EDM is really just short for “Event Driven Marketing”.
At last week’s Billboard Futuresound conference in San Francisco, Deadmau5 aka “Joel Zimmerman” gave a candid interview which you can listen to here. He talked freely about his career, the current EDM scene and where things are heading.
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?
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.
As the saying goes – when life hands you lemons, you make lemonade. And as we face the reality of the digital music business today, many are finding ways to make digital lemonade. This is the first in a series of posts about creative thinking in music.
In the face of declining recorded music sales, we have to look hard at the opportunities for generating money in music and get creative. Most of the energy today in digital music investment is in streaming music, music discovery, ticketing, crowd funding and artist services. Businesses like Pandora, Spotify, Beats, Ticketfly, Soundcloud, Songkick and Indiegogo have received significant investments in recent years as investors chase profits in the music space.
Artist Income – Virtual Tours
But what about individual artists and musicians themselves? What can they do to increase their opportunities to profit from their art when it is becoming increasingly challenging to make a living as a musician. Live performance and merchandise have long been mainstays of any carefully crafted musical career. How are these revenue streams fairing in the digital economy? Live shows it would seem need to be experienced and therefore are harder to digitize and share, although some are trying to broadcast live events and take them to the digital sphere. Take Stageit and Liveset for example. Artists can broadcast their live shows and reach a global audience while performing in a studio, living room or other venue.
Like a virtual campfire, these technologies let fans and performers join together in virtual circles enjoying the music and getting up close with the artists. It remains to be seen how influential these attempts will be, but I expect that inevitably some form of digital broadcast of live events will take hold and be a profitable source of revenue. Afterall, in theory, this form of live event takes a lot of the cost out of the tour, makes the artist more accessible and is easy to promote using social media and email.
Artist Income – Involve your fans
The musician Beck is planning to release his next album in the form of sheet music and full color artwork. His thinking is that people can participate in the creation and performance of the songs in this truly interactive record release. I think this is really smart and another feather in the cap of this truly creative artist/producer. Why not sow the seeds of your music within your fan base, and see what they come up with? Perhaps Beck’s genre lends itself to this kind of experimentation, but other artists can take a cue from him on a clever way to draw your fans closer to the action.
Beck’s latest album comes in a primative form—twenty songs existing only as individual pieces of sheet music, never before released or recorded. Complete with full color artwork for each song and a lavishly produced hardcover carrying case, Song Reader is an experiment in what an album can be at the end of 2012. Beck is inviting his fans to record, mix and produce each track in their own way. If you want to hear “Do We? We Do,” or “Don’t Act Like Your Heart Isn’t Hard,” you will need to bring them to life yourself, by playing the music. It will be very interesting to see what the uptake is on this release when it becomes available in December.
There are already postings of these tracks appearing online such as this cover of “Do We, We Do” from Max Miller on Soundcloud.
Digital Sheet Music
The sheet music business is facing challenges like unlicensed tablature, free files and online video instruction that is making this old-school business look for new ways to monetize their songs. Notation sales have fallen off, though not nearly as rapidly as recording revenues. In this post from Create Digital Music, you can see the transformation of the print music business as it goes digital (as it has been doing for some time now). Sites like sheetmusicdirect.com, musicnotes.com and others are pioneering the distribution of digital sheet music. Sites like lyricstore.com are taking music licensing into an entirely new direction by letting people create custom merchandise from their favorite song lyrics.
There is lots of room for making digital lemonade in the new music economy beyond iTunes, Pandora and Spotify. In the coming weeks I will post more about online music education and a quiet revolution in music merchandising, both of which we will discover, are hotspots for growth and revenue creation in the fast moving world of digital music.
I was reviewing this fascinating data from Mary Meeker over the weekend again, and thought I would share it. Meeker, a partner at Kleiner Perkins Caufield & Byers describes what she calls “the re-imagination of nearly everything” powered by mobile and social. For example: News outlets are reimagined on Twitter, note-taking is reimagined on Evernote, scrapbooking is reimagined on Pinterest and music purchasing is reimagined as listening.
Meeker also traces out the story of the mismatch between mobile growth and mobile monetization, pulling together numbers and analysis of one of the biggest weaknesses in today’s Internet industry.
And she gives some context to the state of the global economy. Here’s the full slide presentation:
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.
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.
Roger McNamee is probably the coolest investor I know. He has called it right so many, many times and just did it again with Facebook. You have to pay attention to him. I have been “schooled” by him on more than one occassion and for that I am eternally grateful.
Here are his thoughts on the road ahead, taken from a Mashable keynote presentation he made the other day. Great stuff if you want to try and make money in web and mobile tech in the years ahead.
The shift is away from the desktop experience of free undifferentiated content. Mobile users don’t navigate the Internet with Google searches. They use apps, which deliver a better experience. And they spend much more time within those apps than on any web story.
Instead of needing tens of millions of lightly engaged users in order to be considered successful, McNamee hypothesizes that future success will come from smaller numbers of even more engaged — and thus more valuable — users.
It will, he believes, will be built not on the Google-controlled HTML4 web nor within Apple-controlled apps, but using HTML5, which allows for differentiated, engaged experiences without the downsides of the app store.
“The basic success factors going forward are going to be exactly opposite of those we’ve had in recent years,” he said.
You can get his entire presentation here.
Awesome stuff. I’m definitely paying attention.
I am often amazed at how much today’s musicians can learn from the past. We all think that we are in the age of digital music and the old rules no longer apply and that there are only new models to develop and pursue. Wrong. Instead, we can all learn a whole lot by looking backwards and trying to map the successes of the past to the future. Lets take a look at the late Dick Clark’s career and see what we can learn.
Dick Clark capitalized on the integration of music and television long before “American Idol.” But his legacy extends well beyond the persona of the laid-back host of “American Bandstand” whose influence can still be seen on TV today.
He was the workaholic head of a publicly traded company, a restaurateur, a concert promoter and real estate investor. Clark, who died of a heart attack in April at age 82, left behind a fortune and is the model of entertainment entrepreneurship. He was ahead of his time, creating a business empire built around his personality and interests that led the way for many other musician/ entrepreneurs to come.
“Work was his hobby,” said Fran La Maina, the longtime president of Dick Clark Productions Inc.
La Maina started as the production company’s financial controller in 1966. He estimates Clark amassed a fortune that reached into the hundreds of millions of dollars. “He had this never-give-up attitude. He was a great salesperson and a task master,” La Maina said.
Clark was one of the early pioneers of the idea that a public company can be formed around an entertainer’s personal appeal. By the time La Maina went to work for him, Clark already had three shows on air: “Swingin’ Country,” “Where the Action Is,” and, of course, “American Bandstand.”
He promoted more than 100 concerts a year back when promoters, not bands, called the shots. His roster included The Rolling Stones and Engelbert Humperdinck. In the 1970s, he launched shows like the “American Music Awards” and “New Year’s Rockin’ Eve” – shows that are highly valued by advertisers because fans still want to watch them live in an age of digital video recorders.
