For a few years now, people have talked about Spotify as the "next great hope" for the recording industry. For those who haven't seen it, it's effectively an "iTunes-in-the-cloud." I've played around with it, and it's definitely a hell of a lot nicer than most other things out on the market and the company continues to improve the product and to play around with some interesting additional models. I'm always a bit wary of anything that people think will "save" an industry, and Spotify is no exception. I think it's nice and useful, but it alone certainly isn't going to be the answer to the recording industry's inability to adapt to a changing marketplace. That said, one of the more amusing things to watch has been the fight over bringing Spotify to the US. It's been rumored to be "coming soon" for about a year and a half now and every time there's some rumor about it getting close, there's another rumor about the ridiculous terms and conditions the labels are insisting on to launch it here. They already have deals in Europe, but apparently, the labels want much better deals in the US.
The latest rumor says that Spotify is (once again) closing on deals with the major labels for a US launch, though it's going to involve massive upfront payments to the major labels (don't expect any of that to actually go to the artists). This has become pretty typical for the majors -- demanding massive cash up-front, which is why so many music-related startups have died an early death. The startups simply couldn't make enough money to cover those huge upfront fees. Now, Spotify might be a bit different in that it's raised a ton of money on the strength of its success in Europe and so it probably can handle the cash payment, at least initially.
So, here's the thing: if the labels are making so much money from Spotify in Europe, why have they fought so hard against doing a deal in the US without huge upfronts and/or guarantees? Part of it may be that the money in Europe has really only ramped up in the past few months, but part of it might just be how the major labels deal with music startups these days -- as seen by various quotes from major label bosses that suggest a jealousy of any other company being successful in the music business even if it helps them succeed as well. Basically, if another company is successful, these execs seem to think that they must have been given a bad deal. It's as if they don't understand how a non-zero sum market works. They believe if someone else is doing well, they must have been ripped off, so they want to make deals that practically cripple any other company, so that at least they're not doing as badly as those new companies.
One of the popular claims from critics of this site is that giving away music (or even offering it much cheaper) "devalues" it. We've posted many times explaining how price and value are two different things. A lower price does not inherently change the value of a product. The simplest way to think about is the example we've used before: all of us value air a whole lot. We use it to stay alive. And yet, we don't pay for it directly. But I don't think anyone claims that this "devalues" air. Value is more a determination of the demand curve. How much you value something tells you whether or not you'll buy it at a certain price. If you value something highly, and it's offered at a lower price, you'll buy it at that lower price. That doesn't mean that the value to you has decreased, it means that you've received a surplus (you got more in value than you paid). That's a good thing.
Yet, recently, the whole "low prices devalue music" thing has come back again. There was the former record label exec who suggested selling albums at $1.60 and got trashed for wanting to "devalue music." Then, of course, we've written a few times about the indie label Asthmatic Kitty, which had worried that having Amazon offer its new album at $4 might devalue the music, since they believe music "is worth more than the cost of a latte."
Thankfully, Ian Port, at SF Weekly has come along to do a nice job of debunking those claims:
Several have argued that selling an album for less than a cup of coffee or a bottle of water would devalue the art of music. But people -- at least, young people who don't buy much music anyway -- don't judge the artistic value of music by what it costs. If they did, they would look down on artists who give away free MP3s and whose albums were obtainable on file-sharing sites. They don't.
The devaluing-the-art argument misses two other important points: First, coffee and water bottles can't be downloaded quickly and anonymously at no cost, while digital music can. Second, paying $3 or $4 for a tangible good (i.e., a cup of coffee you watched a person make especially for you) seems intrinsically reasonable in this day and age, even, I would guess, to a 13-year-old. But paying $10 to download a digital file that's a copy of a copy of a copy -- all of them made at no additional cost -- somehow doesn't.
I'm not saying musicians shouldn't be paid for their work. Selling digital albums for $1 or $3 would not stop superfans from paying $10 or $20 or even $50 for elaborately packaged CD or other hard-copy releases. Vinyl lovers will still pay cash money for virgin 180-gram translucent red plastic with big art. And even the $1 digital album, if it made piracy less attractive and increased sales volumes, could bring artists more revenues than they're currently getting.
It's good to see more people pushing back on the silly "low price devalues music" claim.
