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Two related pieces of content rolled through my email inbox this morning that I have to share. The first is a Apple produced video from 1988 on MIDI, that helped to popularize the use of computers in music in the early days of “desktop music publishing”. Like most things from Apple, the video does not mention any of the amazing products (besides the Mac) that defined this era, including Master Tracks Pro, Finale, Encore, Opcode, Alchemy, and Digital Performer.  But they are all included in the video. It is amazing how relevant this video is even 26 years later. YIKES!  The dawn of MIDI.

I love the big hair and seeing lots of my friends again including David Rosenthal, Frank Serafine, David Mash, Tom Coster, Bryan Bell, Herbie Hancock, musicians Chick Corea, Carlos Santans, Laurie Anderson, Tony Williams, Chester Thompson and others. Thanks to Denis Labrecque for sharing this with me.


SECOND PIECE of content is this great graphic from Digital Music News showing how music formats have changed from 1983 (the year both MIDI and the CD were released) and 2013. You can easily see how the business has morphed, shrunk and completely re-invented itself over the past 31 years. If you don’t think “the music business” has changed much over the last 3 decades – take a good look at this. Thanks to Charlie McEnerney and Paul Resnikoff for this.

30 Years of Music Format Changes

Gotta love it.

James Taylor is suing Warner Bros over digital royalties seeking $2m in compensatory damages from his former label for past MP3 sales.

The Guardian reports that singer-songwriter James Taylor has filed a multimillion-dollar lawsuit against his former label, Warner Bros, claiming they have underpaid millions in royalties on downloads of his songs. As in similar cases brought by Eminem and the Temptations, the principal issue is the royalty rate for downloads or ringtones among artists who signed record contracts prior to the advent of digital music sales.

I reported on this situation in the Huffington Post here a while ago with Musicians may be owed billions in unpaid digital music royalties.

All of this stems from a landmark ruling in 2010, when a company representing Eminem’s publishing rights won a case against Aftermath Records. The label was ordered to pay royalties on downloads and ringtones according to the rate for licensing, not sales. Since then, a wide range of acts have pursued their labels for compensation.

Lots more to come.  The leveling of the playing field.

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.

My friend Roger McNamee, a founding Partner and Managing Director of Elevation Partners has been getting some great press lately on his thoughts on the new music business, investing in technology, Apple, Google, Facebook and much more.  Here is the transcript of a speech he gave at NARM earlier this summer, a must read.

“Our band – Moonalice – is inventing new opportunities in music. We would like you all to join us.

I have been a working musician for more than 30 years, and a technology investor for 29 years. I have played about 1000 concerts over the past 15 years, which means I have personally experienced everything in Spinal Tap except the exploding drummers. I also spent three years helping the Grateful Dead with technology and many more advising other bands, most notably U2.

My band is called Moonalice. We play 100 shows a year in clubs and small theaters, mostly on the coasts. Moonalice was the first band broken on social networks. What broke us was 845,000 downloads – and counting – of the single “It’s 4:20 Somewhere.” We’re the band that Mooncasts every show live, via satellite to thousands of fans on iPads, cell phones, and computers. We’re the band that has a unique psychedelic poster for every show. After four years, Moonalice has 371 poster images from the likes of Stanley Mouse, Wes Wilson, and David Singer. Licensing those images will eventually a big business for us. We’re the band that offers the EP of the Month for $5. And we’re the band that uses the latest technology to radically improve both the production cost and commercial value of the content we produce. Now I’m looking for people who want get on this bandwagon with me.

The first question I hope you ask is “Why now?” The world of technology is beginning a period of disruptive change. The old guard – represented in this case by Microsoft Windows and Google search – is under assault and hundreds of billions of dollars may become available for new and better ideas. I hope that gets your attention!!!

The biggest beneficiaries of this disruption should be the people who got the short end of Google’s business model, especially creators of differentiated content. For the past twelve years the technology of the internet has been static. Every tool commoditized content by eliminating differentiation. The most successful companies monetized content created by others. Google was king.

I believe Microsoft and Google are about to get a taste of what the music industry has been dealing with for a decade. Their world is going to change and they won’t be able to stop it. Not so long ago Microsoft’s Windows monopoly gave it control of 96% of internet connected devices. Thanks to smartphones and tables – especially the iPhone and iPad — Windows’ share of internet connected devices has fallen below 50% … and it will fall much further in the years ahead.