At one point, he hosted shows on all three major TV networks, including “The $20,000 Pyramid” on ABC, “Live Wednesday” on CBS and “TV’s Bloopers and Practical Jokes” on NBC. All the while, he was hosting shows “Dick Clark’s Countdown” and “Rock, Roll & Remember” on the radio and running a business.
“He had boundless energy and a remarkable ability to do innumerable things at any given time,” La Maina said.
By the time it went public in 1987, Dick Clark Productions had several thousand employees, had launched a restaurant chain with Clark’s name on it, and ran a communications-promotion business. Revenue exceeded $100 million a year and the company was profitable.
His daily schedule was daunting, even when Clark was in his late 50s and 60s, according to longtime board member Enrique Senior, a managing director at Allen & Co. who helped Dick Clark Productions go public. “It frankly was the schedule of a 20-year-old,” Senior said. “This guy was a dynamo. I’ve never seen anybody who would be so personally involved in everything he did.”
What can be learned? Work hard, diversify, promote, be personally involved, build a great team around yourself, dream, and go for it.
My buddy Bruce Houghton at Hypebot, caught me last week for a quick interview before Rethink Music. Here is an except from our discussion:
HYPEBOT: Your new focus is on consulting and investing. Are there any sectors, particularly within music and music tech, that particularly interest you or where you see the most room for growth?
DAVE KUSEK: Online education is one of them. This is an area that is already transforming how people learn and gain job skills and it is only going to grow as time goes on. There are big opportunities here that will effect tens of millions of people around the world. Online training is going to be huge. Job requirements are shifting and people need to be able to adapt to changing circumstances that can benefit them. The traditional model of higher education is already under pressure and there are many people and companies exploring alternative models that are very interesting.
The other area I am bullish on is live music and live events. The live concert experience cannot be digitized, yet can benefit enormously from technology. There really has not been much innovation in live music or in music merchandising beyond ticketing. I think there is a lot more that can be done with mobile technology and am actively working in this area. My investment in Tastemate is one way of digging into this potential in a meaningful way. We will be bringing our service to a venue near you, very soon.
I also think that there is potential to expand the reach of live performance using remote technologies. I am interested in ways to cut the costs out of touring to make it more profitable and to reach broader audiences. It is amazing to me that there has not been more activity in this area either, so I am looking for companies and people to work with that are thinking differently about what live music is all about and how to make it even more lucrative.
HYPEBOT: What are some of the things that Digital Cowboys has done in the past or is looking to do now?
DAVE KUSEK: We are focused on business development, marketing and product development, particularly in online and mobile services. We also do strategy consulting for businesses wanting to expand or enter new markets or make acquisitions. I say we, because while I am the managing partner, I also leverage a network of people around the world and with different specialties that I bring together to form a team to address the issues. For example, with a lot of the product work that we have done I brought together a team of visual designers and user experience people to execute on the product vision and do the testing. With business development projects I sometimes work with friends that have particular contacts or relationships that are beneficial to my clients. Sometimes I put together a couple different investors or strategic partners to provide capital or distribution or some other need. The main thing is to get the work done and show results, while trying to have some fun and work on interesting projects that are pushing the envelope.
HYPEBOT: There’s some talk of another tech bubble. Do you see think we’re approaching one in music and media technology?
DAVE KUSEK: I do think that some of the deals we have seen recently are off the charts, like Instagram – but who knows? That has all the earmarks of “bubble” written all over it. But Facebook is also about to go public and at their level, what’s another billion dollars?
But really I don’t think overall that we are at the point of frivolousness and excess that we witnessed in the earlier dot-com bubble, at least not yet. I believe that people are just beginning to figure out better ways to communicate and interact and learn via technology. That is having massive implications on the future of society around the world. Take a look at the stock market trend over the past 100 years and you will see that things tend to move up and people get smarter and more prosperous. I am an optimist.
There are a lot of music startups getting funded these days and certainly they are not all going to make it. I think we will see some consolidation in the DIY space as there are probably more companies addressing that market than the market really needs. The same is true for music streaming and distribution and music discovery. I think the real breakthrough companies will be formed by trying to do something completely different, rather than mimicking the past with technology. We’ll see.
HYPEBOT: Any plans to write a follow-up to the “Future Of Music” book?
DAVE KUSEK: I plan to spend a lot more time posting things to my blog and on digitalcowboys.com. This is a much better way to continue to update original thinking and way more efficient than writing another book. The music industry has gone digital and online outlets like Hypebot really do work as conduits in this business. That is a real bright spot in the transformation of the music industry. So, look for more at futureofmusicbook.com.
You can get the entire interview here.
More coverage from Hypebot here and from Billboard here.
Hypebot reports: Technology has changed a lot about how concerts are marketed, ticketed and produced since Woodstock. Recently, the greatest driver of change – particularly from the fan perspective – has been the smartphone. From taking photos to texting friends and song requests, smartphones are changing how concerts are consumed and remembered. But early glimpses of projects from Live Nation Labs and startups like Tastemate show that we’re on at the start of a smartphone driven live music revolution. This infographic above chronicles the journey so far.
Lots more to come…
All markets are not the same. Most people in India have not had access to high-speed Internet or a PC. The wired broadband penetration of India stands at about 13 million subscriptions and there are only 50 million PCs in the country. Very few Indians have broadband or a PC of their own.
3G expands consumer audience by 100 million listeners
Despite the lack of broadband and PC penetration, there are currently 121 million Internet users in India. Guess where they are? Mobile. With the rollout of 3G in India, access to high-speed Internet has become cheaper and more widely available. People don’t need to own a desktop computer to get online or, most importantly, to participate in e-commerce — all they need is a mobile phone.
The mobile model — and by extension, the mobile music model — scales. It took broadband 7 years to reach 11.5 million wired subscribers. In less than half that time, 3G subscriptions in India topped 13 million, and that number is rapidly growing. There are 884 million mobile users in India, and as smartphones flood the market, more of them will be making the switch, becoming not just first-time smartphone users, but first-time Internet users as well.
Already, 59 percent of mobile web users access the Internet via mobile only. A study by the Boston Consulting Group predicts that the total number of mobile Internet users will balloon to 237 million by 2015. It is connectivity, now more than ever.
Advertisers, rather than end users, are footing the bill.
Brands are embarking on the biggest consumer grab of the century as China’s and India’s multi-billion audiences rise in economic status. Thousands of brands are competing to become the future soda, life insurance and auto brands of this part of the planet. That’s a major influx of ad dollars looking for a scalable way to engage consumers.
Asking consumers to shell out 15 to 25 rupees for a song online was unrealistic when pirated options were widely available for free. But as legal sites gain popularity and engagement numbers soar, major brands are ready to spend their advertising dollars on digital music Web sites and apps, so music services like Saavn, Smashhits and Ragga provide large catalogs of ad-supported music for free.
The benefits are abundant for the brand advertisers, end users and record labels; the end user gets something customizable and valuable for free, while major brands can finally capture the attention of one of the world’s largest emerging markets.
