Don't Take Economics Lessons From Gene Simmons
from the kissinomics dept
Gene Simmons made a first career out of being an outrageous rocker behind the band KISS. He's made something of a second career out of making totally ridiculous and outlandish statements and watching the reaction as people go nuts. His latest is no different as he (perhaps on purpose) shows no understanding of basic economics in trashing the concept of using free music as a promotional effort (found via Digg). He starts out by claiming that he told the recording industry bosses that they should have sued more students earlier:"I called for what it was when college kids first started download music for free -- that they were crooks. I told every record label I spoke with that they just lit the fuse to their own bomb that was going to explode from under them and put them on the street.... The record industry doesn't have a f*cking clue how to make money. It's only their fault for letting foxes get into the henhouse and then wondering why there's no eggs or chickens. Every little college kid, every freshly-scrubbed little kid's face should have been sued off the face of the earth. They should have taken their houses and cars and nipped it right there in the beginning. Those kids are putting 100,000 to a million people out of work."Of course, this isn't even remotely true, and you'd think that Simmons would know it. Every aspect of the music business other than putting out CDs has been doing better. There are more bands making more music. There are more concerts and bands are making more money than ever before from touring. Tools for making recordings are selling better than ever before. Musical instrument sales are going up as well. More people are making money from music today than ever before. So it's hard to take Simmons' comments on the matter at face value. In fact some would argue that the whole reason that the recording industry is suffering is because they tried to follow Simmons' idea of suing these kids. The interviewer tries to point out the Radiohead and Trent Reznor examples as to why he might be wrong, and he brushes it off:
"That doesn't count. You can't pick on one person as an exception. And that's not a business model that works. I open a store and say "Come on in and pay whatever you want." Are you on f*cking crack? Do you really believe that's a business model that works?"That's a nice sleight of hand trick there. First he tries to set the parameters by saying that you can't pick an exception... even though he was the one insisting you can't make money with free music -- so an exception is pretty important. Then he says it's not a business model that works, but actually it appears to be working quite well. Finally, he makes an incorrect comparison to a shop selling tangible goods. He never actually explains why using free as a part of your business model doesn't work, he just says it doesn't -- even when presented with examples where it does work. Then, he really goes off the economic rails. When the interviewer suggests that music can be promotional for tours and merchandise, Simmons responds:
"Well therein lies the most stupid mistake anybody can make. The most important part is the music. Without that, why would you care? Even the idea that you're considering giving the music away for free makes it easier to give it away for free. The only reason why gold is expensive is because we all agree that it is. There's no real use for it, except we all agree and abide by the idea that gold costs a certain amount per ounce. As soon as you give people the choice to deviate from it, you have chaos and anarchy. And that's what going on.Except that... no. First of all, it doesn't matter that the music is the most important part. Breathable air is the most important part of living, but we're not paying for it, because it's abundant. He says "without [music] why would you care?" but no one is saying the music goes anywhere. They're just saying that the music is used to make lots of other stuff more valuable. As for his ridiculous assertions about the price of gold, apparently Simmons doesn't believe in supply and demand, and thinks that economics is all based on shared delusions. That would explain the rest of his comments.
Anyway, the kicker in all of this is that despite Simmons comments, it appears that even he doesn't believe what he's saying. Right in the middle of his tirade about how you can never get paid for putting out music if people can get it for free, he notes that he's coming out with two new boxsets of music. Apparently, despite his complaints, he does think that people will pay him -- and he's probably right about that, despite being wrong about everything else.
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Filed Under: gene simmons, music industry, recording industry
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There goes all my kiss albums, right in the garbage.
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Re:
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He should how much of a greedy imbecile he is on his reality show, so this is not much of a surprise.
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That's HIGHLY debatable. Can you really say, with any seriousness at all, that Kurt Cobain or Eddie Vedder are a better *musicians* than Yngwie Malmsteen, Kirk Hammet, or Eddie Van Halen? Better *songwriters* maybe, but no way in hell were the grunge guys better musicians. Not even close.
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Off subject, but on title
POOF, right there on techdirt. Thank you techdirt, that title made my day! I needed that!
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Have you nothing better to write about?
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Re:
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So...
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Zero = Zero
To think I believed he was a great business man.
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Gene who?
I think Alice Cooper is making a statement on economics tomorrow.
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He does have ONE point
Of course, ask someone in the computer industry, medical industry, or scientific comunity and they'll tell you a couple thousand reasons why gold has worth these days.
But the value of baseless currency is completely unrelated to worth. A US dollar is worth as much as the paper it is printed on. It's value is about that of one 16oz soda.
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Another long-dead rockstar...
