There’s been a lot of hand-wringing ever since this whole Internets thing started to pick up steam in the music industry. Namely, the recording industry has been fretting over what to do, and how to monetize this whole digital thing.
Ed note: The recording industry is a piece of the music industry – if you’re confused, go look here.
At first the Internets didn’t affect CD sales enough to actually bother anyone, so the strategy was “ignore, ignore, ignore”. The RIAA got all put bull and started bringing people to court over illegal downloading, screaming that the people who were doing the illegal downloading (or rather, sharing songs for others to illegally download) were responsible for the current state of the recording industry.
Jump forward a few years and nothing really changed. The recording industry was still for the most part refusing to provide legal options to people who wanted to download music, so the public was still downloading illegally, delivering the Internets equivalent of a middle finger to the big bad RIAA, as well as the recording industry.
Then iTunes happened. Suddenly there was a very popular was to legally download music, and people started doing so. Voila, problem not yet solved, but hey – it was a start.
The thing is, the recording industry and the RIAA were now playing two sides, so to speak. They were getting the revenues from the iTunes downloads, yet still screaming and suing. The theme as it appeared to consumers was “You’re consuming music in the way you want to, and we’re starting to allow you to do that, but we really want our old way back as we made more money, so we’re still going to whine and complain.”
Businesses have to make money, I get it. Everyone gets it.
What many companies in the recording industry fail to realize though, is that their refusal to innovate and adopt new technologies was effectively a huge middle finger in the face of the consumer. That pissed consumers off.
At the end of the day the consumer wants the music – and we don’t necessarily care about the medium it comes on. The limitation of choice is what really pisses people off, and that was a choice made by inaction within the recording industry.
Hello to a problem the recording industry helped create.
So today I ran across his gem of a quote on brand dna, and it got me thinking.
“I think records were just a little bubble through time and those who made a living from them for a while were lucky.
There is no reason why anyone should have made so much money from selling records except that everything was right for this period of time.
I always knew it would run out sooner or later. It couldn’t last, and now it’s running out. I don’t particularly care that it is and like the way things are going.
The record age was just a blip. It was a bit like if you had a source of whale blubber in the 1840s and it could be used as fuel.
Before gas came along, if you traded in whale blubber, you were the richest man on Earth.
Then gas came along and you’d be stuck with your whale blubber. Sorry mate – history’s moving along.
Recorded music equals whale blubber. Eventually, something else will replace it.”
The quote started me thinking about everything I wrote above. How if the THING you trade or sell suddenly is made obsolete, you need to figure out a new thing, a new product, or in this case, a new transportation method (from CDs to fiber optic cables).
Do yourself a favor and go read the entire article. It will take you a few minutes, but the letter is wonderfully written and really shows the evolution and struggle of many to monetize this whole Internets thing, while still delivering what fans want.
I’ve included a few excerpts below (emphasis mine), but really, you should go and read the entire article.
Believe us, we want you to pass our videos around more than you do, but, crazy as it may seem, it’s now far harder for bands to make videos accessible online than it was four years ago
The label fronts the money for us to make recordings – for this album they paid for us to spend a few months with one of the world’s best producers in a converted barn in Amish country wringing our souls and playing tympani and twiddling knobs – and they put up most of the cash that it takes to distribute and promote our albums, including the costs of pressing CDs, advertising, and making videos. We make our videos ourselves, and we keep them dirt cheap, but still, it all adds up, and it adds up to a great deal more than we have in our bank account, which is why we have a record label in the first place.
Let’s take a wider view for a second. What we’re really talking about here is the shift in the way we think about music. We’re stuck between two worlds: the world of ten years ago, where music was privately owned in discreet little chunks (CDs), and a new one that seems to be emerging, where music is universally publicly accessible. The thing is, only one of these worlds has a (somewhat) stable system in place for funding music and all of its associated nuts-and-bolts logistics, and, even if it were possible, none of us would willingly return to that world. Aside from the smug assholes who ran labels, who’d want a system where a handful of corporate overlords shove crap down our throats? All the same, if music is going to be more than a hobby, someone, literally, has to pay the piper. So we’ve got this ridiculous situation where the machinery of the old system is frantically trying to contort and reshape and rewire itself to run without actually selling music. It’s like a car trying to figure out how to run without gas, or a fish trying to learn to breath air.
So, for now, here’s the bottom line: EMI won’t let us let you embed our YouTube videos. It’s a decision that bums us out. We’ve argued with them a lot about it, but we also understand why they’re doing it. They’re aware that their rules make it harder for people to watch and share our videos, but, while our duty is to our music and our fans, theirs is to their shareholders, and they believe they’re doing the right thing.