So what made advertisers change their minds? Piracy. Piracy is being addressed in India via the ISPs — in February, the High Court of Calcutta handed down the decision to ban the pirate site songs.pk on major ISPs. This is a move that many have hoped to see in other territories, and India is stepping up to address the issue directly via the ISPs.
While pirated music is still an issue in India, legitimate and fully legal music streaming Web sites and apps are restoring the faith of advertisers, meaning a huge new audience for advertisers, profits for the music labels from brands with deep pockets and top-notch quality for users.
Digital means data
Labels are excited that they can finally reach audiences who are passionate about their niche content, thanks to the kind of targeting that digital platforms make possible from user data. It’s especially great for indie labels, who now have fast entry to market and an opportunity to get in front of the right audience, despite not having the major-label marketing moolah.
Thanks to the wealth of data digital music supplies, the Indian music industry can get the right music to the right people at the right time. No need to make assumptions based on demographic information or guess what people will like. Data provides the ultimate customization tool for an industry in which customization and understanding the preferences and tastes of the end user is key.
This is the moment the music industry in India has been waiting for; it can finally focus on its core business — producing music — while advertisers happily foot the bill. And users get to sit back and enjoy, share and discover for free.
Why are artist, writer, producer, engineer and other credits almost always missing from iTunes, Pandora, Spotify, Amazon, Rdio, and almost every other music service, with little exception? That’s the basis for a metadata movement being spearheaded by producer, mixer and engineer Count (aka Mikael Eldridge), whose ‘credits’ include artists like DJ Shadow, Radiohead, The Rolling Stones, Frank Sinatra, New Order, No Doubt, Galactic, Zoe Keating, and Tycho.
“If Led Zeppelin had only sold albums digitally when they started, it’s very unlikely that many people would know who Jimmy Page or Robert Plant are because the digital music files you purchase for download or streaming can’t show you who played on them.”
If you think performers, producers, and engineers should be credited on interactive music services like iTunes, Pandora, and Spotify, click here to ‘like’ this campaign.
Over the last few years we’ve seen an explosion in interactive music services. iTunes, Pandora, Spotify, Soundcloud, and dozens of other platforms are touted as groundbreaking services, but if you really think about it, it’s all on the backs of the people who actually created the music; the performers, producers, and engineers. These services are nothing without music creators and at the very least they need to finally give music creators credit on screen.
There is no excuse. Its the right thing to do, it would create a much richer user experience, and it would improve these music services by turning people on to new music. That’s why myself and a crew of dedicated folks at the Grammys are tackling this issue once and for all. But we need your help to show there is real demand.
“It’s absolutely unbelievable that I can go online and instantly have access to Roger Federer’s obscure tennis stats but I can’t even see who is singing a song on iTunes or Pandora.”
There are many obvious reasons why credit must be given to music creators including:
(1) Better credits make better user experiences.
(2) This is Marketing 101.
(3) Hollywood does it, so why don’t we?
(4) This is not about egos. It’s about survival.
(5) It’s an easy fix.
Read the whole post from Count and Paul Resnikoff at Digital Music News.
This came in my bi-annual Sony Music statement last week. It said “You may be Eligible for Increased iTunes Payments (or other permanent Digital Download or Ringtone royalties) as part of the Settlements of Class Action Lawsuits. Please see the enclosed notice for details.”
Ka-ching!
Congratulations to “Shropshire” and the “Youngbloods” (great band) in their pursuit of more fair treatment on how royalties are calculated for digital transactions. Even though this is a small settlement, it represents a step in the right direction of ending years of unfair accounting and payment practices.
Sources in the know infer that progress was indeed made but – still it ain’t anywhere near fair. David did not slay Goliath thus far, nor did David get completely slain. There is more to come.
I’ve written about this before as have many others. Lots of musicians are suing the labels over the claim of unfair payments on digital transactions. Here is the latest article about all of this from Variety.
Weird Al Yankovic
Tower of Power
The Temptations
And many, many more to come.
We have to be patient, and change will happen. Lots of people are jumping on this train.
The good news is that the powers that be seem willing, at last, to try new things and to negotiate. As my friend and co-author Gerd Leonhard has said, “when the pain gets great enough, they will compromise and negotiate.” We must be getting close.
From Billboard.biz yesterday, an agreement was reached between the music industry trade associations for record labels, music publishers and digital music providers. The Copyright Royalty Board, will create new rates and terms for five new digital music service categories.
It also creates new rate formulas for five new digital business models:
– For the paid locker services like the one iTunes offers consumers, music publishers will get a mechanical rate of 12% of revenue or 20.65% of total content cost or 17 cents per subscriber, which ever is greater.
– For digital lockers that provide free cloud storage with a download purchase, music publishers will get 12% of revenue or 22% of the total cost of content, which ever is greater.
– For the third category, called a mixed bundle such as when your cell phone services subscription rate comes with a music service, music publishers get 11.35% of revenue or 21% of total content cost, whichever is greater.
– The fourth new category, called limited interactive service such as when a subscription service can offer limited amounts of music to, say, one genre or playlists that the user can access at a lower price, music publishers will get 10.5% of revenue or 21% of total cost or 18 cents per subscriber, whichever is greater.
– Finally, for the fifth category, called a music bundles such as when a CD album comes with a download, music publishers will get 11.35% of revenue or 21% of total content cost.
We waited for a half-hour for him to come on. Not bad for the Boss. In nearly an hour-long rant from the stage of the Austin Convention Center at SXSW, Bruce Springsteen spoke about his life as a musician and the artists who influenced his career.
As Ann Powers wrote, “Springsteen identified himself as a Motown-loving, Sex Pistols–fearing fan of country’s Silver Fox — Charlie Rich. He vehemently argues for the belief in popular music as dynamic and flexible, kept alive through constant redefinition by new players and fans.”
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.)”
Here is a more in-depth description of MP3, Vinyl, AAC, FLAC, Apple Lossless, WAV, DSD and other formats here from Wired.
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.
Check out the Future of Music book here.
A new survey from the Gartner group shows digital music revenues forecast to grow less than 5% per year. This is close to flatlined if you factor in inflation. Not good news for most of the world.
■ Online music revenue from end users will grow more than 31% by the end of the forecast period: from $5.9 billion in 2010 to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from around $15 billion in 2010 to around $10 billion in 2015.
■ Online music subscription services, such as Spotify, will be the main growth sector in this market, showing fivefold growth from 2010 to 2015. A la carte sales will drive the bulk of overall revenue.
■ The highest growth rates will be in regions such as Latin America and the Middle East and Africa, which have not historically been strong in paying for tracks or albums from online services or stores (although perhaps stronger in paid-for ringtones from their service providers).
My friends at the Future of Music Coalition are conducting an online survey from Sept 6 – Oct 28th to determine the variety, depth and complexity of the ways that musicians are making money these days. Not theoretically, but actually. We are looking for performers, songwriters, composers, band members, session players, producers, MCs and anyone else making music to join in and take the survey.
