Leaving A Major Record Label... And Seeing How The Music Business Is Thriving

from the it's-all-good dept

Wed, Mar 2nd 2011 12:39pm — Mike Masnick

A few years ago, after seeing Ethan Kaplan speak, I had suggested that Warner Music promote him. At the time, Ethan was VP of technology for Warner Bros. Music, one of Warner Music's sub-labels. I'd followed Ethan's writings for a while, but hearing him speak convinced me that he was definitely one of the folks inside a major record label who really understood where things were headed. There definitely are a few such folks mixed in here and there, but they're not always easy to find, and they usually don't get the attention they deserve within those labels. Warner Music didn't promote him until sometime last year, when they moved him up to the parent company, Warner Music Group, but the company's top management still never seemed to recognize quite what they had in Ethan in terms of his ability to recognize where the market was heading and how a major label could (and should) respond to those challenges. So it was disappointing, but of little surprise when he left Warner Music a month ago. I have little doubt he's now in high demand from a variety of forward-looking companies doing technology stuff in the music space, and I imagine he'll pop up somewhere interesting soon.

However, as we wait, he's written a fascinating blog post about his view on the music industry, now that he's out of a major record label and seeing what else is there. The whole thing is so worth reading, I'm having trouble picking a part to excerpt, so here's a tidbit, but you really should read the whole thing:

A lot of the sentiment I've been living under for the past few years has been based on fear. Things slipping through fingers never to be returned. What I found leaving however is that while things slipped through fingers, they didn't fall to the ground. A whole other ecosystem of hands was there to catch it.

The music business didn't die. And it isn't dying. I argue that the human race will have to die before an industry around music fully succumbs. It is changing. Shrinking, contracting and expanding. It is also diversifying and competing for attention and dollars with ecosystems and markets that weren't even imaginable five years ago. Where one dollar might have gone toward a record before, it is now split between entertainment bills, ad-hoc entertainment, subscriptions and the increased cost of providing us the unencumbered connectivity and freedom brought by devices like iPhones.

As I said, there's a lot more in the post, including why he's optimistic and excited about the new ecosystem that's evolving. While we sometimes (if you count the comments, quite frequently) have "music industry" insiders stop by to tell us that we're crazy for saying the music industry is thriving and there's more opportunity than ever before, it's always nice to see someone who's deeply involved on the inside making the same point. I have no idea what Ethan will be doing next, but I'm sure it will be worth paying attention to.

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Filed Under: ethan kaplan, music, music industry

33 Comments

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Anonymous Coward, 2 Mar 2011 @ 1:06pm

While we sometimes (if you count the comments, quite frequently) have "music industry" insiders stop by to tell us that we're crazy for saying the music industry is thriving and there's more opportunity than ever before, it's always nice to see someone who's deeply involved on the inside making the same point.

Don't flatter yourself, I can't remember the last time I saw anyone here that would qualify a "music industry insider". I doubt they would waste their time trying to make points in your comments.
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AJ, 2 Mar 2011 @ 1:11pm

Re:
"I doubt they would waste their time trying to make points in your comments."

Don't be a sore looser troll, you'll find another way to make people pay several times for the same product I'm sure. Hang in there.
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Justin Olbrantz (Quantam), 2 Mar 2011 @ 1:35pm

Re:
Hahaha. So the Anonymous Cowards here are just wannabe musicians? I do believe some of your comrades are going to be offended by that.
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Flyfish, 2 Mar 2011 @ 1:37pm

Sounds more like someone who has new ideas on how to leech into the flow of cash between entertainers and their audience to me.
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Anonymous Coward, 2 Mar 2011 @ 1:50pm

Re:
Oh, so they're just lying, then. Good to know.
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Anonymous Coward, 2 Mar 2011 @ 1:53pm

Re: Re:
Don't be a sore looser troll

What, should I be a sore tighter?

Otherwise, get bent.
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Anonymous Coward, 2 Mar 2011 @ 1:55pm

Re:
I for one don't give a fuck what YOU "doubt they would" do.
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FormerAC (profile), 2 Mar 2011 @ 1:59pm

Entropy
"This business is changing, and one of the things that has always remained constant for five years is the entropy inherent to half century old company having its very foundations seismically shift."