Consumers are abandoning Windows as fast as they can. I expect businesses to follow suit.

This is a HUGE deal. Businesses whose employees use smart phones and iPads instead of PCs will save up to $1000 per employee per year in support costs.If corporations buy fewer PCs, they will save tens, if not hundreds of billions per year.

This is happening because today’s strategic applications – email, Facebook, Twitter, LinkedIn, YouTube and other internet applications – don’t need a PC . . . in fact, they are far more useful on a phone.

Microsoft has been in trouble since it first missed the web in 1994. Then it was unable to prevent Google from taking charge in 1998. When Google showed up, the World Wide Web was a wild environment. No one was in charge. The prevailing philosophy was “open source” . . . and free software.

Google had a plan for organizing the web’s information that treated every piece of information as if all were equally valuable. To create order, Google ranked every page based on how many people linked to it.

What we all missed at the time is that by treating every piece of information the same, Google enforced a standard that permitted no differentiation. Every word on every Google page is in the same typeface. No brand images appear other than Google’s. This action essentially neutered the production values of every high end content creator. The Long Tail took off and the music industry got its ass kicked.

Google captured about 80% of the index search business, which gave it a huge percentage of total web advertising. Google’s success eventually filled the web with crap, so consumers began using other products to search: Wikipedia for facts, Facebook for matters of taste, time or money, Twitter for news, Yelp for restaurants, Realtor.com for places to live, LinkedIn for jobs. Over the past three years, these alternatives have gone from 10% of search volume to about half.

As if all this competition wasn’t bad enough for Google, then along came Apple with the iPhone and App Store. Apple offers a fundamentally different vision of the internet than Google. Google is about the long tail, open source, and free, but also had to remove 64 apps from the Android app store for stealing confidential information. Apple is about trusted brands, authority, security, copyright and the like. In Apple’s world, the web is just another app; it is called Safari.

People who have iPhones and iPads do far fewer Google searches than people on PCs. The reason is that Apple has branded, trustworthy apps for everything. If they want news, Apple customers use apps from the New York Times or Wall Street Journal. If they want to know which camera to buy, they ask friends on Facebook. If they want to go to dinner, they use the Yelp app. These searches have economic value and its not going to Google, even on Android.

When Apple and the app model win, Google’s search business loses. Like Microsoft, Google has plenty of business opportunities, but the era of Google controlling all content is over. Consumers compared Google’s open source web to Apple’s app model and they overwhelmingly prefer Apple’s model. Software development and innovation has shifted from “web first” to “iPad first” . . . which is a monster long term advantage. Get this: Apple may sell nearly 100 million internet connected devices this year!

Apple’s strength can be seen best in the iPhone vs. Android competition. There are many Android vendors. Together they sell more phones than Apple does. But Apple gets around $750 wholesale for an iPhone. The other guys get between $300 and $450. This means Apple’s gross margin on the iPhone is nearly as big as its competitors’ gross revenues. Game over.

The other thing that makes Apple amazing is the iPad. No electronic product in history – not even the DVD player – can match the adoption rate of the iPad. Apple may sell another 30 million this year. At this point, the competing products have not put a dent in the iPad. Image what happens if Apple’s share of the tablet market remains closer to the iPod (at 80%) than to the iPhone (20%)?

This sounds like, “Game Over, Apple wins” . . . but it’s not . . . at least, not yet. The open source World Wide Web has finally responded to Apple. A new programming language has come to market called HTML 5. HTML is the foundation of the World Wide Web. For the past decade, HTML has been static, which allowed Google to dominate.

HTML 5 is a new generation of HTML and it changes the game fundamentally. It allows web developers replicate the iPhone experience, but with many extra bells and whistles … and no App Store. One reason HTML 5 matters is because it eliminates Adobe Flash, which has been an inadvertent barrier to creativity

Creativity enables differentiation. Differentiation can be monetized. Huge differentiation can be monetized hugely. With HTML 5, creative people can now use the entire web page as a single canvas. For the first time in a dozen years, web pages will be limited only by the creativity of the people making them. They can create experiences that will be more engaging to consumers and more profitable for advertisers than network television.

