fact that we all have to face.  The silver lining in all of this may be on the horizon, but it cannot come soon enough for me. We have to do something to reverse the trend.

Courtesy Daily Infographic.

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Modern Merch: Beyond the Tour T-Shirt – CMJ Panel

Ale Delgado wrote this great recap of our CMJ panel on merchandise last week.  Thanks Ale!  Here is most of it.  Visit her site for more:

Considering that I’m always looking for the next big thing, I knew I had to go to CMJ’s “Modern Merch: Beyond the Tour T-Shirt” panel. See, merch is a $2.2 billion business and one of the biggest ways an artist can make money. But while most merch is sold at shows, most people at shows don’t buy merch. Tricky, huh?

The basic premise of the panel was that opportunity comes when you marry a point of passion (e.g., a song stream or live show) with a call to action (e.g., a merch sale)– and yes, they had some tips to help you take advantage of any opportunities that come your way.

Moderator: Dave Kusek, co-founder of MerchLuv and co-author of The Future of Music.

Panelists: Zach Bair, founder of RockHouse Live Media Productions and the original CEO of DiscLive Network, which records, masters, and burns concert CDs to be made available to fans right after the show;  Mary Sparr of screen-printed gig poster pros Print Mafia and culture blog Young Mary’s Record; and Alexandra Starlight, funky and spunky indie starlette whose Kickstarter campaign resulted in 205% funding and a rainbow glitter 7″ EP.

 

1.Think of merch as an extension of your brand

As always, the first thing to do is consider your brand as an artist. Once you develop a consistent aesthetic, you can open the door to more innovative merch because fans will recognize it as one of your pieces. For example, Starlight created a one-of-a-kind rainbow glitter vinyl record for her self-titled EP. A record like that had never been pressed before and each one was hand-glittered, so each fan received a unique copy. If you’ve ever peeked at Starlight’s website (or rainbow-dyed hair), you know that a rainbow glitter album fits perfectly with her brand– and it’s damn memorable.

Furthermore, if you think of merch as your brand being integrated into someone’s lifestyle, it opens up even more creative possibilities. For instance, The Hold Steady created branded foam fingers. Y’know, the ones you wave around like crazy when you’re cheering on your favorite team. What do foam fingers have to do with music? Not much, but they’re fun, different, and priced for the college-aged fan. And judging by the fact that they’re sold out, they’re a big hit with fans.

2. Cater to your spectrum of fans

Take another look at The Hold Steady’s foam finger. It’s $10 reduced to $5. Easy sale for a teenager or college student who might have a lot of spending money but is willing to pay for something cool to show off to their friends. Making sure that you have different tiers of merch for different fans is key to building sales. You should have something at your merch table for the fan who just wants to snatch a free download card and for the fan who wants to buy everything. That also means bundling items together (CD, t-shirt, button combo) for a quick sale.

3. Be show-specific

If possible, create show-specific merch. It can be as simple as individual gig posters for each city in which you tour or something a little more involved. Sparr brought up the tickets that Mumford & Sons created for their Gentlemen of the Road Stopover Tour. Each ticket was a commemorative passport that contained a download code for a compilation of songs recorded at each Stopover. Then it got better. Fans could get their passports stamped at the merch tables at each Stopover, personalizing their passports to their experience. Then it got even better. People were wandering around each Stopover with unique stamps, essentially turning the passports into a Pokemon game. (Gotta stamp ‘em all!) Talk about fan engagement.

Next, update your Facebook and Twitter on the day of the show and let your fans know what merch you’re going to be offering, especially if you have something that will only be available at that show. The more people can prepare (or at least consider the possibility of picking up your record), the more likely they’re going to buy something.

 

4. Work your merch like a pop-up shop

Think about every grumpy salesperson you’ve had to deal with. They don’t greet you, they don’t look you in the eye, they don’t care if their store is a mess, they don’t want to help you find anything, or (even worse) they’re way too pushy… Okay, now be exactly the opposite.

Your merch table is your pop-up shop. Have your items propped up nicely so that fans who are moving past your table can see what you have to offer. Greet them as they walk up to your table; don’t badger them, but put on a friendly face like you would if they were customers coming into your brick-and-mortar store. Also make sure that you’re being as meticulous as you would be if you were running a store: keep track of your inventory and double-check any email addresses written down on your mailing list. Remember that the experience doesn’t end when your show does; fans will remember what you were like behind the table.

5. Extend the experience

Well, actually, the experience doesn’t have to stop when your fans walk out of your venue either. There are a lot of ways you can extend your show experience, from the simple to the elaborate. Here are a few ideas from the Panelists:

  • Make sure there’s someone taking pictures of your show, including grabbing a few shots of the crowd. Then post it on Facebook and encourage your fans to tag themselves.
  • Have your fans post pictures of your show to Instagram with a hashtag of your choosing, and then sending them aPostagram thanking them for coming to the show or giving them a discount for your store.
  • Use DiscLive to record, mix, and master a live recording of your show. By the time you’re ready to sell some merch, they’ll have CDs ready to go. DiscLive also allows for preorders, meaning that a) you can bundle tickets and CDs and b) you’ll have an estimate of what you’ll sell at your show.
  • Use MerchLuv to bundle streaming songs with merch items to cater to those new fans who hadn’t heard of you before your show, but want to check you out afterwards. Remember, opportunity lies where passion meets action.

Read more here including a Happy Halloween Bonus Tip!