A while ago, I posted this from my friend and Berkleemusic student David Sherbow showing a pretty comprehensive list of the different ways that musicians can make money. This might give you food for thought on taking the survey and planning your career…
The artist music business model has been in flux for years. The record deal dream that most artists sought is no longer the viable alternative that it once was. The leveling of the music distribution playing field by the Internet is virtually complete. Terrestrial radio is on a path towards destruction that even the major labels can’t compete with. People now access and download music from multiple sources, usually for free. D.I. Y solutions are everywhere, but for many artists hard to integrate into their daily lives.
Where does this leave the average independent artist? At the beginning. Every artist wants to know how they can make music, make money and survive to write and play another day. Here, in no particular order, is a list of possible income streams.
• Publishing
• Mechanical royalties
• Performance Royalties from ASCAP and BMI
• Digital Performance Royalties from Sound Exchange
• Synch rights TV, Commercials, Movies, Video Games
• Digital sales – Individual or by combination
• Music (studio & live) Album – Physical & Digital, Single – Digital, • Ringtone, Ringback, Podcasts
• Instant Post Gig Live Recording via download, mobile streaming or flash drives
• Video – Live, concept, personal, – Physical & Digital
• Video and Internet Games featuring or about the artist
• Photographs
• Graphics and art work, screen savers, wall paper
• Lyrics
• Sheet music
• Compilations
• Merchandise – Clothes, USB packs, Posters, other things
• Live Performances
• Live Show – Gig
• Live Show – After Party
• Meet and Greet
• Personal Appearance
• Studio Session Work
• Sponsorships, and endorsements
• Advertising
• Artist newsletter emails
• Artist marketing and promotion materials
• Blog/Website
• Videos
• Music Player
• Fan Clubs
• YouTube Subscription channel for more popular artists
• Artist programmed internet radio station or specialty playlist.
• Financial Contributions of Support – Tip Jar or direct donations, Sellaband or Kickstarter
• Patronage Model – Artist Fan Exclusives – e.g. paying to sing on a song in studio or have artist write a song for you
• Mobile Apps
• Artist Specific Revenue Stream – unique streams customized to the specific artist, e.g Amanda Palmer
• Music Teaching – Lessons and Workshops
• Music Employment – orchestras, etc, choir directors, ministers of music, etc.
• Music Production – Studio and Live
• Any job available to survive and keep making music
• Getting Help From Other Artists and Helping Them – Whatever goes around come around. – e.g. gig swapping, songwriting, marketing and promotion
The future of the profitability of the recorded music business is unquestionably in jeopardy. One might speculate that new “access based” services like Rdio and Spotify could re-start a failing record industry. I hope so.
But as sales have fallen to less that 1/2 their heights at the turn of the century, artists and their managers and attorney are looking to every means possible of generating revenue both now and in the future from their recorded works.
The New York Times published a great piece on the coming battles over song rights, excerpted here. This will be a very interesting fight to watch as it has the potential of forever driving the nail into the coffin of the traditional record labels, forcing a complete restart of the business if it is to survive at all.
“When copyright law was revised in the mid-1970s, musicians, like creators of other works of art, were granted “termination rights,” which allow them to regain control of their work after 35 years, so long as they apply at least two years in advance. Recordings from 1978 are the first to fall under the purview of the law, but in a matter of months, hits from 1979, like “The Long Run” by the Eagles and “Bad Girls” by Donna Summer, will be in the same situation — and then, as the calendar advances, every other master recording once it reaches the 35-year mark.”
“The provision also permits songwriters to reclaim ownership of qualifying songs. Bob Dylan has already filed to regain some of his compositions, as have other rock, pop and country performers like Tom Petty, Bryan Adams, Loretta Lynn, Kris Kristofferson, Tom Waits and Charlie Daniels, according to records on file at the United States Copyright Office.”
“In terms of all those big acts you name, the recording industry has made a gazillion dollars on those masters, more than the artists have,” said Don Henley, a founder both of the Eagles and the Recording Artists Coalition, which seeks to protect performers’ legal rights. “So there’s an issue of parity here, of fairness. This is a bone of contention, and it’s going to get more contentious in the next couple of years.”
“My gut feeling is that the issue could even make it to the Supreme Court,” said Lita Rosario, an entertainment lawyer specializing in soul, funk and rap artists who has filed termination claims on behalf of clients, whom she declined to name. “Some lawyers and managers see this as an opportunity to go in and renegotiate a new and better deal. But I think there are going to be some artists who feel so strongly about this that they are not going to want to settle, and will insist on getting all their rights back.”
“Given the potentially huge amounts of money at stake and the delicacy of the issues, both record companies, and recording artists and their managers have been reticent in talking about termination rights. The four major record companies either declined to discuss the issue or did not respond to requests for comment, referring the matter to the industry association.”
“But a recording industry executive involved in the issue, who spoke on condition of anonymity because he is not authorized to speak for the labels, said that significant differences of opinion exist not only between the majors and smaller independent companies, but also among the big four, which has prevented them from taking a unified position. Some of the major labels, he said, favor a court battle, no matter how long or costly it might be, while others worry that taking an unyielding position could backfire if the case is lost, since musicians and songwriters would be so deeply alienated that they would refuse to negotiate new deals and insist on total control of all their recordings.”
“Right now this is kind of like a game of chicken, but with a shot clock,” said Casey Rae-Hunter, deputy director of the Future of Music Coalition, which advocates for musicians and consumers. “Everyone is adopting a wait-and-see posture. But that can only be maintained for so long, because the clock is ticking.”
My friend Roger McNamee, a founding Partner and Managing Director of Elevation Partners has been getting some great press lately on his thoughts on the new music business, investing in technology, Apple, Google, Facebook and much more. Here is the transcript of a speech he gave at NARM earlier this summer, a must read.
“Our band – Moonalice – is inventing new opportunities in music. We would like you all to join us.
I have been a working musician for more than 30 years, and a technology investor for 29 years. I have played about 1000 concerts over the past 15 years, which means I have personally experienced everything in Spinal Tap except the exploding drummers. I also spent three years helping the Grateful Dead with technology and many more advising other bands, most notably U2.
My band is called Moonalice. We play 100 shows a year in clubs and small theaters, mostly on the coasts. Moonalice was the first band broken on social networks. What broke us was 845,000 downloads – and counting – of the single “It’s 4:20 Somewhere.” We’re the band that Mooncasts every show live, via satellite to thousands of fans on iPads, cell phones, and computers. We’re the band that has a unique psychedelic poster for every show. After four years, Moonalice has 371 poster images from the likes of Stanley Mouse, Wes Wilson, and David Singer. Licensing those images will eventually a big business for us. We’re the band that offers the EP of the Month for $5. And we’re the band that uses the latest technology to radically improve both the production cost and commercial value of the content we produce. Now I’m looking for people who want get on this bandwagon with me.
The first question I hope you ask is “Why now?” The world of technology is beginning a period of disruptive change. The old guard – represented in this case by Microsoft Windows and Google search – is under assault and hundreds of billions of dollars may become available for new and better ideas. I hope that gets your attention!!!
