Found an interesting article about a student run record label at USC... a coincidence? I think not.
Rock!
Daily Trojan
http://media.www.dailytrojan.com/media/storage/paper679/
news/2008/04/10/Lifestyle/Usc-Student.Record.Label.Strikes.
Through.With.L.a.Bands-3315951.shtml
4.16.2008
Blogs are... Record Labels?
As it has become obvious that the major labels have begun to lose traction in the industry, it is also realistic to point out that independent labels have continued to grow as their digital marketing and distribution efforts can not reach more people than ever before. So if the major label shrink, and the indie’s grow, then what happens to the void left by the indie’s as they move up the ladder? While it is feasible to say that more and more smaller and localized labels will begin, and have begun, to pop up all over the country, there is a new trend that Gerd Leonhard has pointed out as being the next wave in user filtered reviews and referrals. As it has been coined, the blogesphere, or the community of fans that write and update their own personal music blogs, in addition to the more professional services, the most well know being Pitchfork Media, has begun to create a new model that in Gerd’s view is about to change not only how users find music, but how music is distributed, produced, marketed, and discovered. In essence, he believes that blogs are the future record labels.
Seem far-fetched? It did to me at first, but when you actually begin to consider the value that a blog has to offer, it begins to make sense. After all, with much of today’s music available all over the Internet, it is increasingly simple for any fan to find any music by any artist that they so desire. At the same time, web applications and sites have made it easy for anyone to self-publish their own reviews, referrals, and even playable music widgets with their own track list. These resources have made bloggers not only some of the most informed fans, but also the most technologically advanced reporters that can make use of any media and from any device. Just as fans have begun to look to these people for the best advice on new music, it has become more and more feasible for a well-known blog to have the ability to break an artist by simply writing a positive review. Especially within genre-specific blogs, this has become a valuable resource for A&R people all over the country. If this is the case, and such bloggers have access profitable sponsorships and other revenue sources, than who is to say that they cannot become a record label tied into the blog itself? All of the pieces are there: distribution, marketing, a loyal audience, and with a little extra capital obtained through ad revenue or brand sponsorships, even the ability to produce new content. Seem real yet?
The fi
rst and possibly most important asset that blogs and their respective bloggers have to offer is their loyal viewer base. Because the of the capabilities of the Internet and the spreading use of RSS feeds and readers, any person with Internet access can receive all of their own personalized news the minute it gets published. This means that any person that subscribes to a feed will receive all of the news and content provided by the blogger: and for bloggers, this means a built in audience that is passionate and responds well to the subject of the blog. What does this mean for a blog-label?
And by what medium will all of this content be delivered to the reader? The blogger’s weapon of choice, the widget, has become a widely used device by which media can be delivered, information can be provided, and can even be used as a revenue generating source through the use of target ads and sponsorships. As Gerd describes,
What does this mean for the rest of the music industry and its traditional approach? How about utilize the blogs and the resources they provide? As the article puts it, “Look at bloggers as you next A&R people” (par 13). If labels were smart, and thankfully some have wizened up to the ways of the ‘net, then they wouldn’t shun the sharing of music on such sites, even if no one is getting paid, but they should use them to discover the new trends, new bands, and new ways that listeners interact with their media.
The best thing that ever happened to DIY was the blog, as it allows fans to promote their favorite artists and even help their new local heroes find new audiences. It has created the “me” generation of fans: “My taste, my list, my ears, my audience, my artists, my network i.e.... you guessed, it, my record label” (par 4).
Leonhard, Gerd. "Future Stories #1: Blogs will be Record Labels, and Bloggers will be the new Music Moguls. BlogJs anyone?." MediaFuturist 08 Apr 2008 14 Apr 2008.
Seem far-fetched? It did to me at first, but when you actually begin to consider the value that a blog has to offer, it begins to make sense. After all, with much of today’s music available all over the Internet, it is increasingly simple for any fan to find any music by any artist that they so desire. At the same time, web applications and sites have made it easy for anyone to self-publish their own reviews, referrals, and even playable music widgets with their own track list. These resources have made bloggers not only some of the most informed fans, but also the most technologically advanced reporters that can make use of any media and from any device. Just as fans have begun to look to these people for the best advice on new music, it has become more and more feasible for a well-known blog to have the ability to break an artist by simply writing a positive review. Especially within genre-specific blogs, this has become a valuable resource for A&R people all over the country. If this is the case, and such bloggers have access profitable sponsorships and other revenue sources, than who is to say that they cannot become a record label tied into the blog itself? All of the pieces are there: distribution, marketing, a loyal audience, and with a little extra capital obtained through ad revenue or brand sponsorships, even the ability to produce new content. Seem real yet?
The fi
rst and possibly most important asset that blogs and their respective bloggers have to offer is their loyal viewer base. Because the of the capabilities of the Internet and the spreading use of RSS feeds and readers, any person with Internet access can receive all of their own personalized news the minute it gets published. This means that any person that subscribes to a feed will receive all of the news and content provided by the blogger: and for bloggers, this means a built in audience that is passionate and responds well to the subject of the blog. What does this mean for a blog-label? They will use their blogs as the primary attention channel (yes – attention really is the new distribution) and will dish up a complete, interactive and highly relevant multi-media experience that will include TV shows, chats, webcasts and games. Forget about 'websites' and browsers - the BlogJs will do it on all platforms and devices” (Leonhard par 1).Not only do these news feeds automatically attract attention for regular users, but they also act as a way to distribute the music. While a normal record label may able to reach more physical retailers than a blog, or at least we sure hope they can, it is still much more difficult to attract the attention without spending a large sum of money on marketing and advertising efforts across multiple media platforms. Though it can be argued that a blog’s reach is only as far as the Internet and the readers it attracts, it must be pointed out that generally, if a reader has subscribed to such a blog and trusts its opinions and relies on it for new music and media, than it is also true that these readers are more likely to pick up on the output of that blog. In other words, a blog may offer a smaller radius of influence to a potential artist, but the likelihood that this form of marketing and distribution will be more effective is very high.
And by what medium will all of this content be delivered to the reader? The blogger’s weapon of choice, the widget, has become a widely used device by which media can be delivered, information can be provided, and can even be used as a revenue generating source through the use of target ads and sponsorships. As Gerd describes,
Widgets will continue to become instant, ubiquitous mini-site modules that will allow anyone to re-distribute any kind of content, to any device and any platform, anywhere. Most marketing will be done through and with the users - and some of them will get paid for it, too” (par 2).Just as it was described above, these widgets, in conjunction with RSS feeds, will be able to distribute content, market an artist, and even allow the creator to be paid as they track usage. As described in the article, partnerships through a sponsor can be used to generate revenue through a similar ad model that free music services are using now. Though there is one major difference: these sponsors will be able to target the audience that is most likely to buy their product by backing a blog that attracts a similar audience. In other words, “These ads will pay as much as $5 per click-thru (CPT), with major brands 'sponsoring' music blogs that fit their exact brand vision” (par 10). What does this mean for the bloggers? They can charge a premium for a more targeted audience, which means a better return rate for the sponsor. This money can then be used to help artists produce new material for distribution exclusively through the site, therefore only boosting attention for the blog and the artist. And the best part? They are available on all platforms so that no user will be restricted just to a computer screen, but will also be able to access what they want, when they want.
What does this mean for the rest of the music industry and its traditional approach? How about utilize the blogs and the resources they provide? As the article puts it, “Look at bloggers as you next A&R people” (par 13). If labels were smart, and thankfully some have wizened up to the ways of the ‘net, then they wouldn’t shun the sharing of music on such sites, even if no one is getting paid, but they should use them to discover the new trends, new bands, and new ways that listeners interact with their media.