We're always interested in creative and new business model ideas involving using infinite goods to make scarce goods more valuable. So I have to admit I'm a bit intrigued by the (slightly tongue-in-cheek) claim by Stuart Murdoch of the popular band Belle & Sebastien that he's considering opening a Belle & Sebastien taqueria in Glasgow. In an interview with Planet Money, in which he's asked about any "backup career plans" he says:
I have some ideas that I might have to act upon. One of them is to open a taqueria in Glasgow. There's no decent Mexican food in Glasgow. And I've had this idea for a while, to open a Belle & Sebastian taqueria. You're laughing, but I'm about to get serious about this. Because this could be the thing that allows me to carry on doing music -- to serve a decent taco.
And while my first reaction was to laugh as well, the more I think about it, the more curious I am about the idea of a musician also opening up a restaurant or cafe like this. Of course, the usual complainers in our comments will say that if they're doing that then they're running a restaurant, not "being musicians." But, Murdoch seems to be suggesting that this is one way in which he can continue to be a musician. In fact, I would imagine that Belle & Sebastien fans would be willing to travel a long way, and spend a fair amount, to hang out at the Belle & Sebastien taqueria, and see the band hanging out/playing there as well.
Meanwhile, in terms of stuff the band is already doing, the band has created a neat contest to go along with their latest album release:
Album copies included a unique code to be entered at a website that asks the fan to write 300 words about love. From the submissions, the band will pick a winner, and Belle and Sebastian's lead singer-songwriter Stuart Murdock will come to the winner's town to hang out for an afternoon. Even more awesome is that Murdock will write a song about the winner which will be released on a special 7" record next year!
As promised in our case study on Dan Bull, he's now released his latest song, entitled Death of ACTA. Better yet, the video was filmed on an actual pirate ship:
A few weeks back, we had written about the small indie label Asthmatic Kitty, who earlier this year, had impressed us with a really forward-looking attitude, when it came to the music industry, saying (in part):
I operate under the conviction that people buy records because they want to own them, not because they want to hear them. It is too easy these days to hear a record without having to buy it. I don't resent that fact, rather I feel we at Asthmatic Kitty embrace it through streaming albums and offering several free mp3s (even whole free albums). And why do they want to own it? They want it to illustrate to others their taste and identify who they are as a person. I also believe they want to be part of something bigger than themselves, they want to belong.
Our job is no longer to sell folks things they want to hear. They want an experience and to identify themselves as part of a community. Ownership then becomes a way of them supporting your community through investing in that community. Fostering that in an honest, transparent and "non-gross" way takes a combination of gracefulness, creativity and not taking oneself too seriously, while still taking art and music seriously.
So, we were disappointed last month when the label appeared to have sent out an email concerning the release of the band's biggest act, Sufjan Stevens, suggesting that Amazon's promotion of the album for $3.99 was somehow devaluing the music, telling fans:
We also feel like the work that our artists produce is worth more than a cost of a latte. We value the skill, love, and time they've put into making their records. And we feel that our work too, in promotion and distribution, is also valuable and worthwhile.
This seemed like a bit of an about-face, and we were also confused as to why the label would allow Amazon to promote its album if they didn't like the price. I also wondered if such promotional discounts even impacted the label's bottom line, as everything I'd heard suggest the labels still got the same cut on such discounted albums as they normally would.
John Beeler, who works for Asthmatic Kitty, now points us to an interview with the label's A&R guy, Michael Kaufmann, where he more or less admits that the label goofed in how it presented the email, and that it was never intended as a guilt trip or to suggest there was anything bad about the Amazon promotion. In fact, he now claims, they were actually excited about the Amazon promotion:
Unfortunately we poorly communicated this point. As Sufjan sings, "words are futile devices." When we first heard about the potential Amazon deal we were very excited to participate. For a small label like our own this was a great opportunity for essentially free marketing. It is a great program, Amazon is doing this as a loss leader, and therefore we still make the same amount of money we would have made at the regular sale price.
So I am sure many folks are thinking, "What in the world is our problem?" What gave us pause was that we were also offering the album at a higher price and we wanted to make sure our customers knew that it would be available for half that price on street date through Amazon. We wanted to be honest and transparent about the coming deal so that folks who preordered at a higher price didn't feel like they have been misinformed, or had a lack of information to make an informed choice.
We never wanted to impose any sort of guilt on our consumers. To me this is in large part of what the record industry has been doing wrong: criminalizing music lovers. However, the message when taken away from the intended audience and often taken out of context read as if we were guilting people into buying direct from us. This was certainly not our intention, and if we had known this was how it was going to be perceived, we certainly would not have sent the email.
