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How Not To 'Save' The Music Industry: Ask The Folks Who Benefited From Old Inefficiencies

from the oh-come-on dept

Fri, Mar 13th 2009 5:08am — Mike Masnick

There's a group in the UK called "MusicTank," which is supposed to represent something of a "think tank" around the music industry. It was the head of MusicTank, back at Midem, who "joked" about how everyone there could solve the industry's problems, because all the stakeholders were present, "except the consumers, since they can't afford to be here." That should give you an idea of one of the main reasons why the industry is in so much trouble. It never really considers the folks who actually listen to the music to be a serious constituent.

That's become obvious again, as MusicTank is out pushing its new whitepaper, called "Let's Sell Recorded Music!", which is based on a series of talks that the group held. But reading through the actual paper, three things quickly become clear:

The group started with the wrong premise: how to sell recorded music. What they should have been looking at was how to make money from recorded music. The two things are quite different, and starting with the wrong premise entirely will lead you down the wrong road.
While this paper does consider the "consumer viewpoint" and does make some decent points about consumers and music, it never looks at how consumers interact with music beyond buying or downloading. It doesn't look at the many ways that a fan might support a band.
Most importantly, the paper spends a lot of time getting the perspective of the various collections societies. This gets to the root of the problem. These collections societies are middlemen who profit off of the inefficiencies of the old system. Asking them how to fix the system is always going to get the same answer: just create yet another licensing right and let us handle the collecting of it.

It's that last issue that is clearly the big problem with the music industry moving forward. You're never going to get an industry to move forward when you think that (a) the consumer (i.e., the demand side) isn't a major constituent and (b) you're asking those who profit from the inefficient system to define how the new more efficient system will work. The whole process of collective licensing is a joke that needs to be done away with. The collections societies not constituents -- they're the parasites feeding off an old system that doesn't need them anymore.

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Filed Under: business models, music, rights groups, royalties, selling music
Companies: music tank

31 Comments

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Sam Shemtob, 13 Mar 2009 @ 5:41am

consumer view point
Mike Just wanted to let you know we went to great lengths to involve UK consumer representatives in the think tank series which led to the report. Here's what happened: Jill Johnstone, Director International Policy Advocacy, *Consumer Focus* - was unavailable. She recommended *Univ. Hertfordshire's* BMR report author, David Bahanovich. He, too was unavailable. Anna Bradley, Chairman, Consumer Panel, *Ofcom - *unavailable* -* put us in touch with Dominic Ridley. he felt Anna was the only one to speak. *ORG* - we approached them - Becky Hogge - who was unavailable. we also suggested she submit a written statement. This was declined. They came up with the suggestion of Andrew Dubber - not an ORG person, and politely declined by us (on grounds we were needing a consumer person, not industry) *Point to note:* With both Ofcom & Consumer Focus, we repeatedly asked if they could field alternative spkrs to put their organisation's viewpoint, in view of our 1st choices (Jill & Anna) being unavailable. None were forthcoming. Worth also pointing out that the audience themselves contributed strongly to the debates and to the report, providing a direct from the consumer viewpoint. Finally, we also made sure to go over the consumer responses to the UK's Consultation into file sharing. Regarding Consumer Focus's response that the industries failed to meet consumers needs, well that's exactly what the report is about. Can I give a link to anyone who wishes to download it? Here - http://www.musictank.co.uk/reports/filesharing/for-free Thanks Sam
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Matt, 13 Mar 2009 @ 6:12am

Re: consumer view point
consumer representatives are still not consumers. Much in the same sense how politicians clearly do not represent the people that they supposedly are.

This is like expecting consumer reports to be the most accurate source of information, it is quite far from it.
How stupid can you be? Oh wait, you're exactly the one he mentions, musictank. No surprise. Good job at failing almost immediately.
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some old guy, 13 Mar 2009 @ 6:19am

There's only two parties that matter
The only two parties that matter, are the artists and their customers.

The ISPs are dumb pipe providers, they do not need to be involved. Any attempts to involve them, or allow them to involve themselves is a stupid legacy reaction.

The Government is irrelevant to the discussion. They do not need to be involved either. Why? Because consumers DO NOT ACCEPT the copyright laws as they are now. Because consumers do not accept the law, civil disobedience ensues, and the law is not followed. Might as well just get rid of it, its only wasting money to try enforcing it. IT WILL NEVER BE ACCEPTED BECAUSE ITS NOT NEEDED AND UNFAIR.

UK Music (the org) is a waste of music industry funds. Just how many collections of legacy mindsets do you have to form before you recognize that the legacy mindset is no longer valid? The central scarcity that was carefully managed is no longer scarce. No matter how many committees you form, DISTRIBUTION OF BITS WILL NEVER BECOME SCARCE AGAIN.

