Music as Commerce: Understanding a Mindset - hypebot

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Glenn

Ironic that this post shows up the day after the launch of Vevo, an attempt to begin a genuine shift away from the CD-based business and monetize music in a new way.

Look...music has long been a commercial product. Before the CD, before radio, it was commercial. The music business has been transformed many times over. We're in the midst of another transformation. And the "culture, not commerce" debate has come up many times. But at the end of the day, the music people love and the way they experience it is brought to them through through commercial means.

Music is both culture and commerce. They are inseparable -- from superstars like U2 to unknown bands that play local clubs for free beer. That will not change.

Kot's "single-minded pursuit of profit" line is hilarious. Is there some other goal of a corporation? I must have missed the presidential order that decreed corporations are allowed to slack off and return less than maximum returns to shareholders. Maybe that means some artists (especially the ones that are fortunate enough to self-finance their development) need to re-think their involvement with corporations. That's fine. Artists that do not agree with the Milton Friedman view of corporations are free not to sign up with multinational corporations. They have always had other options.

Krzysztof Wiszniewski

I find the opposition of music as culture v. music as commerce to be a misstatement and worse: designed to mislead. There is no such thing. The cultural influence of music will always be prominent as long as people continue to listen.

However, the creation of music is subject to economic restrictions, which is where music as commerce comes in. Ideally, the two should be complementary: a market that rewards music most sought after by listeners both ensures cultural development and incentivises the creation and promotion of new music.

This is not the market we are seeing.

Quite the opposite, the trend now is to reduce the price of music, with the ultimate goal often presented as a couple of dollars monthly for access to all music ever created (through "cloud-based" subscription services). That is of course, unless the ultimate goal is presented as "free music for everyone". In the long run, such a vision will damage the potential to create and promote new music (because it will become a non-profitable activity, for the musicians themselves no less than the recording industry) and in effect, the potential of cultural growth through music.

All the erudite quotes about "bottom-up value creation" beg the question whether there is enough real demand among listeners for this to be a scalable strategy. It apppears to me, that the majority of the market is composed of casual listeners who'd much rather get the flavour-of-the-month served up on a plate, rather than go questing for obscure new music. While it may be possible for an artist to emerge from a local level based solely on hard work and slowly accumulating assets for expansion, it is hardly an efficient way to do it (not to mention the fact, that the sheer amount of time needed for slow and steady growth will be a killer factor - unlike most small businesses, musical artists can be hard pressed to earn a susistence income for years and there is only so long you can continue an unprofitabile activity, before you decide to quit and do something else). Paradoxically, the industry funding model allows for a much greater scope of experimenting with new product on a large scale - provided the industry remains healthy.

In conclusion, the maintenance of music as culture will depend greatly on the viability of music as commerce - just as in any aspect of human endeavour. On an aside, I've noticed much of the quoted material bears a marked resemblance to the rethoric of Marxist scholars (especially when declaring the inevitability of social change on a given gradient and decrying the opposition of business to adapt to this gradient - without addressing whether and how such an adaptation is even possible). As someone who had the opportunity to experience practical Marxism first-hand, I am willing to disregard such a mode of argumentation outright.

I advise others to do the same.

Kyle Bylin

Glenn, your right, as that was definitely an unintended coincidence. I’ve had How The Mighty Fall since the middle of August and simply hadn’t found a way to weave it into an essay. Also, the way that you’ve framed Kot’s remark does put a different light on it, but after reading though Rushkoff’s Life Inc., that’s what framed by perspective on how corporatism has shaped our perceptions and the landscape before us.

Being the curious person that I am, it leaves me to explore an idea first, and then consider whether or not I want to accept the ramifications later. This is a rather public way to learn how to think about a topic like this, but that’s what this is, learning, in the form of thesis’s and puzzle pieces. How does the institutional decline that Collins wrote about relate to Knopper’s arguments? I want to know. I want to explore the idea.

If Hypebot readers, like yourself, who are way smarter than me, criticize or don’t agree with an essay I wrote, then I get a learning experience that’s far more valuable than if I wrote an essay that everyone liked. If I write something and someone shrugs their shoulders and murmurs that I’m an idiot then I’ve done far worse than if they actually engage the idea and seek to correct my thinking.

