John Mellencamp: Back In The Good Old Days...

from the they-don't-exist-any-more dept

A bunch of folks have been sending in John Mellencamp's essay on what happened to the music business. It's a worthwhile read from someone who's been through a lot -- and you can even forgive the silly "you can't comment on the industry unless you've recorded an album" rhetoric we were just laughing about. While some might quibble with the specifics, the point Mellencamp makes is that the industry "went Wall Street," and focused on what it believed was the best way to generate profits -- pushing a very top down approach. This generated some dollars in the short-term, but at the long-term expense of the music business.

Or, at least that's how he views it. I know that we're not supposed to comment on the business -- never having recorded an album and all -- but, from a fan perspective (which I think enables me to comment), I'm enjoying much more music than ever before (yes, legally obtained, thank you) -- and much of it is significantly better than what I heard back in the "good old days." The issue is that it's not the super popular music that plays on the radio -- but as a fan, I need to dig it out a bit. It's really not that hard, though. I find a few folks who have similar tastes to me, and I trust them to make recommendations.

Sure, the top 40 business that made Mellencamp famous might no longer exist, but that's not the music business. Mellencamp complains about the fact that new measurement systems got everyone focused on radio stations in big markets -- but ignores the fact that these days radio doesn't matter nearly as much as it used to. There are all sorts of ways for fans to get new music. And, sure, he complains that he doesn't want to be PT Barnum, but he doesn't need to be. If he hooked up with a smart label or business partner who handled that side of it, he could just focus on the music. Finally, he talks up how wonderful it was that his success came from "the bottom up," with songs starting to play on one radio station and then spreading across the country... though, he conveniently leaves out the payola that his record label likely put behind the record to get it onto different stations. Bottom up or greased palms?

While you can understand where Mellencamp is coming from, it seems like once again, it's someone who's complaining about "the way things used to be," and refusing to recognize that there's tons of opportunity in the new model and tons of wonderful music being created, listened to and shared every day. It may be a different business than it used to be, and that may make it more difficult for John Mellencamp to have hit songs like he used to, but for plenty of us fans, we're living in an era of opportunity and wonderful music. It would be great if John Mellencamp stopped by and checked it out.

Filed Under: john mellencamp, music, music industry

Lars Ulrich To Ask Trent Reznor For Music Business Advice?

from the wow,-didn't-see-that-coming dept

As most folks know, Metallica was an early "skeptic" of online music, with drummer Lars Ulrich leading the way -- suing Napster and complaining about iTunes. In many ways the band, and Ulrich specifically, became the face of the big anti-fan, anti-internet rockstar. More recently, the band has tried to change that image, working hard to embrace the internet a bit more, and even shrugging off the fact that the band's new album was leaked online. However, those early actions really hurt the band's reputation, leading many fans to boycott the band and refuse to buy any of its new music.

Still, even as the band (and Ulrich specifically) has been working over time to try to rebuild the band's online credibility, I didn't expect this: Ulrich is apparently excited to pick Trent Reznor's brain about music business models:

"We're doing a bunch of shows with Trent this summer in Europe. I look forward to sitting down and talking to him about what's on his radar."

That's certainly quite a shift, considering that Reznor has pretty fully embraced online distribution, including file sharing and things like BitTorrent. So, now we just have to see if Ulrich actually learns some of those lessons.

Filed Under: business models, lars ulrich, metallica, music, nine inch nails, trent reznor

There May Be Hope For The Recording Industry, Yet

from the let's-wait-and-see... dept

As noted, I'm at the Leadership Music Digital Summit to give a keynote talk tomorrow. Today's keynote is from Rio Caraeff, the executive VP of the eLabs group of Universal Music Group. Listening to his talk, it's impressive to see that it appears someone within Universal Music Group actually seems to understand what's going on. That may seem a bit dismissive of Universal Music Group, but it's not my assessment, but what the CEO of Universal Music Group flat out said just a couple of years ago, in noting that he had absolutely no clue about digital music and didn't even know how to hire the right people.

Caraeff, however, seems focused on all the right things. He talked about how access to music is more important than possession. He talks about how it's the experience that has always made music valuable, noting "you can't steal experience." In fact, he points out that the concept of the album is dead, but that UMG (and others) need to build a true "living album" that goes beyond the music: adding a full experience that can update over time, that allows fans to access the music however they want, and that enables interaction with that music -- including fan participation and user-generated content associated with the music. And he wants it all built on open standards, to avoid a situation like the Blu-ray consortium where only a few companies have control of the system.

