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MUSIC | Noah Brier

Fixing Music

It's an industry in a state of disarray and things only seem to be getting worse.

July 13, 2007 | RSS | EMAIL | PRINT | 7 COMMENTS

[First a message from our sponsor: "Big Winners in J&J Media Review: OMD and Naked" and "Naked Wins J&J’s U.S. Comm. Planning Chores". Have a nice day.]

Let's talk about music. Sure, I know "writing about music is like dancing about architecture", but it's fun nonetheless. Every article I read telling me that they're struggling only makes me feel less bad for them. Industries change and businesses need to change with them. The choices are hold on to an outdated business model and die or evolve and survive (note I didn't include sue customers as an option).

Anyway, the latest round of articles on the music industry's woes has much to do with Prince's latest move. Rather than releasing his album in stores, he made a deal with the Mail on Sunday in England to give away nearly 3 million copies of his new album with the paper. According to the Guardian, "Prince is estimated to be being paid between £250,000 and £300,000 by the newspaper, a far greater sum than he would receive as an advance from a record company."

Of course, this makes the record stores and industry none-too-happy as evidenced by a quote from Paul Quirk, co-chairman of Britain's Entertainment Retailers Association: "The Artist Formerly Known as Prince should know that with behavior like this he will soon be the Artist Formerly Available in Record Stores." (Zing!) Funny enough, it's Fake Steve Jobs who put it about as succinctly as I've seen:

Here's the back story. The music companies are in a dying business, and they know it. Sure, they act all cool because they hang around with rock stars. But beneath all the glamour these guys are actually operating two very low-tech businesses. One is a form of loan-sharking: they put up money to make records, then force recording artists to pay the money back with exorbitant interest. The other business is distribution. They’ve got big warehouses and they control the shipment of little plastic boxes that happen to have music in them.

Neither of those businesses are particularly relevant in today's digital age. But that doesn't mean they're not still trying to make it happen. A recent Economist article mentions "360 degree contract": "Instead of settling for a cut of CD sales, they increasingly offer artists broader contracts that encompass live music, merchandise and endorsement deals. Such deals, also known as multiple-rights or all-rights contracts, are particularly important in regions with rampant CD piracy, such as Africa, Asia and Latin America." Not surprisingly, many artists are reluctant to sign deals like this.

I wish I had some incredible insight into how to fix this problem, but at the moment I don't. What I do know, however, is that there's got to be an answer. I also think this is an incredibly good case study in resistance to change. How long before the music industry realizes the world has passed them by and they take off the blindfold? People are out there doing clever things. Apparently RCRD LBL is going to seek out sponsorship/marketing deals as part of it's association with Downtown Records. Or take a look at what Canadian folk-pop singer Jane Siberry has done: "she has a “pay what you can� policy with her downloadable songs, so fans can download them free — but her site also shows the average price her customers have paid for each track. This subtly creates a community standard, a generalized awareness of how much people think each track is really worth. The result? The average price is as much as $1.30 a track, more than her fans would pay at iTunes."

There was a pretty good idea in this Slate article from a few years ago: "What we need is a system that will continue to pack the corporate coffers yet be fair to music lovers. The solution: a real-time commodities market that combines aspects of Apple's iTunes, Nasdaq, the Chicago Mercantile Exchange, Priceline, and eBay." All these require evolution of the current model, however, and the industry doesn't seem so down on that.

So as not to throw out a lot of problems without any solutions, I turn the table to all of you (and myself . . . I will give it more thought): What would you do to fix music?


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COMMENTS

1Pam

I think what's happening can only be a good thing, ultimately, for the artists. The company I work for - Getty Images - recently bought Pump Audio, a music licensing company which connects artists directly to businesses who want to license their songs. As of now, it's a 50/50 split, which is a WAY better deal than artists would get through a label. Furthermore, it removes most of the middlemen (lawyers, publishers, etc), and allows for anyone - with a budget of course - to directly license music for use in their films, commercials, flash presentations etc. And thanks to the miraculous web, artists get loads more exposure and marketing than they would otherwise. ALSO, this month's issue of Fast Company has some other interesting music industry case studies...

July 13, 2007

2mikej

Nice one Noah. I have three drafts about the music industry on my blog. But I just couldnt finish them. I have worked on pitches for three music companies in the last year. They are still doing what they have always done almost refuse to realise whats going on.
I saw an interesting article on what John Legend did with Musictoday

Which is an interesting new model. Im also talking with some friends who are making a lot of money out of tracks on mobiles and we are discussing interactive music. Which could be interesting. As video game sales have now taken over music sales

keep up the good posts

congrats on J&J

July 13, 2007

3Jason

Some thoughts/predictions:

This problem is mostly relevant to major labels. Indy labels are less affected I think. The mid to large size indys are going continue to do well (ie. Matador, Sub-pop, Stones Throw) because they have loyal fanbases, are more agile as businesses, and cater to a niché. Artists are gonna continue to make money off of touring and merch, as they always have. The only difference now is that the label doesn't make the money off of units that they used to. Digital sales will increase, less physical units will be sold, but there will be more of a focus on the medium as a collectible object (ie. nice artwork, gatefolds, limited editions). More of a boutique approach. Licensing is becoming more important, as Pam mentioned. In a way, it seems like the playing field has been leveled in favor of the little guy. There will be more indy labels with major distribution ala Cash Money, Downtown, etc.

July 13, 2007

4chartreuse

Nice peice.

I've worked for the majors and FakeSteveJobs has it exactly right.

A few things.

The typical answer is for the majors to put out less product of a higher quality.

That's wrong.

The real answer is more product.
Decentralized digital distribution.
And more targeted marketing.

They need to come to grips with the idea that The Superstar era is done. It ended with Napster.

More music, available everwhere, with targeted marketing.

Record labels should be valued higher than Google.The fact they are not is proof of their incompetence when it comes to selling their product.

Where's the huge search engine with every track WEA has ever produced with the ability to stream and then pay and download the track?

Huge archives. A product enjoyed by everyone on the planet. Low marketing costs due to word of mouth. Cheap distribution costs.

Yet they are losing millions of dollars a year.

It's pathetic.

July 14, 2007

5Damiano Vukotic

Fixing Music - Check out this piece on my blog last week Noah. Interesting ideas and links for you to go to.

Competing with Free - Content Predictions for Music Industry

July 14, 2007

6jeff

Convince REO Speedwagon to release a new album.

July 15, 2007

7mark

Agree with Chartreuse that ture curating (which is what A&R should really be doing) is one way to go.

But I have also seen social funding models pop up and these look like an interesting way forward. Much like Zopa, you spread the risk of investing in the artist by getting many people to fund it. There is one site in Europe that already does this (I have blogged it but can't find the name) - if you like an artist you committ $20 to their cause until they get enough to make a record. Why can't a record company do the same thing?

July 18, 2007