Suzanne Lainson

There are so many economic issues looming ahead that I see much to deal with beyond major labels:

1. Fuel prices have come down enough that right now bands aren't having to deal with that. But it's still a problem in need of a solution. Sooner or later we need to reduce the cost of transportation, or bands and fans will need to stick closer to home.

2. Worldwide recession. People don't have as much disposable income as they used to. I'm one who thinks it will become a permanent downsizing. If you are trying to get by with less, you probably won't buy as much music-related merchandise.

3. More user-generated music. That's where I think music is headed. I think more people will make music, and fewer of them will collect enough fans to sustain themselves solely from music. And maybe that is progress. If everyone creates music rather than serving as passive fans, music may return to what it once was: something you did for self-expression and community-building rather than profit.

Old Record Guy

Kyle;

I enjoyed your piece a lot, and it think it advances a lot of interesting theories. If one works backwards from the situation the music industry finds itself in today, there seems to be a thread of logical deduction that seems to help explain all the mistakes. But it's a lot easier to look at a scenario this complex in hindsight and point out mistakes. Living it wasn't so simple.

As someone who worked for several majors in "new media" from its emergence in the early 90's thru 2005, I can say that the decisions made at the time were based on a variety of factors. It wasn't as simple a a picture as "greedy, stupid guys wearing black hats" - there was a long history of how business was done, the industry had faced many challenges before and survived, and let's face it, few people really knew how much digital media would change the world eventually. Least of all record people, who might know how to break a band, but none were exactly MIT grads.

People forget that the "music industry" is/was not just major labels - it was retailers, radio, rights societies, management companies, press, and of course artists. All of these parties had a symbiotic relationship, one that had been shaped over decades. And it worked - not all the time, and not always fairly. But bands got signed, records got made, articles got written, songs got on the radio, fans saw their favorite bands play live, and a lot of recorded music got sold.

Some artists got rich; most didn't. Some got completely screwed. Some artists who didn't even have homes had millions of dollars invested in them. No bank or VC would have given a nickel to most of them.

One thing everyone in the industry was guilty of - they wanted to keep making money off music. Nobody wanted to earn less money, whether or not consumers or Shawn Fanning or Michael Robertson thought they should. Everyone wanted to keep making a living with music, and that's what EVERYONE - artists included - were trying to protect.

But we all know how hard that is now. While we're checking our rearview to say how arrogant and dumb the music industry was to fight the change, let's also examine the current state of the business. The perceived commercial value of music (and many other forms of content) is lower than it's ever been. Artists who used to make huge sums off their back catalog have seen the revenue slow down to a tiny drip. Artists have all these great DIY tools, but few have the time or inclination or in some cases understanding to take advantage of it. And when they do immerse themselves in the new world, it's not too long before they ask where the ROI is.

The music industry of today is still fighting the changes, which is futile. But if you could go back in a time machine to 1993, and show everyone in the business how things would turn out in 2009, I'm not sure they would embrace Napster, or do things all that differently. I fact, I think the industry would have fought even harder, knowing that it was all going to fall apart. Some would call that stupid, or arrogant. But are we really better off now? We will be eventually, but not yet. I bet there are many artists who wish things were still the way they used to be. Don't get me wrong, there were so many things wrong with the old music business. But let's not forget it brought us all a shitload of music we love. Everything that gets written now about the old industry ignores that, which is revisionist bullshit.

I don't lament how things are, or wish for a return to the old days (well, maybe the salary....) It's a very exciting, transitional time for how music is consumed. And certainly we all keep hoping that an artist messiah will emerge from this sea of equal opportunity, and rise above the white noise without help from the machine.

One last thing - tt seems the only people who assert the music business was only about money, not about the music, are those who never actually worked in the business. Like any business, money was important, but not just money. It was always about music too. Anyone who was actually there knows that, and it shouldn't be forgotten or dismissed.


Suzanne Lainson

Although I didn't work at a major label, I've watched it all unfold and I also don't see that there could have been a workable solution. I got online and involved with online media in 1993. I was working part-time at the Apple Media Lab, which was in Boulder then. We were discussing how to creative profitable online media businesses to serve newspapers, readers/consumers, and advertisers.