The best thing that ever happened to DIY was the blog, as it allows fans to promote their favorite artists and even help their new local heroes find new audiences. It has created the “me” generation of fans: “My taste, my list, my ears, my audience, my artists, my network i.e.... you guessed, it, my record label” (par 4).
Leonhard, Gerd. "Future Stories #1: Blogs will be Record Labels, and Bloggers will be the new Music Moguls. BlogJs anyone?." MediaFuturist 08 Apr 2008 14 Apr 2008
4.02.2008
The Future of Music: Is Here
Back in 2005, Gerd Leonhard and David Kusek predicted what they thought the music industry would like by the end of the decade. Looks like their predictions will come true even sooner than they thought.
In their book, they described a music industry in which music flowed “like water” and was paid for as if it were a utility. In their view, music would no longer be a product, but a service that would draw in the consumer and prompt them to participate in other revenue streams such as merch, live events, street team membership fees, and etcetera. In addition, the direct consumers, or the ones downloading (because who would continue buying physical CDs when digital songs would be easier to access, available for use and any and all media players, and most importantly, free) would not actually be paying for anything, but instead, a variety other companies would be paying. The music might be supported by ads, or including in the bill for internet service, or even bundled with physical products, such as a phone, computer, or iPod (because let’s be honest, d
oes any body really have a Zune?). This money would be compiled in a pool, so they said, that would be split among the distributors, the labels, the creators, and on down the list. The Future of Music wouldn’t be about dictating prices, adhering to outdated copyright laws, or encoding songs with DRM, but more about losing control and letting the consumers get what they want, when they want, and where they want it. They preach a culture of change, in which music companies (and any company that cares about making a profit in any industry) will have to adapt if they want to survive.
In a recent article published on Portfolio.com, all of Gerd and David’s dreams have started to take shape in the form of Warner Music Group’s new project that is being directed by Jim Griffin, former digital chief at Geffen Music. In the simple form, the project has been described as a way for consumers to obtain music in a manner that is unobstructed and easy to access: “Consumers will pay a monthly fee, bundled into an internet-service bill in exchange for unfettered access to a database of all known music” (Gustin par 2). So let me get this straight, I’ll pay for my internet access like I always have, and in addition I’ll get access to all of the music I could ever want. Kusek/Leonhard 1, traditionalists 0.
The next point that the article brings up is the issue of how government regulations have affected (or have failed to affect) the growth of illegal downloading. But more importantly than this, after it became obvious that such downloading wasn’t going to stop, there was never a successful attempt at amending either the copyright law, or adjusting/creating a new license that would allow music to be used in this way, but also to make sure that money flowed to where it was deserved. As the article describes, “digital music seers have argued the rise of such networks has made copyright law obsolete and free music distribution universal” (par 5). While this is a valid point, the reasonable counterpoint would be, where the (insert expletive here) have you been for the last decade? Okay, maybe that’s not quite a reasonable response, but in essence, the point will still remain that almost all, if not all, of the biggest music companies failed to adapt, experiment with a new model, or embrace the changes that were occurring. Blame it on the causes that you will, but now that nothing has been done, these companies have been, and will continue to suffer until something substantial is done about it. Kusek/Leonhard 2, traditionalists 0.
The next point, and one of the more promising realizations that Griffin and his team have expressed, is that the way things are being done now will no longer suffice for the future. As he explains, “we’re swinging toward the vine of music as a service. We need to get ready to let go and grab the next vine, which is a pool of money and a fair way to split it up, rather than controlling the quantity and destiny of sound recordings” (par 9). While Griffin may sound like quite a business genius, it is very obvious that Kusek and Leonhard pointed this out in their book more than three years ago. Yes change will be slow, but at this rate, will it ever be accomplished? While I’m skeptical about the major labels’ ability to make such large changes, the idea still remains that all of these companies are losing control. They will no
longer benefit from using DRM or attempting to keep their music within their own distribution channels. It is simply too large a task to control all of their music’s use, let alone virtually impossible to stop such use from happening. Instead, as Griffin stated, these companies will need to stop wasting so much energy on cracking down on illegal downloading, and start using that energy to figure out the best way to implement a new plan, and then how they will split up the money accordingly. Kusek/Leonhard 3, traditionalists 0.
The final point that is worth mentioning comes from Griffin himself as he describes the goals of creating a music “utility” that will be bundled with some sort of fee. “Ideally, music will be free” (par 19). While speculation on how these fees will be paid and by who, either way, the consumer wins and music companies get a sizeable return, and isn’t that the most important part? And who’s to say that there couldn’t be a combination of companies paying the fees? Some websites could use an advertising model, where in exchange for watching or receiving a few advertisements, users would get the music they want for free. Also, the article comments on the possibility of iTunes’ model, in which in buying an iPod or other media device, customers would automatically get access to a trusted music supplier and all the music has to offer. Finally, the ISP model, in which the fee is built into the service, could be added to the pot as well. If you were to combine all of these models so that each takes part, in which the ISPs only charge a dollar or two per month, Apple only increases the prices of their players by a few dollars, and more advertisements become integrated with the material, the overall toll on the listeners would minimal, if noticeable at all. Kusek/Leonhard … I think you get the picture.
While music is more important and more widely used than ever been before, music companies seem to be complaining more than ever as well. While some of their complaints about fair use and legal rights and yada yada yada seem to be legitimate, the point is, they had their chance, and now the consumer is going to do what they will until they get want they want. Kusek and Leonhard had it right the whole time, and if anything, the industry should look to their latest work to figure out what might happen next… (ad support at work).
Gustin, Sam. "Fee For All: Jim Griffin Will Lead Warner Music's Fight To Tame The Web's Lawless Music Frontier." Portfolio.com 27 Mar 2008 01 Apr 2008.
In their book, they described a music industry in which music flowed “like water” and was paid for as if it were a utility. In their view, music would no longer be a product, but a service that would draw in the consumer and prompt them to participate in other revenue streams such as merch, live events, street team membership fees, and etcetera. In addition, the direct consumers, or the ones downloading (because who would continue buying physical CDs when digital songs would be easier to access, available for use and any and all media players, and most importantly, free) would not actually be paying for anything, but instead, a variety other companies would be paying. The music might be supported by ads, or including in the bill for internet service, or even bundled with physical products, such as a phone, computer, or iPod (because let’s be honest, d
oes any body really have a Zune?). This money would be compiled in a pool, so they said, that would be split among the distributors, the labels, the creators, and on down the list. The Future of Music wouldn’t be about dictating prices, adhering to outdated copyright laws, or encoding songs with DRM, but more about losing control and letting the consumers get what they want, when they want, and where they want it. They preach a culture of change, in which music companies (and any company that cares about making a profit in any industry) will have to adapt if they want to survive.In a recent article published on Portfolio.com, all of Gerd and David’s dreams have started to take shape in the form of Warner Music Group’s new project that is being directed by Jim Griffin, former digital chief at Geffen Music. In the simple form, the project has been described as a way for consumers to obtain music in a manner that is unobstructed and easy to access: “Consumers will pay a monthly fee, bundled into an internet-service bill in exchange for unfettered access to a database of all known music” (Gustin par 2). So let me get this straight, I’ll pay for my internet access like I always have, and in addition I’ll get access to all of the music I could ever want. Kusek/Leonhard 1, traditionalists 0.
The next point that the article brings up is the issue of how government regulations have affected (or have failed to affect) the growth of illegal downloading. But more importantly than this, after it became obvious that such downloading wasn’t going to stop, there was never a successful attempt at amending either the copyright law, or adjusting/creating a new license that would allow music to be used in this way, but also to make sure that money flowed to where it was deserved. As the article describes, “digital music seers have argued the rise of such networks has made copyright law obsolete and free music distribution universal” (par 5). While this is a valid point, the reasonable counterpoint would be, where the (insert expletive here) have you been for the last decade? Okay, maybe that’s not quite a reasonable response, but in essence, the point will still remain that almost all, if not all, of the biggest music companies failed to adapt, experiment with a new model, or embrace the changes that were occurring. Blame it on the causes that you will, but now that nothing has been done, these companies have been, and will continue to suffer until something substantial is done about it. Kusek/Leonhard 2, traditionalists 0.