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Modernizing the Merch Madness

For artists struggling to make a living in the digital age, a strong merch strategy can be the difference between living life as a starving artist and making a comfortable living.

Yet compared to the recording, publishing and ticketing businesses—which have felt the full effect of technology and the Internet— the merch business today is mostly stuck in the analog 70s. If we are looking to make money in the music industry of the future, why focus our energies on debating the intricacies of Spotify payments or whether licensing terms stifle innovation. Instead let’s examine an area ripe for disruption and revenue expansion.

A Highly Fragmented Environment

Indeed merch seems to be a highly fragmented business ripe for consolidation and transformation. To illustrate, let’s look at some research conducted by a company I work with— Merchluv. We looked at the August 2012 Big Champagne charts and came up with a list of  100 top artists and analyzed their merch availability:

– The 100 artists on the list used 44 different merch vendors (how’s THAT for fragmentation?).

– 75% of artists sold merchandise on their website, Facebook page or through an official supplier.  A surprising 25% of the top selling artists in August did not sell any merch AT ALL.

– 18 artists were “self” merchandisers, meaning they used Topspin, Paypal, Amazon, or a 3rd party services or ran their own commerce site/shopping cart.

– The remaining 57 artists were served by 26 different merch suppliers.

That means to sell merch for the top 100 artists in August you need to make nearly 44 deals with merch suppliers. Clearly a consolidation of merch vendors could help to rationalize the market. Where is the Amazon of music merchandising?

Merch is an Insulated Service

The merch business is largely disconnected from the real heat in the music market today, namely the explosion in digital music services. For example: 45 BILLION songs are streamed or viewed every month, yet there is NO MERCH being sold against this engagement. And that number is just going to BLOW UP to hundreds of billions of streams per month in the next few years.

Imagine if streaming services allowed fans to browse and buy an artist’s merchandise from the same page where they  are streaming their album or buying their tickets? There is a complete disconnect between where most music is discovered today, and the $2.2 billion in annual merch revenue.  The vast majority of merch is sold at the venerable merch table at any given concert. Why not make the effort to expand that experience into the digital realm? An alignment of merch distribution with the direction that the overall music market is headed would serve artists and merch companies extremely well, and potentially unlock a flood of new revenue.

Merch is Analog

Most artists sell 85% or more of their merch directly at live shows at the merch table. As effective as they are, merch tables can stand to be improved on in the digital age.  For example:

– Fans have to know where the merch booth is.

– Why stand in line when you can order from your seat?

– What if the merch guys don’t have your size or color preference at the table?

– When you buy merch at a show you have to hold it and take it home. Do you want it delivered instead?

– What if you want a bundle of something physical and something digital.  Is this easy to buy?

– How about something personalized for you, or something bigger than you can carry home?

There hasn’t been much innovation at the merch table at all, except for perhaps using Square readers to process credit cards. I wonder if the major merch vendors of today are going to be blindsided by technology and the changing habits of music consumers in much the same way that the record labels were hit.  Merch is extremely difficult to digitize.  But the sales of merch are not.

Tons of artists have web stores attached to their web sites and Facebook pages.  Companies like Reverbnation and Bandcamp can help independent artists manage their merch on their web stores and spread the merch offer out via social media to numerous outlets.  There are many businesses such as Bandmerch and Cinderblock, JSR and Bubbleup addressing this niche, providing fulfillment, webstores, warehousing and shipping services.

But the problem with this approach is that fans need to navigate to an artist’s web site and find the merch for sale and be ready to buy.  Today only 15% of merch is sold online.  New companies like Merchluv, which I am an investor in are about to blaze new trails in digital merchandising. The reason to do this? Grow overall revenue.

The large merchandising companies are very aware of the opportunities of snaring a hot band and bringing their merch to market effectively.  The holy grail of this is the long-term sales possible from mega-popular bands over time.  Anyone want to guess how many Dark Side of the Moon T-shirts have been sold?  Companies like Old Glory have been licensing artist merchandise for decades.

Now we can argue whether there will ever be another blockbuster band like Pink Floyd or the Rolling Stones or Metallica – but if there is going to be significant revenue in the music market of the future, merchandise is going to be a huge contributor.  Merchandise might possibly become the single largest revenue generator for artists of the future. You have to think big here and broader to see what I am talking about.

When artists today are being pulled in various directions to run their businesses, create, act, teach, write and express themselves and interact with their audience, what could be better for supporting a career than a good merch strategy?  Think about the merchandising empires built by Jimmy Buffett, Jay-Z, Puffy, 50 Cent, the Grateful Dead.  The merch is the tail wagging the dog and it has made these artists a fortune.

For musicians in the digital age, revenue needs to come from something than other the recording itself.  To some extent this has always been true, but never more so than today.

Creative Explosion

My friend Todd Siegel and partner in Merchluv tells me that these days creating innovative merch and finding things that resonate with your audience is easier than ever, and many clever artists are using fan sourcing and crowd sourcing options like Talent House and Creative Allies to design merch with their fans.  Once you have a design, you can use sites like Zazzle to test ideas for new products without investing in inventory up front.
Bands like Insane Clown Possee (ICP) have created a cult-like brand through the use of iconic imagery and building a strong following by involving their fans.  The Misfits have sold more merch than music because of that iconic skull that people buy because the merch itself is cool and fashonable.

