There seems to be this continuing myopia in the recording industry, where they continue to insist that the only possible business model involves selling music directly. Hence the discussion at a recent industry conference where industry execs talked about how selling digital downloads doesn't work, so the answer must be subscription services (despite little evidence that most consumers actually want music subscription services). It's this weird disconnect that seems to stop these execs from realizing that the business model is not in trying to sell the pure music files anymore. Too many people just expect those for free. The secret is in giving fans a real reason to buy. That means adding real value beyond just the music. The music is free. That's just the way the market views it. Pretending its not doesn't save anything. It just annoys people.
At 75, an artist may be too old to write a new hit single, but that doesn't make them too old to sue someone famous with a new hit single for a large sum of money over 10 syllables from a 37-year-old song. Cameroonian artist, Manu Dibango, is suing both Michael Jackson and Rihanna for copyright infringement over his 1972 hit, Soul Makossa. The complicating factor is that Jackson was already sued decades ago for infringing the tune in his 1983 single, Wanna Be Startin' Something, and he had settled with Dibango, but now he's under fire again for allegedly licensing the infringing bit to Rihanna for her 2007 hit, Please Don't Stop the Music, without contacting Dibango to get permission. According to Wikipedia, Soul Makossa features a Duala chant, "Mama-ko, mama-sa, ma-ka-ma-ko-ssa," while a similar sounding Swahili chant, "Ma Ma Se, Ma Ma Sa, Ma Ma Coo Sa," appears in both Jackson's and Rihanna's song. Dibango is demanding €500,000, and that the courts block the labels from receiving any money from the allegedly infringing tunes until the matter is resolved.
Dibango has a history of making great music, but more recently, he served as President of the Cameroon Music Corporation, where he was known for defending intellectual property rights and fighting piracy. It's a real shame that you need to hire a law firm to make use of a catchy phrase from another song, but I guess that's what happens when everyone is focused on "protecting" their rights, rather than on making music.
Jon Lawrence points us to an article in Variety where a bunch of movie directors admit that they often look to other movies for ideas to "steal" in making their own movies. Of course, they don't really mean "steal." They mean that they use the ideas of others for inspiration and to build off of in creating their own films. Yet, these days, when there's been an ongoing push to make people think they can own ideas and concepts, that line between good ("inspiration") and bad ("stealing") seems to keep getting pushed further and further back, for no good reason at all. If people recognized that there's no real line at all, and being inspired by someone else to copy them is actually a great jumping off point for new art, we'd have a lot fewer silly lawsuits. I'm reminded of a passage in James Boyle's The Public Domain where he quotes Ray Charles on copying other musicians:
I knew back then that Nat Cole was bigger than ever. Whites could relate to him because he dealt with material they understood, and he did so with great feeling. Funny thing, but during all these years I was imitating Nat Cole, I never thought twice about it, never felt bad about copying the cat's licks. To me it was practically a science. I worked at it, I enjoyed it, I was proud of it, and I loved doing it. He was a guy everyone admired, and it just made sense to me, musical and commercial sense, to study his technique. It was something like when a young lawyer--just out of school--respects an older lawyer. He tries to get inside his mind, he studies to see how he writes up all his cases, and he's going to sound a whole lot like the older man--at least till he figures out how to get his own shit together. Today I hear some singers who I think sound like me. Joe Cocker, for instance. Man, I know that cat must sleep with my records. But I don't mind. I'm flattered; I understand. After all, I did the same thing.
Yet, these days, if you sound too much like someone else, you get sued.
Remember Ruckus? That was the attempt by a former recording industry guy and a former Napster employee to create an online music service that colleges would pay for, but which students could use for "free" (free in the sense that students wouldn't be paying for it directly). When we pointed out how lame the service was, we actually got angry emails from some folks who insisted that it really had revolutionized the campuses who had bought into it. In fact, the recording industry used this argument in its big push to force universities to sign up for Ruckus.
Apparently the revolution was short-lived -- and without government help to force colleges to subscribe, Ruckus has shut down. For some of those who got their music from Ruckus, the DRM on the tracks means that the music will be unplayable. Some tracks are still playable, but will apparently die once they hit their "renew date" and can't find a DRM server to renew. Yet another recording industry backed solution to the "piracy problem" that wasn't. At what point does the industry finally realize that piracy isn't the problem at all?