We were looking for profitable solutions. Little did we know that a few years later a lot of unprofitable dotcom companies would get funded. We didn't realize that it wasn't necessary to create businesses that had a sound business basis. All you had to do was to convince some venture capital people to throw money at you, then take your company public, and then take the cash and run before the company collapsed.

In 2001 I was writing about VCs, start-ups, and tech companies, and also working with musicians. I knew the Internet had disrupted the music business, and I thought someone would come along to make money from the change. Now nearly 10 years later, I see the extent to which the disruption has come, but I haven't seen anyone other than Apple make money in music because of the disruption. In the past year I've started to tell people not to expect to make any money in music, accept that, and make music because you love it.

Music has become so diffuse, that I don't think there is the critical mass anymore to make it profitable. But on the other hand, I think the technological tools are there to allow virtually everyone to create music. So we can all do it for fun, self-expression, and community. Maybe having a culture of working musicians is going away, and getting replaced by a vast supply of music where everyone contributes a little bit.

Suzanne Lainson

That should have read "how to create profitable online media businesses."

Geoffrey Kidd

The real problem in the movie, music, and publishing industries is that they are, in general, not run by people who love the product. They are not fans. They are business people, lawyers, and accounts, and their interests run to money and control, not quality or culture. And, of course, they don't see the "commercial mindset" as a weakness.

Old Record Guy

That may be true in terms of the CEO's, but that isn't unusual. They're supposed to put people in place who do love music. Shareholders don't see a "commercial mindset" as a weakness - they expect it. The CEO's usually give label heads a free hand to release anything they like, so long as it sells.

Even the tiniest indie label releases music that it hopes has some commercial potential, otherwise how do they pay the bills? The problem is that the ROI on artists that require development takes time, and shareholders want results every quarter. The biggest mistake that big music companies ever made wasn't Napster, it was going public. When it was Ahmet or Jac Holzman doing their own thing, they didn't have this concern.

Having worked for majors for 20 years, I can say 100% that plenty of people who love music worked at all of them. What labels did you work at, Geoffrey?

wallow-T

Old Record Guy validates one of my arguments -- in the Good Old Days, the execs at the top of the music companies did not have to answer to anyone who did not love music. After the labels were corporatized, the music bigwigs did have to answer to even higher management who were only concerned with dollars, and who would have been just as happy selling bags of hammers.

As I like to phrase it: is the market a tool, or is the market a God? -- Do market economics offer a way to manage resources to achieve that thing that one wanted to do? Or does one shape one's entire effort in search of bigger and bigger financial rewards?

(Of course my belief is that the market is an important tool for keeping cultural businesses afloat, but it makes an absolutely awful God for such businesses.)

Kyle Bylin

If we took a time machine back to 1993 I would be five years old. Lets say that I understand the limits of such provocations and that historical analysis does look much clearer in hindsight.

I was just rather interested to see how three books, with three different ideas and theories, could be put together in a way that at the very least gives us cues to what stage of institutional decline we're at.

Also, on that note. The whole point of this isn't to say, here's my opinion and make it your's. I simply wanted to put a big picture together that made people think about what's going on. I don't actually intend to be as harsh as I may come off either. These essays are thought experiments.

Suzanne Lainson

My point (not that you were necessarily responding to me) is that people still haven't figured out how to make money in music in this new environment.

Sure, there are musicians who are making a living at this. And there are millionaire artists, too. So I'm not saying that no one is succeeding, because there are.

But there hasn't been an obvious replacement for the income that used to be generated from recorded music sales. Live performances work as a source of income for some artists, but that's always been the case. We've had people listening to live music for as long as anyone has been performing.

Merchandise seems to be an unlikely replacement for recorded music. There's a limit to how much stuff most people want to accumulate.

My guess is that a lot of the money that used to go to purchase recorded music will end up going to some other form of entertainment, some which may not be invented yet. If you can get most of your music for free, you can spend your money on something else. For awhile it looked like video games might be the next thing, but those seem to have peaked as well.

Anyway, back to my point. I don't think the problem is that the major labels didn't respond. Rather, I don't think there's been an obvious solution. We have an excess of music, which keeps the price very low.