The next point, and one of the more promising realizations that Griffin and his team have expressed, is that the way things are being done now will no longer suffice for the future. As he explains, “we’re swinging toward the vine of music as a service. We need to get ready to let go and grab the next vine, which is a pool of money and a fair way to split it up, rather than controlling the quantity and destiny of sound recordings” (par 9). While Griffin may sound like quite a business genius, it is very obvious that Kusek and Leonhard pointed this out in their book more than three years ago. Yes change will be slow, but at this rate, will it ever be accomplished? While I’m skeptical about the major labels’ ability to make such large changes, the idea still remains that all of these companies are losing control. They will no
longer benefit from using DRM or attempting to keep their music within their own distribution channels. It is simply too large a task to control all of their music’s use, let alone virtually impossible to stop such use from happening. Instead, as Griffin stated, these companies will need to stop wasting so much energy on cracking down on illegal downloading, and start using that energy to figure out the best way to implement a new plan, and then how they will split up the money accordingly. Kusek/Leonhard 3, traditionalists 0.The final point that is worth mentioning comes from Griffin himself as he describes the goals of creating a music “utility” that will be bundled with some sort of fee. “Ideally, music will be free” (par 19). While speculation on how these fees will be paid and by who, either way, the consumer wins and music companies get a sizeable return, and isn’t that the most important part? And who’s to say that there couldn’t be a combination of companies paying the fees? Some websites could use an advertising model, where in exchange for watching or receiving a few advertisements, users would get the music they want for free. Also, the article comments on the possibility of iTunes’ model, in which in buying an iPod or other media device, customers would automatically get access to a trusted music supplier and all the music has to offer. Finally, the ISP model, in which the fee is built into the service, could be added to the pot as well. If you were to combine all of these models so that each takes part, in which the ISPs only charge a dollar or two per month, Apple only increases the prices of their players by a few dollars, and more advertisements become integrated with the material, the overall toll on the listeners would minimal, if noticeable at all. Kusek/Leonhard … I think you get the picture.
While music is more important and more widely used than ever been before, music companies seem to be complaining more than ever as well. While some of their complaints about fair use and legal rights and yada yada yada seem to be legitimate, the point is, they had their chance, and now the consumer is going to do what they will until they get want they want. Kusek and Leonhard had it right the whole time, and if anything, the industry should look to their latest work to figure out what might happen next… (ad support at work).
Gustin, Sam. "Fee For All: Jim Griffin Will Lead Warner Music's Fight To Tame The Web's Lawless Music Frontier." Portfolio.com 27 Mar 2008 01 Apr 2008
3.24.2008
When Copies Are Free: Part 2
The third generative that grabbed my attention was the art of personalization. Kevin explores this generative through the idea that consumers will pay for something that is tailored directly to them and to no one else. While he applies the idea to medicine based off of a person’s DNA, a book that is custom edited to incorporate a reader’s previous background in literature, or a movie edited to fit the rating desired by the viewer, his take on music is exceptionally unique: “A generic version of a concert recording may be free, but if you want t copy that has been tweaked to sound perfect in your particular living room – as if it were preformed in your room – you may be willing to pay a lot” (par 15). I know that I would. This idea of customization based on a consumers personal preferences or desires could be a serious coup for the music business as the EQ of a recording can be changed, set lists can be chosen by the fans before the show, and even merch can be personalized. A new website, Zazzle.com, has given consumers and music fans the ability to customize any piece of a band’s merch. By creating a partnership with MySpace, the companies “will enable musicians with MySpace pages to create virtual stores for T-shirts, posters and other merchandise, using artwork and graphics that their fans can customize when they order it” (Smith par 1). As bands can upload their graphics, users will now be able to custom edit these to their own preferences, order the type of clothing or merchandise that they would like their new design to printed on, and can even receive the item within a week at most. By created a service such as this, not only will bands allow fans to interact with the material, but it also allows for “an ongoing conversation between the creator and consumer, artist and fan, producer and user” (Better par 15). This conversation and interaction is the key to personalization and will allow the industry to move away from the formulaic presentation of acts and the media that they can offer to their fans.Another of the generatives that Kevin mentioned in his article was that of accessibility, and while I completely agree with his overall concept, I don’t think he took the idea to the furthest level. While he talks about accessibility of the product on all digital mediums such as phones, PDAs, laptops, TVs and etcetera, I believe that there is a larger significance. Having unlimited access to all of the material and artist has created is all fine and dandy, but in today’s age, it is easy said and done as the internet gives anyone access to anything at anytime. But what about access to the artist him/herself? Wouldn’t people pay more for an album, concert ticket, piece of merchandise, etcetera, if it meant that they might have the chance to actually meet and talk to the artist? Or what about exclusive fan clubs that offer meet and greets before and after shows, special acoustic or small club shows, and even photo shoots or music videos?
In another article written by Kevin in which he explores how the Long Tail phenomenon can apply to donations to an artists as her primary source of income, he describes a situation in which Jill Sobule, a Canadian singer songwriter, has been asking her true fans for donations to fund her next studio album. In a sense, she used herself as an auction item to raise enough money to create the product that the true fans really desired. According to an interview she did with the Canadian Press:Contributors can choose a level of pledges ranging from the $10 "unpolished rock," which earns them a free digital download of her disc when it's made, to the $10,000 "weapons-grade plutonium level," where she promises "you get to come and sing on my CD. Don't worry if you can't sing - we can fix that on our end." For a $5,000 contribution, Sobule said she'll perform a concert in the donor's house. The lower levels are more popular, where donors can earn things like an advanced copy of the CD, a mention in the liner notes and a T-shirt identifying them as a "junior executive producer" of the CD (One Thousand par 29).While Kevin was right about how listeners want to have the ability to access their content anywhere, anytime, and on any device, I think he missed a significant part of point of accessibility: it is nice to have such accessibility to the content, but nicer to have access to the artist on a more personal level.
The final generative that I feel is essential to the future of the music industry is that of patronage and how audiences will pay creators for their work. Though similar to the ideas discussed above, in the end, it all comes down to the perception that the fans have of the artist and how they will be paid in the future. As he states, consumers “will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators” (Better par 20). And with this one, he hit the nail on the head. While band like Radiohead have figured out that by eliminating the business model presented by a label, the majors have still not caught on to the idea that people do not need to be forced into a specific model. As different people will pay different amounts, or even participate in other ways, a new business model has emerged centered around generosity. And surprisingly enough, as Radiohead has proved and countless others will duplicate in the future, people are willing to pay if it is a band they care enough about (I hesitate to quote any speculation of actual sales since Radiohead has refuted most recent guesstimate and still won’t reveal their current success).
Despite what “the experts” have been saying, I am of the opinion of Kevin that the future of the music industry is not as dim as it has been projected to be. Music is more popular now that it has ever been before, but instead of making a profit through traditional means, the creators themselves will have to begin to rely on their creative abilities not only for their music, but for how they sell it as well. These generatives seem to be the keys, at least for now, and as artists and labels begin adopting these new practices and values, new and exciting opportunities will present themselves not only for the creators, but for the users as well. Keep your eyes open and ears tuned in, and let me know what you find out.
Kelly, Kevin. "Better Than Free." The Technium 31 Jan 2008 . 1 Feb 2008
Kelly, Kevin. "Onethousand True Fans." The Technium 4 Mar 2008 . 11 Mar 2008 <>.