The fight between music bloggers and record labels reached its most visible point when a guy who uploaded a leaked copy of the latest Guns N' Roses album to his site got arrested by the FBI. But many music bloggers are now fighting a much more invisible menace, with posts they've written suddenly disappearing from their sites (via Tyler Hellard) hosted on Google's Blogger platform. An RIAA source says that the group sends Google a list of URLs it doesn't like, and Google "then deals with the problem." Google says that it notifies bloggers after their posts have been taken down, in accordance with the DMCA. But it should hardly be surprising that many of those affected say they've gotten no such notice, nor that the offending material was either legally posted and/or supplied by the labels themselves. So two possibilities emerge: the RIAA is filing false DMCA takedowns, and/or its legal right hand doesn't know what the labels' promotional left hands are doing. The upshot of this is that lots of music bloggers say the threat of landing in legal trouble -- particularly for posting music supplied to them by labels and artists -- is having a chilling effect on them, and could eventually stop them from blogging, shutting down a valuable promotional tool for the labels. That sort of shooting itself in the foot, though, seems to be the record industry's specialty.
Embedded here is the 15 minute (trust me, it goes by quickly) presentation I did at MidemNet on January 17th in Cannes, France. If you're reading via RSS or another site like iGoogle, click through to see the full presentation. Sorry it took so long to get the video up. There were a few minor technical difficulties. Anyway, the presentation garnered an interesting reaction and a whole series of fascinating discussions over email, in person and over the phone since I presented it, and while I don't want to repeat what's in the video, I did want to discuss a few points raised by the presentation. The core of the presentation is the following simple "formula" that is the basis for making money in the music business (and, I'd argue, many other businesses) in the digital era:
Connect With Fans (CwF) + Reason To Buy (RtB) = The Business Model ($$$$)
There are many artists -- famous and not so famous -- who have been making use (on purpose, or not) of this formula to create successful strategies for building up a stronger fan base, creating wonderful new works of art, distributing them out to the community and getting paid for it at the same time. What made Reznor so interesting as a case study was the fact that he's done it so many times in so many different ways that he, by himself, represents a great example of how you can approach this simple formula in an infinite variety of creative ways.
One of the issues I've had in discussing recording industry business models is that we always hear excuses for why a, b or c won't work. "Well, that guy can make money selling t-shirts, but this guy's fans aren't t-shirt types." "That guy will sell concert tickets, but this guy doesn't like to perform." "Maybe some fans will pay upfront, but people are so greedy that most will just free-ride." It's all excuses. They all want a simple model that everyone can follow, but the point here is that while the model itself is simple, executing on any business model is difficult.
It's about applying that "simple model" in a variety of different creative ways -- which Reznor has done time and time and time again. Hell, I couldn't even include all of the examples of Reznor's successes in this single presentation, let alone successes by other musicians who have executed differently -- but all of whom connected with fans (CwF) and then gave them a real reason to buy (RtB).
A second point that needs to be discussed is that a true reason to buy (RtB) is a voluntary transaction. Too often we've seen musicians or other content creators think that there is some sort of obligation to buy. And, so they put something out with a price tag, but without doing a very good job convincing fans why they should buy. There was no real reason -- and then they seem to lash out at their fans for hurting them. The fault, however, lies with the musician (like any business) who failed to give a proper reason to buy, and falsely assumed that fans had some sort of obligation to buy. If an artist believes there's an obligation to buy, fans will often educate the artist very quickly.
One final point on this is the last question that people often raise: why should the musician be involved in any of this? Shouldn't they just be creating music. There are two answers to this. First, this is exactly where a smart record label, agent or manager can come in and be quite helpful. Let the musician create the music and let the "business guys" focus on applying this business model. Second, however, is that due to the way the industry is these days, the musician does need to be somewhat involved. You cannot connect with fans if you're in seclusion. If you don't want to make the effort to connect with fans, then that's fine: you won't have that many fans. It's a choice you make.
That said, there are tremendous opportunities allowed by new technologies, new communities and new methods of communicating today. They all enable better ways to connect with fans, and better ways to offer real reasons to buy. Those who look at the past and complain about what's been lost need to turn around and look at the vast open fields of opportunity in front of them. There's a lot more music to be made, a ton of new fans to make very, very happy -- and, yes, through it all, an awful lot of money that can be made as well. You just need to stop worrying about what was lost and recognize all there is to be gained.
A bunch of folks have been sending in various stories about Groove Armada's experiment for distributing its latest music. The program, which was actually launched at Midem a couple weeks back, is explained (somewhat) in the following video at that event:
There are a few elements here that are interesting and make sense... and a few that seem a bit questionable. First up, the musical group left Sony BMG last year and rather than signing a deal with a new record label, instead partnered with drink brand Bacardi, which has a long history of sponsoring music and live music events. This was interesting and followed on similar experiments by brands like Tag body spray, which launched its own record label recently, as well. It also followed on the massive success some musicians have seen in China by focusing on "sponsored" music.
That happened last year. What was new that was announced at Midem was the ability for people to download and share songs from an upcoming EP. I'll let reader SteveD summarize the good and bad:
The good:
DRM-free music promotions though corporate sponsorship
Opt-in mailing Bacardi list rather then Opt-out
Very polished; quick sign-up, hassle-free download, links for inviting friends and facebook app supplied.