And talk about branding, take a look at what Deadmau5 is doing with the goofy mouse head. This guy has merch everywhere and may just overtake Mickey Mouse in brand awareness across teenagers.  Even if you have never heard him perform, you know who he is.

Beats by Dr. Dre is another example of merch that has gone over the top and transcended the music entirely to become a lifestyle product that in some respects is becoming a big part of the music industry.  This in only a matter of a few years.

The brainchild of artist/producer Dr. Dre and Interscope Chairman Jimmy Iovine, Beats is bringing high-quality audio to fans through their headphones, sound systems, and now the recently acquired MOG digital music service. Dre has taken a brand established as a recording artist and is in the process of turning it into the music industry of the future, through a grand merchandising strategy.

Conclusion

In the face of declining recorded music sales, many of us are looking hard at the opportunities for generating money in music today. Most of the investment from VCs, Angel investors or Private Equity in music has been in streaming music, discovery, ticketing, crowd funding and artist services. Businesses like Pandora, Spotify, Beats, Ticketfly, Soundcloud, Songkick and Indiegogo all have received significant investments in recent years.

There are two ways that bands have always made money. One is by performing and the other is by selling merchandise. Both are tried and true methods, difficult to download or duplicate, and solid and reliable opportunities.

Why have hundreds of millions of dollars in venture capital been poured into online music services in the face of severely declining recorded revenue, when one of the most profitable parts of the music business—namely merch—been largely ignored by investors? Wouldn’t it make more sense try to increase sales of an already healthy and expanding market segment, ripe for disruption?

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Digital Music Stats

This video from James West and Len Henriksen shows that the consumption of music has come along way since the days of vinyl records. But now with all the digital variants of music available to anyone with an internet connection, what has become of the stability of the industry and the ability of artists’ to make money?

To sum it up, while digital consumption has absolutely exploded – the revenue per download, or spin, or play has collapsed. Data is from 2010.

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Learning from the Music Business

Photo by Brian Cantoni on Flickr

Photo by Brian Cantoni on Flickr

Netflix — the poster child for premium Internet video services — was birthed by iTunes and other online music services before it. Yes, movies and music are fundamentally different forms of media, but the online video guys can learn a lot from the transformation of the music business.  What works and what doesn’t.

Peter Csathy from TechCrunch says that three ingredients that have proven to be essential for the success of any online music service apply equally to the premium online video world. This trilogy represents the “Sacred Tenets of Online Media” that apply to any service provider.

Sacred Tenet #1 – Quality.

No brainer, right?  But how many service providers truly understand this? Remember the early online music services (both legitimate and not)? Audio quality was frequently abysmal.  I would argue that the quality of digital audio is still not good enough, but it is getting better.  The early audio experiences were usually empty (meta-data, what meta-data?), and the bad guys infected you with viruses. Enter iTunes, which offered a healthier, better sounding product and far richer overall experience. That mattered. That was a game changer.

The same applies, of course, for online video viewing, no matter how big or small the screen. To “win,” service providers must ensure that movies and television shows look good on every device regardless of the explosion of new devices, form factors, endless specs, new formats (MPEG-Dash, UltraViolet) and variable network conditions. Consumers don’t care, and they aren’t patient. Not anymore. They just want the stuff to work. And, that ain’t easy. That’s why Netflix transforms each movie into over 100 renditions to account for different devices, formats, and network conditions. THAT’s a commitment to quality.

Sacred Tenet #2 – Deep Content.

We live in a world where iTunes, Rhapsody and Spotify offer virtually any music track you could ever think of – 15 million of them! We take that for granted. We expect it. But remember, it wasn’t that long ago when that wasn’t the case.

In the earliest days of legitimate online music services, music libraries were small and filled with gaping holes (how’s that for an oxymoron?). iTunes launched with a scant 200,000 tracks back in April 2003. Think about that. Those numbers, of course, represent only about 1.5% of the total number of tracks now offered today. Ultimately, once customers got over the novelty factor of new music services, that paucity of content led to frustration – and opportunities to differentiate based purely on size.

This same basic truth applies to premium online video services of course. What happens when you can’t find the movie you want? You bolt and look elsewhere. Well, none of the service providers want that to happen, so each of them is feverishly racing to expand its cache of movies and television shows. That’s why you read about deal after deal after deal. It’s the quest to get the critical mass they need for their customers to stay.

Sacred Tenet #3 – Discovery & Navigation.

It’s essential for online movie customers to easily find the premium content they want, when they want it. But, it’s also essential for them to find a way to intelligently and easily navigate the vast expanding universe of other content that they don’t necessarily know they want – until it “finds” them and they experience it. That is the fundamental role of discovery.

The same holds true for premium video. As movie libraries expand online, it is essential to give the consumer powerful tools to make sense of it all. Many flavors of discovery exist, including social. Service providers will look to differentiate themselves here too as music services, like Pandora, do in the online music world.

iTunes got it right 10 years ago – and rules the online music world at least for the moment. But, things are very different in the online video world. Many hats are in the ring this time around. Netflix is the leader, but certainly isn’t a lock. And, Apple isn’t a significant player (yet). The players who pay homage to the Sacred Trilogy will best position themselves to be the big winners tomorrow.

This is an editorialized excerpt from a post by Peter Csathy from TechCrunch.  Peter is President & CEO of online video technology company Sorenson Media.

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The Front End of the Donkey

You gotta love Neil’s honesty. We owe it all to artists to stand up to what they believe in and drive us forward. Without them, we would have nothing.