The biggest beneficiaries of this disruption should be the people who got the short end of Google’s business model, especially creators of differentiated content. For the past twelve years the technology of the internet has been static. Every tool commoditized content by eliminating differentiation. The most successful companies monetized content created by others. Google was king.
I believe Microsoft and Google are about to get a taste of what the music industry has been dealing with for a decade. Their world is going to change and they won’t be able to stop it. Not so long ago Microsoft’s Windows monopoly gave it control of 96% of internet connected devices. Thanks to smartphones and tables – especially the iPhone and iPad — Windows’ share of internet connected devices has fallen below 50% … and it will fall much further in the years ahead.
Consumers are abandoning Windows as fast as they can. I expect businesses to follow suit.
This is a HUGE deal. Businesses whose employees use smart phones and iPads instead of PCs will save up to $1000 per employee per year in support costs.If corporations buy fewer PCs, they will save tens, if not hundreds of billions per year.
This is happening because today’s strategic applications – email, Facebook, Twitter, LinkedIn, YouTube and other internet applications – don’t need a PC . . . in fact, they are far more useful on a phone.
Microsoft has been in trouble since it first missed the web in 1994. Then it was unable to prevent Google from taking charge in 1998. When Google showed up, the World Wide Web was a wild environment. No one was in charge. The prevailing philosophy was “open source” . . . and free software.
Google had a plan for organizing the web’s information that treated every piece of information as if all were equally valuable. To create order, Google ranked every page based on how many people linked to it.
What we all missed at the time is that by treating every piece of information the same, Google enforced a standard that permitted no differentiation. Every word on every Google page is in the same typeface. No brand images appear other than Google’s. This action essentially neutered the production values of every high end content creator. The Long Tail took off and the music industry got its ass kicked.
Google captured about 80% of the index search business, which gave it a huge percentage of total web advertising. Google’s success eventually filled the web with crap, so consumers began using other products to search: Wikipedia for facts, Facebook for matters of taste, time or money, Twitter for news, Yelp for restaurants, Realtor.com for places to live, LinkedIn for jobs. Over the past three years, these alternatives have gone from 10% of search volume to about half.
As if all this competition wasn’t bad enough for Google, then along came Apple with the iPhone and App Store. Apple offers a fundamentally different vision of the internet than Google. Google is about the long tail, open source, and free, but also had to remove 64 apps from the Android app store for stealing confidential information. Apple is about trusted brands, authority, security, copyright and the like. In Apple’s world, the web is just another app; it is called Safari.
People who have iPhones and iPads do far fewer Google searches than people on PCs. The reason is that Apple has branded, trustworthy apps for everything. If they want news, Apple customers use apps from the New York Times or Wall Street Journal. If they want to know which camera to buy, they ask friends on Facebook. If they want to go to dinner, they use the Yelp app. These searches have economic value and its not going to Google, even on Android.
When Apple and the app model win, Google’s search business loses. Like Microsoft, Google has plenty of business opportunities, but the era of Google controlling all content is over. Consumers compared Google’s open source web to Apple’s app model and they overwhelmingly prefer Apple’s model. Software development and innovation has shifted from “web first” to “iPad first” . . . which is a monster long term advantage. Get this: Apple may sell nearly 100 million internet connected devices this year!
Apple’s strength can be seen best in the iPhone vs. Android competition. There are many Android vendors. Together they sell more phones than Apple does. But Apple gets around $750 wholesale for an iPhone. The other guys get between $300 and $450. This means Apple’s gross margin on the iPhone is nearly as big as its competitors’ gross revenues. Game over.
The other thing that makes Apple amazing is the iPad. No electronic product in history – not even the DVD player – can match the adoption rate of the iPad. Apple may sell another 30 million this year. At this point, the competing products have not put a dent in the iPad. Image what happens if Apple’s share of the tablet market remains closer to the iPod (at 80%) than to the iPhone (20%)?
This sounds like, “Game Over, Apple wins” . . . but it’s not . . . at least, not yet. The open source World Wide Web has finally responded to Apple. A new programming language has come to market called HTML 5. HTML is the foundation of the World Wide Web. For the past decade, HTML has been static, which allowed Google to dominate.
HTML 5 is a new generation of HTML and it changes the game fundamentally. It allows web developers replicate the iPhone experience, but with many extra bells and whistles … and no App Store. One reason HTML 5 matters is because it eliminates Adobe Flash, which has been an inadvertent barrier to creativity
Creativity enables differentiation. Differentiation can be monetized. Huge differentiation can be monetized hugely. With HTML 5, creative people can now use the entire web page as a single canvas. For the first time in a dozen years, web pages will be limited only by the creativity of the people making them. They can create experiences that will be more engaging to consumers and more profitable for advertisers than network television.
New forms of entertainment will emerge. New forms of business. Companies the size of Facebook and Google will develop in categories I can’t guess at. Companies as important as Amazon, iTunes, and Netflix will emerge to support what new content comes to market.
Whether you view Apple as friend or foe, HTML 5 offers real opportunity. Why?
Because you can deliver a better experience than an app . . . without an app. HTML 5 is cheaper to build, cheaper to support, no 30% fee . . . oh, and the apps perform better, too.
I believe Apple’s best response would be to focus on selling hardware and accept that consumers will demand products that happen to bypass the app store. Based on the argument with Amazon, I sense Apple is not ready to concede the point. That’s ironic, because the only way Apple can get hurt would be if they try to force all commerce through the App Store. The would create a real reason for customers to buy a tablet other than iPad.
Let me review my key points so far:
Google and Microsoft will remain huge, but their influence is evaporating, which means we can ignore them
Apple is winning big, which means we have to support their platforms first
For people who make content, Apple is a better monopolist to deal with than Google.
HTML 5 will give you a better product than the Apple app model at a lower cost and with more value.
Now let’s figure out what we can do together. My band Moonalice exists because T Bone Burnett wanted to produce an album of new and original hippie music in the old school San Francisco style. We put together an all-star band with in late 2006 and recorded the album. T Bone was about to win the GRAMMY for the Alison Krauss/Robert Plant album, Raising Sand, so we thought we were made.
We had a budget
We had an A-list PR guy
We had a really fine manager
We had custom label deal with a nice budget
T Bone’s innovative sound technology would make the album cutting edge
Old school music is good. Old school marketing wasn’t going to work for us. About four months before release, I reviewed the media plan with our PR guy. He said, “Sorry, man, but nobody cares.”
A few moments of somber reflection followed. Then, with great regret, I let our manager go. I let our publicist go. I let our label go. For all intents and purposes, we wrote off an album everyone was extremely proud of and which accounted for half of T. Bone’s portfolio the following year when he was nominated for Producer of the Year.
But I freed up most of our operating budget. Real money. And I focused it all on Twitter and Facebook. Our goal was to build an audience of dedicated fans around a Moonalice lifestyle. Three years later, we have 57,000 fans on Facebook and 75,000 on Twitter. We learned a great truth: as hard as it is to get people to spend money, it is much harder to persuade them to spend enough time listening to you to become a long term fan. We traded our music for their time. We discovered we could build an audience by giving away stuff that costs nothing to produce and distribute. These are serious fans who engage with us dozens and often hundreds of times a year.