I mean, lets look at it from their point of view. You’re an ageing rockstar with a crapload of cash. Your running a successful business and have your own reality TV show to both promote it and yourself. What possible reason would you have to actually make music? It’s really only about making money.
That’s what we need to change. The culture of celebrity that grunge tried to take on and failed. For all Mikes hard work on innovative business models, that sort of progression means the end of men like Gene Simmons. You’d never make money off it like you did in the 80s and 90s.
I may be a music romantic, but I believe that part of what has to go with the old models is the culture of celebrity that supports it/is supported by it. Far too many youngsters are getting into the business for one reason alone; to become a celebrity. You see it on the TV every day with people like Simon Cowell grinning behind his fake smile at all the money he’s going to make off them before he drops them for the next one.
But that sort of change goes far deeper then a simple business model, and in the mean time we’re going to see a lot more comments from previously respected men like Gene Simmons...the old guard who don’t want things to change.
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Shared Delusions
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Okay, now's the time for metaphor
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Not to mention, I've never heard any KISS growing up. I'm now about 30 years old. The only way I ever got my hands on any KISS was through the internet. I could have bought some, but why would I spend my hard earned money on an album of a band that were older than my parents, unless I was sure I liked their music?
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This from a man
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And his examples with the free store and the value of gold are pretty damned good too. I'm actually kind of surprised by how good his argument is. I'm not saying I agree (I don't). But his argument is pretty good. The guy is not an idiot and he's certainly not clueless about economics.
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No way. That's an entirely different situation -- one where the new technology providers were able to buy up the obsolete one and kill them off. This is quite different, as it's the new, better, more efficient, more useful technology that they're trying to suppress. AND it's not from a few companies where it can be bought, but from a legion of programmers and users who clearly want it to continue. There was no way they could have effectively suppressed it.
And his examples with the free store and the value of gold are pretty damned good too.
How so? You just say they're good, but don't provide a reason why. The free store is an awful example, because he's talking about tangible goods, which are quite different than digital goods. Hell, the analogy is totally off because Radiohead's business model was NOT just "pay what you want" (which is what Simmons implies) but "pay what you want for *THIS* download, and then buy our boxset that's coming out later, and then come see us on tour when we play." In other words, the pay what you want was a piece of the business model -- not the whole thing.
As for the gold thing, I'm at a loss to see how you could think that's a reasonable argument. Price is not a mass delusion because people all believe in it, it's set by the intersection of supply and demand. Can you explain why his gold example is in any way accurate?
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The difference between the two is caused by demand, which is irrational and caused, often, by mass delusions.
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If you could duplicate what products you had at pretty much Zero cost (like digital music) - actually... it might.
Or you could offer it dirt cheap at least - which is what the consumer really wants.
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I should clarify that if CD's/MP3 were priced at $0, it wouldn't affect his income. However, if people stopped listening to KISS, it would have drastic consequences on his income.
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That's only true if you think railroads are obsolete or worse than cars. But then you'd have to ask yourself, why would the automobile companies bother buying up railroad tracks if they were so obviously worse than cars?
And this is where Gene Simmon's theory falls apart. As you say, his whole argument is based on the idea that music companies could effectively suppress new file sharing technologies. He doesn't understand that this is impossible.
BUT if you assumed that his assumption was true then his argument makes complete economic sense.
The only reason it's different is because you don't have as much control over the digital goods. Again, assuming you did have full control over the digital goods, his example makes perfect sense. In that case, you *don't* want to give the consumers a choice of buying the music or taking it for free. So once again, Simmons fails to understand the technology. He understands economics perfectly fine.Semantics. As Simmons said, it's the *music* is what's important, not the box that it comes in or even the concert. Nobody is going to buy a boxset from a bad band or go to their concert. The music drives everything.
Simmons' argument was more fundamental than that. When discussing gold's value, he wasn't talking about supply and demand. Simmons was saying society's shared belief that gold is valuable is what makes it valuable. If we as a society stopped caring about gold, there wouldn't even be a demand curve.
But lets say that 50% of society stopped believing gold was valuable. Guess what? Now gold is MUCH easier to obtain. Simmons was saying that once people get used to the idea of getting music for free, then that's what they'll expect. And this is absolutely true. Now this is great for us consumers, but worse for the guys who benefit in the current system. What Simmons fails to understand is the disruptive nature of digital media and file sharing. He doesn't understand that record companies can't stop it with a couple of lawsuits.
BTW, this isn't a moral argument about "rightness" or "wrongness" of the current system. (Not saying you believe this Mike, but this is more for anyone who may read more into this than I intend.) It is just objectively true that the new ways things are done is worse for people like Gene Simmons who benefited tremendously from the old way of doing things.