“Still the searcher
must ride the dark horse
Racing alone in his fright.”

“I’m finding that I have a little bit of trouble with the quality of the sound of music today,” says Neil Young. “I don’t like it. It just makes me angry. Not the quality of the music, but we’re in the 21st century and we have the worst sound that we’ve ever had. It’s worse than in 1978. Where are our geniuses? What happened?”

I can’t agree more.  We need a new format that breathes life into the music industry by improving the quality of the sound that we listen to.   If you are under the age of 22, I will bet that most of you have never really heard a great audio recording.  You don’t even know what I am talking about.

This issue is vital to the future of the music business.  What we have today with the proliferation of ear buds as the primary listening medium and compressed MP3 files is a low res music experience that is the bottom of the barrel, lowest common denominator form of a listening experience there can be.  Really listening to music is simply lost on most people these days, and as a result the art form has lost the majority of its value.

It commonly accepted that crappy sounding music is the norm and people, by and large, have no idea what they are missing.  The MP3 has stripped the emotional value from music today and has reduced it to a commodity.  The audio business has truly been compressed and marginalized and is nearing extinction.  We cannot let that happen to the music business.

As artists, “We can’t control the back end of the donkey, laments Young.  The donkey has two ends, products like Beats and Bose and every little product that comes out for your car, the whole thing – is all about the back end of the donkey.  There is nothing talking about the front end of the donkey, that’s what I’m talking about.  You don’t have to that rich to do this, you just have to be smart…  We are in the low res world, make no mistake that is right where we are…

“I look at the internet as the new radio.  I look at the radio as gone…  People change and do their music, people trade it they do whatever and Apple makes it very possible for you to store stolen or traded songs in the cloud, they opened up the door so that that can happen… its acceptable.  Thats the way it is… Piracy is the new radio, that’s how music gets around, thats the real world for kids, thats the (new) radio… Lets let them really hear it.

“I’m hoping that some people who want the hi-res would have the choice in buying it.  It has to be convenient, people should not associate hi-res with inconvenience.  That’s a myth, we’re living in the 21st century and all of these things are possible.  The technology exists, the internet is fast enough to support it…  If Steve Jobs had lived long enough, he would be eventually have done what I am trying to do.”

Quality.  We need a new format that will deliver better quality sound to drive the business forward.  Period.  Here is a true clarion call for innovation, and something that we all need to pay attention to.   Neil Young cares about music. He is successful enough that he could sit back and ignore the realities of the marketplace today, but instead chooses to push the agenda forward. Awesome. I would not be surprised to hear a new song from Neil about a donkey.  Maybe I can sing backup on it.

See the video with Neil Young and Walt Mossberg from All things D here.

Here is a brief description of some of the technical issues from Thinkdigit.  “The renewed focus on audio quality in some circles has a sense of déjà vu about it. Some of it recalls the 1970s, back when the term “high fidelity” was thrown around to indicate quality stereo recordings. We also saw this go around again at the turn of the millennium with the introduction of SACD and DVD Audio formats, which brought 24-bit fidelity and surround sound to audio mixes, although neither took off at the time.

So what’s going on here? In a word, it’s about data. More data translates to better-sounding audio files—but those files are largely unavailable to most consumers. Granted, to the casual listener, Amazon MP3 and Apple iTunes Store sound pretty good, as they’re encoded as 256Kbps MP3 and AAC files for the most part. Amazon has some MP3 files encoded at variable bit rates, but most of them center around the 224Kbps to 256Kbps range. AAC generally sounds slightly better than MP3 when encoded at the same bit rate, although recent improvements in MP3 encoding algorithms have largely rendered this academic.

Aside from music purchases, 256Kbps is also iTunes’ default encoding rate for when you rip audio CDs in iTunes (although you can change it), and it’s the size iCloud uses to deliver tracks to other PCs or mobile devices on your network if you’re a subscriber. I’m just using Apple products here as an example; Windows Media Player, Winamp, and countless other apps do similar things. Any way you cut it, 256Kbps files sound a lot better than ones encoded at 128Kbps, which is what Apple used years ago before it removed DRM from its iTunes Store tracks. Granted, 256Kbps files take up twice the space as 128Kbps files, but on today’s devices, that usually isn’t a problem, and the improved sound quality is worth it.

The thing is, 256Kbps still isn’t enough. Higher-resolution, uncompressed, 16-bit audio files match the sound you get on an actual CD. 24-bit sound files even sound better; the increased headroom matches the format most artists and mix engineers have been working in over the past decade or so.

Cheap consumer electronics manufacturers abused the phrase “CD-quality” for many years, but in this case it still has meaning. True CD-quality files take up anywhere from three to 10 times as much as space as an MP3 or AAC file, depending on the latter’s bit rate; 24-bit files take up even more space. They come in several formats: FLAC, WAV, AIFF, and Apple Lossless. (FLAC and Apple Lossless contain some data compression but only in a method that doesn’t affect sound quality. FLAC is much more widely supported than Apple Lossless, though.)”

And finally, The Tennessean wrote a great piece on the lure of high fidelity and what some people in Nashville are working on to bring it back.
More to come.  This is a big issue.  Chime in on what you think and how can we move this agenda forward.
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Visions of the Future

Here are two visions for the future, one from Corning and one from me.  The Corning video is from earlier this year and shows their vision for a visually connected communications environment.  This is not unlike the future that Gerd Leonhard and I described in the Future of Music in 2005.