What we wanted to do was provide choices. And in the process we thought it would be an interesting opportunity to give food for thought on the perceived worth (or value) of an album. But that discussion should have taken place in a different context. The intent was certainly not to criticize of Amazon's approach. Rather, we hoped to spark conversation and examination of our methods of doing business real time with our customers. We didn't realize this spark was going to blow something up in our faces. Again, what we intended as a cursory thought of the email became the main focus of its criticism.
That makes a lot of sense, and I apologize for contributing to blowing the story out of proportion, and apparently not providing the proper context, which I was unaware of at the time. I'm still a little confused about the claims in the original email about the "value" of music, but I understand that's a different discussion. In the meantime, the label seems back to recognizing that it's important to connect with fans in whatever manner possible, rather than guilting them:
We want them to have the opportunity to hear our releases. We want them to have the opportunity to listen. We want them to take active part in deciding what it is worth to them to own our music by deciding how they purchase. The last thing we want to do is dictate price or guilt someone into a particular point of sale. That is pretentious for us to think we even can. It is a complex mechanism that involves supply, demand and all the other facets that make a market economy. We have our opinion, but that isn't meant to be an authoritative statement.
We do want to encourage folks to support us, and they are supporting us whether they buy it from Amazon, iTunes, eMusic, Bandcamp or from their local record store. So ultimately their decision of where they buy and how much they pay is trivial, because they chose to support us in an age where it is so easy to just download for free.
Two quick announcements. First, this is the latest in our "case study" series, of content creators doing interesting things online, and seeing what we can learn from them. The case studies now have their own tab if you want to check out previous case studies. Second, this profile is about Dan Bull, but stay tuned, because tomorrow, he'll be coming out with a new song, commenting on ACTA and the Gallo Report. We'll post it here, but trust me, you don't want to miss it.
You may recall, about a year ago, there was a bit of a kerfuffle involving singer Lily Allen -- who had built her (major label) career, in part off of releasing a bunch of clearly infringing mixtapes of other artists, mixed with some of her own music on her MySpace page and her official website (controlled by EMI). And yet... she suddenly posted a rant against file sharing, talking about how it was destroying the industry. She even started a blog about how evil copying was, but amusingly plagiarized an entire Techdirt post. We were fine with it (our material is free to use however you'd like), but thought it was an interesting teaching moment about the value of copying, and how even those who claim they're against it implicitly seem to recognize that copying is "natural." While Lily apologized to me, as we noted there was no need to apologize -- the content was free for using. We were hoping that she would understand how her actions went against her own words. Instead, she blamed everyone else, claimed she was "attacked" and shut down her blog.
However, soon after all of this, a musician in the UK, named Dan Bull, wrote and recorded a musical "open letter" to Ms. Allen, for which he created a video, and posted the whole thing to YouTube, generating a ton of attention. If you haven't seen it (or even if you have...), check it out:
Now, in the interest of full disclosure, I'm name checked in the song, which actually caused me to go out and buy Dan's album, even though he makes it available for free as well, uploaded to various file sharing systems that are regularly decried for "destroying" the industry. With the Dear Lily song getting so much attention, Dan has continued to write new songs along these lines, starting with an open letter to Peter Mandelson, the UK politician who was the main driving force behind the Digital Economy Act, which brought three strikes to the UK:
Earlier this year, as the debate heated up over kicking people offline via the Digital Economy Act, UK ISP TalkTalk had Dan Bull create a new song, reminding us how familiar the recording industry's complaints sound to their complaints from years back about how home taping was killing music:
Tomorrow he's coming out with his latest track related to copyright issues, specifically commenting on ACTA and the Gallo report. I've heard it already, and you don't want to miss it. We'll post it as soon as it's ready to go tomorrow. However, as we gear up for that, I spoke to Dan about his experience creating music that has championed the idea that copyright is a much bigger problem than a solution to the music industry, and what lessons he's learned.
The first thing, of course, is that his music career was completely transformed by the original Dear Lily video. Even though he'd already released an album, this one song, changed things. As Dan told me:
I've been putting my songs on YouTube for years without anyone really noticing, so I didn't expect anything different with Dear Lily. I uploaded the video, e-mailed the link to the P2P blog TorrentFreak, and went to bed. The next morning I woke up to find my inbox was broken due to responses arriving every couple of seconds. The video seemed to have struck the right chord at the right time, and I was summarising what was on everybody's mind. Except Lily Allen's.