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"The only reason it's different is because you don't have as much control over the digital goods."
Nope, that's completely wrong. The reason why a physical store is totally different is overheads, not control. With a physical store, you have to pay rent, staff, lighting, water. The labels have to pay for manufacturing, design and transport. These give the product a fixed cost that cannot be easily recovered with future profits from concerts, etc., and many of the costs are borne by a 3rd party (the retailer), so you have to sell the product at a particular price to make a profit. So, taking a copy from the store for free loses money.
With digital media, most of those costs disappear. Bandwidth costs are negligible nowadays for a file the size of a song or average-sized album. The labels don't need to depend on 3rd parties, so they can afford to give away or drastically reduce costs of the music in order to advertise other products (e.g. the aforementioned boxsets, concerts, etc.) which have significantly higher profit margins. It's much easier to recoup costs when your distribution consists of a single copy of a digital file that can be duplicated an infinite number of times.
That's the difference. Worrying about "control" leads to dumbass strategies like lawsuits and DRM, which have stopped me from buying any RIAA material for over 3 years now. Yes, I still buy a lot of music - over $60 from e.g. eMusic subscription, indy labels direct (money that the RIAA has lost that I used to spend btw), and I don't pirate anything.
"Semantics. As Simmons said, it's the *music* is what's important, not the box that it comes in or even the concert. Nobody is going to buy a boxset from a bad band or go to their concert. The music drives everything."
Actually, you just echoed Mike's point. People want to see great bands, but how do you find out who the great bands are before you see them? In the old business model, bands were pushed at you by the radio, TV and other avenues controlled by the RIAA. If they didn't like the bands they were pushing, people would give up on buying music, going to concerts, etc. and grumble about how music is worse nowadays.
With the new model, you give away (or sell at a reduced price) the music, which acts as promotional material for the live shows, boxsets, DVDs, T-shirts, etc. People are no longer limited to the narrow avenues offered by the RIAA, so they can more easily find what they like, not merely what the labels want to sell.
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Further clarification in my second reply...
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Re: Further clarification in my second reply...
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Trent is a fan of Kiss
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It's ironic...
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Take one second plz...
"He's made something of a second career out of making totally ridiculous and outlandish statements and watching the reaction as people go nuts."
Ahh, so... if he learned anything from watching those reactions, and the reactions of the public when the Moguls took to the lawsuits, perhaps he is actually seeing something and gunning for a gut reaction to his outlandish comments.
He's known for years the money isn't in the actual music, but rather in the product recognition, and I'm willing to bet that this "tirade" is nothing more than a shrewd attempt to trick the "freshly scrubbed faces" to download his new album to spite him... which goes to prove that negative press is also press.
Or, he could be an idiot... which I find much harder to believe.
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look at yourself
Um, I guess everyone has gotten past the point that (in most cases) these pieces of "digital goods" and "digital media" are ***art***.
Sharing is very convenient for those who can't find it in themselves to give up a few bucks in exchange for the music. I'm both a musician and a torrent user. I use it to sample first, then buy because album quality can be somewhat lacking. How else could I have discovered Wolfmother? And how about all those CDs I bought which have been lost over the years? I'm not paying twice - I'll find a torrent instead.
But this whole EXPECTATION by people that music should be free ***simply*** because the distribution channel exists or because it is a "gateway" to other merch is completely wrong. I know it is here to stay, but that doesn't make it ok from a moral perspective.
And for those who say it's "just like the tape trading days of old", keep telling yourself you have hundreds of thousands of "friends" that you swap with online. Maybe your ego really needs the boost.
If you don't think the art is worth the money, then don't buy it. But don't expect it to be free. I'd like to see these "journalists" or "writers" or "students" start not getting paid for their "articles" or "writings" or "sucky part time job". Pull your head out people!
Ok, you are right. It never will happen. Music isn't worth paying for. So I guess over time you will get stuck with a bunch of clever business minded people playing instruments with awesome marketing ideas rather than awesome musicians who can spend all their time writing amazing music. Reap what you sow...just don't complain in 5 or 10 years about how you can't find any great new bands.
How many of you understand how songwriters get paid? I think all these RIAA lawsuits are ridiculous, but come on people. Really, is this what your mom taught you about right and wrong?
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Shows
Many people went to their shows for the act, not the music.
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Gene Simmons
The days of selling CD's is dead. And in reallity, a musician should be paid for their work. Plus also you are placing less demand on people working the inside of these record companies.
Buy them not being able to sell the CD's, they cut jobs. You forget that bands have to pay back to the ompanies for studio time, and production and advertisement.
