Read Part One KB: In Cognitive Surplus, Clay Shirky urges companies and consumers to stop clinging to old models and embrace what he characterizes as "as much chaos as we can stand" in adopting new technologies.
In your opinion, do you feel like this is the same mindset that the record and music industries need to adopt in order to thrive, prosper, and create a brighter future for themselves in the digital age?
Aaron Ray: Yes, technology is changing and at a blistering speed, but the real question is “How are people going to act?”. Half of the world is under 30 right now and the conflict between the generations is happening every 2 years rather than every 25. I look at it as a model of constant diligence. Our whole company is trained in understanding that moving forward requires a path made of whipped cream and not of stone.
"I think it is important to rewind and remind ourselves how bad every industry is at predicting events to begin with. This is hardly an albatross of the music business."
Take a snapshot of current events, who predicted the BP Oil spill? The Sub Prime bust? The total annihilation of the Investment Banking business? The demise of maps. land lines, newspapers? No one predicted social networks, the iPhone, the app store, Google AdSense, YouTube, the Kindle, iPad, 500 mill people in a Facebook world and multi billion dollar social gaming companies. In hindsight, many people appear to make the facts match the outcome seeming to have forecast many of these things.
Clay touched on this in HERE COMES EVERYBODY…. There are other deep thinkers in this area and I would recommend not only THE BLACK SWAN by Nassim Taleb, but Kevin Kelly’s END OF CONTROL if you wanted to explore this further.
On that note- the book that sums up the state the music business is in and how it got here is the excellent MISTAKES WERE MADE (BUT NOT BY ME) by Carol Tarvis and Elliot Aronson, explaining cognitive dissonance.
KB: Artists too, it could be said, might benefit from this mode of thinking; they need to adopt new technologies and allow their careers to be redefined, rather than clinging to 20th century notions of what it means to make music.
Why should we encourage more artists to try anything they like with new technology, without regard for existing cultural or social norms or potential damage to current social institutions, like labels?
Aaron Ray: The more accurate question is, “Why wouldn’t we?”
As I stated before, no one is coming in offering new solutions or different models. They ARE capable of selling ads without giving money to the artists, blowing deals with games, sync licenses, streaming- they will destroy an artist if it helps the corporation. When looking after the career of an artist- I have an obligation to them only. Is it good for an artist to be taken off of YouTube for a year?
The YouTube search bar is the second largest search engine in the world, only behind Google itself. People hear a song and decide to look on YouTube and see that the artist isn’t there, or worse yet- has been taken down. How is that good for an artist?
"There is no traditional institution that is
in place that is legitimately lined up 100%
with the individual artist’s interest."
The infamous 360 deals are shaky at best. Lady Gaga is a true phenom, but who knows what the label will impose in the future. Who know if the label will be around? These companies are public and they have been bought and sold and merged and shuttered many many times over the last 20 years. Why would you expect the future to be any different? Having said that, she appears to be one of the hardest working artists in history. She is embracing many of these tools and her fans are rewarding her for it. Good for her.
The future is all going to be about Direct To Consumer. If you don’t know how to reach your consumer- how can you go direct?
I think that Behavioral Economics is a field that is much more relevant to our business than ever before. So I say “Why wouldn’t an artist explore other methods of engagement, distribution and monetization?”
KB: The great paradox is that those in the record industry are committed to solving a particular problem, mainly the financing and distribution of recorded music. Therefore, when something like file-sharing comes along and disrupts the process through which those operations occur, as well as, their core business model; it is important to remember that these company executives have also committed themselves to maintaining the barriers of music consumption—keeping them as high as possible—in order to keep their solution viable.
How have the wide ranges of technological and society shifts challenged the dominance of the record industry in recent years and what ways are new companies emerging to fill roles they just can't?
Aaron Ray: The global worth of the entire recorded music business is approximately $17 Billion (and dropping). The Chinese Internet Company Tencent (which makes most of it’s money from virtual goods) is worth $38 Billion by itself and is publicly traded. That company alone is worth DOUBLE the whole recorded music business
Do you believe that Facebook is growing, that Microsoft will counter with an elegant Xbox solution, that Dell will come out with a new tablet, that Samsung will partner w Google, that there are 2 guys in a garage about to come out with the “new new thing”, etc, etc.? Android is shipping 100k new phones a day. Facebook Credits may become the world’s first global currency. None of these require any efforts of the record industry. They require a lot of work to be part of though. In order to exploit these systems, it requires that you have talent and there are consumers who want to purchase interaction and context. A special song with virtual roses. Your own VIP access to an artist’s new songs while you play Texas Hold Em. Your Avatar’s or Guild’s own theme song in MMORPGs or Social Games. Who knows what the futures holds, but just get above the rhetoric and look at the facts.
"No single institution can service artists in the way
the next generation will demand."
The fans dictate the outcome. They vote with their time, their feet or their money. Artists need data and they need to know their fanbase. Right now, if you are 12-24 and are a music fan- MySpace Music is head and shoulders the place to be. As MSM evolves and they open their payment systems, their app economy and mobile integration- they will be able to help target and facilitate transactions from $.05 on a vote for something to paying a premium on live tickets. If you are a 35-42 year old mom- you are checking in 6 to 12 times a day on Farmville (or another social game) on Facebook. That valuable Oprah audience is now available to artists and the scale allows for all sorts of monetization models.
Every action requires a team. With Linkin Park, we run a team that includes deep integration with NING, WordPress, Topspin, MySpace Music, Facebook, MobileRoadie, InfoChimps, Salesforce and constant contractors jumping on other systems API’s as they open up and this doesn’t include the manpower behind the effort. The team required to execute will change as technology and platforms change, but the goal will not. We are constantly using the tools available to find their fans, aggregate them and the super serve them with Linkin Park. This requires a commitment by the band to make it worthwhile to be a Linkin Park fan. That will be repaid in ways not even comprehended over the next 30 years of their career.