From his post on leaving Warner
http://www.blackrimglasses.com/2011/01/27/leaving-wmg/
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The eejit (profile), 2 Mar 2011 @ 2:51pm

Re:
Prove that you're a 'music insider'. Cite your own credentials. Me, I'm a citizen of the UK.
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Anonymous Coward, 2 Mar 2011 @ 3:04pm

Re:
Middlemen have their place. ACs keep coming here screaming "If you have to be a business man, you don't have time to make art!".

So, be a good middleman that artists WANT to stay with, and everyone wins. Hopefully.
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mike allen (profile), 2 Mar 2011 @ 3:25pm

arnt the major lables the ones who sued kids grans through the RIAA mmm i just got back from a seminar with Richard Steelman so il quote his words after a questtion on music labels " They want destroying". i dont mind helping.
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Freddy Walker, 2 Mar 2011 @ 3:47pm

Great post as usual Mike. It's the evolution of economics in the music business which will allow great artists with great models to thrive where they could never before.
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Richard (profile), 2 Mar 2011 @ 4:02pm

Re:
So you aren't an insider then?

Even less reason to pay attention to you.
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Patrick, 2 Mar 2011 @ 4:54pm

I know this has been said before, but the age of the millionaire rock star is fading. I believe that in the future, there won't be enough to go around so the rock stars will just be making a good living. People make music for music (and chicks), getting paid lots of money was just a bonus. A lot of the comments here seem to be hung up on the myth that if there isn't a lot of money to be made or copyright monopolies then no one will ever make music again. Kids everywhere pick up guitars and play just for fun, I'm sure they always will, and some will make money.
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sevenof9fl, 2 Mar 2011 @ 5:18pm

Hum....$$$$
Ethan tells it like it is; however, it doesn't take a rocket scientist to see that music's money flow has changed radically in the last 15 years and it's not going to go back to what it was, ever. Labels are going to have to change with it, or die. Artists don't even need "big labels" any more unless they want to be a superstar and many are happy just to get opportunities to perform and make a decent living. Look at Lady Antebellum; they posted their music for free on the internet and look at where they are now. Sure they are "big label now, but in the beginning they gave away music on My Space. It's a Brave New World out there, and Big Label better wake up and smell the coffee, or die.
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Justin Olbrantz (Quantam), 2 Mar 2011 @ 5:22pm

Re:
Part of the problem is the simple math, as I believe I've said on TechDirt before.

Previously, the record labels largely controlled music distribution and so effectively controlled the number of bands that went public. Now that the internet has made distribution nearly zero-cost for everyone with an internet connection, and computer technology has caused the costs of producing and recording music to plummet (I make no statements about the relative quality of the music), the total amount of music being produced is increasing exponentially.

The problem is that there isn't an unlimited amount of money available to make from music, as it's always limited by the number of consumers, the size of their paychecks, how much of those paychecks they're willing to spend on music, etc. The result is that the amount of money available per musician is falling. The end result may be that music will become less of a profession and more of a moonlighting activity because money is spread so thin among the enormous number of musicians. This is a problem that even CwF+RtB can't help with, and something I've been worried about for a while now.
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RadialSkid (profile), 2 Mar 2011 @ 8:19pm

Re:
Actually, as traditional record labels continue to decline, independent artists will eventually become mainstream. When that happens, I think there will still be millionaire rock stars...they'll just be self-made.

However, this should not be any real musician's goal. Focus on the music, not "making it." If you can play a show of any size and win over the audience, then you have already "made it."
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Anonymous Coward, 2 Mar 2011 @ 9:14pm

Here are some facts that I came across recently:

- Music Piracy is declining.

Every year apparently people monitoring music piracy see it decline, you think that after the music industry lost half their revenues piracy would be at an all time high, nope apparently the more piracy falls, the more revenues falls too, now that is a fun correlation LoL

Damn some studies say music piracy is as low as 3% of all piracy being committed, not even pirates want to pirate music anymore.

- The IRS says there is no crisis anywhere.