He pointed out that the video got 80,000 views that first night, and the MP3 (made freely available, of course) was downloaded over 20,000 times. And, despite all the claims that folks who support file sharing or think that copyright has problems are just a bunch of freeloaders who want stuff for free, this song made Dan money:
I made more money from music that week than I had in my entire musical career previously. I'd say it was split 50/50 between sales of my album, and donations from people who just wanted to show their appreciation. It goes to show that filesharers aren't cheapskates; they're happy to hand over a bit of cash if they know who it's going to.
He also pointed out that, if all of the interest in his songs had been monitored by the folks who create the charts, the song actually would have ended up on the UK singles charts.
But, of course, was this just a flash in the pan, one-hit-wonder sort of thing? Not according to Dan. He notes that he had a decent group of supporters before:
But this was when I first started to feel like I had a real fanbase, and that there are lots of other people out there who feel the way I do. Plenty of the people who saw the video have stuck around to check out my new stuff too. It's also made it easier to get my other songs noticed, and I've been on television and radio a few times as a result.
And, in talking about attention from elsewhere, it's not just limited to music about copyright. He's becoming a go-to guy for music about all sorts of political issues, including a successful (and brilliant) UK Election Debate Rap Battle. The tech/copyright songs are still the songs that get the most people excited, but all of his new works are getting more and more attention. As Dan notes, the way you build a career is to continue to keep building, rather than relying on old works and copyright complaints:
I enjoyed the wave of publicity I had from the novelty of the Dear Lily video, but instead of trying to milk it I decided to carry on and write more songs. Each one I do gets a little more attention and it's very satisfying when new fans get in touch with me. It's good to discuss the issues with people who disagree as well - it makes me think hard about whether my beliefs are right.
Oh, and finally, I did wonder if he ever heard from either Lily Allen or Peter Mandelson in response to his open letters. No such luck, apparently, but he's heard from a reliable source that Allen has at least seen the video, and he got to perform Dear Mandy right outside the houses of Parliament in front of a bunch of TV cameras, so he's hoping that maybe, just maybe, Mandelson got to hear it "drifting through his window..."
Once again, this is another case of an artist really finding a way to connect with fans in a fun way, encouraging the free sharing of his music, but recognizing that fans are more than willing to pay, if given a reason to buy. And, of course, I do wonder how folks who insist that no "real" musician would ever speak out against copyright respond to folks like Dan Bull.
Anyway, thanks to Dan for taking the time to answer my questions, and stay tuned for his latest song and video...
Nicolas Sarkozy had talked in the past about taxing Google, Microsoft and Yahoo to fund the recording industry. Apparently, in the meantime, he's just going to tax citizens instead. The EU has apparently given approval to a plan that will have the French government paying half the cost of special music download cards, with the goal being to attract users to pay the half-price fee to get them using authorized music services. Of course, it seems worth pointing out that Sarkozy's wife is a recording artist, so it does seem a bit unfair for him to have taxpayers forking over money which is going to end up with his wife. There are, of course, also anti-competitive concerns when the French government is subsidizing specific music services, but the EU apparently claimed that the "benefits" of the plan outweighed those issues. What benefits? If there are benefits to offering music for less then, um, shouldn't the record labels just be lowering their prices?
We've been making this point for years now, but as more and more evidence comes from the recording industry itself, it's nice to see mainstream publications like The Economist finally willing to admit that the music industry is actually thriving, contrary to the stories you keep hearing in the press. It covers many of the same data points and stories we've seen before, but highlights a few others -- including a rapper who set up a clothing line before he even made his first video, but is making more money selling clothes (which he wears in his videos) than selling music. As the article says: "Scorcher is not so much selling music as using music to sell. 'If you buy into me musically, you will also buy into the clothing and the lifestyle.'"
The other thing that the article highlights is the absolutely thriving B2B side of music, where companies will sponsor musical acts, either for tours or other efforts. The companies get their brands associated with cool acts, while the artists get a nice chunk of cash. This is an area of the business that keeps on growing.
Unfortunately, despite all this evidence of a very strong music business, the article does revert to an odd interpretation later, complaining that the market is "greying," because only old people buy music any more. But, they point this out after they spend many paragraphs showing all of the other business models that artists can embrace to make money -- so I'm not sure why it matters that only older people now buy music any more. Selling music isn't the music business model any more, and it's time for everyone to recognize that.