The bad:
Treats access to music as a value-adding service in itself
Restricts further access to content until you've invited x number of friends
'Rewards' system is really just a way of getting you to abuse you address book for them (access to all 4 tracks requires you spam 2000 friends, according to site Q&A).
To the "bad" list, I'd add the fact that the program is only going on for a month or so, and then the special "sharing widget" goes away. Again, there's plenty to applaud here in experimenting with new models, especially involving sponsored content and giving away music for free. However, the execution involving spamming of friends leaves plenty to be desired. That's not so much about connecting with fans as forcing yourself on people who aren't interested.
We recently wrote about Corey Smith, a musician who had gone from a weekend amateur to supposedly earning $4.2 million last year. We took that number from our source, though some folks in the comments questioned it. Bruce Houghton was kind enough to republish my post, and there was some skepticism in the comments there as well. So, Smith's manager stopped by Hypebot to clarify: it turns out that Corey grossed $4 million last year, not $4.2 million. Specifically, it was $3.5 million in touring and $0.5 million in merchandise. He also clarifies that these are gross, not net, numbers, but I don't think anyone was assuming otherwise. Even if we assume (for sake of argument only that the margins on all of this is 10%, he still did damn well, and I'm guessing the margins are significantly higher. One point that I did want to clarify, which Corey's manager didn't do directly, but which led to some confusion in my initial post: while he does offer $5 tickets to his shows, it does not mean that all tickets to all of his shows are $5. That may help to explain some of the discrepancy as well.
We've covered how various performing rights societies have grown more and more desperate over the past few years -- including going after auto repair shops because their mechanics, out in the garage, played radios loud enough for customers in the waiting room to hear. That, to these societies, represents a "public performance." Reader John points us to an even more insane example. Apparently, PRS, in the UK has even taken to phoning up small businesses, and if they hear music playing in the background, they demand payment:
Robson, 75, who was targeted last year, said: "There is usually only me here and I like to have nice relaxing music. The woman said she could hear music in the background. I thought, 'My God, you’ve got good ears.' She asked how many of us were here listening. I said me and sometimes the dog. Eventually, after I made a fuss, they apologised and said I would not be bothered again."
John Collins, 57, who runs a software company from a room at his home in Welwyn Garden City, Hertfordshire, received letters saying he needed a licence for the classical CDs he played while working. "If my wife Susan brings me a cup of tea and hears the music then I might be liable," he said.
Apparently even playing music to animals is considered a potential public performance to PRS:
Even dogs and cats do not always escape targeting. Follybridge cattery near Peterborough and Stokenchurch dog rescue centre in Buckinghamshire, which play Terry Wogan’s Radio 2 show to their "guests", were both told they would need a licence in case any workers heard the music.
Yes, they're really reaching for that point where you'll need a general license just to listen to music yourself.
I got to spend some time with the organizers of Midem when I went there last week, and beyond doing an incredible job putting together a great event they actually have a really comprehensive view of what's happening to the market. Unlike some of those in the industry they serve, the Midem organizers not only have a really clear understanding of the market changes, but they seem to be working quite hard to adjust to the times -- and they've done it before. Midem actually started (and still functions) as a "marketplace" for buying and selling music rights around the world. So, for example, deals would be made where someone would buy the European rights for a hot new American artist or whatever. Somewhere along the way, the organizers realized that with so many folks from the industry all there together, it made sense to go beyond just a marketplace, and they added a conference on top of it. Then, ten or eleven years ago (well before many other folks) they realized that the internet and digital technologies represented a profound shift in the marketplace -- and they added MidemNet on to the beginning of the event, having two days that are just focused on digital issues.
There was one thing that struck me, though, during the event -- which is that separating out the digital part as a stepchild doesn't necessarily make much sense anymore. While they do include some digital/online things during the rest of the event, having the digital part as a "separate" event feels like it's a minor side issue, rather than a core trend changing the market. I had thought of bringing that up to the organizers... but, not surprisingly, it sounds like they're already ahead of me on that. Hal Bringman has a writeup on Midem for Digital Media Wire, where he notes that the director of the event, Dominique Leguern, says that they're considering merging MidemNet into the wider Midem as the industry is evolving into a fully digital domain. Also, Leguern made a key point that plenty of people have been making for a while:
"It's not a music industry crisis, it's a CD crisis."
Indeed. It's great that Midem is in such good hands. As an "insider" music industry conference, it wouldn't surprise anyone if the organizers acted like some of the old school execs in the industry -- focusing on the past and creating an echo-chamber of people trying to recapture a lost marketplace. Instead, they've been forward looking for many years, and working to change along with the market -- and even trying to help pull some of those execs along with them.