New forms of entertainment will emerge. New forms of business. Companies the size of Facebook and Google will develop in categories I can’t guess at. Companies as important as Amazon, iTunes, and Netflix will emerge to support what new content comes to market.

Whether you view Apple as friend or foe, HTML 5 offers real opportunity. Why?

Because you can deliver a better experience than an app . . . without an app. HTML 5 is cheaper to build, cheaper to support, no 30% fee . . . oh, and the apps perform better, too.

I believe Apple’s best response would be to focus on selling hardware and accept that consumers will demand products that happen to bypass the app store. Based on the argument with Amazon, I sense Apple is not ready to concede the point. That’s ironic, because the only way Apple can get hurt would be if they try to force all commerce through the App Store. The would create a real reason for customers to buy a tablet other than iPad.

Let me review my key points so far:

Google and Microsoft will remain huge, but their influence is evaporating, which means we can ignore them

Apple is winning big, which means we have to support their platforms first

For people who make content, Apple is a better monopolist to deal with than Google.

HTML 5 will give you a better product than the Apple app model at a lower cost and with more value.

Now let’s figure out what we can do together. My band Moonalice exists because T Bone Burnett wanted to produce an album of new and original hippie music in the old school San Francisco style. We put together an all-star band with in late 2006 and recorded the album. T Bone was about to win the GRAMMY for the Alison Krauss/Robert Plant album, Raising Sand, so we thought we were made.

We had a budget
We had an A-list PR guy
We had a really fine manager
We had custom label deal with a nice budget
T Bone’s innovative sound technology would make the album cutting edge

Old school music is good. Old school marketing wasn’t going to work for us. About four months before release, I reviewed the media plan with our PR guy. He said, “Sorry, man, but nobody cares.”

A few moments of somber reflection followed. Then, with great regret, I let our manager go. I let our publicist go. I let our label go. For all intents and purposes, we wrote off an album everyone was extremely proud of and which accounted for half of T. Bone’s portfolio the following year when he was nominated for Producer of the Year.

But I freed up most of our operating budget. Real money. And I focused it all on Twitter and Facebook. Our goal was to build an audience of dedicated fans around a Moonalice lifestyle. Three years later, we have 57,000 fans on Facebook and 75,000 on Twitter. We learned a great truth: as hard as it is to get people to spend money, it is much harder to persuade them to spend enough time listening to you to become a long term fan. We traded our music for their time. We discovered we could build an audience by giving away stuff that costs nothing to produce and distribute. These are serious fans who engage with us dozens and often hundreds of times a year.

The first thing we invented was the Twittercast. Before us, no one had ever done a concert over Twitter. Now we have done 103. Our marginal cost is exactly zero. Next we created Moonalice Radio, which has broadcast one song every hour on Twitter for the past two years. Then our drum tech bought a video camera and started recording the shows. Then he bought more cameras, put them on mic stands and started doing live video mixes. About a year ago, he figured out how to mooncast our concerts over the net for free.

Nearly all of our past 100 shows have been mooncast live on MoonaliceTV and then archived. Because we play mostly late shows on the west coast, only 10% of the audience watches in real time. But approximately 3,000 people watch EVERY show on a time shifted basis. Fans like the Moonalice Couch tour because they can chat, make friends, and do things that are not permitted at a live venue. They even buy Couch Tour tee shirts. And they are helping us create a new ecosystem where most of the music is free, because Moonalice art and life style products have huge economic value.

Thanks to HTML 5 and a satellite dish, Mooncasts can now be viewed on a smart phone without an app. Our video quality competes favorably with the best you have seen on an iPhone, and the technology to do all this costs the equivalent of six months of our former manager. He was a really good guy, but a satellite-based tv network is more valuable.

I want to finish up by recommending a course of action for you

Step 1: Remember that HTML 5 is just getting started, but the learning curve is less expensive and more profitable for those who commit to it from the beginning. The new business is going to emerge over a few years, not overnight

Step 2: Don’t wait for the labels to figure this out. Labels are not organized to get this right, which leaves a big hole in the new music market where labels used to be.

Step 3: Don’t wait for major artists to figure it out. The great new stuff is going to come from artists who have nothing to lose. Artists who come out of nowhere will create huge value for next to no cost.