Can you imagine organizing your daily schedule with a few touches on your bathroom mirror? Chatting with far-away relatives through interactive video on your kitchen counter? Reading a classic novel on a whisper-thin piece of flexible glass?

The video depicts a world in which interactive glass surfaces help you stay connected through seamless delivery of real-time information – whether you’re working, shopping, eating, or relaxing.

Does the world showcased in “A Day Made of Glass” seem like something out of a fantasy movie?  Just a decade ago, pay phones, VCRs, and film cameras were also commonplace. Today, we’re accustomed to movies streaming on demand to a 60-inch television hanging on the wall and to video calls on notebook computers, essentially for free.

What might this mean for music? Well, today we have Spotify and Rdio and Mog all providing on demand music for free or nearly for free. Listen to this vision for the future and see how far we have come in the past 5 or 6 years from our book on the Future of Music.

https://player.soundcloud.com/player.swf?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F29101326&show_comments=true&auto_play=false&color=ff7700

Check out the Future of Music book here.

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Gasping for Breath as the Ship Goes Down – the final days of the recorded music business

Believe it or not, the National Association of Broadcasters and the Recording Industry Association of America have announced that they want new digital  devices like cellphones, iPods and music players to be legally required to incorporate FM radio receivers.  This appears to be a twisted bargain to get the radio broadcasters to agree to pay performance royalties for radio airplay to the record companies, in exchange for propping up their business models via legislation.  How bizarre.

As reported in Arstechnica, “Congress should mandate that FM radio receivers be built into cell phones, PDAs, and other portable electronics.

Radio broadcasters and music labels are at each other’s throats over the question of whether radio ought to pay performance rights to labels or artists when it plays their music on the air (currently, only songwriters get paid, not artists or labels). A bill percolating in Congress, the Performance Rights Act, would rationalize performance rights in the US; satellite radio and webcasters currently pay full performance fees to labels or artists, but radio does not, thanks to a longstanding exemption in copyright law.The bill has already passed out of committee in both the House and Senate, but it is vigorously opposed by the broadcasters; they argue that radio provides valuable promotion to artists and shouldn’t have to pay. Congress tried to force two of the main lobbying groups, the National Association of Broadcasters and musicFIRST (RIAA is a member), to hash out a solution last November. None was forthcoming, but talks have continued since then and are now close to completion.The two sides hope to strike a grand bargain: radio would agree to pay around $100 million a year (less than it feared), but in return it would get access to a larger market through the mandated FM radio chips in portable devices.”As regards the chip, this is a key issue for the radio industry,” musicFIRST told Ars today. “musicFIRST, too, likes FM chips in cell phones, PDAs, etc. It gives consumers access to more music choices.”

As the contours of this deal came into sight last week, the consumer electronics companies saw the prospect of a new government mandate, and one that was transparently about propping up a particular (and aging) business model.

“The performance royalty legislation voted out of the Senate Judiciary Committee does not include this onerous and backward-looking radio requirement,” said the CEA’s Shapiro, and he wants to keep it that way.

The deal has not been finalized, we’re told. When it is, the two sides still need to convince Congress to go along, but they’re hopeful something can be wrapped up late this year or early in 2011.

The Consumer Electronics Association, whose members build the devices that would be affected by such a directive, is incandescent with rage. “The backroom scheme of the [National Association of Broadcasters] and RIAA to have Congress mandate broadcast radios in portable devices, including mobile phones, is the height of absurdity,” thundered CEA president Gary Shapiro. Such a move is “not in our national interest.”

“Rather than adapt to the digital marketplace, NAB and RIAA act like buggy-whip industries that refuse to innovate and seek to impose penalties on those that do.”

But the music and radio industries say it’s a consumer-focused proposition, one that would provide “more music choices.”

Please.

Hypebot has lampooned this absurdity with it’s own list of “Top 10 Government Mandates Needed to Save Us.”