BPI is the same thing as UK Music, a waste of music industry resources. Yet another committee of scarcity managers trying to make distribution scarce again so they have something to manage.

PRS for music is an organization responsible for "taxing" people for listening to the radio. How is this party relevant to discussions for new business models in a "distribution is free" world? Because they have experience making people pay for free things?

When you invite a hundred middle men to the table in a discussion on how to eliminate the middle men, all you are going to get is ideas on how to increase the middle mans share of the market.

What good is that? Stop wasting your money!
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Ima Fish, 13 Mar 2009 @ 6:30am

How to save the music industry? The best idea is to simply scrap the current one and start fresh. However, if you must save the current music industry, here's how.
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Jim, 13 Mar 2009 @ 6:32am

Re: Re: consumer view point
Calling people names does little to advance (y)our argument. Any points you make are lost as soon as you resort to insults.
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ehrichweiss, 13 Mar 2009 @ 6:40am

something told to me..
I was told that if I wanted to build a really good car that I needed to study the good ones and how they were built and the place to look was NOT a junkyard. That seems to fit here.
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Chronno S. Trigger, 13 Mar 2009 @ 6:40am

Re: Re: consumer view point
It was kinda hard to read the wall of text but I believe that's what he was saying. They could not get a consumer representative but they did get consumers themselves.

And Sam, I'm not going to sign up for your newsletter just to look at one report. That's as bad as putting your data behind a registration wall.
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Atlas, 13 Mar 2009 @ 6:42am

-
"The collections societies not constituents -- they're the parasites feeding off an old system that doesn't need them anymore."

I think you're missing the word "are". The collections societies ARE not constituents.

Other than that, well written article. I enjoy the stance that techdirt represents, and often wonder if, in economic terms, the site finds itself in a Objectivist mindset. If it weren't for the interference of the government, the free market principles would've pushed groups like the RIAA etc out of business long ago.
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Weird Harold, 13 Mar 2009 @ 6:50am

Sometimes I have to wonder, when the current "collections societies" are strung up and killed off like witches, what will replace them?

After all, almost all distribution industries (from food to building material to movies to books) benefit greatly from some centralization, call it command and control. It is almost natural in the way that a clearing house is created either regionally or nationally in almost all of those industries.

So when you toss out the current music industry structure, will not another centralized structure come into play? I can't picture 10,000 radio stations and X thousands of websites and such all wanting to deal with artists individually each day.
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Manny, 13 Mar 2009 @ 7:05am

Re:
No, but the artist themselves can be the control point of their work. And from there, you can interact directly with the artist. You can download, make comments, view videos, get tour updates, etc. The whole point is to get rid of the middle man and deal directly with the producer of the goods. And from this type of model, I think a band would prove to be more responsive to their fan base than the current model. Plus, any money made will go directly to the artist. Not some legacy collections group that controls an industry. Your missing the point with your statement of "10,000 radio stations and X thousands of websites and such all wanting to deal with artists individually each day". The point that the post is trying to make is that the fan should have the ultimate choice of how to interact with an artist. So by having "radio stations" and "web sites", you are again creating a middle man. The point is to do away with this altogether.
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whitneymcn (profile), 13 Mar 2009 @ 7:08am

A little Friday irony...
I love the fact that you can download the whitepaper "Let's Sell Recorded Music!" for free, in exchange for signing up for MusicTank's monthly newsletter.
Apparently not charging for the content that you've created in order to build a long-term audience for your other output is an idea that has merit. Or possibly not. Now I'm confused.
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SteveD, 13 Mar 2009 @ 7:35am

Re: A little Friday irony...
Heh, I just registered with them. Rather then getting emailed the PDF you get a link, with the message:

"Please note: This link is valid for 5 days, and will then expire."

"Want to share this report? Frankly, we'd rather you shared the link below in order for colleagues and friends to download the report in the same way you have, rather than share the report file itself! Please do share this:"

"Why? We're a not-for-profit organisation. Every unique visitor to the MusicTank website will indirectly help sustain the network and its activities."

The irony is perhaps found in trying to promote such a scheme on blog like TechDirt...which manages to support itself without asking for our email addresses.
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Paul Berry, 13 Mar 2009 @ 7:37am

Re: something told to me..
You'd also do well to study the bad ones so that, in aiming to build a great car, you don't end up in the dead-ends that the bad car makers found themselves in. Everyone *wants* to make a great car, few manage it. You need to study both ways.
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Rorschach, 13 Mar 2009 @ 7:59am

They'll look up...
The RIAA and MPAA will look up and say "Save us!"