The first thing we invented was the Twittercast. Before us, no one had ever done a concert over Twitter. Now we have done 103. Our marginal cost is exactly zero. Next we created Moonalice Radio, which has broadcast one song every hour on Twitter for the past two years. Then our drum tech bought a video camera and started recording the shows. Then he bought more cameras, put them on mic stands and started doing live video mixes. About a year ago, he figured out how to mooncast our concerts over the net for free.
Nearly all of our past 100 shows have been mooncast live on MoonaliceTV and then archived. Because we play mostly late shows on the west coast, only 10% of the audience watches in real time. But approximately 3,000 people watch EVERY show on a time shifted basis. Fans like the Moonalice Couch tour because they can chat, make friends, and do things that are not permitted at a live venue. They even buy Couch Tour tee shirts. And they are helping us create a new ecosystem where most of the music is free, because Moonalice art and life style products have huge economic value.
Thanks to HTML 5 and a satellite dish, Mooncasts can now be viewed on a smart phone without an app. Our video quality competes favorably with the best you have seen on an iPhone, and the technology to do all this costs the equivalent of six months of our former manager. He was a really good guy, but a satellite-based tv network is more valuable.
I want to finish up by recommending a course of action for you
Step 1: Remember that HTML 5 is just getting started, but the learning curve is less expensive and more profitable for those who commit to it from the beginning. The new business is going to emerge over a few years, not overnight
Step 2: Don’t wait for the labels to figure this out. Labels are not organized to get this right, which leaves a big hole in the new music market where labels used to be.
Step 3: Don’t wait for major artists to figure it out. The great new stuff is going to come from artists who have nothing to lose. Artists who come out of nowhere will create huge value for next to no cost.
Step 4: Make sure you are successful addressing the needs of next generation content creators … not just listeners. There are WAY more of content creators than you may realize. Thanks to Moore’s Law, Karl Marx is right at last: the means of production are in the hands of the proletariat. At the peak, there were 8 million bands registered on Myspace. They weren’t playing gigs, they were creating stuff, mostly for their own entertainment. Those people spent a lot more money creating the content they posted on Myspace than they did on recorded music. Thanks to Apple’s Garageband, the population of people capable of mixing something is now measured in tens of millions. Making these people successful is the key to creating new markets and new music products.
Step 5: Do everything in your power to encourage new product ideas and new forms of content. HTML 5 is a blank canvas and there is no telling what people will do with it. For all I know, HTML 5 may produce five or even ten amazing categories of product.
Contests, prizes and publicity will give you an opportunity to associate yourself with whoever creates the cool new stuff. If you have local stores, do local events. Think Alan Freed.
Step 6: Near term, focus your platform strategy on Apple.
Step 7: Long term, focus on HTML 5. The sooner you commit to HTML 5, the more likely you will produce something of economic value.
Step 8: Remember that HTML 5 will produce companies as important as Amazon, iTunes, and Netflix. It costs musicians practically nothing to create good digital video and fantastic audio, but they need distribution systems optimized for their content.
Step 9: Make music fun again”
—
And if that isn’t enough, Roger was kind enough to share with me his thoughts on investing in technology related businesses. TechInvestingHypotheses
Well, we finally have it. Music like water raining down from the sky. iCloud.
For slightly more than $2/mo everybody will soon have access to all the music they can find, steal, share, rip, produce, morph or buy using iTunes Match. Is this amnesty for all the music pirates? I hope so.
As we predicted in The Future of Music, the future is about access to music rather than ownership. With Apple iCloud and iTunes Match, Apple has once again set the bar for all music distributors, while again lining up all the major record labels for yet another lunch. The twist to all of this is – does iCloud grant you immunity from prosecution for copyright infringement for sharing or downloading music however you wish to? We shall see.
Fantasize with me as we did in 2005…
It’s the year 2015 and you wake to a familiar tune playing softly. It gets you out of bed and makes you feel good. As you walk into the bathroom, your Personal Media Minder activates the video display in the mirror, and you watch a bit of personalized news while you get ready for the day. You step into the shower and your personalized music program is ready for you, cued up with a new live version of a track that you downloaded the other day. It is even better than the original recording, so while you dress, you tell your “TasteMate” program to include the new track in your playlist rotation.
You put on your new eyeglasses, which contain a networked audio headset, letting tiny earbuds slip into your ears. You switch on the power, and the mix that your friend made for you starts to play. Music pours into your consciousness. It becomes yours.
During the day, your headset and other wireless devices help you communicate across the network, with your friends, associates, network buddies, and “digital peers.” The headset also keeps you connected to that hard rock collection that you really love to listen to. Meanwhile, a variety of new songs, new versions, and remixes of tracks you truly dig, along with your old favorites, continues to come your way. Using TasteMate, you access and trade playlists, and recommend a couple of songs to your friend in Seattle, and they get added to his rotation. Music propels you throughout the day.
This is the future of music– a future in which music will be like water: ubiquitous and free flowing. In this future, music will be ubiquitous, mobile, shareable, and as pervasive and diverse as the human cultures that create it. Many of the already ill-fitting definitions of copyright and intellectual property and patent laws will be adapted to fit the “music like water” model that we propose–in a way that ensures the enjoyment and benefit of society as a whole, and that allows all involved parties to prosper.
David Bowie encapsulated the current state of affairs in a June 2002 New York Times article:
“The absolute transformation of everything that we ever thought about music will take place within ten years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in ten years, and authorship and intellectual property is in for such a bashing. Music itself is going to become like running water or electricity. [ . . . ] So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen . . .”
Let’s run the numbers. As I outlined in Forbes, with hundreds of millions of people connected to digital networks, the potential annual revenue stream for this is enormous. At $25 per person, if 200 million people opted in for iTunes Match, the service would gross $5 billion a year just for the ability to provide access to any song on any device, and let you pirate all the music you want to at will. Add to that the money from new songs you purchase, premium access, increased storage, exclusive concerts and the recording industry may see a bottom to its revenue decline, and could begin to rebuild from there. Seem counter intuitive? The record business will never be the same again, but maybe (just maybe) it will not go extinct.
And it remains to be seen if iTunes Match will grant you complete immunity from prosecution for copyright infringement. Kind of like AppleCare for pirates. There are lots of moving parts to this story.
Welcome to the future.
This piece originally appeared in the Huffington Post.
Here is an excerpt from a great piece from Wyndham Wallace of The Quietus on how the music industry is killing music and blaming the fans. This rather dark opinion is spot on in so many ways and raises some very difficult questions about the future of the music business that most people do not want to talk about.
“All the time the industry talks of money: money it’s lost, money it’s owed. It rarely talks about the effects upon artists, and even less about how music itself might suffer. But no one cares about the suits and their bank accounts except shareholders and bankers. People care about their own money, and the industry not only wanted too much of it but also failed to take care of those who had earned it for them: the musicians. And it’s the latter that people care about. Because People Still Want Good Music.”
