I get some interesting questions about my interest in music/film. (You may have noticed that commentary on this subject tends to run on Tuesdays). In particular, I find the intersection between technology and entertainment to be fascinating. Clearly, its been a huge driver of so many new innovations and products, from iPods to plasma screens to TiVos.
Understand where my criticisms of the recording industry come from: While I am interested in music and film as a fan, my issues with some of the poor decision making of the labels and studios comes from a business/investment perspective.
As an investor, I want to know how the Labels have managed their key assets, how they have strategized, what their business model is for the future, how they incorporated new technology, what their responses are to changing consumer tastes.
In short, they have done a horrible job. Not just recently, but historically. The recording industry has failed to recognize several key ideas:
– all business models are temporary;
– change is ever present;
– adapt or die.
On that note, I would like to share a terrific commentary/rant from music industry insider Bob Lefsetz. His take on the Music Industry’s failure to adapt to P2P and other new tech is fascinating:
Give It Away
"Call it the Metallica Rule. When you can’t get arrested, give it
away. When you’re a star, arrest people for stealing your music.
Radio’s over. The model is done. Unless iPods start coming with
commercials and every Internet radio station has to have twenty
minutes of ads, terrestrial radio is done. Oh, it will survive in a
fashion. As a place for news and talk. But for music it’s history.
OH NO, you say. It’s in all those cars!
Don’t be a fucking idiot. Of course radio counts today. But if
you’re thinking about today, you’re just as dumb as the major labels.
Because really, it’s what’s gonna happen TOMORROW!
Look at major label release schedules. It’s not like the seventies
anymore. If something doesn’t have hit potential, it doesn’t come
out. Furthermore, that which DOES come out is tweaked endlessly,
making it palatable for sporting events and fashion shows, but it lacks
that one essential ingredient of TRUE hit music…it doesn’t touch your
It’s all about the bottom line . . .
"And the only way to make quick
bucks is to overexpose, pay for play EVERYWHERE! (Yeah, like the
Spitzer settlement is really going to stop this, the money/game will
just be refashioned.) Major labels release records like movies.
They’re pre-sold with campaigns, and you know in most cases in a week,
certainly a month, if they have legs. And most don’t. Because, like I
just stated, they’re just not real."
So, you’ve got majors fighting over an ever-dwindling marketplace. And the lack of success they’re having is blamed on the consumer, who has tuned out their game, isn’t listening to terrestrial radio, thinks MTV is a joke, thinks even "Rolling Stone" is a joke.
The problem with the above paradigm, the major label paradigm, is breaking acts. It’s just too damn expensive. The lawyers have to get paid, so they demand huge contracts. The records and videos have to be remade to perfection, in order to compete. It’s like a supermodel competition. It’s just that there are no slots for new acts. Oh, all the outlets say they want stars, but the only way to make an instant star is to overhype the act, which kills it.
So, in order to have success, in order to survive the ultimate disaster, you’ve got to play by different rules. You’ve got to give the music away.
We’ve established it’s about breaking acts. We’ve established it’s expensive to do so in the major label way, and the acts end up being laughable bland pussies. So how are YOU gonna compete?
By making the record cheaply.
That’s how Dell succeeded. Drive down the price of parts, lower the cost to the consumer, reap market share and sales.
The records can’t even cost $100,000.00. I’d say $50,000.00 must be the limit. A record at this cost sounds just about as good as the major label turkeys, and the audience doesn’t hear the difference, they’re just looking for something that RESONATES.
And it’s the audience that’s going to help you out, gonna break your band.
In the not too distant future, file-trading will be legal. People will pay to trade, and they won’t get sued for doing so. This is going to be the major labels’ savior. When they can reach more people at a lower aliquot cost per track. You’ve got to beat them to the punch. You’ve got to get your music in the system NOW!
How do you get your music in the system?
By giving away MP3s on your Website.
Every band should give away its whole album on its Website.
I KNOW, sounds RIDICULOUS!
But there are a couple of realities.
One, some people are so dumb they don’t know you’re giving the songs away, they buy the CD anyway.
Two, people who download the files often buy the CD. Doesn’t make sense, I know. And it won’t happen forever, the CD’s days are numbered. But, they want better sound, they want the photos and lyrics, and they want a piece of what they believe in.
You can’t believe in a file. You need something TANGIBLE! That you can HOLD ON TO! Like a T-SHIRT!
THAT’S what the CD is now, a t-shirt.
Oh, let’s say you lose some sales. To people who only need the file. But now, your audience is MUCH LARGER, and ultimately you sell more CDs.
It’s economic reality. The more people who hear something, the more you sell.
And you can’t hear good new music on terrestrial radio. So, people go to the Web and discover things, which they then tell OTHERS about!
Doesn’t matter where you hear it first, where you get wind of something. I mean you must seed the system somehow. You’ve got some reasonable print, Websites like pitchforkmedia.com, satellite radio, Internet radio… ALL of these outlets take a chance. Get somebody to say SOMETHING good about your record or better yet, PLAY IT! If it’s good, people will research it. They’ll Google the act. And then they’ll download the files from the Website. And become fans. And one thing about fans, they spread the word.
Let’s look at the way it is now. It’s almost impossible to hear good new music. But, when you do, you go to the band’s Website, where AT BEST, you can stream some songs. You MIGHT tell friends to go to the Website, but streaming is ultimately unsatisfying, you want to possess the tracks, you want to put them on your iPod, you want to e-mail them to your friends. But, you CAN’T DO THIS if the tracks aren’t THERE! You hit a dead end. It’s like being back in the sixties. You have to tune into XM to hear the same damn song again, and that could be MONTHS! Oh, you load your P2P software, but the files have to start somewhere, if the band is obscure, the songs usually AREN’T THERE!