Step 4: Make sure you are successful addressing the needs of next generation content creators … not just listeners. There are WAY more of content creators than you may realize. Thanks to Moore’s Law, Karl Marx is right at last: the means of production are in the hands of the proletariat. At the peak, there were 8 million bands registered on Myspace. They weren’t playing gigs, they were creating stuff, mostly for their own entertainment. Those people spent a lot more money creating the content they posted on Myspace than they did on recorded music. Thanks to Apple’s Garageband, the population of people capable of mixing something is now measured in tens of millions. Making these people successful is the key to creating new markets and new music products.

Step 5: Do everything in your power to encourage new product ideas and new forms of content. HTML 5 is a blank canvas and there is no telling what people will do with it. For all I know, HTML 5 may produce five or even ten amazing categories of product.

Contests, prizes and publicity will give you an opportunity to associate yourself with whoever creates the cool new stuff. If you have local stores, do local events. Think Alan Freed.

Step 6: Near term, focus your platform strategy on Apple.

Step 7: Long term, focus on HTML 5. The sooner you commit to HTML 5, the more likely you will produce something of economic value.

Step 8: Remember that HTML 5 will produce companies as important as Amazon, iTunes, and Netflix. It costs musicians practically nothing to create good digital video and fantastic audio, but they need distribution systems optimized for their content.

Step 9: Make music fun again”

And if that isn’t enough, Roger was kind enough to share with me his thoughts on investing in technology related businesses.  TechInvestingHypotheses

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.

Corey Smith

Bob Lefsetz posted in December about Corey Smith, a fantastic artist who is blazing a new trail through the music business using entirely new ways of thinking.

Corey’s whole business model is based on giving away lots of music for free and building relationships with his fans. Last year he grossed $4.2 million with a team of seven people. He does it primarily through touring and developing seriously close relationship with his fans.

Lefsetz said “Corey was a high school teacher. Playing gigs on the weekend. Marty Winsch (now his manager) was booking a venue. Was there any way to make headway, for Corey to support his wife and two kids playing music?

Absolutely said Marty. But first they had to release the equity in Marty’s recordings. They had to make them free on his site. To everybody.

And it was this giving away of the music that was Corey Smith’s tour support. They didn’t need a nickel from a label or a fat cat. Because once people heard Corey’s music, they had to see him live.

Which they did. In 2007, Corey Smith grossed $1.7 million. This year, not even half a decade into Marty’s management of the act, Corey’s going to gross $4.2 million. Free music built the base. Fan rabidity blew the act up.

You can buy the tracks on iTunes. They’ve sold 420,000 so far. When they experimented last summer, and took the free tracks down from Corey’s site, iTunes sales went DOWN! So, they put the free tracks back up. Actually, people e-mail Marty every day, asking for a track. AND HE JUST E-MAILS THE SONG BACK!

Not everybody’s ready to commit right up front. The free music allows people to try Corey out.

They don’t want radio play. They gave a station in a city sixty tickets to give away, but only on the condition that they DIDN’T play the songs. Marty wants people to experience Corey Smith live. That’s where it happens.

And Marty wants it to be easy. So therefore, he sells FIVE DOLLAR TICKETS! Yes, he rewards fans. Tickets are CHEAPER on the on sale date. And let me ask you, how many people are going to tell their friends they scored such a deal? And maybe drag them along with! That’s your marketing. Your fan base. It isn’t about hiring a PR firm or using Twitter. Actually, Marty pooh-poohs most technology. He says you’ve got be wary that the technology doesn’t get ahead of, doesn’t overwhelm the act. He doesn’t use Google Analytics to find out where each and every fan is. Marty goes on feel. He, and his uber agent Cass Scripps just go into a new territory, and although the first gig might be soft, the one after that never is. Because Corey delivers.

Actually, that’s important. Marty has tried releasing the equity, giving away the music of other acts. But they haven’t succeeded. Because they’re just not good enough.

If you’re truly good, you don’t need anybody else’s money, your recordings can be your tour support, they can put bodies in the seats, you can build a career.

Whenever anybody e-mails Marty and asks if they can meet Corey, Marty always says YES! He tells them when to show up for the meet and greet. This is the new paradigm. Eliminating the gulf between the act and fan. Trusting your audience. That if you’re damn good, they’ll give you all their money.

You don’t have to play by the old rules. You don’t need any money. You just need good music. And good management.”