  1. All Videogames Come Bundled With Top 40 Albums: The RIAA would like you to believe the number one threat to the profitability of the record and music industries is file-sharing, but I think there’s another industry that deserves a little attention. Call of Duty: Modern Warfare 2 sold ten million copies in the US alone. That money could’ve been spent on albums. Let’s lobby and make it so every videogame sold is bundled with Rihanna & Lady Gaga’s latest album. Hey gamers, it’s only fair.
  2. iTunes & Amazon Can Only Sell Physical Albums: Think about it, digital singles are cannibalizing the sales of full and physical albums. If we could only get a bill passed that forces iTunes to sell only physical albums. Fans should be forced to enjoy music the way that artists intended it to be consumed and this whole idea of them having their personalized music experience needs to go away. I’m sick of fans thinking they can just cherry-pick the songs they want and never hear the other ten songs on the album. This bill needs to get passed now.
  3. MTV Must Play Music Videos During Mandated Hours: I am sick of all this reality TV junk and I bet you are too. Ever since they stopped playing our videos sales have fallen through the floor. Once we get The Hills off the air and Ke$ha’s new video back in solid rotation, fans will have no choice but to get back to watching our expensive productions. I bet we can even get Carson Daly back. Without him, no one wants to buy music anymore. To make sure our music is playing during prime hours the record industry must have jurisdiction over their programming.
  4. Music Downloaders Must Be Downgraded To Dial-Up: Screw this three strikes business, let’s just throw those evil pirates back to the stone-age and throttle every suspected pirate, as determined by our monitoring systems that we got installed on all 5 billion of net enabled devices, back to dial-up internet speeds. If they think they can steal our content then they can also wait 10 minutes for the email and Facebook to load. Who’s file-sharing my music now Mr. 28k connection? BAM!
  5. Big Towns Must Have Record Stores: Wide-spread file-sharing has decimated the profits of our record stores and forced them to close their doors. All those pirates on dial-up are going to need to buy music somewhere. I say we make it so there’s a government mandate that forces record stores to be placed across the street from Starbucks Coffee Shops in every town that has a population of over 250,000.  In the event that there is already another Starbucks across the street from the other Starbucks, our record store will be placed to the left of the shop in question.
  6. Guitar Hero, One Real Guitar For Each Fake Controller: Seriously, who do these punk college students and videogame developers think they are? Interacting with music using plastic pieces of junk; these kids need to get a life and learn how to play real music, with real instruments. I’m convinced that the only way we can ensure profitability of GuitarCenter and make sure that these varmints don’t destroy our cultural history with their little white flippers and colored buttons is if we make it so every fake Guitar Hero controller comes with a real guitar too.
  7. The Music Blog Network & Pay Wall:  All music blogs must be forced to join a subscriber network and be put behind a pay wall. If users want to read to their amateur content and get DRM encrypted, virus laden MP3 files, then, they must pay money to have access to that content. It’s only fair. They work hard to write about music and they are entitled to money if you want to read their blog.  Also, with every single subscription to the music blog network users must also opt into a year’s worth of either Rolling Stone or Spin; it’s time they learn what real music journalism is and stop getting advice from talentless strangers, failed musicians, and their college dorm buddy who thinks he’s a hipster, but really isn’t.
  8. Resale Is Prohibited, No More Used CDs: Fans should not, I repeat, fans should not be able to buy music for half price at some local store run by a hippie. We need to put a stop to this and make it so the resale of albums is prohibited. To ensure that fans are receiving the optimum experience that we intended them to have we need mandate them to buy new CDs every time. For years, fans have been buying music from these places that smell like pot and incense sticks. They buy an album and they go home and all it does is skip because of how scratched it is.  No more used CDs. Period. New music sounds better anyways.
  9. Ticket Sales Combined With Albums Sales: Fans already pay 20 different fees when they purchase a ticket to see live music so why not add a surcharge on their that they understand. The album fee. For every single show that a fan attends they will now be mandated to buy the album too. The artists work really hard on their records and live music should not be considered a substitute for professionally produced music.
  10. Home Recording & Music Production Is Outlawed: Those amateurs and indie musicians thought they were clever when they started producing music in their homes and not getting it mastered at a recording studio. With all those fly-by-night music schools that graduate sound engineers by the hundred we need to guarantee that those students, who paid good money, have jobs when they get out of college. This will also have the effect of making artists dependant of the major label system to fund the recording of their music and drastically increase the quality of all music in general. All that stuff on YouTube sounds terrible, let’s fix that.
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Peter Jenner on the Future of Music

Photo credit: http://bit.ly/18lnuFf

Photo credit: http://bit.ly/18lnuFf

Former Pink Floyd and T Rex manager Peter Jenner, now emeritus president of the International Music Managers’ Forum, talks online music, copyright and the future of the music industry.  It is very satisfying to see the ideas expressed in our Future of Music book becoming mainstream concepts in the industry.

>As physical sales decrease, how should the music industry be monetising its content?

Record companies believe that music is about selling bits of stuff to people in a retail environment. They always looked on the internet as a potentially huge retail environment and it’s actually a service environment. The record companies should be working out what services they can provide.

They should also be talking to ISPs instead of fighting them. The key thing is people are going to want music as part of what they get on their digital connections. The ISPs are going to have to invest more and more to develop better services, and in that context they will have to start charging for content, whether they charge for content directly with a meter or whether they bundle it or use advertising or sponsorship.

Another way to go would be to look at statutory licensing for different types of usage. It would be incredibly bureaucratic but it would be one way. So let people access whatever music they like and pay a set rate. The same with commercial businesses.

>Do record labels still have a role to play in the music industry?

Yes absolutely, particularly for investment and promotion and marketing. And they could become very good at licensing, at helping artists to develop their website. But they have to get away from this idea of control and instead become partners of the artists. Many of the record and film companies are very enamoured with the idea of control because it’s how their model has always worked, with in-house lawyers and copyright advisors. There is huge inertia in the way the industry licenses and administers content. We have to fight this.

>How have the sources of revenue in the music industry changed?

Until the CD came along I think artists overall got a better deal and more control and a better bite of the money. After they invented the CD the record companies increasingly fought back, decreasing artists’ revenue share and increasing their control. That’s just got worse with the advent of the internet because there is less money available. You used to be able to sell 5,000 albums, now that is incredibly hard so the industry has to look at digital options, but a lot of web services don’t pay properly. Google will pay you a share of the revenue you generate for them, but if you don’t make them money you don’t get money.

>Has social media changed the way bands are marketed and content is discovered?

Yes, but it has huge potential to do more. At the moment, because it isn’t licensable, it isn’t doing the job that it ought to be doing. But what it can do is alter the value chain. With less money available in the music business we have to instead look at what we do have. And what we have is lots of data on music fans. Marketing has always traditionally been more expensive than recording but we can cut these costs by using social sites and viral links. And maybe we can cut out advertising costs because acts can just directly email their fans.