“In March this year, for instance, the RIAA – the Recording Industry Association of America – and a group of thirteen record labels went to court in New York in pursuit of a case filed against Limewire in 2006 for copyright infringement. The money owed to them – the labels involved included Sony, Warner Brothers and BMG Music – could be, they argued, as much as $75 trillion. With the world’s GDP in 2011 expected to be around $65 trillion – $10 trillion less – this absurd figure was, quite rightly, laughed out of court by the judge. The RIAA finally announced in mid May that an out of court settlement for the considerably lower sum of $105 million had been agreed with Limewire’s founder.”
What is questionable about all of this is exactly how much of the settlement of $105 million will flow to the musicians, songwriters and producers whose work was the subject of the infringement to begin with. In previous settlements including Napster ($270 million), Bolt ($30 million), Kazaa ($130 million) and MP3.com ($100 million) it is unclear how much, if any, of the money received by the labels ever reached the pockets of the artists. I have yet to see an accounting of this and many managers I have spoken with have simply laughed when I asked the question if they ever received any payment from these settlements. I suppose that proceeds from litigation may be considered recoupable costs.
“But if the industry wants to talk money, let’s talk money, albeit the ways that developing musicians are encouraged to make up the loss of sales income in order to ply their trade. Someone’s got to bring this up, because it’s not a pretty picture. Consider, first, direct-to-fan marketing and social networking, said to involve fans so that they’re more inclined to attend shows, invest in ‘product’, and help market it. In practise this is a time-consuming affair that reaps rewards for only the few. Even the simple act of posting updates on Facebook, tweeting and whatever else is hip this week requires time, effort and imagination, and while any sales margins subsequently provoked might initially seem higher, the ratio of exertion to remuneration remains low for most. It’s also an illusion that such sales cut out the middlemen, thereby increasing income, except at the very lowest rung of the ladder: the moment that sales start to pick up, middlemen start to encroach upon the artist’s territory, if in new disguises. People are needed to provide the structure through which such activities can function, and few will work for free – and nor should they – even though musicians are now expected to.”
“Still, if an act can find time to do these things, or has the necessary capital to allow others to take care of them on their behalf, then they can hit the road. Touring’s where the money is, the mantra goes, and that’s the best way to sell merchandise too. But this is a similarly hollow promise. For starters, the sheer volume of artists now touring has saturated the market. Ticket prices have gone through the roof for established acts, while those starting out are competing for shows, splitting audiences spoilt for choice, driving down fees paid by promoters nervous about attendance figures. There’s also a finite amount of money that can be spent by most music fans, so if they’re coughing up huge wads of cash for stadium acts then that’s less money available to spend on developing artists. And for every extra show that a reputable artist takes on in order to make up his losses, that’s one show less that a new name might have won.”
“Touring is also expensive. That’s why record labels offered new artists financial backing, albeit in the form of a glorified loan known as ‘tour support’. Transport needs to be paid for, as do fuel, accommodation, food, equipment, tour managers and sound engineers. These costs can mount up very fast, and if each night you’re being paid a small guarantee, or in fact only a cut of the door, then losses incurred can be vast, rarely compensated for by merchandising sales. Again, financial backing of some sort is vital, but these days labels are struggling to provide it. In the past, income from record sales could be offset against these debts, but with that increasingly impossible, new artists will soon find it very hard to tour. Everyone’s a loser, baby.”
From Beck’s ‘Loser’
Forces of evil in a bozo nightmare
Banned all the music with a phony gas chamber
‘Cause one’s got a weasel and the other’s got a flag
One’s got on the pole shove the other in a bag
With the rerun shows and the cocaine nose job
The daytime crap of a folksinger slob
He hung himself with a guitar string
Soy un perdidor
I’m a loser baby, so why don’t you kill me?
(Know what I’m sayin?)
“Whether the industry likes it or not, music is now like water: it streams into homes, it pours forth in cafés, it trickles past in the street as it leaks from shops and restaurants. Unlike water, music isn’t a basic human right, but the public is now accustomed to its almost universal presence and accessibility. Yet the public is asked to pay for every track consumed, while the use of water tends to be charged at a fixed rate rather than drop by drop: exactly how much is consumed is less important than the fact that customers contribute to its provision. Telling people that profit margins are at stake doesn’t speak to the average music fan, but explaining how the quality of the music they enjoy is going to deteriorate, just as water would become muddy and undrinkable if no one invested in it, might encourage them to participate in the funding of its future. So since downloading music is now as easy as turning on a tap, charging for it in a similar fashion seems like a realistic, wide-reaching solution. And just as some people choose to invest in high-end water products, insisting on fancy packaging, better quality product and an enhanced experience, so some will continue to purchase a more enduring musical package. Others will settle for mp3s just as they settle for tap water. Calculating how rights holders should be accurately paid for such use of music is obviously complicated but far from impossible, and current accounting methods – which anyone who has been involved with record labels can tell you aren’t exactly failsafe – are clearly failing to bring in the cash.”
“The problem is, it’s not really the industry that is being cheated. It’s the artists and their fans. People get what they pay for, but – whatever the industry claims – most fans know that. They just don’t want to hear the businessmen fiddle while the musicians are being burnt. Revenues are unlikely ever again to reach the levels of the business’ formerly lucrative glory days, but in its stubborn refusal to recognise that both the playing field and the rules themselves have been irreversibly redefined without their permission, the industry is holding out for something that is no longer viable. Lower income is better than no income, and the industry has surely watched the money dwindling for long enough. Musicians, meanwhile, are being asked to make more and more compromises as they’re forced to put money ahead of their art on a previously unprecedented scale.”
Read the whole ugly story here at The Quietus.
The comments alone tell the sad story of the state of affairs in the music industry today.
Photo by Robert Couse-Baker on Flickr
From the Wharton School, an article on the new economics of life for creators and how they will be compensated in the future.
Making a living as an artist has never been easy — whether in film, music or publishing. But the digital revolution — and to a lesser extent, the global economic crisis of the last two years — is transforming the business of content creation. One of the biggest shifts is in how filmmakers, musicians and writers are compensated. There is an evolving relationship between creator and publisher in which the artist bears a larger percentage of the upfront costs for the production and marketing of his or her work. In this new world, artists’ pay is based to a greater degree on how their product sells in the marketplace, a change that has major implications for the content creators themselves, large firms like Hollywood studios and music labels, and consumers.
“In the past, it used to be the case that content creators got paid the bulk of their salary in advance and whoever made that payment — whether it was the music label, the book publisher or the studio — would take on the risk of marketing and distributing that product,” says Kartik Hosanagar, a Wharton professor of operations and information management. “If [the project] was a success, [the publishers, studios, etc.] kept the upside, and if it was a failure, they bore that failure. Now the upside — or downside — is shared with the content creator.”