"How do we compete with piracy? It's creating a unique experience that can't be easily replicated through file sharing."

He then goes on to say that the business of "licensing music" is a dead end because it's just not scalable (whoo hoo!) noting that it's killing innovation. Even saying that they need to acknowledge that they need to enable letting a thousand innovators bloom.

He did admit that the team at UMG is still struggling to figure out the best way to make money in this new world -- but he recognizes this is where things are going:

"I'd rather have access to all my music, tv shows and movies anywhere on any device, rather than "own" 100 files. This is going to be a swift transition. It's taken us less than 10 years to go from plastic discs to digital files. It will take 5 years or less to go from digital files to cloud-based services, which will make the music even more valuable."

This is all good news. It's someone who clearly recognizes the shift that needs to be made by a major record label. But, the real question is how much influence he actually has at Universal Music Group. We've seen similar recognition among employees at other record labels, including Warner Music and EMI -- but the "top management" at both of those firms has continued to go in the opposite direction, focusing on stomping out innovation, rather than encouraging it.

Unfortunately, this may be a real issue. He did admit:

"Universal Music is a big company and not everyone there is on the same page, but I was put into this job to make these changes. Turning a big ship around is slow. It's not a lack of desire, but it's a question of when not if. A lot of what I do is talk and evangelize to others within UMG to try to raise the consciousness level about where our business is going, to bring us to a path to growth again. It's not about how do we stop the decline of our business, but to find another billion dollar business for us. I'm not interested in how to I sell more MP3s on Amazon or to create new competitors to iTunes. That's important, but that's not going to transform our business. It's difficult in the day-to-day grind to turn a big company around, but it starts with passion. Passion sells. This is how it works."

It's great to see some optimism coming from within one of the major labels, recognizing all of the opportunities out there. Hopefully, it actually leads to something useful.

Filed Under: access, experience, music, music business models, rio caraeff
Companies: universal music

Yet Another 'Savior For The Music Industry' Shuts Down

from the down-down-down dept

Over the last few years, as the recording industry has finally started to at least come to terms with the idea that its market is changing, industry insiders keep looking for "a savior." That's a new tech-focused company that will somehow come up with the magic model that revitalizes the recording industry's revenue stream. You begin to notice a pattern with every one of these: the hype is never based on users flocking to the service. They're always based on a big PR campaign and quotes from recording industry insiders. In the early days, there was PressPlay and MusicNet. Then, there was the "new Napster" and Rhapsody. More recently, there's been SnoCap, TotalMusic, Qtrax and plenty of others. They get buzz, with the stories reporting how the industry is "supporting" these innovative new startups. But they never seem to go anywhere. The latest is SpiralFrog, which got some buzz for being "ad supported" music, which has never made much sense to us. It's now shutting down, just as pretty much all of the other "saviors" have done.

And yet... file sharing sites are thriving.

It all comes down to the same thing: you don't compete with free by being lame. And, all of these "saviors" have focused on paying the record labels first, and giving users a reason to use them second (or sometimes even further down the list). The record labels are desperate for new revenue, so when they make these agreements, they're so costly that it's impossible for any of these startups to make money -- and since they're bound by all sorts of restrictions, the services tend to not be very compelling anyway. That's a recipe for disaster. Perhaps before the press declares the next major label-backed music startup the "savior" for the industry, the reporters should take a look at the littered path of failures.

Filed Under: ad-supported music, ads, music, music industry, recording industry, savior
Companies: spiralfrog

Reznor Does It Again: Releases Free EP Of Unreleased Tracks From NIN, Jane's Addiction To Support Tour

from the go-get-'em dept

Trent Reznor sure has a way of releasing new experiments just before I'm about to give a presentation about him. He did it right before my MidemNet case study about his experiments, and now that I'm getting ready to an updated (and expanded!) version of the presentation at next week's Leadership Music Digital Summit, Reznor has launched a new website called NIN|JA 2009 in support of the new tour Nine Inch Nails is doing with Jane's Addiction (and Street Sweeper). The site has a streaming playlist from all three bands, along with the ability to download an entirely free EP of unreleased tracks (two from each band) in exchange for your email. And, not surprisingly, the page lets you get more info on the tour.