Let me say it again – go read the entire article.
OK Go (or Gizmodo, I’m not sure which) then included the Vimeo video you can see below, and me being a blogger of course put it on this very blog (I dig the song and love the video, so go forth and view).
What’s the conclusion? Well, I’d say right now we’re all in agreement on something at least. There’s far less money to be made from selling CD’s then there was 10 years ago, or even 5 years ago. This Internets thing has thrown a major wrench in the recording industry operations, and labels are suffering.
Is there a solution? That remains to be seen. Companies like Topspin, TuneCore, Involver, Kickstarter, ArtistData and others are coming out and helping artists (and labels!) better manage things in this whole Internet-driven economy, but these companies are still few and far between in the grand scheme of things. It’s progress, but is it the solution? I don’t think it is, at least not yet.
I’d love to hear your thoughts on things. Do you still buy CD’s? Do you download music from legal online sources? What trends do you see (for better or worse) in the recording industry??
I recently had the pleasure of attending and speaking at the Social Fresh Cruise, an invite-only social media 4-day floating conference/cruise from Miami to Cozumel.
The cruise was part conference, part pure fun. I was one of eight speakers for the conference portion of the cruise, and spoke about “The Recording Industry is Screwed… Now What Do We Do?”
Why yes, I do like to stir the pot. Thanks for asking.
The 45-minute “speech” was more of an open discussion, prefaced by a bit of background about the industry.
The background centered around the alternatives that exist, allowing musician to carve their own paths and often times, decide IF they even want a record deal with a major label.
The discussion portion of the talk was the most valuable, and many people contributed their thoughts, opinions and experiences about the music and recording industires.
The discussion ranged from how research completed in the 80’s about how people would contribute and use the Internet is still relevant, from how one of the attendees favorite bands used Kickstarter to finance their projects. Many of the attendees had their own experiences to share about connecting with artists on Twitter, and as we were on the cruise with Rick Springfield’s fan club, we ALL could see a real-life example about how connecting directly with an audience really works.
To talk a bit more about one of the best comments of the discussion, I’m going to jump back and discuss a bit about my personal tastes:
I REALLY like a great debate, and really enjoy people intelligently disagreeing with my opinions. As mentioned, the highlight of the talk came from one such comment by Lucretia Pruitt, who made the excellent point that the recording industry is experiencing what a lot of other industries go through when a seismic shift in their business model occurs. Hint: This shift for the recording industry begins with an “I” and rhymes with schminternet.
In general, innovation comes from the bottom up. The start-up, the smaller companies and the ones that have “less to lose” take the “risk” and innovate. They try out new things, see what works and adopt that into their strategy. The bigger more entrenched companies usually wait to see if what the smaller guys do works. If so, they copy it and make it part of their business. Less risk with potentially the same rewards.
Now, I’m not saying that this is an absolute, but it’s certainly a trend.
The difference with the music industry, is that the “big guys” have fought against this change for the better part of a decade, instead of embracing it and trying to innovate from the beginning. From a PR perspective, that decision has caused a huge problem for the public image of the music industry. In many people’s minds, it is now “us vs. the music industry”, especially “us vs. the RIAA”.
I’m thrilled to see some of the “big guys” waking up and beginning to realize that the “stick my head in the sand” approach is NOT a smart move, but they must do this while remembering that consumer perception is still a huge concern.
I have much more to say on this topic, and am starting with a conversation today at 3:30PM EST/ 12:30PM PST where I’ll be participating in an un-panel on SnazL with Mary McKnight (EMI, Sacrilicious Marketing) and Mike Fabio (Warner Bros. records).
Join the un-panel and upload a video, share photos or chat to participate.
In my previous post, I covered Imogen Heap’slatest release (Ellipse) and how it’s up to the artist to decide what their own “free” will be. Is it the music? Is it the experience of getting to see the work behind the scenes? Is it copies of your live concerts? Whatever it is, you need to have a strategy and be clear on how that strategy gets executed day-to-day.
I’ll start at the beginning, with a chart explaining how Forrester’s proposed Music Release Windows schedule would work:
Now, the critique from Michael Masnick at Techdirt (emphasis mine):
But, of course, parts of the plan are a bit of a headscratcher. It still seems very much focused on getting people back into “buying music” rather than coming up with actual scarcities to buy. Instead, it tries to invent new artificial scarcities, mostly by copying an awful idea from the movie industry: windowed releases. The idea is that “premium club” members would pay to get access to music before others, and could get some sort of bundle of content. Two weeks later, the regular “release” would happen, with CDs, download stores and radio. Then, three weeks later, there would be a “free” component that actually is more “feels like free” using either ad-supported downloads or streaming.