I was looking at the statistics for industries and either taxes did go up tremendously and the industry have been completely honest and paying their dues(LoL) or the IRS is reporting unbelievable numbers about collected taxes.

- I have yet to see any artists that is making less money then their counterparts in the last decades across the board.

- The game industry and movie industry suffer from piracy more than the music industry and they still manage to post record profits year after year. Maybe the problem really isn't piracy.

- Free legal streaming services are the new bane for the industry.

Seeing all that, my conclusions are, legitimate alternatives sprung up, people are not pirating anything either because they found it legally somewhere else with easy access or they changed their habits like me that goes to Jamendo to have his music fix. People also don't seem interested in "buying" music since that is not true you don't buy anything from those people you license and they keep bugging people about it, so I would be not surprised if many are aware of licenses that don't let them do anything and are looking elsewhere for things that can be used by them to do something, that is culture is shifting away from illegal to legal alternatives that gives them the same things illegal piracy gave them but legally.

After a decade calling fans pirates they finally got everyone pissed and nobody is "renting"(a.k.a. buying) from those creeps.

On the other hand, I see starting musicians that want to make some money doing just fine, they may not be making millions but they are making enough to make a good living so much so that many don't have a day job.
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Justin Olbrantz (Quantam), 2 Mar 2011 @ 10:30pm

Re:
If that study you mention that puts music piracy so low is the one I'm thinking of, there's a very substantial flaw in it: it measures the number of simultaneous peers. Meaning it's strongly biased in favor of large files: movies > TV episodes >> music. The others would be interesting, if you have any links to post.
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Anonymous Coward, 2 Mar 2011 @ 10:33pm

Re:
Music piracy is declining only because the long tail has been eaten up. That is to say that all of the back catalog, all of the old stuff, all of the classics... everyone has them. People now look for new stuff, not as much for old stuff.

The gaming and movie industries are currently suffering in part because people are only just getting connections fast enough to pirate DVD and larger sized files on a reasonable scale. This is something new in the last couple of years, before that movie piracy wasn't as hot, as people were unwilling to run their torrent program online for 48-72 hours to get a single movie.

Free legal streaming services are the new bane for the industry

If they are paying proper licensing fees, the music industry likes them. They don't look at them any different than they look at radio stations or music video channels. It's another income source that also offers promotion.

However, if they "free streaming" sites aren't licensed, they are a bane. They are also likely to get sued into oblivion.

After a decade calling fans pirates they finally got everyone pissed and nobody is "renting"(a.k.a. buying) from those creeps.

Actually, after a decade of fans pirating everything and anything they can get their hands on, they no longer need so much new product because they have a huge back catalog of stuff to enjoy for free. Just because the file sharing part has ended doesn't mean the enjoyment of the pirated product stops.
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Justin Olbrantz (Quantam), 2 Mar 2011 @ 10:55pm

Re: Re:
"If they are paying proper licensing fees, the music industry likes them. They don't look at them any different than they look at radio stations or music video channels. It's another income source that also offers promotion."

Presumably that bullet point refers to Music execs stressed over free streaming

I'm less sure about some of the other things he said.
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Anonymous Coward, 2 Mar 2011 @ 11:55pm

The Effect of File Sharing on Record Sales An Empirical Analysis
http://www.unc.edu/~cigar/papers/FileSharing_March2004.pdf
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Anonymous Coward, 3 Mar 2011 @ 12:39am

Re: Re:
http://thepiratebay.org/top/all
http://www.sumotorrent.com/top100.php

Well you can get some anedoctal references for yourself on the various "TOP 100" of P2P websites, currently on the Pirate Bay and SumoTorrent there is only 3 "music" files being shared at the top on each(coincidence?), that means 3%, the others are the same thing, people are not using P2P to download music anymore for some reason.

