David Pakman: Witnessing The Atomization Of The Music Industry And What Do Do About It

We are witnessing the atomization and decentralization of the music industry, says David Packman, a partner at venture capital firm Venrock and former eMusic CEO. The music industry's best hope going forward is to decentralize music consumption as well.

image from www.scienceblog.com "We have been witnessing the atomization of artistic culture. The internet gives us far more choice than the limits imposed upon us by broadcast media. We know of more bands, we can get tour dates pushed to us, can sample music long before it is released and we can reserve tickets well before the show. But we are doing this across many more artists, spreading our limited disposable income around in ways we didn’t when we had fewer choices…"

"The future of the (music) business is atomized and decentralized. It is one where the collective power of the many fans actively engaged in discovery and sharing have more power than a few senior execs calling the shots about marketing budgets. Yes, there will always be superstars…But today’s superstars sell a fraction of records/downloads as the ones from years past…"

The New Power –

"The new power, in my mind, is granted to the aggregators who pull together our collective wisdom. The music business today is blogs, Twitter tweets, Facebook links, the Hype Machine, TheSixtyOne, Rockwood Music Hall, Pandora and Foursquare."

"Part of the fabric of the web,
not an overlay"

"…Where might today’s execs focus their energy? Providing tools and assets to empower the many fans willing to do their marketing work for them… Shouldn’t the music catalogs be available through a click-wrap API, paving the way for thousands of new music filters on hundreds of thousands of web sites? Shouldn’t music be decentralized? Not free, but just available everywhere…Music needs to become part of the fabric of the web, not an overlay on top of it. Like I can embed my Twitter stream anywhere, I need to be able to embed the music driving my life all over the web too. Not just the song names, the music itself. I have a need to share it, but I really can’t today. If this happened, the businesses that could be built on top of it are quite interesting. The data becomes the value here enabling the new generation of music programmers to emerge based on the collective and specific expertise of the masses."

– From David Packman, The Sad State of the Old Music Business

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  1. sorry but the power is not with the aggregators if you mean those 3rd party music/band sites that come and go and try to take a cut of everything, it’s in the individual musicians (and fans) who create and control their own websites, sell their own products, with easy to use open source tools and widgets that exist today like wordpress, paypal, buddypress, facebook fan page, twitter, etc.

  2. I agree with you Packman. I would say that we are moving to the point where we can embed music anywhere or almost. We have sites such as soundcloud and mix cloud that allow you to embed a decent mp3 on most sites.
    I think that this “decentralization” of the biz is a beautiful thing…scary but exciting.

  3. Dave’s 100% right. And there’s a huge value exchange in this model to everyone, because the content will be in context, because of the data that could be collected. The data could enable the delivery of highly targeted content to the consumer – and also, hyper-contextualized advertising to that consumer.
    The only thing stopping music from really being integrated with the web is the fact that no one has really figured out a business model to support the licensing fees required, and organizations like Sound Exchange, Ascap and BMI, in addition to the majors, always smother the baby in the crib. It will need to be other industries that lead the way, music will go kicking and screaming. They all can’t get their heads out of the unit based mentality.
    Think about the billions of social discussions taking place online about music, posts on forums, Facebook etc, and the opportunity of enabling legal music delivery in those discussions. Add an unobtrusive, dynamic advertising element that reacts realtime to this consumption, wherever it happens, and that’s the real opportunity for the music business.

  4. My business model for the new age is exactly the opposite by Protecting content via content exclusivity, having it not everywhere, but only one place which, for a fee can be used.

  5. Do any real musicians actually believe this drivel? Music embedded in the web is just more meaningless wallpaper, a soundtrack to whatever someone happens to be wasting their life on at the moment (ie, Facebook, Twitter, etc.) Sort of like playing in a lounge band at the Holiday Inn, with even less interaction with the audience. Music is dieing because people don’t know how to stop what they’re doing, actively engage with the music, and *listen*. The typical music consumer is hooked on passive entertainment and has the attention span of a dog.

  6. It seems to me that the sharing part is happening just fine. It’s not hard to make a shareable widget – the formats and players exist today in free and paid forms. You can make and share iMixes, you can use Last.fm, youtube, and multitudes of other shareable widgets and good old fashioned links, and it wouldn’t be hard to write your own. Oh and don’t forget the file sharing networks.
    It’s the *paying* for content displayed and played across the web that’s not happening, and when it is happening, artists are making pennies or less – unless they are licensed through one of those pesky licensing companies that make you pay a fair price for the music you use or through the artist directly.
    Oh, wait, people don’t want to pay a fair price and own just a small piece of the music market. It’s hard to imagine! And they don’t want to pay for *someone else* to discover music on their site. They don’t want to pay for music shared on their newsgroup or social network or blog. They don’t want to take a risk and pay for music that might never be earned back with ad revenue. They want it all for next to nothing while they whisper they’re doing ‘for the artist’ in the name of publicity.
    What’s really scarce on the internet is paying customers. Many internet music companies have come and gone thinking that if you wrap music up in the right package someone will buy it, and most of those aggragators find that there is an infinite amount of music to serve but only a fraction of the customers needed to properly pay the artists for the privilege of using their music. The end result is a *necessary* devaluing of the musical product in order to cover the administrative costs of maintaining and serving a vast music library. That’s why Last.fm stopped paying pennies to indies.
    I can envision a system whereby a portion of ad revenue that comes on a music media page go direct to an artist – and those payments will be fractions of the pennies we earn today and almost certainly less than what the artist would earn if the site had to license directly.
    Crowfeather may have the more profitable idea.

  7. Hello !*** stealing is still “STEALING”…no matter what year or technology….if you’ve ever read or Drafted a Music/film or Production/publishing agreement (and i’ve done Hundreds) it say’s for use in any format this is in use now or the “Future”, ..Joseph Nicoletti consulting ph 949-715-7036 California,USA-Planet Earth .
    what was the Question?…….

  8. technology does not give anyone the “Right” to Steal !..
    just because you can copy it!..put the shoe on your Foot!
    if “you” were the Songwriter/publisher or Whatever ,how would you view it as thousands of copies of your “Works”
    were distributed for “Free” ! yes ! …Free!…and no, it
    is not Promotion.in america the base core of this country is “(from what i understand) earning $$$ is not bad,is a “Reward” of what you have done & earned !..or what is the motovation to be creative ?….Joseph Nicoletti consulting/Promotion Calif,USA ph 949-715-7036

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