But if the songs are free on the Website, then they end up in your iTunes library, then they’re shared when you load your P2P software, then people peek into your hard drive after finding you’ve got similar tastes and they take the tracks of this band they’ve HEARD OF, but have never actually heard.
The major labels could employ this technique. They should actually. But it doesn’t square with their philosophy. Oh, sometimes they’re like anti-abortion crusaders who get pregnant, they insert tracks into P2P services. But that’s like a back door abortion. Come into the light, give the tracks away RIGHT UP FRONT, on the WEBSITE!
But that would involve admitting that the iTunes Music Store is a failure. And that streaming services are a failure too.
They are. 500 million iTunes downloads in two years, worldwide? Ooh, I’m pissing my pants.
You see the majors have to believe their own b.s.
The guys in charge have never used P2P, never surfed the Web for hours, they dictate it must be the way it’s always been. Middle management loves its salaries and the bottom level workers, the young ‘uns who are conversant with reality? They either drink the kool-aid to maintain their jobs, or get fired or quit. I mean who can work at such a FUCKED UP PLACE??
No, get your head out of your ass. This isn’t about giving away music, this is about breaking bands. People have to be exposed to the music SOMEHOW! If you don’t seed the system, HOW WILL THEY?
SoundScan new bands. If radio doesn’t go on them, they can sell under 1,000 records. After all that investment.
Please. Every one of you new and developing acts. Whether you’re selling on CDBaby or are signed to a major. Give your music away. It’ll give you a leg up on the competition. It will allow people to spread the word. It will build your act.
And one thing we know about successful acts, fans will give them ALL their money.
A story about music.
I don’t listen to commercial radio (expect for traffic and weather info), locally I only listen to the college stations in the Raleigh, NC area (props to my friends at WSHA, WXDU, WXYC).
At home I stream into my Slimp3 player, mostly from Radio Paradise. My whole CD collection is in MP3 format on my PC, backed up to my home Linux Filer server, the moment I get a CD I rip it.
A couple weeks ago I was watching “Later with Jools Holland” on Ovation. Ovation and Trio a “culture” station that has pretty good music programming and actually play music, unlike MTV which is all about the reality programming. I mean seriously did you see any of Live 8 on MTV? they had 8 stages to telecast then the duplicated the same programming feed on MTV and VH1 and decided to show their yapping heads instead of the music
Anyway, I was watching Jools and he had KT Tunstall on, she did this incredable performance of “Black Horse and the Cherry Tree”. I couldn’t decide if it was the music or seeing her in those floppy boots, I have a thing for women in floppy boots. So I went to find her on the web. She has a pretty good site , but alas no music downloads, or streaming. She seems to be signed by Sony which use to be a technology company, but since they bought Columbia is now the caveman of every industry that it is in.
So I do some more searching, the Beeb has a special web feature for her on their collective site, and “Black Horse..” is there as a real audio stream. So I fire up Audacity and set it to record the line out, using the famous analog hole, and save it as an MP3. So now I’ve got an MP3 that I can listen to on my player, only I got a couple emails during recording so there are a couple “ding” sounds in the track as they arrive, but that’s OK with me.
I listen to it for a couple days, and think hey! its not just the boots. So I go to Amazon and find the only way a can get her new CD is via a $23 import
I figure what the heck and get it a a few things that are on my wish list. I get the CD a couple days later and rip it to MP3s and now I’m listening to it a work.
This whole thing would have been much simplier if:
1) Sony let her/made her put some 64k MP3 tracks on her site.
2) Offered unrestricted MP3 purchases from any of the MP3/iTunes places. I am still holding out on signing up for these sites because of the restrictions.
Anyway there you go another statisfied music consumer, it no wonder people play video games instead.
There is one more HUGE point to remember as well….
Start thinking about how much the Rolling Stones, U2, etc. gross in a given tour. Now I know, there are a bunch of hands digging in the proverbial pocket. The promoters take a cut, the venues charge fees, etc. However, if the major labels had contracts with bands/artists stipulating that they will record, produce, and distribute music online, and in return they gett x% of concert revenues as well… Big Bucks.
Also, there is plenty of proof that your model of giving away music driving sales works. Just look at the Grateful Dead or Phish. No radio support. No mainstream media support (atleast until after they became huge). In fact, you can go to archive.org and download any of over 2,000 live Grateful Dead performances for free. However, they are constantly releasing “official” live recordings on CD. (Hell, the Dick’s picks series in up to volume 30-something!) And you know what? The fans buy it UP! Along with T-shirts. Along with Stickers. Along with tickets to concerts of members who were formerly in the band. Logo Pint Glasses. Posters….. AND THESE ARE BANDS THAT HAVE BROKEN UP!!!
I totally agree with you. Give people something they care about, and they will have no problem supporting it. It might not be via purchasing 5 inch plastic discs, but they will spend. Guaranteed.
Why is it that we interweb surfers understand the concept, but high level executives are just too freaking dense?
I should have posted this on the post about movies a few days ago, but it is still applicable here. The movie industry should take a que from the music industry and offer the movies for sale as a download online. If you think about why Piracy even exists, perhaps a contributing factor is that there is no place online to actually *leaggly* download movies. People said that Itunes would never work because people wouldn’t pay for something they were downloading for free; now Itunes and Ipod is one of the driving forces increasing their profits. I wonder just how big the opportunity cost is for the movie industry completely ignoring the potential of the download marketing channel.
Musicians are already giving away their tunes for free via ‘netlabels’ under a Creative Commons license. So they reach a broader audience who might come to their concert. At our website we’re promoting these artists and this new phenomena.