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The Future of Music Book

Corey recently gave a lecture at a UGA Music Business class and talked about his philosophy and career. He mentioned that he has been influenced by “The Future of Music” book. Yeah Baby!

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Check out Corey’s Website here and be sure to get one of those $5 tickets to see his live show. This is the future of the music business.

Our book is available in various forms.

The Future of Music Book

You can listen to the book on iTunes as a podcast for free. Go to the iTunes store and search “Future of Music” podcasts and subscribe.

You can buy the book on Amazon for $11.53 or less.

You can purchase the audiobook from Audible for $7.49.

Here are a few of the reviews.

Publishers Weekly
Two innovators in music technology take a fascinating look at the impact of the digital revolution on the music business and predict “a future in which music will be like water: ubiquitous and free-flowing.” Kusek and Leonhard foresee the disappearance of CDs and record stores as we know them in the next decade; consumers will have access to more products than ever, though, through a vast range of digital radio channels, person-to-person Internet file sharing and a host of subscription services. The authors are especially good at describing how the way current record companies operate – as both owners and distributors of music, with artists making less than executives – will also drastically change: individual CD sales, for example, will be replaced by “a very potent ‘liquid’ pricing system that incorporates subscriptions, bundles of various media types, multi-access deals, and added-value services.” While the authors often shift from analysts into cheerleaders for the über-wired future they predict – “Let’s replace inefficient content-protection schemes with effective means of sharing-control and superdistribution!” – their clearly written and groundbreaking book is the first major statement of what may be “the new digital reality” of the music business in the future.

5.0 out of 5 stars THE FUTURE OF MUSIC IS NOW
Gian Fiero (Hollywood, California)

This book is so brilliant that it makes the vast majority of music industry books that are being published seem irrelevant. It discusses in detail, the reasons why the future of the music industry is headed into the digital/mobile entertainment era. It also provides statistical information that professionals, marketers, entrepreneurs, and educators can use constructively. Both Dave and Gerd (the books co-author), have their fingers firmly planted on current music industry activities and trends. They also possess and display a clairvoyant eye toward the future that offers beneficial insight and foresight to those who may not be aware of what this whole digital (i.e. independent) revolution is about, and most importantly, what it will entail to prosper in it. The book is easy to read, easy to understand and simply brilliant. If you buy just one industry book this year, this should be THE one. Buy it now!

5.0 out of 5 stars Indispensible
Stephen Hill “Producer, Hearts of Space” (San Rafael, CA USA)

A stunningly candid source of concentrated, up to date insight about the music business and its turbulent transition into the digital era. This book tells it straight and will make the dinosaurs of the music industry very unhappy.

Like Martin Luther’s ’95 Theses’ nailed to the door of Wittenberg Cathedral, Kusek and Leonard drive nail after nail into the sclerotic heart of the old-fashioned music business. Their rational vision of the future of music rests on the idea of unshackling music from the hardcopy product business in a yet-to-be-realized era of open content licensing, facilitating sharing and communication among users, and growing the business to its full potential.

It provides as clear a vision of the future of the music industry as you will find, from two writers with a rare combination: a solid grounding in the traditional practices of the music business, an up-to-the-minute knowledge of the new technologies that are changing it, and the ability to think through the consequences.

I’ve dreamed about a book like this, but thought it would be impossible in today’s hyperdynamic environment where every week seems to bring a breakthrough technology, device, or service. But by digging out the underlying trends and principles Kusek and Leonard get under the news and illuminate it. Along the way they provide a brilliantly concise history of the evolution of digital media.

I can’t think of any book more important for artists to get the full re-orientation they need to survive and prosper in the digital era. It’s no less critical for members of the music and broadcasting industries who need to consolidate their thinking into a coherent roadmap for the future. In a word: indispensible.

From the Business Innovation Factory Summit, my presentation on the Past, Present and Future of Music.

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Here is the story they wrote about me for the Summit.

Back in the seventies, David Kusek walked from his freshman dorm at the University of Connecticut, down a long hill to the music department for classes several times a week. When the routine got a little stale, he began taking other routes. One detour took him past the computer science building where he quickly noted the “hot” cars in the parking lot. Naturally, he began taking computer science courses.