Old Record Guy

Kyle;

I didn't perceive your piece to be "harsh", not at all. It was very thought provoking, and the attention it is getting is well deserved - congrats.

I do however, think that history is done a disservice when both sides of the issue are not explored. There are much better answers why the industry behaved as it did than pure greed or fear. Much of what actually happened hasn't been covered by anyone, not even in Appetite For Self Destruction.

Why is that a bad thing, why should we care? Because truly understanding the past might help us figure out the future. The information is out there and it's compelling.

And for once, I'd like to see someone sit down and explain how the Napster economics would have worked, how they would have convinced the artists to provide clearances, take pennies on the dollar of their royalty rate, gotten Harry Fox to drastically cut mechanical rates and changed the entire business model overnight. How unlike the computer software, gaming and movie industries, the music industry shouldn't have bothered trying DRM. How the industry should have turned their back on their retail customers, whose backs were already against the wall, and given a sweetheart deal to Napster or Limewire, companies who said "Fuck You" to the record business before they ever said "Hello".

Thats's the piece I'd really like to read.


Kyle Bylin

Harsh in the sense that I usually don't have good / nice things to say about the record industry -- that I haven't ever gone to the extent of talking about what they did right.

It's much easier to criticize what they did wrong, than going out on a limb to say that they could've done better and how this mess might actually be navigated. But, to my defense, there's still much to learn about the bad before I'd be in any kind of position to offer such advice about the good.

Thank you for the kind words. I have much appreciated the great reception that this piece has gotten. As for the essay you suggest, well, I think your definitely right in the points you make -- that saying such things and having not explained how they could've actually worked is what has handicapped the latter arguments.

I would say that in the case of DRM, they did greatly underestimate how little teenagers who want to do with the music on their iPods, that they purchased, whatever it is that they want. The extent to which they would rather file-share music, than not be able to transfer songs for good reason, not illegal ones.

MusicBizGuy

Messrs Bylin, Old Record Guy, Wiszniewski and Kidd have combined to make a fairly complete picture of the feelings and issues behind the record company decline looking at the good and the bad. I have worked for record companies for the past 15 years breaking records at radio for everyone including the greatest hit making machine ever put together, Def Jam from 1995-2004. I have seen everybody a music aficionado could ever want to see from 1965 to the present. I am immersed in the Internet music space having put an enormous amount of time and money into launching a user generated music booking widget and platform called LiveMusicMachine.Com and the majority of my remaining time trying to figure out how artists can make money in the new music business.

Having lived through it all, obsessed with the majesty and power of popular music for almost 50 years, its nice occasionally taking a stroll like this article down memory lane and for the students of the music business past and present, I am sure that tomes and comments like these are educationally gratifying. However, we are enmeshed in a business in an extraordinary transition.

It's obvious that the leaders of the old music business have been acting out of total desperation and self and salary preservation and have been more concerned with circling their wagons than venturing out into an unknown territory risking their very existence to find a new and better path to music business success.

It would be great to hear concrete suggestions about how messrs. Bylin, Old Record Guy, Wiszniewski, Kidd and Ms Slainson think artists can actually help gain exposure and make money in these confusing and somewhat overwhelming days of extraordinary transition.
Anyone who is in the thick of it like we are knows how difficult it is for today's music artists to gain traction in the fragmented new music business especially since the old model has completely broken down and it totally unreliable.

By choice, I am stuck out in the Brave New Internet Music World and would like to see more collaboration to find better answers to help music survive both as commerce and culture. Thanks

Suzanne Lainson

I've been proposing that everyone start over and imagine music as a totally new entity. What would it look like?

Based on what I see, it looks like a much more participatory environment that what we have had in the past. People like to make music, play music, etc. Many of them are willing to give it away and play for free because they either want to share or want an audience.

Business models built on having artists who find ways to sell to fans seems less forward-thinking than models built on the idea that the new popular artists will be those who find ways to include "the people formerly known as fans" and make them feel creative.

Giving the population as a whole what it wants from music may be a better direction to imagine than finding ways for music people (both music biz people and artists) to make money at this.

The ones who make money might be the ones who create the tools and the environment that people will pay for. Content, as we have seen in a number of fields, has become essentially free.

Old Record Guy

Thanks for asking, MusicBizGuy.