If they cannot recoup all their costs, what happens, just like everything else, cutbacks, people out of work. So where do they make up their money?
Who do you think foots the bill for tours these days? The record companies get first cuts from those profits too. They get the merchandising first cut also.
So bands are not making the money as to what they should be. Plus stealing music is illegal. So what is wrong with his point aside from that it is exagerated, and Gene is known for the "BIG" of everything. He is bringing attention to the subject again.
And yeah, these kids with the innocent eyes and freckles should be busted.
It is like this kid coming into your garage and stealing your lawn mower, tools, bike.. whatever. You busted your ass to pay for that. Bands work hard to put out a product.
I do not think it is too much to ask for people to pay for their music. iTunes is a good way to get just the songs you like. and $.99 a song is not too much to ask. I used to pay $2.50 for a 45.
Too bad Mr Simmons is way smarter than you are. He knows how his money was made. He does not see that for the future of the people to come after he is long and gone.
I mean why is it that so many of the record companies of past have been gobbled up by Universal and Virgin?
You just don't get it. He made a valid point, just a little exagerated
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Re: Gene Simmons
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Re: Gene Simmons
And while CDs are on the decline, they aren't dead yet. While it may seem that everyone and their mothers have iPods, not everyone does. There's still a little life left in that model, so hold off on throwing the dirt in.
And while you think people complain about paying $.99 for a song (and you assert that you paid $2.50 for a 45; good for you!), think about this: Whole songs are a bargain when you consider that the average cell phone user is paying $2.50 [that's right; the amount you paid for an entire 45] for a ringtone that is less that 20 seconds long. I don't know many people who complain about the pricing of songs...other than the music industry itself who feels that the prices are too low.
You're right; band's aren't making what they should. Blame the people who decided to only give them $0.03 for each album sold.
Gene isn't bringing attention to something people have forgotten about; it's discussed all the damn time! All he's doing is showing what kind of an idiot he can be about the industry. His points aren't valid; they're the vacuous babblings of a man desperate for attention who is willing to ignore what is actually going on in the music landscape and, instead, is content to keep his head up his ass because he loves the smell of his own shit.
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They don't cost near what they charge anymore... so the "loss" isn't as great as they make out. Distribution costs drop daily, even for physical goods with improved and innovative means of shipping.
And as far as who foots the bill of the tour, the tours are what makes the money today. The music IS a promotional tool to get people to the show. the concept of the "Recording Star" is fading as fast as it was created... and soon we will be back to paying musicians for their performance, just like God intended!!
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Number one - what about people who would not buy the music to begin with, but download it because it is free. How can you lose sales that were never going to take place. Why would you turn down someone who may change their mind and eventually buy some merch or go to a concert or even *gasp* buy new cd's if your music was worth it.
And number two - has anyone noticed that the only people who say sales are decreasing is RIAA, any independant study I have come accross has shown INCREASING MUSIC SALES.
Just my two cents. I could be way off, but that is the way the current info has swayed my view. *Before I thought all those bright faced teens were EVIL THEIVES, just like in those anti-piracy ads(end sarcasm)*
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I don't know if this has been said already...
When I was a young child (circa the early 1980s), I thought that Kiss was more of a death-metal band because of their costumes, the spitting of blood, and everything else I could see in their merchandise. When I found out what kind of music they did, I was greatly disappointed with what I believed to be a jarring disconnect between their image and their songs. Don't get me wrong: I like the songs, but I thought that their sound would be very different from what it was.
The point of this story is that Gene is wrong about the importance of the music on the industry's profits; I was into buying their stuff based on image, which carried them a lot further with me before I heard them.
This is also the same idiot who went on NPR prepared for a fight, and spent the entire time treating the interviewer (and callers) like they were beneath him, and told people that the only reason anyone wants to be a famous musician is not for the artistic merits of being a musician, but to get laid.
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Who says a free store can't make money?
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Why are All Internet Discussions Based on Nonsensi
Every argument that suggests giving away music as a loss leader is a good idea ~is~ insanity... Claiming that Record Companies set-up Artists with bad contracts/royalty structures does not justify revoking the MUSIC CREATOR's right to OWN and SELL his Intellectual Property!!
The further idiocy of Concert Tickets and Merchandise as 'physical goods-service' sold to counterbalance the DEBT of having created the music itself is the very problem.. not any future economic model!
What if a band created music but cannot Tour?
What if they are not structured to sell merchandise?
There should be an AUTOMATIC Right to Ownership of any expressed IDEA (remember Copyright?)... nothing should disrupt that notion anywhere on Planet Earth!