Great ideas are born in such serendipitous ways. When Kusek melded his deep-rooted love of music with his newfound affinity for computers, he opened up unchartered territory in the music world by inventing the electronic drum. His company, Synare, took a relatively unfamiliar technology (computers) and combined it with an indigenous musical tradition that tuned percussion to the key of the song. Kusek also knew how to start a business, develop products, and take them to market. Having the right price point added to the appeal of the electronic drum and attracted the attention of fledgling artist Donna Summers who took a chance on the new sound and propelled her career.

“For better or worse, we had our part in the disco age,” Kusek says. “We helped to define the sound of the era.”

Taking another detour for curiosity’s sake led Kusek to study animal communication in California with noted biologist John Lilly. They were trying to use sound to communicate with dolphins when the Apple II computer came to market.

Kusek was already synthesizing the sounds that dolphins make, so he devised a way to do the same with musical instruments, to “put the Apple II between the instruments.” He explains that his new company, Passport Designs, “broke music down into a language of expression, which we mapped to simple computer code and connected it to the instruments. We created a computer language for music.” Witness the birth of Musical Instrument Digital Interface (MIDI), developed by a group of companies including Passport, which has left an indelible mark on the music industry by becoming the prototype for all music interface software.

If only they had patented it.

Kusek, along with Dave Smith and the other people responsible for creating MIDI could have made millions with MIDI, but he remains philosophical about this missed opportunity. “Maybe the reason why it took off was that it was absolutely free,” he says. “It was a compact way of representing music in a simple and cheap format.”

Kusek has learned to appreciate and even extol the benefits of free and open access to music. He helped create musical notation software and was instrumental in developing enhanced CDs for the commercial market. He supports the creation of a music utility to “monetize” the immense wave of file-sharing that has become standard operating procedure in the industry. He reasons that Internet users already pay for access to a network that supplies the music, so why not add a nominal fee to the ISP bill and allow for legal trading? With approximately 80 million households using the Internet, a monthly music utility fee of $3 would generate almost $3 billion in annual music sales from households alone.

“If you tracked what was downloaded,” Kusek says, “you could create a system where the money flows exactly to the people who are listening. It could be a 30 to 40 billion dollar business again, as it was in the nineties.”

Admittedly, this system would spread those billions among a larger base of artists, establishing an unfamiliar sense of parity in the music industry. But Kusek says that the megastar is gone, anyway: “In the last four to five years, new artists coming to market are not making anywhere near what artists like Madonna made. I think that happens because of file-sharing, but also because the music industry was taking its eye off what was important. In the mid-nineties, the record companies thought their customers were WalMart and Target. They had no connection to their audience at all.”

File-sharing may have killed the megastar, but not the art, Kusek insists. “I think it’s a great time to be an artist,” he says. New performers may have smaller audiences, but they also have a more efficient way of finding that audience and staying connected to it through online chats, newsletters, and blogs. And instead of the record industry’s marketing machine pushing music at fans with an $18 plastic CD case and the elaborate promotion attached to it, word of mouth is shaping the musical tastes of the rising generation.

As it should, according to Kusek. He has brought technological innovations to the music industry by accepting such change and using it to open up the possibilities of sound. He envisions music flowing in a clean stream wherever people communicate, allowing artists and fans to express themselves freely.

British Music Rights survey on music consumption of people aged 14-24. The average age of respondents was 22. This is the largest UK academic survey of its kind.

* 14-24 year olds love music – arguably more than any previous generation.

Well I am not quite sure about this one, but lets move on.

* But their consumption of music is changing significantly – the perceived value of sharing, recommendation and copying have all increased.

The world has changed for the digital kids.

* The upshot? Emotional importance does not correlate with spending – especially compared to other entertainment sectors.

* Around 90% of respondents now own an MP3 player. They contain an average of 1770 tracks – half of which have not been paid for.

IMPORTANT TO NOTE – the MP3 player is only about 8 years old.

* 58% have copied music from a friend’s hard drive to their own, and 95% copy music in some way.

* 63% download music using P2P file-sharing networks.

* 42% have allowed P2P users to upload music from their computer. Much of this behaviour is viewed as altruistic.

* 80% of current P2P users would be interested in a legal file-sharing
service – and they would pay for it too.

* The CD is not dead. Even if a legal file-sharing service existed, over 60% say they would continue to buy CDs.