On Kickass torrents nobody is seeding music torrents that much, apart from some all-female-punk-rock band called Sick of Sarah that you can download legally apparently since their record label even have a video explaining how to use bittorrent (WTF LoL)

http://adamantrecords.com/

When you do a search for recent torrents there, music doesn't come up that often.
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Anonymous Coward, 3 Mar 2011 @ 12:42am

Re: Re:
Please explain why legal music torrents have tens of thousands of seeders and leechers compared against illegal music that has only a thousand at most?
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Anonymous Coward, 3 Mar 2011 @ 12:56am

Re: Re:
The gaming and movie industries are currently suffering in part because people are only just getting connections fast enough to pirate DVD and larger sized files on a reasonable scale. This is something new in the last couple of years, before that movie piracy wasn't as hot, as people were unwilling to run their torrent program online for 48-72 hours to get a single movie.

Then explain why BSA almost every year says that piracy is down?

PC game piracy 'in decline'
Monday 21-Feb-2011 10:11 AM
Design shift making piracy less viable, reckon PC Gaming Alliance
http://www.computerandvideogames.com/289894/news/pc-game-piracy-in-decline/

http://www. redorbit.com/news/international/1863005/china_reports_software_piracy_decline/
China Reports Software Piracy Decline
Posted on: Monday, 10 May 2010, 13:20 CDT
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Anonymous Coward, 3 Mar 2011 @ 1:14am

Re: Re:
Collapse in illegal sharing and boom in streaming brings music to executives' ears
http://www.guardian.co.uk/music/2009/jul/12/music-industry-illegal-downloading-streaming
by Alexandra Topping
guardian.co.uk, Sunday 12 July 2009 20.07 BST
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Anonymous Coward, 3 Mar 2011 @ 1:19am

Re: Re:
Don't worry piracy will go up as soon as the industry start doing the window thingy withholding releases to the public LoL

Quote:

Taking lessons from Hollywood

The music industry could take a lesson from Hollywood, Crupnick suggested. He noted how the Hollywood studios have deliberately withheld their products in certain formats to spur revenue. He held up a DVD package of the 2010 movie "Inception," explaining that consumers could either purchase a deluxe Blu-ray packaged edition of the movie for $75, purchase a DVD for around $14.99, or watch it as a pay-per-view or rent it from a video store for about $4.

Consumers, however, could not watch it for free on an existing Netflix streaming service. He encouraged the music industry to create a similar form of "artificial scarcity."
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vivaelamor (profile), 3 Mar 2011 @ 4:59am

Re: Re: Re:
"Well you can get some anedoctal references for yourself on the various "TOP 100" of P2P websites, currently on the Pirate Bay and SumoTorrent there is only 3 "music" files being shared at the top on each(coincidence?), that means 3%, the others are the same thing, people are not using P2P to download music anymore for some reason."

There are many issues with trying to compare stats for different types of media being shared. One evident from my own experience is the fact that music is more likely to be organised into a library than video. Another is that music tends to have a longer life than TV shows. While a TV show may have 5000 seeds the week it is aired, come back a year later and it may not have any. Ditto to a lesser extent for films.

These factors of course go both ways; I'm not trying to prove the stats under or over represent, just point out that such a basic analysis is probably useless.
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Anonymous Coward, 3 Mar 2011 @ 5:33am

Re: Re: Re: Re:
The top hundreds are based on the actual download of torrents, there is no doubt about those numbers unless they are being invented by the website.
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Anonymous Coward, 3 Mar 2011 @ 5:39am

Re: Re:
I don't see the problem if the measure was done for a period of time it will reflect the number of downloads for that period, if it was not measuring the volume of data transferred I would agree but the number of connections downloading something can be seen as the measure of people in a period of time that have procured something.

That looks good for me.
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Anonymous Coward, 3 Mar 2011 @ 5:59am

Hope he starts a record company. Us bands need a list of people like him.
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dano (profile), 3 Mar 2011 @ 7:46am

Iphones are unencumbered?
Since when? Then why do people have to jailbreak them?
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vivaelamor (profile), 4 Mar 2011 @ 1:31pm

Re: Re: Re: Re: Re:
"The top hundreds are based on the actual download of torrents, there is no doubt about those numbers unless they are being invented by the website."

I would be interested to find out how they track actual downloads. Also, am I right in presuming that such stats would exclude DHT connections (which raises questions about The Pirate Bay's statistics since they shut down their tracker)?
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