Smith, Ethan. "Virtual Art Gets Body." Wall Street Journal.com 30 Oct 2007. 23 Feb 2008
3.08.2008
When Copies Are Free: Part 1
I once had a conversation with my dad about the new culture (or at least from his standards) of downloading digital music for free. See, to him, and most from his generations and almost certainly from the generations before him, downloading music for free seems to be a crime. Not one in as much as to be fined by the RIAA, because after all, if a whole generation of kids is doing it, how can holding an infinitely small amount of them accountable going to change anything. But to him, it is more so a sense of robbing the artist of what they deserve: “How would you feel if you wrote something and someone copied it for free?” Well considering I’m posting this blog for free, probably not all that bad. But that is just an ignorant artist/writer/creator point of view, but the point of view for an entire generation, and maybe even multiple generations as every age group from now on will be of the “iPod” generation.
While the conversation came to a head, my dad made a great point: “Well if artist aren’t going to sell music anymore because everything is free, then what are they going to sell?” Of course I could point out the obvious: concert tickets, merchandise at shows and online, live tracks or DVDs, and maybe even the occasional backstage pass or limited edition poster. But in one form or the other, all of these income sources have always existed in addition to record sales, and some even before that. In today’s digital world, where all copies are free and it is virtually impossible to keep content from being duplicated and distributed, how do artists and labels make money?
This is exactly the question explored by Kevin Kelly, the founder and executive editor of Wired magazine, in his blog post titled “Better Than Free.” As he frames it: “If reproductions of our best efforts are free, how can we keep going? To put it simply, how does one make money selling free copies?” (Kelly par 4). In this case, the laws of supply and demand may be on the side of the artist, for when a good is easily available to everyone, the price will drop as a result. But what if the good or service is not in full supply, but in limited amounts? As he later goes on to answer, “When copies are super abundant, they become worthless. When copies are super abundant, stuff which can’t be copied becomes scares and valuable.” or in other words, “When copies are free, you need to sell things which can not be copied” (par 6-7). In the end, as supply is restricted, demand will rise, and a premium can be charged for what people cannot easily obtain, but still want access too.
So what exactly cannot be copied? In the article, Kevin describes eight qualities that he labels “generatives” as the saving graces of the music industry. As he describes them:
The first of these eight that I feel is most applicable to the music industry is the time dependent function of immediacy. As Kevin explains in the article, in today’s digital world, sooner or later, there will be copies of whatever a listener wants all over the web. It is not a question of if or how, but when. Part of what many creators must do to combat the potentially negative (although this may be debatable as well) effects of having their material available for free on the web at some point is to establish a relationship with their listeners that allows the fans to receive the material first. As Kevin sees it, people will pay a premium for material that they want the second it is released if there is a way for them to obtain it at that moment. He demonstrates this by way of other media: people will wait in line and pay a higher price to see a movie the first night it is released in theaters, and the same even goes for hard cover books, concert tickets, and in the past, records. But in today’s digital world, a supplementary aspect must be added to entice people to line up and pay that extra premium for music. As he suggests, a process in which “fans are brought into the generative process itself” may be just the kick-start that many artists and records need (par 14). Imagine the excitement that would be created if a band opened up their creative processes to the public. From the first steps in writing the song or album, to entering the studio, to creating the final mixes, bands and labels could document and post it all. This would give all fans the chance to make comments and suggestions about which lyrics reach out to them, which guitar part compliments the bass line most appropriately, or even which mix sounds best to them, all from the artist’s website page. Not only would this draw in more listeners through the process of user recommendations, but it would also tie many of the fans more closely with the music and the band itself. It would make them feel as if they were a part of the album itself, and as a result, they would be more willing to purchase the end product, buy the concert ticket, and acquire the merchandise that would be the physical representation of their relationship with the music.
The next generative that gives value to something that could otherwise be copied is the work’s authenticity. In other words, people will pay for the original. Why else does “vintage” demand a higher premium? Simply because it is the original, or at least more original than anything else. All types o
f products from paintings by the original artist, the first pressing of a novel or vinyl album, signed sports memorabilia, and even antique Mac computers demand high prices in exchange for a sense of authenticity. When it comes to music, authenticity can mean many different things. In it’s original sense, it signifies a track played by the artist, and not a sound-alike or cover of the original. As Kevin points out, “There are nearly an infinite number of variations of the Grateful Dead jams around; buying an authentic versions from the band itself will ensure you get the one you wanted” (par 17). Here, the original version is obviously the one that will be valued as it is more authentic and true to the creators. But what about in genres where remixes are common and creators don’t necessarily create in the true sense of the word, but maybe rearrange, or interpret original works to create something new? How does a listener decide what is authentic in a case like this? Some may argue that Kanye is original, but others would say that he blatantly rips off the genuine creativity and isn’t a creator, but an imitator instead. On the other end of the spectrum, groups that make a living as tribute bands to other artists are often valued almost as an equal to the original. For example, Dave Matthew’s cover band, the Trippin Billies have made a career based on playing not one of their own songs, but only exact replicas of Dave’s material. And what sets this group apart is their true dedication to Dave himself, as they learn each version of each song that the he plays in each city around the country, and can play the exact version that the Matthews Band played in that city. In this case, the originality is in the music itself, and not necessarily the band playing it. And while authenticity is generally in the eye of the beholder, the value that such authenticity creates is clearly unmatched as people will pay as much for a concert ticket to see the Trippin Billies as they will to see Dave himself.
Continued in Part 2…
Kelly, Kevin. "Better Than Free." The Technium 31 Jan 2008 01 Feb 2008.
While the conversation came to a head, my dad made a great point: “Well if artist aren’t going to sell music anymore because everything is free, then what are they going to sell?” Of course I could point out the obvious: concert tickets, merchandise at shows and online, live tracks or DVDs, and maybe even the occasional backstage pass or limited edition poster. But in one form or the other, all of these income sources have always existed in addition to record sales, and some even before that. In today’s digital world, where all copies are free and it is virtually impossible to keep content from being duplicated and distributed, how do artists and labels make money?
This is exactly the question explored by Kevin Kelly, the founder and executive editor of Wired magazine, in his blog post titled “Better Than Free.” As he frames it: “If reproductions of our best efforts are free, how can we keep going? To put it simply, how does one make money selling free copies?” (Kelly par 4). In this case, the laws of supply and demand may be on the side of the artist, for when a good is easily available to everyone, the price will drop as a result. But what if the good or service is not in full supply, but in limited amounts? As he later goes on to answer, “When copies are super abundant, they become worthless. When copies are super abundant, stuff which can’t be copied becomes scares and valuable.” or in other words, “When copies are free, you need to sell things which can not be copied” (par 6-7). In the end, as supply is restricted, demand will rise, and a premium can be charged for what people cannot easily obtain, but still want access too.
So what exactly cannot be copied? In the article, Kevin describes eight qualities that he labels “generatives” as the saving graces of the music industry. As he describes them:
A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing cannot be copied, clones, faked, replicated, counterfeited, or reproduces. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold (par 12).Of the eight he describes, being immediacy, personalization, interpretation, authenticity, accessibility, embodiment, patronage, and findability, I will analyze those that I feel apply directly to the music industry and the role of the independent band or label.