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KISS' success contradicts Simmons' argument
Even in the 70s, the band rapidly capitalized on the popularity of their breakthrough "Kiss: Alive" album to license dolls, comics, lunchboxes, cartoons, and a TV movie, and it's only continued from there. Simmons himself notes that KISS' (and his own) skill at milking these ancillary markets is a huge reason for their success. Just so. And more power to him. But would I have been any LESS interested in attending concerts or buying T-shirts if the music was FREE? No, I probably would have been MORE likely to buy (hey, I would have more money from not spending on the LP/cassette/CD).
Despite what Simmons (or Paul Stanley, above) say, their actions speak louder. What's Gene's primary revenue stream these days? Album sales? I doubt it. More likely, TV shows, and the string of other businesses he's invested in.
I'm a musician, actor, and writer. I sympathize with the artist's plight. The business is shifting under our feet. But instead of denying it, we must adapt.
And don't get me started on Paul Stanley's "automatic copyright of ANY idea" statement. We'd still be paying Archimedes royalties...
DISCLAIMER:
I'm a huge KISS fan from way back. Since the Terri Gross interview on NPR's "Fresh Air", I've become less of a Gene Simmons fan. I thought he had just faked me out when I saw the very entertaining "Family Jewels" pseudo-reality show, but then I read his Billboard interview. *Sigh.*
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For all those who are arguing about whether bands make money off of album sales, I would direct you to the following link:
http://www.mercenary.com/probwitmusby.html
The article is from Steve Albini, a music industry insider. (He was in a band in the 80s and has produced many of the more popular albums from the last decade and more.) The labels sure as hell make money off of album sales, but not necessarily the band. In fact, most emphatically NOT the band. Everyone else got a nice chunk of change, though. For every Rolling Stones, Beattles, or U2 out there, there are 10, no, 100 other bands who never made it to their level. In the end, many musicians end up owing moeny to the labels even after the label cuts them from their roster. Even high-profile millions-selling bands have criticized the labels for their predatory activities, including the type of accounting they use. Accounting that in any other industry but the entertainment/content industry would end up with Congressional hearings into it. (Think Enron and Ken Lay.) When was the last time that the Rolling Stones had an album out? Nothing in the last couple of decades that sold anything worthy of discussion. but they still go out on tour. And they gross hundreds of millions of dollars on each outing. Even if they only get to kep 25% of that, they still can sit back and watch the interest on their cuts build up. Let's not forget that the music labels charged more for CDs when they first came out than they had been charging for cassettes or LPs. And they cost considerably less to make. Why? Because it improved their bottom line. Digital delivery of content interferes with their bottom line in a way they don't like. That's why they push for things like ACTA and extended copyright terms. As for Gene Simmons, well, those that can do. And those that can't pontificate. Woadan[ link to this | view in chronology ]
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wow, this is terrible
regardless of what everyone says here, you all are going to go on doing (and thinking) what you always do. you are all so closed-minded that you believe you are all absolutely right and you wont be persuaded otherwise. its amazing that people who think they are "smart" are such IDIOTS!!! and this goes for both sides; the idiots slamming simmons, and the idiot trying to protect him. he made music for a LIVING, if you work at a garage and the garage goes fully automated, you get pissed. not the exact same situation i know, but you all should get the idea. i have been to quite a few sites like this, and i always find this stuff. where is the 'electronic duct tape' so i can tape all your mouths shut?? why not have an intelligent conversation for once, and not get all uptight and defensive because someone doesnt agree with you?
alright, well theres my rant for the day. hope some of you learned something (like how to keep your yap shut, for instance, or have obtained the realization that you cant argue with brick walls)
thanks again for being idiots so i could take some extra stress out on you, its been a pleasure. you can all go back to your idiotic, self-serving lives now, where you argue about crap like this and arent making sure youre safe from, oh, the impending economic collapse or something of that nature. have a nice day all!
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Gene is right, it will just take a little while for all you to see it.
The recording industry is in bad shape, in that most labels are much smaller, have had to merge, or no longer exist. The movie companies will become the same, thanks to criminal things like bit torrent. Today's youth culture searches for ways to get everything for free, and doesn't see things like bit torrent as stealing, when it is. Eventually no one will want to pay for anything entertainment, and then there will be none.
I do NOT make, proportionately, what I did twenty years ago. As an example, popular cover bands in the late 1970's and early 1980's in my area used to make $500-$1000 per night. Believe it or not, the best cover bands around here now only make between $450 and $600 per night. Do the math, with inflation they are making less.
Gene is right, the rest of you don't understand the industry. And oh, by the way, Trent Reznor doesn't make nearly what Kiss did proportionately at the same stage of their careers.
I'd love some MBA to tell me otherwise...
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