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November, 2007

Looking at Music

About an hour ago I received this IM: "Can you write a bitchy response to this? i can't understand how this is a failure when the band is taking $2.26/unit when signed bands typically earn about $0.02-$0.10 per record"

The article in question, Most Consumers Grabbed 'In Rainbows' for Free, not surprisingly refers to Radiohead's In Rainbows which let people download the album for any price they chose. Numbers have started to emerge from the experiment and pundits everywhere are debating about its relative success.

My take: This very debate lies at the heart of the problem. Success, like just about everything else in the universe, is not a binary. Things are not either successes or failures, rather it's a relative measure based on a number of factors. (It's a very postmodern take, I know.)

Now when it comes to most articles, the focus is that 6 out of 10 people paid nothing to get the album, leaving the whole experiment with an average price-per-album of $2.26. The other half of the equation, however, is that of the 38% who chose to pay something, they "forked over an average of $6, with U.S. consumers paying almost twice as much ($8.05) as those from other countries ($4.64)." Now sure this is less than the cost of a physical album or download on iTunes, but maybe, just maybe, what people are telling us is that these things cost too much. Plus, has anyone asked what percentage of people actually pay for albums? Is it unreasonable to think that if Britney Spears sells 2 million records, another 3 million people steal it? (Sounds about right to me.)

Part of the reason I've been so focused on music lately is because I think it's a nice case study for what's going on in media generally. Here are a couple thoughts on how:

  • Music is stuck in a contradiction: While it's more popular than ever before (how many people do you see with white headphones), it's also less profitable in traditional terms (that is record labels are struggling).
  • Digital production has fundamentally altered the economics of creating music (garage band is a piece of software, not a bunch of guys with nowhere else to practice).
  • It's increasingly unbundled (the shift to a world of singles rather than albums is all but complete -- hink about all the people who listen to playlists or shuffle on their iPod).
  • Musicians are discovering it's not the size of the audience, it's what you do with them. (This is a lesson I've been explaining using NoahBrier.com as an example: I don't make any money directly off this site, however, the platform has allowed me to start things like likemind, which certainly have monetary value.
  • Finally, and maybe most importantly, the best distribution platform anyone ever built for it is free. Napster was better than any record store that ever existed. I didn't need to leave my house and I could get anything I wanted in seconds. Oink, which was a giant BitTorrent site that just got shut down, had everything on the planet in every format you could ever imagine. Even musicians liked it: As Trent Reznor of Nine Inch Nails explained, "I'll admit I had an account there and frequented it quite often. At the end of the day, what made OiNK a great place was that it was like the world's greatest record store. Pretty much anything you could ever imagine, it was there, and it was there in the format you wanted. If OiNK cost anything, I would certainly have paid, but there isn't the equivalent of that in the retail space right now. iTunes kind of feels like Sam Goody to me. I don't feel cool when I go there. I'm tired of seeing John Mayer's face pop up. I feel like I'm being hustled when I visit there, and I don't think their product is that great." Or, as DJ Rupture put it: "In many cases, I believe that downloading an album from Oink would be both faster (more on this in a bit) and give you more information about the CD than sites like iTunes."

As usual, I haven't really answered anything here, just added a whole lot more questions. But, as Terry Heaton so nicely put it, "Postmodernism offers no answers, but asks questions that might lead to answers, if we're willing to ask them."

Update (11/11/07): Keith makes a great point: "What I failed to realize when the news hit was, regardless of how much coin the band makes from the actual sales, they’ve just built a most impressive consumer database. In order to download the album, you must give your address, e-mail address (obvs), and mobile phone number!" Think about the value of a database of over a million of your fans. Amazing.

November 7, 2007
Noah Brier | Thanks for reading. | Don't fake the funk on a nasty dunk.