The first of these eight that I feel is most applicable to the music industry is the time dependent function of immediacy. As Kevin explains in the article, in today’s digital world, sooner or later, there will be copies of whatever a listener wants all over the web. It is not a question of if or how, but when. Part of what many creators must do to combat the potentially negative (although this may be debatable as well) effects of having their material available for free on the web at some point is to establish a relationship with their listeners that allows the fans to receive the material first. As Kevin sees it, people will pay a premium for material that they want the second it is released if there is a way for them to obtain it at that moment. He demonstrates this by way of other media: people will wait in line and pay a higher price to see a movie the first night it is released in theaters, and the same even goes for hard cover books, concert tickets, and in the past, records. But in today’s digital world, a supplementary aspect must be added to entice people to line up and pay that extra premium for music. As he suggests, a process in which “fans are brought into the generative process itself” may be just the kick-start that many artists and records need (par 14). Imagine the excitement that would be created if a band opened up their creative processes to the public. From the first steps in writing the song or album, to entering the studio, to creating the final mixes, bands and labels could document and post it all. This would give all fans the chance to make comments and suggestions about which lyrics reach out to them, which guitar part compliments the bass line most appropriately, or even which mix sounds best to them, all from the artist’s website page. Not only would this draw in more listeners through the process of user recommendations, but it would also tie many of the fans more closely with the music and the band itself. It would make them feel as if they were a part of the album itself, and as a result, they would be more willing to purchase the end product, buy the concert ticket, and acquire the merchandise that would be the physical representation of their relationship with the music.
The next generative that gives value to something that could otherwise be copied is the work’s authenticity. In other words, people will pay for the original. Why else does “vintage” demand a higher premium? Simply because it is the original, or at least more original than anything else. All types o
f products from paintings by the original artist, the first pressing of a novel or vinyl album, signed sports memorabilia, and even antique Mac computers demand high prices in exchange for a sense of authenticity. When it comes to music, authenticity can mean many different things. In it’s original sense, it signifies a track played by the artist, and not a sound-alike or cover of the original. As Kevin points out, “There are nearly an infinite number of variations of the Grateful Dead jams around; buying an authentic versions from the band itself will ensure you get the one you wanted” (par 17). Here, the original version is obviously the one that will be valued as it is more authentic and true to the creators. But what about in genres where remixes are common and creators don’t necessarily create in the true sense of the word, but maybe rearrange, or interpret original works to create something new? How does a listener decide what is authentic in a case like this? Some may argue that Kanye is original, but others would say that he blatantly rips off the genuine creativity and isn’t a creator, but an imitator instead. On the other end of the spectrum, groups that make a living as tribute bands to other artists are often valued almost as an equal to the original. For example, Dave Matthew’s cover band, the Trippin Billies have made a career based on playing not one of their own songs, but only exact replicas of Dave’s material. And what sets this group apart is their true dedication to Dave himself, as they learn each version of each song that the he plays in each city around the country, and can play the exact version that the Matthews Band played in that city. In this case, the originality is in the music itself, and not necessarily the band playing it. And while authenticity is generally in the eye of the beholder, the value that such authenticity creates is clearly unmatched as people will pay as much for a concert ticket to see the Trippin Billies as they will to see Dave himself.Continued in Part 2…
Kelly, Kevin. "Better Than Free." The Technium 31 Jan 2008 01 Feb 2008
2.25.2008
If It's an Issue With Kid's, It's an Issue With Me
I read an article in the Daily Trojan, USC’s student community newspaper, this week that brought to light an issue about the use of illegal peer-to-peer websites and other sources for music. The article itself highlighted many of the reasons why students have started downloading, and will continue to download for a long time: the ease of use, the portability (when transferred to digital audio player), and most importantly, the price. Since Shawn Fanning (some may even ask, Shawn who?) first made it possible in a dorm room, students and many other age groups have desired to have the music they want for free.
As the debate has progressed (or has barely even budged), and the major label continue to suffer, newer developments have brought to light not only the reasons why it is difficult to establish a system in which users can access all the music they want at any time under the all heralded “name here model,” but also a new reason for users to hate the major labels and their inseparable umbilical chord to the “way it used to work.” While their most recent approach has been “to litigate rather than license their catalogues,” supposedly, many within the machine have said that things will soon be different (Orlowski par 2). Universal Music Group’s very own digital chief, Larry Kenswil, proclaimed in January that “We have to license […] and think like the publishers” (Orlowski par 3). In other words, he is speaking on behalf of the labels when he realizes that the traditional model for sales is no longer working and that new revenue streams must be created.
Now this is no surprise, as it has been said for who knows how many years and has only become more commonly pointed out in the past few months a newer and better social networking platforms are beginning to fill the chasm between consumer and label. Even the “litigation before licensing” strategy is something that consumers will always detest, but have learned to either deal with, or avoid. The newest addition in a string of many attempts to destroy the industry they call their own is in the way they approached a possible solution to the very problem they have been trying to solve. Imeem, an Internet startup that is half social networking platform, half music and media player, attempted to strike a deal with major labels in which the website would be able to offer free music downloads, assuming they negotiated and paid for all the appropriate licenses. The company was structured to make a profit from ads as it expected its website to be a very high traffic area with many users often staying on the website for extended periods of time. The part that is most disturbing is what happened after a lawsuit between Imeem and UMG, in which “Imeem has settled a lawsuit with UMG on terms that ensure it will never make money” (Orlowski par 6). The licensing costs are so high, as set by the label, that "A financial analysis of a royalties plus operational costs reveals that Imeem cannot ever turn a profit with this financial structure […] Setting aside the large prepayments, online advertising revenues will not even cover the one penny-per-play song, much less the operational costs of running a net company, such as servers, personnel and bandwidth” (Orlowski par 8). So with all things being equal, which they actually aren’t, then any similar service could provide music for free with the same underlying economics, as long as they got the initial stamp of approval… right?
In the Daily Trojan article, written by what I assume to be a fairly clued-in student, a new service called Ruckus works under much the same concept. The difference here is that only students with a valid .edu email address can access the music for free. But as the writer Stephanie Lau discovered, free music available to be listened on the computer may not be the entire solution. During the article, it is pointed out that there are still many obstacles that students must navigate to actually receive the music they want. Sure, they can listen from their desk on their computer while they have an Internet connection (which even that can be iffy at best), but only PC users have the benefit of this access. The service is not compatible with Macs, maybe just a slight oversight on a college campus, where Macs rule and PCs are those pieces of junk your parents struggle with on a daily basis (why?). As the article describes: “Additionally, music cannot be coped or burned to CDs with the free service. The song selection numbers at 3 million compared to the 6 million iTunes offers. And because of Digital Rights Management, song files have licenses that must be renewed every 30 days” (Lau 2). Sounds like a lot of restrictions to me, and some major ones that would prevent almost every single music listener I know from bothering with the service at all. A student interviewed in the article put it best when he said that “the reason people download is because they want to own music for free. They want the functionality of carrying around music, and Ruckus isn’t the solution for that… The ideal site would have a good business model to pay the artists while allowing students to download the music and port it anywhere… how that site would work, I’m not sure” (2). And of course he’s right, because he is the voice of his generation: kids want to see their favorite artists get paid for their work, and they even demonstrate this by going to shows and buying merch. But due more to the economics of the Internet (see The Long Tail), developing technologies, and plain negligence of the major players in the market, kids have taken it into to their own hands to get what they want until someone offers how they truly would like it to be presented.
Meet Last.fm. This web service was already widely known in most music-centered groups as the one that tracks all of your plays from your computers hard drive it, catalogues it in a database, and presents it in the form of a profile that can be viewed and shared by friends. A true hybrid between Facebook and iTunes, it can either generate recommendations based on the songs you log in its system, based on suggestions from users with similar tastes, or by allowing users to share through the old fashioned ways of direct communication (if two screens and a wire is direct or not is up to you). In an attempt to expand, the company has now begun plans to begin creating a music library that will eventually rival iTunes: “The total number of songs available now is 3.5 million, but the company is aggressively adding content, and Stiksel said it will never stop adding music. ‘The mission is to have every track available,’ said Last.fm co-founder Martin Stiksel” (Buskirk par 4). In addition to allowing non-registered users to access the content for free, much as if it were a free store, the company has come up with a new way to make sure that writers and artists will continue to be paid fairly. Said Co-founder Alex Miller, “We're overlaying the content on top of the already very active community. When I buy a CD, the artist gets paid once [...] What we're doing with the model we're proposing today for Last.fm is that playback gets monetized [...] If I clock 100 plays, this means the artist gets paid 100 times the money” (par 9). And how with the artists get paid? Through more directed adds that can be generated based on the users listening patterns. Will this affect the user’s experience? Fortunately for us, “the ads' volume will default to the mute position” (par 11). Sounds good to me (get it?), but in the mean time, finer details are still being worked out, but hopefully this type of service will be the one to carry us into the future, for now.