* Money spent on live music exceeds that spent on recorded music

This is all very good news for the music industry.

British Rights Survey

These days there are hundreds of options for acquiring music from free legal download and streaming services. Many of these sites offer streaming and/or downloading options. Some are up there for the love of music, some are driven by advertising and some are building business models behind the scenes. They are alternatives to paid services like iTunes, Rhapsody and Napster.

There are an ever expanding number of these services that offer great music from both established and emerging artists. Free Geekery has compiled an interesting list of 100 of these sources for your music enjoyment. Happy listening.

I heard this song again and had to post about it one more time.

This is a blast from the past (2006) written and performed by MC Lars and inspired by the “Future of Music” book. It is interesting that the point of view represented in the song seems almost like a mainstream idea at this point. Not to say that the financial side of things is working yet, but a lot has happened in the past two years. The future is becoming clearer.

Download this Song – MC Lars

It’s 2006, the consumer’s still pissed
Won’t take it anymore so I’m writing a list
Don’t try to resist this paradigm shift
The music revolution cannot be dismissed
$18.98 Iggy Pop CD?
What if I can get it from my sister for free?
It’s all about marketing Clive Davis, see?
If fans buy the shirt then they get the mp3
Music was a product now it is a service
Major record labels why are you trying to hurt us?
Epic’s up in my face like, “Don’t steal our songs Lars,”
While Sony sells the burners that are burning CD-R’s
So Warner, EMI, hear me clearly
Universal Music, update your circuitry
They sue little kids downloading hit songs
They think that makes sense
When they know that it’s wrong!
CHORUS
Hey Mr. Record Man
The joke’s on you
Running your label
Like it was 1992
Hey Mr. Record Man,
Your system can’t compete
It’s the New Artist Model
File transfer complete
Download this song!
Download this song!
Download this song!
I know I’m rhyming fast, but the message is clear
You don’t need a million dollars to launch a career
If your style is unique and you practice what you preach
Minor Threat and Jello both have things to teach!
I’ve got G5 production, concept videos
Touring with a laptop, rocking packed shows
The old-school major deal? It makes no sense
Indentured servitude, the costs are too immense!
Their finger’s in the dam but the crack keeps on growing
Can’t sell bottled water when it’s freely flowing
Record sales slipping, down 8 percent
Increased download sales, you can’t prevent
Satellite radio and video games
Changed the terrain, it will never be same
Did you know in ten years labels won’t exist?
Goodbye DVD’s, and compact disks!
REPEAT CHORUS
You know, we just wanted a level playing field.
You’ve overcharged us for music for years, and now we’re
Just trying to find a fair balance. I hate to say it, but…
Welcome to the future.
REPEAT CHORUS

Here is what I wrote in ’06.

Check out Lars site.

Do you think Edgar Allan Poe could have made money if he sold The Raven separately from 30 other poems?

This is a question posed in the U.K. Register article examining the “value gap”, or the amount that sound recording revenue has fallen since 2004. The report suggests that Apple (and others) should take the blame for the woes of the music industry (British) for unbundling the song from the album format.

“The Value Recognition Strategy working group was created last summer – largely at the impetus of the indie labels and collection societies, but backed by all sectors of the industry – to examine alternative revenue opportunities for digital music. The growth of MP3 has seen large hardware manufacturers such as Apple and media companies such as News Corp’s MySpace prosper from music, but returning little or nothing to composers, songwriters, and sound recordings owners.

It’s what economist Will Page, of the MCPS-PRS Alliance, calls a “broken supply chain”. Revenues from telecoms companies and service providers dwarf the revenues from the beleaguered music business.

The conclusion that unbundling is the chief factor is richly ironic. When Apple launched the iTunes Music Store in 2003, it did so with the backing of all four major labels. The labels had failed to see digital music as an opportunity, and launched only small scale and piecemeal commercial offerings. At iTunes, consumers chose one or two songs from a performer’s repetoire for 99 cents a song, rather than pay $9.99 for the CD.”

Since that time Apple has reaped tens of billions in sales of iPods, while the labels have lost tens of billion in sales of CDs. It has almost been a complete one-to-one swap of revenue from the label’s, writer’s and artist’s pockets – into Apple’s. See an analysis I did of this a while back here.

Read the whole Register article here.