It's not particularly different than the release of The Slip, but shows that he's continued to combine these two factors of connecting with fans (often via free music) and immediately giving them a real reason to buy. Oh yeah -- and he still did it in a fun way for the fans. Last night, on Twitter, he alerted people that the site would be going live today, but then had fun with it this morning -- giving people a 3 minute countdown following by a bit of joking around, first backing it up to 5 minutes, saying someone had kicked the plug out of the wall, then geekily pretending to be a clueless Windows user:

• trent_reznor: So... anybody know what it means when your PC's screen goes all blue and wont do anything? Give me a sec here.
• trent_reznor: An exception has occured at 0028:C11B3ADC in VxD DiskTSD(03) 000016660. It may be possible to continue normally. ????
• trent_reznor: Come on, people - you know me better than that.

And with that, the site launched. Time to go update the presentation...

Filed Under: business models, concerts, fans, jane's addiction, music, nine inch nails, trent reznor

Is The UK Turning The Policing Of File-Sharing Over To The Copyright Cartel?

from the inmates,-asylum,-etc. dept

The UK released its "Digital Britain" report a couple of months ago, and it was derided not just because it was very vague, but also because it caved to the interests of the recording industry. The extent to which that's the case is slightly staggering. The British government has now released some details on part of the plan that would create a "Digital Rights Agency" -- a government-backed industry body to tackle file-sharing. The government says that the group wouldn't have any enforcement power, but that it could be "backed up by legislation." That sounds an awful lot like giving the copyright cartel the ability to set the rules on what people can do online, which will certainly only benefit them, and not the public -- just in case you wondered whose "rights" a Digital Rights Agency would seek to protect. The justification for such an approach is pretty appalling. The report says that consumers' attitudes towards content has changed, and that they're not willing to accept limitations on how and where they access it. Smart businesses would see this as an opportunity to change their business model and create new products and services that fit consumers' changing attitudes. But instead, the likes of the recording industry go looking to government to get a legal stick with which to beat customers to fit their outmoded business models.

Filed Under: file sharing, music, recording industry, uk

Topspin Shows That Premium Offerings Get Sales: People Will Pay For Value Beyond The Music

from the a-reason-to-buy dept

It's really been great over the past year or so to see more and more bands adopting business models that involve tiered "premium" options that add real value for fans -- the key to creating a real reason to buy, as discussed in my MidemNet presentation a couple months ago. We've seen all different variations on the tiered theme from Trent Reznor to Kristin Hersh to Jill Sobule to John Wesley Harding and many others. Personally, I still think that the most creative of the bunch is Josh Freese's tiers that go from just fun to ridiculous (one option lets you keep his car -- after you drop him off at home).

One of the companies that's doing a good job helping some musicians make this model work is TopSpin, who we've discussed before. In fact, TopSpin has helped Reznor and Freese with their offerings (as well as the Beastie Boys, who recently launched something similar, as well). With TopSpin's platform coming out of beta this week, the company has released some data on its success so far, and it's impressive -- especially for those of you who keep insisting that fans these days just want music for free and are unwilling to pay for anything.

• Its campaigns have certainly helped bands grow their audience and improved ways to connect with fans. One of its first major projects was the release of David Byrne's latest album, and it increased his email list by 3000%. (Update: Originally we said 37%, but that was wrong. It's actually 30x, or 3000% as per Topspin).
• The various projects have shown that people are quite willing to pay if they're provided with real value and given a real (rather than artificial) reason to buy. The average transaction price is $22 -- significantly more than what people are paying for "just the music" and even more than what an average CD costs.
• Perhaps the most appealing stat: on a recent project 84% of the orders were premium offers above the lowest tier. People will pay more for being given real value, rather than just being forced to pay for the music.

This is great news. Unfortunately, TopSpin is still rather limited right now to bigger name artists (they pick and choose who they work with). I think the world is open for another player to come in and disrupt the market by making such systems available for anyone. Also, in the various projects that TopSpin has run so far, I still think the pricing is a little off (Reznor's was the exception, and he only used TopSpin's backend, rather than its whole program). Also, it seems pretty rare for artists using TopSpin to offer a free option, which limits opportunity greatly (and drives folks to file sharing, rather than opening up a better relationship with those fans, and maybe gaining an email contact and the ability to create sales later). This is (I hope?) an issue from the musicians' side, rather than TopSpin's.