>Can music-streaming services support the music industry?

They are good, but they don’t have all the music. I manage Billy Bragg and there are a hundred versions of his tracks online. I can get a recorded version but a lot of the times on these services there are no live versions. And globally there are billions of tracks so the problem remains of how people find a particular piece of music or if they like something how they find similar bands. People aren’t just looking to buy the music, they are looking to buy a service which is personal and recommends music and enables discovery and which saves them time. I’m not sure anyone is really offering this yet.

>Is there a future for physical music?

Yes, but its role in the industry will become less. Probably physical music, like CDs, will become very expensive and luxurious and they will be like hardback coffee table books and people will only buy maybe one or two a year. The music industry’s job is to make as much money as it can from a track or album, and that includes physical sales alongside digital sales, access services and anything else they can come up with.

>What do you think the music industry will look like in 10 years?

Probably very similar. But what we might look on as broadcasting income will hugely increase. Most revenues will come from users paying to access the content. You won’t notice that you are paying for recorded music so much.

I think the artists ought to be much more powerful, whether they will get it together is another matter. There will be record labels, but whether they will be labels that own content or just be agents I don’t know. They might be more like the Performing Rights Society and less like Universal.

Read the whole interview here from Sara Vizard at Strategy Eye

Musician Economics 101

musicians&money

From Hypebot.  It’s no secret that the amount of money artists are earning from recorded music is declining.  But by how much? And as digital sales replace physical and streaming music gains traction do the numbers shift in the artist’s favor?  Infographic created by David McCandless of Information Is Beautiful from a spreadsheet of data.

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Are these really the key trends and challenges for Digital Music?

Here is a list of 9 trends and challenges that were recently published as part of an overall report on Digital Music by Redwood Capital.  You can download the entire report here.  What I find most bothersome about all of this is that it is a very backward looking, rationalization and justification about the collapse of the recorded music business and the fantasizing about protection of the label’s assets and proliferation of the traditional business model.  While it may be a good snapshot of some of the major issues the industry has faced and a good way for people to orient themselves, this is hardly the way to think about the future.  No wonder the investments made in music startups over the past decade or so by the VCs and Investment Bankers have not panned out.  If this is the way VCs and investors look at the world of music, I got to tell you, we are all in a lot of trouble.

I have pitched and have had many deep discussions with investors over the years about the music industry and have learned one thing that is holding the entire industry back.  Investors say they care about the music business, but when it comes right down to it, they don’t care about the musicians.  Not one of them would bet on a new label or artist driven business model.  They all wanted to back technology or distribution, but not musicians.  Pathetic.

I have taken the liberty of annotating some of these “treneds and challenges” below:

1) Rampant Piracy Continues

Despite a decade of aggressive attempts by the industry to reduce illegal downloads and peer-to-peer file sharing and preserve what remained of the old model, the biggest challenge facing the industry is still the fact that consumer attitudes towards paying for music have been forever changed, especially amongst the ever-important younger demographic. This places tremendous pressure on industry players to provide the consumer with an experience that exceeds that which can be achieved illegally and for free. The solution likely lies in packaging music with other products and services that consumers expect to pay for, such as mobile phone service, Internet connections, ringtones, concerts, merchandise, etc., and taking advantage of improvements in broadband speed and access to provide a service that can’t be replicated for free. – Certainly this is true for recorded music and something that we predicted nearly 8 years ago in our book on the Future of Music. However you cannot expect a healthy market when you have to “package” what you are trying to sell with something else as the primary means of distribution.  New forms of music experiences would certainly trump “bundles”.

2) Strategy of Major Labels

Despite numerous attempts to cut out the labels as middlemen, and the potential damage they have done to their relationships with the public after years of suing their customers, the major labels still have tremendous clout in determining the fate of the various new distribution models and emerging companies. While backing by the major labels by no means guarantees any degree of success, opposition from the labels is an obstacle that is extremely difficult to overcome. That being said, many of the larger players today began without the blessing of the labels, but once they became too big to ignore the labels were willing to make a deal. – Again I would argue this perspective assumes that the existing music, the existing catalog is more important than the new music, or the music yet to be created.  Tens of millions of dollars have been wasted and countless hours of negotiation sunk into trying to secure licenses to existing major label content by many companies trying to recreate the distribution model for an asset class in severe decline.  I will go out on a limb here and say that the new music matters far more in the future than the existing music, and that licenses from the major labels are far less valuable than the labels think they are.  Perhaps an order of magnitude less.

3) Legal Complexity

Many US copyright laws were written when the only form of music distribution was printed sheet music and as such, obtaining the proper licenses from all relevant content owners is extremely complex. Given the relative youth of the digital music industry, the law is being written and applied haphazardly and has been difficult to interpret. International differences make it difficult to offer consistent products on a global basis. For example, currently Pandora is legal in the US, but illegal in the U.K, and vice versa for Spotify. Developing a business plan in this environment is extraordinarily difficult. – Of course this is true if you are building a business based on catalog.  New labels and music companies that are forming to support new artists can completely eliminate this issue by creating licenses for their content that bundle all the rights in one global license that can be easily acquired.  By using this strategy, new content businesses can outrun old content business and begin to take over the landscape.