In the end, it can once again be blamed on the major labels and their partners in crime for slowing the industry down to a deathly slow crawl. It seems to me that as long as they know they are going down, they are trying to take everyone with them, which is certainly no way to run a business. To the labels: preventing consumers from getting what they want most, your music, is not going to help you. You will not be able to snap your figures when you are ready and convert everyone to your new website or service that will fix everything, because once you have finally asked your intern to do the site for you, everyone will be paying attention somewhere else, and you won’t matter. “But let's just say it's a pity that in order to maintain control, the major labels insist on shooting themselves in the foot. As the chief of the indie label alliance AIM, Alison Wenham, said earlier this year: ‘You can fight piracy valiantly on the beaches and in the trenches, but you can't win it. The average file sharer has as much chance of being caught as they have of being hit by a meteorite. We need to monetize the usage of our music - whether or not we delivered it in the first place’” (Orlowski par 14, 16). Well said Alison, well said.
Buskirk, Eliot Van. "All Labels to Stream Free Music on Last.fm." Wired: Blog Network 23 Jan 2008 24 Jan 2008.
Lau, Stephanie. "Congress addresses illegal media downloads." Daily Trojan Vol. 163 No. 22. 15 Feb 2008: 1-2.
Orlowski, Andrew. "Digital music: Go legal, get screwed." The Register 20 Dec 2007 20 Dec 2007
As the debate has progressed (or has barely even budged), and the major label continue to suffer, newer developments have brought to light not only the reasons why it is difficult to establish a system in which users can access all the music they want at any time under the all heralded “name here model,” but also a new reason for users to hate the major labels and their inseparable umbilical chord to the “way it used to work.” While their most recent approach has been “to litigate rather than license their catalogues,” supposedly, many within the machine have said that things will soon be different (Orlowski par 2). Universal Music Group’s very own digital chief, Larry Kenswil, proclaimed in January that “We have to license […] and think like the publishers” (Orlowski par 3). In other words, he is speaking on behalf of the labels when he realizes that the traditional model for sales is no longer working and that new revenue streams must be created.
Now this is no surprise, as it has been said for who knows how many years and has only become more commonly pointed out in the past few months a newer and better social networking platforms are beginning to fill the chasm between consumer and label. Even the “litigation before licensing” strategy is something that consumers will always detest, but have learned to either deal with, or avoid. The newest addition in a string of many attempts to destroy the industry they call their own is in the way they approached a possible solution to the very problem they have been trying to solve. Imeem, an Internet startup that is half social networking platform, half music and media player, attempted to strike a deal with major labels in which the website would be able to offer free music downloads, assuming they negotiated and paid for all the appropriate licenses. The company was structured to make a profit from ads as it expected its website to be a very high traffic area with many users often staying on the website for extended periods of time. The part that is most disturbing is what happened after a lawsuit between Imeem and UMG, in which “Imeem has settled a lawsuit with UMG on terms that ensure it will never make money” (Orlowski par 6). The licensing costs are so high, as set by the label, that "A financial analysis of a royalties plus operational costs reveals that Imeem cannot ever turn a profit with this financial structure […] Setting aside the large prepayments, online advertising revenues will not even cover the one penny-per-play song, much less the operational costs of running a net company, such as servers, personnel and bandwidth” (Orlowski par 8). So with all things being equal, which they actually aren’t, then any similar service could provide music for free with the same underlying economics, as long as they got the initial stamp of approval… right?
In the Daily Trojan article, written by what I assume to be a fairly clued-in student, a new service called Ruckus works under much the same concept. The difference here is that only students with a valid .edu email address can access the music for free. But as the writer Stephanie Lau discovered, free music available to be listened on the computer may not be the entire solution. During the article, it is pointed out that there are still many obstacles that students must navigate to actually receive the music they want. Sure, they can listen from their desk on their computer while they have an Internet connection (which even that can be iffy at best), but only PC users have the benefit of this access. The service is not compatible with Macs, maybe just a slight oversight on a college campus, where Macs rule and PCs are those pieces of junk your parents struggle with on a daily basis (why?). As the article describes: “Additionally, music cannot be coped or burned to CDs with the free service. The song selection numbers at 3 million compared to the 6 million iTunes offers. And because of Digital Rights Management, song files have licenses that must be renewed every 30 days” (Lau 2). Sounds like a lot of restrictions to me, and some major ones that would prevent almost every single music listener I know from bothering with the service at all. A student interviewed in the article put it best when he said that “the reason people download is because they want to own music for free. They want the functionality of carrying around music, and Ruckus isn’t the solution for that… The ideal site would have a good business model to pay the artists while allowing students to download the music and port it anywhere… how that site would work, I’m not sure” (2). And of course he’s right, because he is the voice of his generation: kids want to see their favorite artists get paid for their work, and they even demonstrate this by going to shows and buying merch. But due more to the economics of the Internet (see The Long Tail), developing technologies, and plain negligence of the major players in the market, kids have taken it into to their own hands to get what they want until someone offers how they truly would like it to be presented.
Meet Last.fm. This web service was already widely known in most music-centered groups as the one that tracks all of your plays from your computers hard drive it, catalogues it in a database, and presents it in the form of a profile that can be viewed and shared by friends. A true hybrid between Facebook and iTunes, it can either generate recommendations based on the songs you log in its system, based on suggestions from users with similar tastes, or by allowing users to share through the old fashioned ways of direct communication (if two screens and a wire is direct or not is up to you). In an attempt to expand, the company has now begun plans to begin creating a music library that will eventually rival iTunes: “The total number of songs available now is 3.5 million, but the company is aggressively adding content, and Stiksel said it will never stop adding music. ‘The mission is to have every track available,’ said Last.fm co-founder Martin Stiksel” (Buskirk par 4). In addition to allowing non-registered users to access the content for free, much as if it were a free store, the company has come up with a new way to make sure that writers and artists will continue to be paid fairly. Said Co-founder Alex Miller, “We're overlaying the content on top of the already very active community. When I buy a CD, the artist gets paid once [...] What we're doing with the model we're proposing today for Last.fm is that playback gets monetized [...] If I clock 100 plays, this means the artist gets paid 100 times the money” (par 9). And how with the artists get paid? Through more directed adds that can be generated based on the users listening patterns. Will this affect the user’s experience? Fortunately for us, “the ads' volume will default to the mute position” (par 11). Sounds good to me (get it?), but in the mean time, finer details are still being worked out, but hopefully this type of service will be the one to carry us into the future, for now.
In the end, it can once again be blamed on the major labels and their partners in crime for slowing the industry down to a deathly slow crawl. It seems to me that as long as they know they are going down, they are trying to take everyone with them, which is certainly no way to run a business. To the labels: preventing consumers from getting what they want most, your music, is not going to help you. You will not be able to snap your figures when you are ready and convert everyone to your new website or service that will fix everything, because once you have finally asked your intern to do the site for you, everyone will be paying attention somewhere else, and you won’t matter. “But let's just say it's a pity that in order to maintain control, the major labels insist on shooting themselves in the foot. As the chief of the indie label alliance AIM, Alison Wenham, said earlier this year: ‘You can fight piracy valiantly on the beaches and in the trenches, but you can't win it. The average file sharer has as much chance of being caught as they have of being hit by a meteorite. We need to monetize the usage of our music - whether or not we delivered it in the first place’” (Orlowski par 14, 16). Well said Alison, well said.