It's also worth noting that the company has also announced a program with Berklee College of Music to teach courses to musicians in how to leverage TopSpin for better business models. Hopefully at least some of that class will include an explanation of how using free as a part of your business model can extend it even further.

Filed Under: business models, music, platforms, premiums, reason to buy
Companies: topspin

Feds Ask For Jailtime For GNR File Sharer

from the with-fans-like-these... dept

I have to admit that I'm still confused why the FBI was spending time going around arresting the guy who put up Guns 'N Roses' latest album, rather than focusing on issues that really matter these days. The arrest alone actually led to much more downloading than if they had just let it go. Yet, now, following a guilty plea, the feds are demanding a six-month prison term for the guy. For promoting the band. Considering how much downloads picked up after the news of the arrest broke, why isn't anyone demanding that we put the FBI agents who spent taxpayer money on this behind bars for even longer? Sure, unauthorized sharing of files breaks copyright law, but it's difficult to come up with any reasonable explanation for (a) spending taxpayer money on having the FBI track down and arrest the guy and then (b) sending him to jail. Every album that's released gets leaked online -- and plenty of musicians have learned how to use it to their benefit. That should make it clear that getting your music leaked online isn't about any economic loss. It's all about what sort of business model you choose. So, because Axl Rose chooses a bad business model, some guy who was sharing GNR music needs to go to jail and the FBI and the Feds need to be involved? Doesn't something seem wrong with this picture?

Filed Under: copyright, fbi, file sharing, guns n' roses, jailtime, music, promotion

Terry McBride: Songs Are Not Copyright. Songs Are Emotions

from the getting-there... dept

Last year we wrote about a fascinating interview with Terry McBride, the CEO of Nettwerk Music, a Canadian record label that has proven to be quite innovative with its business models (and quite successful). He's really focused on helping musicians build up valuable brands, and then being able to make money off of those brands by being consumer-friendly, rather than consumer-antagonistic. One of the examples mentioned in that interview was a new album coming out where before the album was even released, the raw files were put online for fans to download and mix themselves. As he said, it wasn't "remixing," it was "premixing." And, the plan is to take the best of those and release the actual album in two formats: the official mix and the best fan mixes.

There's now another interview with McBride at the Future of Music site where he talks more about his vision of a music future where people effectively pay not for the music, but for the convenience of a "music valet" that does a better job organizing and finding the music you want when you want it. I'm still not convinced this is how things eventually work out, but it's certainly worth thinking about.

However, there are few statements McBride makes that are worth highlighting. First are two statements I agree with, and then one I don't:

People have always been sharing music. Why would I want to stop them? Why would I want to tell them what to do? The way to win was to get them to support my artists, not to force them to do it a certain way. I know I wouldn't like anyone telling me that.

This is a huge point that is so often missed by those in the industry who are focused on "protecting" and "control" rather than recognizing how people want to interact with musicians. The thing that I find most ridiculous from those complaining about file sharing is that they always make some statement along the lines of, "people who are sharing my files aren't fans, because real fans spend money." Of course, if that's true, what's the problem? The people who aren't fans aren't paying and (based on that statement) the real fans will pay. So, there's no problem at all...

Songs are not copyright. Songs are emotions.

Indeed. And that's the point. Do people pay for emotions? No. However, emotions will impact what people will pay for. However, despite agreeing with McBride on so much, I think he goes a bit off-track with the following:

Out of all of the sharing of music, who's making an economic return? Whoever is should then share that with all the people that allowed it to happen, creating a nice alignment of interests to grow any business. A lot of the providers have viewed music as free content, while at the same time paying for the cable content to grow their networks. They've been making money off the backs of the artists without any compensation for the artists at all. I think that's fundamentally wrong. I've also said it's fundamentally wrong to go after the consumers that are using that opportunity. That's not the right approach either. The phone companies and the cable providers have gotten away with murder in this whole situation.

This is the blame game and it's missing the point. The ISPs haven't "gotten away with murder." They've simply put in place a reasonable business model based on fundamental economics -- and there's nothing stopping plenty of others in the music business from doing the same. Demanding those who have figured out how to make money share with those who haven't isn't the answer either. There are business models that work just fine for those creating the music that don't require demanding anyone else share their profits. You just focus on coming up with real scarcities that give people or companies real reasons to buy and there are tons of business models that work.

Filed Under: business models, labels, music, terry mcbride
Companies: nettwerk

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

from the oh-come-on dept

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:

1. 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.
2. 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.
3. 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.

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