And I'll say... "No!"
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Hulser, 13 Mar 2009 @ 7:59am

Re: Re: A little Friday irony...
"Want to share this report? Frankly, we'd rather you shared the link below in order for colleagues and friends to download the report in the same way you have, rather than share the report file itself! Please do share this:"

So, out of one side of their mouth they're saying they want you to share their message, but then they're putting up a barrier that all but guarantees the sharing will be crippled.

Irony is right!
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SteveD, 13 Mar 2009 @ 8:18am

Re: Re: Manny
I can't agree with you, Manny. Middlemen will ALWAYS be needed in the music industry, because they bring skills necessary to manage and establish acts that young artists generally don't have.

The problem with the current system is the middle men have gone from the 'means to an end' to the end itself (the Publishing arm of EMI is worth more in value then its current roster of artists).

What we need is a re-balancing of things, so that the bulk of revenue goes to support artists rather then supporting a system that supports artists as an after-thought. That might be best accomplished by changing the roles of middlemen from controllers of content to enablers.

Also, I object to the idea that fans should have the 'ultimate' choice of interaction with an artist. Sure they should have choices, and artists should work hard to provide what they want, but the notion that an artist should give up control to his(or her) fans is a bit daft. Who in their right minds would agree to that?
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Geoff W, 13 Mar 2009 @ 8:22am

Re: consumer view point
Consider the consumer's eyes, try out paragraphs.

Thanks.
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Geoff W, 13 Mar 2009 @ 8:28am

Re: Re: A little Friday irony...
You then clicked on the link and were able to download the pdf right. Their site doesn't have ads, while this one does.

Is it seriously that hard to click an unsubscribe link?
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SteveD, 13 Mar 2009 @ 8:51am

Re:
I think the centralisation will always be there. Mike wants an industry where there is no need for fee's to be collected, that work simply by providing promotional benefits to the artist...but if that is the future I'm afraid we're still a very long way from it.

But the system in its current guise really needs an overhaul. Sound Exchange in the US and the PRS in the UK...both could do with some serious overhauls to bring them up to 21st century standards.

But ultimately these centralised organisations seem to be tools of the majors, rather then of Governments, and politicians rarely get involved.
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Scott Atkinson, 13 Mar 2009 @ 8:55am

Re: Re: Re: Manny
From my (rapidly shrinking) middle ground, this is a smart post.

It doesn't satisfy anyone's desire to hang the music industry, nor does it further the revolution, but it is sane and moderate.

Nicely done.
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Anonymous Coward, 13 Mar 2009 @ 9:05am

Re:
Harold, the collection societies have nothing to do with distribution. That's why we call them "collection" societies. They collect money, and maybe even distribute a few pennies once in a while, but they aren't even in the same league as the world's smallest distributor. It doesn't require a "distributor" to mail checks every once in a while.

Have you ever tried to comprehend anything you read, BEFORE you comment?
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James, 13 Mar 2009 @ 9:27am

Re:
I agree with Ima, except I don't ever seeing anyone scrapping the current industry while there is still even a glimmer of a possibility that they might benefit from it financially. I expect it will just trundle on, hemorrhaging cash until it implodes under the weight of it's own ego. Meanwhile the consumer will continue to find new and innovative ways of experiencing music without the "help" of middle men.
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Anonymous Poster, 13 Mar 2009 @ 9:29am

Re: consumer view point
1.) Paragraphs. Ever heard of them?
2.) Consumer representatives are not consumers, nor do they represent consumers as a whole.
3.) You and your group are a bunch of idiots trying to keep a failing, dying, on-its-last-legs business model on life support, and the sooner you drive the stake into the heart of the old model and start looking for a model that serves everyone -- not just the license holders -- with fairness and equality, the better off everyone will be. Except the people who cling to that dead business model, of course.
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Weird Harold, 13 Mar 2009 @ 9:57am

Re: Re:
collector societies exist as part of the process to collect the money for certain groups. They don't just collect money in vapour.

Perhaps if you actually spent some time in the music business (I have) you might understand a little better.
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Weird Harold, 13 Mar 2009 @ 10:00am

Re: Re: Re: Re: Manny
Agreed - you can evolution without revolution. You know that old Who song "the parting on the left. Are now parting on the right". Shooting the record industry would just mean new middle men with new ways to sneak off with the money.

I have starting to get a feeling that Mike wants to start a middleman company, but can't get in to the current industry ;)
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Anonymous Coward, 13 Mar 2009 @ 10:33am

Re: Re: Re: A little Friday irony...
Most of TechDirt is actually supported by the work they do through the Insight Community, not the ads no one clicks on.
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Mike McCready, 13 Mar 2009 @ 10:47pm

The Future of the Music Industry
Hi Mike,

I wrote about my take on the future of the music industry at Huffington Post: http://www.huffingtonpost.com/mike-mccready/the-future-of-the-music-i_b_173481.html

Best,

Mike McCready
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TonsoTunez, 14 Mar 2009 @ 7:34pm

Collections Societies
Mike says: "These collections societies are middlemen who profit off of the inefficiencies of the old system."