Buskirk, Eliot Van. "All Labels to Stream Free Music on Last.fm." Wired: Blog Network 23 Jan 2008 24 Jan 2008
Lau, Stephanie. "Congress addresses illegal media downloads." Daily Trojan Vol. 163 No. 22. 15 Feb 2008: 1-2.
Orlowski, Andrew. "Digital music: Go legal, get screwed." The Register 20 Dec 2007 20 Dec 2007
2.06.2008
Music for the 9-Year-Old Generation
A lot of people, including the “executives” that work at the major labels, have said that downloading music without paying is part of a generational shift. The older generations that grew up with vinyl and later saw the transition to other mediums have always paid, and will continue to pay for music, as they feel as if it is their responsibility to pay. They have trouble understanding how the younger generations can justify downloading music for free without paying the artists and the companies behind the artist their dues. But when it comes to the younger generations’ point of view, this logic is reversed: “Why would I pay for music when I can download it for free? Sure, I don’t pay for the music I download, but then I go to see my favorite artist play shows, so I pay for a ticket and a T-shirt.” Or even more discouraging for the businesses behind the music, “Why would I pay for the recordings when only a small portion actually goes to the artist anyway?” As the industry stands right now, both points of view, the simple logic of the older generations as well as the ever-prevailing self-righteousness of the younger generations must be reconciled in a way that makes sense for both sides. Or, the labels could just act as the airlines do, and charge their customers on a variable pricing scale that would depend on the use of the music or where the music is being purchased from (shh, I don’t want them to illegally download my idea). Either way, there is a clear disconnect between the mentality of not only the different generations of consumers, but between the younger consumers and the labels, and instead of complaining about the loss of sales do to illegal downloading, or whatever the RIAA would like to claim next, there are ways that the labels can continue to profit while allowing the consumers to obtain music in any way they choose.
More often than I’d care to hear, I’ve read about how CD sales are plummeting, as people no longer feel it’s necessary to pay for music. While this may be true, I tend to feel as if the suffering much of industry is experiencing is as much, if not more so their own fault than it is the consumers’. In any industry, the tastes and preferences of the consumers change, and it is the job of the firms, or at least the ones that plan to survive, to adapt quickly and find new ways to continue to make a profit. As CBS and Viacom Executive Chairman Sumner Redstone put it in a keynote address at the Media and Money Conference, “The more platforms our content is on, the more numerous our revenue streams,” and as more forms of distribution begin to take shape, “professionally produced content only increases in value as digital platforms multiply” (Weisenthal par 2). By this standard, labels and content providers should not and can no longer depend on just a few forms of revenue, especially forms that are outdated, but must begin to expand their business models to more and newer revenue sources. As many have suggested before, it has become increasingly evident that content providers alone can no longer monetize what they offer, but will need to enlist the help of other businesses. The most commonly suggested strategy would be to enlist the help of ISPs and media device makers. In other words, allow the companies that provide the access to charge additional “media fees” included in the consumer subscriptions fees, collect this money in a large pot, and distribute it to the content providers. Though this idea is not original, it has become one of the more popular solutions as writers like Dave Kusek and Gerd Leonhard continue to preach the “music like water” solution: or paying for music as if it were a free flowing utility that everyone assumes must be paid on a monthly basis.
Another model that has been explored, and is currently being embraced by many of the up and coming independent labels and social networking sites, is the ad-supported music model. Though there are many creative and new ways to allow advertising to pay for the use of music so that users can listen to it for free, the more current issue at hand is how the larger companies will begin to embrace this new model. As the smaller labels continue to find new ways to reach their listeners through either as supported tours, ad supported websites, or user-filtered social networking sites, their content will be more noticed simply because of how often users will be interacting with the music. A great example of this increased interaction was demonstrated in a recent article in which a 9-year-old file sharer was interview for the popular digital media blog, TorrentFreak. In the article, when she was asked if it was okay if to copy music for free she cited a specific example involving her cousin. In this case she decided that “yes it’s ok because she only does it to make her [MySpace] page better” (Enigmax). The major labels continue to miss out on these opportunities as they only seek ways to sell their music online that are traditional in the sense that it is still a music store, just available on the computer. Instead of embracing these new outlets, they often shun them and refuse to take part with the assumption that they are just a passing fad. As Sumner put it, “It seems fairly clear that advertising will for the most part pay the way on the Internet, just as it has on traditional media platforms. [...] I think in all the public clamor in all the doomed fortunes of traditional media, people miss the greater trends at work” (Weisenthal par 3). The reality is that people will never again revisit the traditional forms of acquiring music, and in order continue to monetize the use of music, record companies will have to expand their horizons and find new ways to derive value from their content.
In the same article that Hannah was interviewed in, it was made obvious that a split between generations exists. But it also seems to be obvious that if a 9 year old can reveal a similar business model as stated above, then record labels should be ashamed of being so far behind. As the young girl, named Hannah, described how she obtains music from places like LimeWire and YouTube, the article’s author asked her simply, “what was cool about it [downloading music from the internet]? Her response: “Because you can put anything in and it will come up and you don’t actually pay for it. Well you have to pay for the Internet and LimeWire comes with the Internet but you have to pay for that so LimeWire isn’t really free.” Not only did she put it together that if she paid for access to the Internet, than by right, she should be allowed to download music, but she even went as far as claiming that by paying for the Internet, the music wasn’t “really free” after all! Smart girl. But the reality is that record companies “need to make it easy for consumers to attain our content in a legal manner” (Weisenthal par 4). In order to be successful at monetizing use, the consumers must have access where and when they want it: a freedom that was first explored with the use of free downloading, and a value that many avid listeners feel is their legal right. After all, as Hannah put it, “Why would they put [music] on the Internet and invent mp3 players if it was against the law?” Amen.
Enigmax, "Inside the Mind of a 9 Year Old File-Sharer." Torrent Freak 21 Oct 2007 30 Oct 2007 .
Weisenthal, Joseph. "CBS and Viacom Executive Chairman Hip to Digital Trends." nytimes.com 08 Nov 2007 08 Nov 2007.
Weisenthal, Joseph. "CBS and Viacom Executive Chairman Hip to Digital Trends." nytimes.com 08 Nov 2007 08 Nov 2007
1.21.2008
The Independent Model
Gerd Leonard, Co-author of what I consider to be the music industry’s most recent bible, “The Future of Music” recently wrote an article that he titled “Open Letter to the Independent Music Industry” in which he shared many of his theories on where the industry is headed and how people can begin to adapt and prepare for the changes. While some of this changes he suggests may be preformed retroactively (ahem, the majors) to an already drastically different industry from what we knew just a few years ago, some of what he suggests has begun to take shape and should be of great consideration for anyone entering the industry.
The first point he highlights about this changing industry is how the future “business model” will begin to take shape, a model in which the “new ecosystem […] is not based on music as a product, but music as a service: first selling access, and only then selling copies. An ecosystem based on ubiquity of music, not scarcity. An ecosystem based on mutual trust, not fear” (par 5). This approach, in which music is not offered as a prepackaged product, but instead as a service of which people access for entertainment, offers many new and exciting ways to monetize the listener. No longer are listeners grouped as a large consumer base that buys the product, but as individuals that all interact with their media of choice in different ways, all of which can be, and should be monetized based on this use. For example, the casual listener may only demand music when working on their computer, and may only access music through streams that are either free or paid for by advertising. But the music connoisseur that would rather own an artist’s collection to download on her iPod for portability may pay in a more traditional manner. Or, as Gerd has suggested before, maybe the music will be offered for free in any form, but a tax may be levied on the digital media player that includes an all-you-can-eat subscription model in which the tax is split by a pool of content providers, publishers, etc. As he states in the article, “It’s not the copy of the recording that makes all the [money], it’s the use,” because “usage right is where you monetize” (par 23, 34). Instead of monetizing the ownership of content, he suggests monetizing the use itself, whether that be a stream, a download, or a copy, and whether its paid by advertisers, the user herself, or the digital equipment companies, and then up-selling the ownership when a consumer desires to own a physical (or more likely the digital) copy.