Firstly, I don't think that the answer lies with any specific technology or social media trend. Artists seem to get hung up on the latest thing, thinking it's some kind of magic bullet for success. We've all seen trends come and go, Twitter is already a punchline, soon it will be Google Wave. IMHO the technology or platform is unimportant, it's really using it effectively that matters.

I think the point most often forgotten in this immediate gratification society we live in is that artist development is, and always has been, a long term process. Fanbase = customers, you can't have one without the other.

So many artists or new label have unrealistic expectations about social networking; they put up a Myspace page with some samples and a purchase link, and then complain 3 months later that they're not selling anything.

I don't think artist development is any easier today than it was in the old days, although certainly you have more control and can react more dynamically as marketing opportunities come and go (like changing a Facebook ad campaign if you see click thrus aren't good - couldn't do that with a full page Rolling Stone advert).

If you want to gain exposure for a new artist, you've first got to ask some basic questions:

1) What genre does this artist truly fall into?
2) What other artists fall into this genre?
2) What is the demo of this genre's fans?
3) What websites, blogs, newletters, etc cover this genre CREDIBLY?

It amazes me how many artists get signed, how many records get made, before these questions are asked. Once you do the research, know the answers, then you know where to focus your efforts, who to reach out to. You have to build relationships with people and places that will help your cause - over a sustained period of time. This is the way artist development always worked, and social media has only served to reinforce that. It's not gonna happen in 4 months.

And how to earn money off this? Again, everyone's forgotten that 95% of artists in the old music economy made ZERO from record sales. So why in this world where anyone can release a record digitally, with global distribution, does everyone suddenly expect to get a return on their investment? Huge record companies, with whole departments handling sales, marketing, press and international, couldn't even guarantee ROI on even multi-platinum acts. The music industry is purely speculative, and most acts do nothing which is one of the reasons labels always milked a given trend (like Boy Bands) - a sure thing helps pay the bills. And while the labels released plenty of Boy Band schlock, you only need to look at their release schedules to see that they also put out plenty of "developing artist" projects at the same time. They needed to do this, because the artist development acts required a lot of work, and the chances of winning were way less than a roulette wheel - literally.

So, again, why should a developing artist expect to make money, if they have no fan base? Their music should be used (and majors did this all the time historically via promos, or radio) as a tool to create a spark. I wouldn't advise ANY artist starting out to even consider selling their music - they should be giving it away as a way to build their email list, so when they tour (which is where artists really earn their $$) people come see them.

If nobody knows who you are, and you try to sell your music instead of giving it away to anyone who'll listen, you're just plain stupid. Uploading the entire album to file sharing networks, or better yet asking fans to share the record for you and ideally figuring out a way to reward them for doing so, is smarter (so long as you leave a trail of breadcrumbs back to your website, like putting the URL in the file's metadata.)

An artist's most valuable asset, whether they are just starting out or are a legacy, multi platinum act, is their on-to-one relationship with their fans, meaning specifically: email addresses, Facebook and MySpace friends, Twitter followers, mobile fan club subscribers, etc etc etc. Building those relationships, and maintaining them, is the job, every hour, day, week, month, year, for ever and ever and ever.

Amen :-)

Suzanne Lainson

Building a fanbase where fans go to every show seems to work much better on the local level than on the national level. There are bands like the Dead and Phish that had fans who dropped everything to follow those bands everywhere.

But most people don't put a band as the focus of their lives. Therefore, they catch bands that perform when coming through their areas. That usually means 3 months and 3 years between shows.

Some local bands play often enough within a region that their fans can go to shows weekly. That way the fans get to know the other regulars, the people who work at the venues, etc. It turns into a real community for them. I think the local/regional bands that cultivate this sort of loyal fanbase tend to get overlooked when we talk business models because they traditionally haven't been signed, so it's often been assumed they weren't all that good. That's not always the case and even if it were, there are fans who just want to go out and have a good time and are perfectly happy with local bands who can get them up dancing.

Old Record Guy

you bring up a good point Suzanne which is think globally, act locally :-)

an artists should develop their live chops and build an audience locally first, before having regional, national or international aspirations. and if they live somewhere without a vibrant live music scene, whether it be at clubs or college campuses, then they should relocate.

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