It might be useful, Mike, if you would identify the collection societies of which you speak then explain exactly how they profit.

The collection societies referenced in the MusicTank paper are not-for-profit advocates for their constituencies.

The PRS for Music (http://www.prsformusic.com) in the UK, for example, represents songwriters and music publishers. They bargain collectively for their members - license, collect and protect their members rights, and pay out everything they take in, less overhead of about 15% which is rational for the activities they undertake.

You seem to think it would be beneficial for songwriters to cut themselves loose from their societies and swarm the world like overly agitated ants to individually license, track and collect royalties from each of the thousands of music users who use their songs to make a profit.

Explain to us exactly how they could do that...and what would happen if users told those lonely, stand alone songwriters to screw off?

It's always a little easier to get someone to take you seriously when you have 600,000 other songwriters standing behind you.

Songwriters, by the way, are not forced to join a collection society - they always have the option to go it alone ... most writers, the smallest of small business people, would view you suggestion as a very bad business decision.

Be that as it may, Mike, it would be really valuable to all of us if you would give us some examples of collection society fat cats ... and, explain just how they are getting fat.

You might want to take the time to find out what Collections Societies actually do before responding.
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Killer_Tofu (profile), 16 Mar 2009 @ 8:55am

Re: Collections Societies
If you visited here semi regularly you wouldn't have to ask for examples as they have been given before.
Some of these agencies have threatened mechanic shops for playing radios loud enough that patriots could hear them from the waiting room.
What purpose does it serve to collect from them? They have already collected from the radio stations. Is threatening small business for simply having a radio turned on really helping anyone? And how about the ever increasing amount of artists who are always against the actions of those who claim to represent them.
Just because these agencies say they represent artists does not mean they have the artists best interests at heart. They have a job and they are fighting to keep it. That is all.
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Mike (profile), 16 Mar 2009 @ 3:58pm

Re: Re: Collections Societies
Some of these agencies have threatened mechanic shops for playing radios loud enough that patriots could hear them from the waiting room.

Not just "some of these," the worst offenders are PRS, who was a major player in the MusicTank report.

I was just over in the UK last week, and you couldn't believe how much antipathy there is towards PRS's efforts.

As for Tonso's points:

The collection societies referenced in the MusicTank paper are not-for-profit advocates for their constituencies.

Yup. But that hasn't stopped them from greedily destroying the business they're supposedly trying to save by demanding ever more and more money, as KT noted above.

They're not "advocates for their constituencies." They're advocates for squeezing short-term dollars at the expense of long-term opportunity.

The PRS for Music (http://www.prsformusic.com) in the UK, for example, represents songwriters and music publishers. They bargain collectively for their members - license, collect and protect their members rights, and pay out everything they take in, less overhead of about 15% which is rational for the activities they undertake.

And their actions have massively damaged their reputation in the UK. They're not about setting up better business models. They're just looking to squeeze money.

You seem to think it would be beneficial for songwriters to cut themselves loose from their societies and swarm the world like overly agitated ants to individually license, track and collect royalties from each of the thousands of music users who use their songs to make a profit.

No, you misunderstand me. I'm saying that licensing and royalties themselves are outdated modes of compensation for creative works, and there are much better models that don't require getting payment for every use.

Explain to us exactly how they could do that...and what would happen if users told those lonely, stand alone songwriters to screw off?

It would focus the musicians on business models that are fan-friendly, rather than anti-fan. And, because of that, they'd greatly benefit, as would stand alone songwriters, who would have many more opportunities to get paid due to better relationships between musicians and fans, allowing those musicians to pay for songwriters where necessary.

It's always a little easier to get someone to take you seriously when you have 600,000 other songwriters standing behind you.

Not sure what that has to do with anything.

Be that as it may, Mike, it would be really valuable to all of us if you would give us some examples of collection society fat cats ... and, explain just how they are getting fat.

Already described.

You might want to take the time to find out what Collections Societies actually do before responding.

Quite aware, thanks.
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Sandy Fitzgerald, 21 Jan 2010 @ 8:32am

The bigger perspective
There is a cultural question here that is almost absent. Unless everyone lifts their heads and sees what is happening around them, then music people (I mean people who make music not the industry. An industry is an industry and they don't make music, they make units for sale, like any other industry. They only follow the money) are at the mercy of market forces like everyone else. The market is reductionist. Culture is meant to be expansionist. Music creators, if they are serious, need to be looking for allies everywhere: like minded people who are creative and revolutionary in their thought. This is a time of change and opportunity and the next wave will not come from the industry, the middlemen, or the market.
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