We've talked about plenty of examples of musicians doing creative things to connect with fans. One example was Trent Reznor hiding concert tickets in random places around LA, and then mentioning the coordinates on his website, leading fans to scramble and find them. It appears that "underground" musician Emperor X (aka Chad Matheny) is doing something similar, and fitting with his underground status. Ross Pruden points us to the news that Matheny has been recording early versions of new songs he's working on to cassette tapes and then burying them in random places. He'll later reveal the GPS coordinates, and if people can find the tapes (apparently it's not always so easy), they get not just the tape with the music, but also "a secret code that will unlock more music on his website for the rest of the world to hear." In other words, people have incentive to find the tapes not just for themselves, but for other fans as well.
Some will (of course) mock this as a "gimmick," and even Matheny flat-out admits that it's a gimmick -- but it's a "gimmick" that works. It gets his fans excited, it gets some more folks interested in his music, and it makes the whole thing fun. As the article notes, it's sort of a way to bring back the old experience people used to have of trying to track down works from a more obscure artist:
"He's creating an experience that really fits his music, and what it is is that he's an underground musician," Dahlen says. "Back in the day, there'd always be that artist that you were in love with. You had to find all their albums, but they were really unknown, and you would go to used record store after used record store trying to track them down. And then, finally, you find one of their albums in the bin, and you love it more because of all the effort you put into it. You have a stake in this musician now. And that was the wonderful experience about finding people who are off the mainstream. I think it fits perfectly with what he's doing. I think it's kind of brilliant."
This highlights, once again, that the idea behind these actions aren't that everyone should do it this way, but that each artist needs to come up with ideas that really fit with the type of artist they are. Something like this really appears to fit with Matheny and the fans of Emperor X, so it works for him. Other artists need to figure out what works for them as well.
A whole bunch of you have been sending in variations on the story, first highlighted by Michael Geist that the CBC (Canada's public broadcasting offering) has stopped using Creative Commons music in its podcasts. That was first revealed in the comments to a recent show, when someone asked why there were no links to Creative Commons music (something the show had apparently done before). In response, Dan Misener wrote:
There's simply no Creative Commons music used in this episode. By management decree, CBC podcasts are no longer permitted to use CC music. Instead, we're using the APM Music library (http://www.apmmusic.com/), which is copyright cleared and fully licensed by the CBC.
People quickly (and rightly) started complaining that this was ridiculous, and then Lily Mills from the CBC tried to provide more info, saying:
It turned out that our use of Creative Commons licensed music was going against some of the details in collective agreements we hold with certain talent agencies. As such, we had to discontinue our use of it.
Of course, that doesn't make much sense. What sort of agreement would forbid you from using Creative Commons music? Later on, Lily tried to clarify, and said that APM was just more cost effective:
I asked around and it sounds like APM was the most cost effective choice for production music. We're actually simply piggy-backing off the use license acquired from CBC Television (a license that can be used for the entire network).
Again, this makes no sense. The Creative Commons music is free to use, so, how could that not be cost effective?
Eventually, Chris Boyce, the Programming Director for CBC radio chimed in to explain, that it's really about problems with "commercial use" restrictions on some CC music:
The issue with our use of Creative Commons music is that a lot of our content is readily available on a multitude of platforms, some of which are deemed to be "commercial" in nature (e.g. streaming with pre-roll ads, or pay for download on iTunes) and currently the vast majority of the music available under a Creative Commons license prohibits commercial use.
In order to ensure that we continue to be in line with current Canadian copyright laws, and given the lack of a wide range of music that has a Creative Commons license allowing for commercial use, we made a decision to use music from our production library in our podcasts as this music has the proper usage rights attached.
Now, that makes a lot more sense. The early responses didn't make much sense. And this is perfect timing as we've just been having some discussions on this very topic, explaining why commercial use restrictions might not be such a good idea, and even noting that I'm often hesitant to use CC content that has a commercial use restriction because almost anything could be seen as commercial use at times. While it's unfortunate that the CBC won't be using CC content in certain areas any more, perhaps this will give more people reasons to rethink the value of commercial-use restrictions.
I would guess that most of the artists featured in CBC podcasts who used CC licenses were happy about that exposure. Now they'll be missing out because of their worries about commercial use.