Of course, like the movie industry, this ignores both reality and what people want. Those timelines won’t make much sense, because as soon as the music’s out, it’ll be widely available. There’s just no stopping that. Artificially holding it back doesn’t do much good and doesn’t give anyone a reason to buy. If anything, it actively drives people to unauthorized copies. Those who don’t want that “premium club” offering won’t wait six weeks for the official “free” streaming version with ads. They’ll just go out and get an unauthorized copy.
Fair point from Michael, and one I strongly agree with. I liken this to the practice a lot of smaller (especially electronic) record labels use when selling new tracks digitally and on vinyl. I’ll list it out step-by-step for those not too familiar with how this works.
Release a digital track
Press a small number of numbered Limited Edition vinyl releases
See how they both sell
If demand continues to be present for the Limited Edition vinyl release, press a larger amount with a different B side, keeping the star track on the A side, preserving the value of the Limited Edition release and fulfilling the demand with product for eager consumers
This works with electronic music as many people still like the physical copies of the records. Record stores may be a niche business to many, but they’re still a profitable business for people interested in jazz, soul, hip hop and electronic music to name a few.
The process above is also a great example of true scarcity and responding to true demand for a product, which is different than purposefully creating a scarce product in order to try and attach a better profit margin to the product. Same result, but created from two different situations; one is business-led, the other consumer-led.
Mark Mulligan later posted a blog entry defending his stance in the “Music is Free” raging debate.
Here’s the part I take issue with:
One of the counter arguments used by commentators is that having a MySpace page is an ends in itself these days. No, it is a means to an end, and the VAST majority of artists see it that way. If an aspiring artist doesn’t get signed to a label / publisher / agent they’ll remain one of those many tens of thousands of artists struggling to stand out from the crowded pack on MySpace.
My question to Mark, or any artist that reads this blog, is WHY does a label / publisher or agent have to be involved in order to make you successful?
What is preventing the independent artist from getting in contact with companies like TuneCore (nice new website design, by the way!)? If the answer is “it’s too much work to be my own label / publisher / agent” then why not use a company like ArtistData to simplify everything? Even the argument of “funding is given by these companies to develop the artists” is rendered pretty null and void if you use Kickstarter (see my recent post about JuaKali’s project on Kickstarter, which I’m happy to report got funding and is being produced!).
Forrester’s points are valid if viewed within the mindset that you HAVE to involve a label, publisher or an agent. They’re also valid if you view the “main problem” of the music industry as “the inability to stop illegal downloading and file-sharing and the struggle to get consumers to buy music”.
That’s the point, though. The music industry doesn’t require any of those parties or viewpoints expressed above. Yes, it’s a struggle for many artists to adapt to this new model when they’ve been able to survive so long on the old one. On the flip side, it’s an event greater opportunity for those very same artists and companies to lead the way with developing the new music business model.
It’s an opportunity to develop a model that works, one that evolves, one that is sustainable and, most importantly – one that satisfies the needs of the businesses, the musicians AND the fans.
As I dug a bit deeper I discovered that JuaKali was using Kickstarter, “a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers…”
It’s a pretty simple service.
Someone (an artist, designer, etc) creates a project and names the price. From there, they use their network (and Kickstarter’s own “Discover Projects” area) to solicit pledges. Creators can specify pledge levels and associated rewards; a great incentive tool to get those larger pledges.
If the project reaches the funding level before the deadline the pledges are collected and the project goes ahead as planned. If not, no money is ever taken from the people who pledged for the project and the project disappears.
This has a lot of potential.
It’s easily shared. Email the link, put it on your website or your blog, tweet it, include it on your Facebook fan page, or put it on MySpace.
It’s low-risk. If the project gathers the necessary amount of pledges before the deadline, the project gets funded. If not, no money is ever taken and the project disappears. No risk for the people pledging, and no risk of the artist ending up with partial funding for a project that requires the full amount.
It’s low-fee. Kickstarter takes a 5% fee out for each successful project, but otherwise the service is free.
It’s social. Each project lists the supporters, as well as provides space for the artist to update (blog-like updates) and comment on the project. Everyone involved has an identity.
Have you used Kickstarter? I’m interested in your experiences and opinions, so leave a comment!
I recently had the pleasure of attending and speaking at the 