This shift is largely driven by the move away from shipping physical products toward increasing digital distribution. In music, the threat of digital piracy has made the business of selling songs more challenging, even as the shift from album sales to digital singles has further undermined traditional revenue streams in the music industry. In film, the decline in home entertainment revenues as consumers switch from DVD purchases to online streaming video has also put pressure on profits. And in book publishing and journalism, the move toward e-readers and online news platforms where revenue models are still in flux has created additional uncertainty. The difficulty in predicting the profitability of these products, Hosanagar notes, means that marketers are trying to shift their cost base. “A lot of firms are asking, ‘How do we move from fixed costs to variable costs?'” he adds. “That makes a lot of sense when you have unpredictable returns.”
In the music industry, the pressures on the business model have been even more intense. Ed Pierson, a Seattle-based attorney who represents musicians, says the 1990s were the heyday of big advances for musicians. According to Pierson, easy credit and a war for talent led labels to pay escalating upfront fees to musicians. But as music sales began declining, in part due to piracy and digital downloads that allowed consumers to buy just the songs they wanted and not the entire album, the flush times came to an end. The result these days, notes Pierson, is that labels are making fewer advances and the upfront money they do dole out is smaller.
Artists have responded by taking greater control of their business. “The risk is shifting away from the label and toward the artist,” says David Kusek, chief executive officer of online music school Berkleemusic.com and a digital music technologist. Some big names, including the Dave Matthews Band or the Eagles, have created their own recording labels. Lesser known artists have been forced to become entrepreneurs of sorts. Kusek points to firms like ReverbNation and Top Spin Media that have sprung up to help artists sell their music on platforms like iTunes, to promote a group or artist, or to help sell merchandise. Those firms, in many cases, will charge a small upfront fee and then get a cut of the sales the act generates. “It is a different gamble now,” adds Wharton’s Whitehouse. “The corporate players may be gambling a bit less and the artists may be gambling a bit more. But those artists can now have more control over their work than they did before.”
Andrea Leonelli from Digital Music Trends recorded a series of interviews with many of us from the Midem show. You can listen to the interviews here or go to his site for lots more. Thanks Andrea!
This Midem 2011 series includes:
http://player.soundcloud.com/player.swf?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F9483455&show_comments=true&auto_play=false&color=ff7700 Episode 71 – Midem 2011 Coverage Day 1 by digitalmusictrends
Photo credit: http://bit.ly/17JbZsJ
Last Friday I was interviewed by Dr. Amy Vanderbilt @DrAmyVanderbilt from the Trend POV Show where we discussed the changing distribution in the music industry and what it means for businesses everywhere. Here you go:
http://www.trendpov.com//sites/all/modules/swftools/shared/flash_media_player/player-viral.swf
Check out lots of great interviews on trends in business at Trend POV.
For the past 5 years I have been delivering presentations, in a wide variety of contexts including Digital Music Forum, AES, Billboard, IEBA, Music Hack Day, NAMM, Digital Hollywood and at many, many other private consulting gigs. The essence of the presentation I have been making since 2006 is shown below with a couple of updates, roughly based on the Top 10 Truths described in our Future of Music book. All along I have been advocating for artists, songwriters and publishers to challenge the way iTunes transactions were accounted for by the labels on the legitimacy of the splits. The way iTunes royalties have been distributed is just wrong, a scam and a holdover from the accounting practices of the record companies past.
Finally someone (Eminem’s production company), challenged Universal Music Group in the way that artists and labels split the money generated by iTunes transactions and won an initial ruling in their favor. Just this past week Universal Music Group’s inevitable appeal was rejected meaning that the industry giant may now have to split its digital music royalties from money earned from ringtone sales and iTunes.
San Francisco’s US 9th Circuit Court of Appeals decided last month that all royalties made by the record label from such sales must be shared in higher proportions with producers. The recent court rejection will result in this case proceeding in a lower level court which will then determine exactly how much Universal owes Eminem and his producers, taking into account both damages and royalties.
This could be a very significant development for the entire recorded music industry. When Steve Jobs and his team negotiated the original iTunes deal with the major labels, the economics of what iTunes would receive from transactions was roughly 35% of each download, a similar number as a distributor/retailer of CDs would receive and the remaining 65% would flow to the labels and be split as with a traditional CD sale.
This was a masterful negotiation by Apple, effectively granting itself amnesty from claims of copyright infringement or inducement to infringe copyright on the part of the major labels and publishers in exchange for the promise of digital cash flow, potentially reigniting the recorded music business for the labels. Even if most of the music contained on iPods was pirated, now the labels would have a new revenue stream and Apple would be safe from litigation. This move paved the way for Apple to become the dominant company in the music business and one of the most valuable brands on the planet. A transformational revenue shift was underway whereby Apple would effectively eat the labels lunch. The ultimate iCon.
But what artists and writers failed to question at the time, was the way the 65% label share would be split. The labels assumed that these downloads were “sales” of copies of the songs and that artists would receive their royalties based on traditional accounting practices. In the early days of payments from iTunes, labels often continued to deduct fees from the artists share for “packaging” and “marketing” and “coop” often when there were no actual costs being incurred. No one questioned whether iTunes downloads were “licenses” versus “sales” which would have tipped the accounting in favor of the artists. Indeed Steve Jobs himself referred to his deal with the labels as a “license” in his rare and open “Thoughts on Music” letter posted February 6, 2007.
Now fast forward to 2010. Although not directly listed in the UMG suit, Eminem could benefit from the results, as he could get a much larger share of the payments. The case is being touted as a landmark decision for the music industry as it could determine a precedent that could see 90 per cent of contracts signed before 2000 change for the benefit of the artists and songwriters. If this ruling holds up and is widely interpreted, it will destroy the traditional record labels.
The ruling will hinge on the standard record deal contract, which predates the digital era and changes that have come with it. New rulings will most likely govern how digital royalties will be accounted for.
In the most recent decision the court has defined record companies’ deals with such firms as Verizon and iTunes as ‘licensing’ contracts as opposed to music sales, meaning the 50/50 split would apply. This will be devastating for the labels and great for artists.
When I commented on this issue in an earlier post, one of my readers wrote “if Eminem eventually prevails it will be the end of discovering and nurturing new talent by record companies and will throw the music scene into more disarray that P2P ever did.” While this may be true, I am completely convinced that the old record company model must change, will change, and will eventually be replaced by something more clearly aligned with the times and the new digital reality. There is no doubt that these times are truly wrenching for the music industry – but music will prevail and the interests will realign into something sustainable.
Read more here and stay tuned to see how this all turns out.
There is a lot of innovation happening with electronic music instruments and new interfaces. Reactable is one of the latest in music technology fusing DJ culture, touch screen topography and electro-pop showmanship. Coming to an iPad near you. Reactable says their company “is about the promotion of creativity and the mediation of culture through the application of the latest technologies in human computer interaction, music technology, graphics and computer vision.” Check it out.
Reactable Systems is a spin-off company of the Pompeu Fabra University and is collaborating with its Music Technology Group, one of the worlds largest research labs in music technology.
More info: http://www.reactable.com/mobile
More videos here: http://www.youtube.com/reactable
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