4) The End of DRM

The recent decisions by the labels to finally eliminate digital rights management for many applications should represent a landmark change for emerging growth companies in the music space. This greatly reduces a longstanding barrier by allowing compatibility of content and devices across platforms. By decoupling content and devices, consumers can now download a song from their choice of providers and listen to that song on their choice of devices. – Excuse me but the labels had nothing to do with the elimination of digital rights management.  That was eliminated long ago when people began trading MP3 files while all the attempts to distribute “legitimate” digital music failed. This is just the labels saying uncle.

5) Mobile Strategy is Critical

Whereas it has been extremely challenging for content owners across all digital media sectors to monetize online content, consumers do not expect mobile content to be free to the same degree because they have been conditioned to pay for such services. Therefore, we believe that online models that don’t have credible mobile strategies will continue to struggle, and killer mobile apps will prosper. We believe that one of the primary reasons for MySpace’s acquisition of Imeem was Imeem’s mobile capabilities. – Here I agree with the basic premise that a mobile strategy is critical, although have yet to see one that works.  Do people really want to listen to music on their phone?  Is that the killer app?  I expect that something far better is around the corner, more integrated into your life at the moments where you can and want to listen to music.  The damage being done to people’s hearing by the “Ear Buds” sold with the iPod and nearly every other mobile listening device is limiting the experience and holding back the growth of mobile music more than anything.  MP3 sound like crap.  Ear Buds are destroying people’s hearing.  No wonder hardly anyone wants to pay for digital music.  Anyone who focuses on improving the sound quality of mobile listening will find a explosive opportunity.

6) Dominance and Importance of the iPhone

With iTunes’ almost 70% US share in digital downloads, and the iPhone quickly taking market share in the smartphone category, alliances with Apple and/ or apps on the iPhone have become critical to success. Rhapsody, Spotify and Sirius have all launched iPhone apps in the past few months, and MOG’s is expected shortly, and this should give each an important boost in marketing their products. Without the iPhone app, customers would have had to spring for another device to use those services. With customers hesitant to even pay monthly service fees, adding a hardware requirement would have been an insurmountable obstacle in reaching a large customer base. We believe that Apple has been smart in its willingness to approve apps even from services that compete with iTunes. – I love my iPhone, I think it is the coolest thing ever invented.  But I also know that worldwide, the iPhone is just a speck on the landscape of mobile phones.  Will Apple really dominate this space over time?  I doubt it very much.  The vast majority of people cannot afford to buy Apple products.

7) Importance of Wireless Broadband

The widespread availability of broadband in the home and the office in the past decade has enabled computer-based downloading and streaming to develop entirely new methods of discovering, purchasing and listening to music. Many of the previously mentioned business models revolve around this experience. However, the next frontier for the developing models is to take the experience mobile without frustrating consumers. Now that consumers have accepted that cell phones are also music players, the market for mobile music has dramatically expanded, given that 139 million smartphones were sold worldwide in 2008 (Source: Gartner). To date, while streaming services such as Rhapsody and Pandora are a great way to listen to music at one’s desk, the experience on a mobile phone is mediocre at best, given dead spots and dropouts, and in the case of Rhapsody, low bitrate streaming. We suspect that many early adopters have tried these mobile services, only to get frustrated and go back to listening to MP3s on their iPods. Spotify’s and Slacker’s ability to cache playlists may prove to be a good workaround until wireless broadband availability and quality catches up. – I am a firm believer that you do not have to worry about storage and bandwidth, that they will always expand faster than you think they will.  Agreed.

8 ) Consumers Remain Willing to Pay for Exciting New Technologies and Products

Consumers have proven that they are indeed willing to pay for new products and technologies that enhance the music experience or provide new uses for music. The tremendous initial growth of the ringtone market is one example. US ringtone sales grew from almost zero in 2002 to a peak of $714 million in 2007, before dropping 24% in 2008 (Source: SNL Kagan) as consumers ultimately figured out how to create ringtones on their own for free. iTunes has created new value added products that sell at a premium, such as iTunes Pass, which automatically delivers all new product, including exclusive extras, from a specific band to its fans, and iTunes LP, which adds album art, videos, and other extras to an album purchase. Shazam is another good example. Shazam is the second most popular music app on the iPhone and claims 50 million users. Shazam is a unique technology that enables users to use their mobile phone to identify and tag any song they hear in public or on the radio and immediately purchase the song. The app is so popular that Shazam is now charging customers $5 for the premium app, and is limiting free users to five tags per month, and its usage is accelerating. – Completely agree.  This is in line with my basic premise that the new stuff matters far more than the old stuff, and if you can deliver a unique experience to a fan, especially one that is fun and sounds incredibly great, they will eat it up.

9) Convergence of Models

Most streaming services also offer the ability to purchase tracks either with their own ecommerce model or with links to others, most often iTunes and Amazon. To date, most ecommerce models have not offered streaming services, likely out of fear of cannibalization as well as licensing requirements. We believe that as streaming catches on with a broader audience, the e-commerce players will have to offer both. Apple is now more likely to move in this direction with its purchase of Lala, and increases our level of confidence that the streaming model is the wave of the future. – I believe as we wrote about in the Future of Music, that a utility model is the only way to make money with recorded music in the future.  Until music become always on and always available and feels like it is free to you, the market will continue to decline.  It is not so much the convergence of models but the ascendance of a model that will work.  The broadband mobile carriers are the ones that can make this happen.  It is a winner take all business strategy for the company with the balls and commitment to bake paid media distribution into their basic business model.

Comments anyone?

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Terry McBride at Berklee

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.”

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Interview with Jeff Price of Tunecore

“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.