In this new ecosystem, the listener is the one that has control over how he interacts with the content, and the providers lose control. But instead of fearing this relationship, companies must be open to giving the customers the control, as this will build a community of trust that will truly allow music to be explored and shared, as it should. As Gerd describes the current situation that faces the music industry, “the losers built digital music stores, and the winners built vibrant communities based on music. The losers built walled gardens while the winners built public squares. The losers were busy guarding their intellectual property while the winners were busy getting everyone’s attention” (par 15). In this view of the industry, the so-called “losers” are the labels that attempted to make their offerings digital, but instead of letting listeners control how they interacted with it, made it much the same as a normal retail store like iTunes or Amazon. The “winners” are the DIY bands, labels, and publishers that made their content available either for free, or offered it with a new model. While Radiohead may be the best current example of the winners at work, other notable winners often include social networking sites such as the sixty one, iLike, or Last.fm. While each one of these websites may have a different layout or focus, all have one thing in common: they allow the listeners to interact with the media they listen to. Whether that is through a voting system to promote a new artist, recommending new music and concerts to friends, or discovering what other people with similar tastes are listening to, each site allows the listener to, in a sense, extend their music network. In order to continue profiting from the production and distribution of music, labels must no longer attempt to control the media they present to the public, but instead make it easy to interact with and then monetize the use or find a new way to create new, more untraditional revenue streams.
Many people may be confused or perplexed when it comes to the issue of creating new revenue streams (i.e. what can I sell if I don’t the music? How do I get people to pay for music if they can simply get it for free from a peer-to-peer website?). And that is exactly the point: why would you ask someone to pay for something that they can get for free? While the usual assumption is that an artist or label can’t compete with free, Gerd has another take:
In the end, the customer is always right, and the customer has been showing the industry exactly what they want: free music and more content. Now it is up to the providers to make the consumer happy and to find a way to derive revenue from the access and not necessarily the ownership. Content will still be king and talent to create that content will still be in high demand, but now providers of that content must find a way to monetize access and attention in more creative ways than every before. As Gerd says, “Call me a Utopian, call me a Dreamer, call me a ruthless Optimist, but I think this is the Future of Music (par 51).
Leonhard, Gerd. "Gerd Leonhard's Open Letter to the Independent Music Industry." Future of Music 01 Jul 2007 21 Jan 2008.
The first point he highlights about this changing industry is how the future “business model” will begin to take shape, a model in which the “new ecosystem […] is not based on music as a product, but music as a service: first selling access, and only then selling copies. An ecosystem based on ubiquity of music, not scarcity. An ecosystem based on mutual trust, not fear” (par 5). This approach, in which music is not offered as a prepackaged product, but instead as a service of which people access for entertainment, offers many new and exciting ways to monetize the listener. No longer are listeners grouped as a large consumer base that buys the product, but as individuals that all interact with their media of choice in different ways, all of which can be, and should be monetized based on this use. For example, the casual listener may only demand music when working on their computer, and may only access music through streams that are either free or paid for by advertising. But the music connoisseur that would rather own an artist’s collection to download on her iPod for portability may pay in a more traditional manner. Or, as Gerd has suggested before, maybe the music will be offered for free in any form, but a tax may be levied on the digital media player that includes an all-you-can-eat subscription model in which the tax is split by a pool of content providers, publishers, etc. As he states in the article, “It’s not the copy of the recording that makes all the [money], it’s the use,” because “usage right is where you monetize” (par 23, 34). Instead of monetizing the ownership of content, he suggests monetizing the use itself, whether that be a stream, a download, or a copy, and whether its paid by advertisers, the user herself, or the digital equipment companies, and then up-selling the ownership when a consumer desires to own a physical (or more likely the digital) copy.
In this new ecosystem, the listener is the one that has control over how he interacts with the content, and the providers lose control. But instead of fearing this relationship, companies must be open to giving the customers the control, as this will build a community of trust that will truly allow music to be explored and shared, as it should. As Gerd describes the current situation that faces the music industry, “the losers built digital music stores, and the winners built vibrant communities based on music. The losers built walled gardens while the winners built public squares. The losers were busy guarding their intellectual property while the winners were busy getting everyone’s attention” (par 15). In this view of the industry, the so-called “losers” are the labels that attempted to make their offerings digital, but instead of letting listeners control how they interacted with it, made it much the same as a normal retail store like iTunes or Amazon. The “winners” are the DIY bands, labels, and publishers that made their content available either for free, or offered it with a new model. While Radiohead may be the best current example of the winners at work, other notable winners often include social networking sites such as the sixty one, iLike, or Last.fm. While each one of these websites may have a different layout or focus, all have one thing in common: they allow the listeners to interact with the media they listen to. Whether that is through a voting system to promote a new artist, recommending new music and concerts to friends, or discovering what other people with similar tastes are listening to, each site allows the listener to, in a sense, extend their music network. In order to continue profiting from the production and distribution of music, labels must no longer attempt to control the media they present to the public, but instead make it easy to interact with and then monetize the use or find a new way to create new, more untraditional revenue streams.
Many people may be confused or perplexed when it comes to the issue of creating new revenue streams (i.e. what can I sell if I don’t the music? How do I get people to pay for music if they can simply get it for free from a peer-to-peer website?). And that is exactly the point: why would you ask someone to pay for something that they can get for free? While the usual assumption is that an artist or label can’t compete with free, Gerd has another take:
“Guess what: you can compete with free because what you can offer is not free. Yes, a copy of a file is free. A CD burned from another CD is free, a USB stick’s content copied to my computer is free. But the real-life connection to the artist, the experience that is happening around the music, the added values such as videos, films, games, chats, books, concerts and merchandising, the context (!!!) - all of that must not be free. You must stop the obsession with trying to make money merely from selling copies, and instead provide access, because only the legitimate and authorized source (i.e. agent-label-manager) can provide the whole bundle of values that the users, fans, the people formerly known as consumers, will buy” (par 37).In other words, yes people want music, and no, people will not necessarily always pay for music, but yes, people want more content and more interaction with their favorite artists than just through listening to music. There are opportunities to sell that access through a multitude of models. Whether you are the artists bundling merch and live recordings with an album, the label selling a membership so that the user will have access to all multimedia content, or the concert promoter selling tickets to the sound check and meet-and-greats with the band before the show, people want access to it all, and are willing to pay for that access if the price is right and the offering adds enough value.
In the end, the customer is always right, and the customer has been showing the industry exactly what they want: free music and more content. Now it is up to the providers to make the consumer happy and to find a way to derive revenue from the access and not necessarily the ownership. Content will still be king and talent to create that content will still be in high demand, but now providers of that content must find a way to monetize access and attention in more creative ways than every before. As Gerd says, “Call me a Utopian, call me a Dreamer, call me a ruthless Optimist, but I think this is the Future of Music (par 51).
Leonhard, Gerd. "Gerd Leonhard's Open Letter to the Independent Music Industry." Future of Music 01 Jul 2007 21 Jan 2008
1.19.2008
The Experiement
This is a blog run by the student record label located on the USC campus. We are experimenting with new models for the music industry, and this is where we will talk about our analysis, thoughts, and findings.
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