Ex-TuneCore CEO Jeff Price: The End Of The New Music Industry Transformation - hypebot

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StoryAmp

Excellent summary, Jeff. I'd be interested to hear what you think the NEXT chapter is for the music industry. Once these gatekeepers are all gone, won't there emerge another group of gatekeepers who earn their status and significant fan followings by discovering and amplifying music they think merits attention? What form will those gatekeepers or curators come in?

Thanks!

Dmitri @ StoryAmp
http://www.StoryAmp.com

:: music PR on cruise control ::

:: amplify your story ::

Yourdonation

"'There is very little left to "disintermediate" or "disrupt." + With all the new pieces in place"

Jeff I think we are missing one piece: the opportunity to give back !
For the last months I am working to close this loop of enjoyment and appreciation with YourDonation.
Let's create the modern day minstrel model: Give back to those who provide value / enjoyment.

Can it be done, or am I a hopeless fool?

mike

I've been talking about this subject since the early 90's.

Dennis

Jeff, I could not agree more with your article! I have just finished my diplomatic thesis stating all the above mentioned plus a detailed narrative of the reasons that the old school music industry refuses to cede its only asset : intellectual property.

Please continue doing innovative things like Tunecore. The current era needs people like you, as well as fans of music!
Cheers
Dennis

PS for Yourdonation: I think there are still great indie labels who support you proposal - they provide value, great music and fans excitement

Suzanne Lainson

There is another next step which most of the new music industry and the artists haven't yet grasped: The wall between artist and audience will come down. There won't be a difference. Everyone will be creative. Sure, there will be people who do it better than others, but as the technology allows more people to create for themselves, the idea of "fans" will transform.

Given world economic conditions and the fact that work itself is changing, and who has money and who doesn't have money is also changing, the idea that there will be a vast population of fans waiting to give their money to artists is likely to change, too.

Jason Spitz

I think Jeff is right in his analysis, but here is the problem: the tools are much more sophisticated but the people who use them are not. In the new model, the "ideal" outcome would be for the fan to purchase directly from the artist. This way, the artist makes a higher margin on fan purchases and captures useful information, while the fan feels good knowing they are directly supporting the artist. But most bands lack a good direct-to-fan infrastructure, and most consumers don't bother to think about this issue. So consumers opt for the most convenient route: they buy on iTunes (lower margins and no fan data for the artist) or they listen on Spotify or YouTube (fractions of pennies for the artist, and again no data). "More people engaged with music" does not necessarily mean "a better outcome for artists", if the system does not allow artists to fully capitalize on the increased demand for their work. Can fans be "taught" to support artists through the channels that are most beneficial to them?

TonsoTunez

Yada, Yada, Yada ... Old news from the perspective of someone who used to be a new world aggregator.

Aggregators have always been the real winners in the entertainment business.

Old world aggregators put their money up to bet on talent they believed in understanding that the public was unlikely to accept 90% of them no matter how good they were. The 10% that made it produced profits for the aggregators, provided funding and marketing expertise for future talent, and gave the world the longest run of amazingly wonderful music the world has ever known -- and will never know again.

The new world aggregator, on the other hand, makes his money off of enticing millions Tex Nobodies to pay fees for services that are unlikely to generate enough money to cover those fees. Outside of a few bells and whistles their clueless clients are left to manipulate themselves, they offer nothing that will lift unknown artists out of the crowd and help them achieve legendary status. They have no skin in the game - outside of developing a few automated computer programs.

Now I'm not calling for a return to yesteryear... That will never happen. We are where we are.

I just want creators to come to the realization that the brass ring has vanished. They might make a living ... some might make an OK living ... but, the 90% that didn't make it before will become 95% - 96%, and nobody will attain super stardom. That period in history is gone.

The new world aggregators will indeed replace the old world aggregators, and the public and the creative community will be the losers as the once glorious soundtrack of our lives fades into history.

Kevin Rivers

Excellent article Jeff. I agree 100% with your analysis. Technology is ever increasing the way consumers view music while the old traditional model is slowly but surely fading away.

Kevin Rivers
CEO, Xeinge Group
kevinrivers@xeinge.com

Jeff Price

You lost me. That, is, go back to the old world. Bands spend thousands to record a demo, mail it, beg to get a gig, drive to the gig, play in hopes of having an A&R person see them and having the A&R person liking them. The A&R person than asks to see them play live again, they have to beg to get another gig, drive to that gig (van rental etc), play at that gig and hope the A&R scott brought a higher level exec. If that exec like them, than it goes to VP A&R. That person than need to see them play.

If that goes well, long form legal agreement gets sent to bands lawyer ($200 - $400 an hour), gets negotiated, advance is provided to re-record the songs they already recorded (now about 6 to 12 months old). Album gets recorded, copyrights get transferred, photos taken, physical product made, street date set up with four month lead time.

The band is now in the hole for thousands, given up their copyrights and the album is not even out yet. It gets released about 18 to 24 months after the songs were first recorded. 98% of what was released failed on the majors so probability is they fail. Six weeks after street date the band are road kill never able to have a career as the cost of failure was so damn high.

And your position is the label has "skin in the game" vs. now when there is no one else but the artist that has "skin in the game"

With all due respect, this is exactly how it should be - its the artist's music and copyrights and they should damn well have skin in the game.

This is a hard hard hard hard industry to make it in. No matter what the business model, most will not become superstars. There is no ifs or butts about it. However, claiming the right way to do things is for the artist to be clueless so others can take advantage of them is not a business model I support.

Yes, artists need to learn things and do work. Its the cost of pursuing a career in this industry

Jeff

Chris Seth Jackson

I'm curious why a new streaming or music sharing platform hasn't emerged that solely deals with independent artists that want nothing to do with the majors.

All these technologies are being stifled when trying to use music from the majors. Where are the startups that avoid the majors entirely?

A Spotify or Pandora for the unknown bands...which is most of us!

Clyde Smith

It's hard to make money off unknown bands. And given indie complaints about Spotify payouts, it's kind of hard to imagine them being happy with any of the options that could be created.

That said, drip.fm is doing some interesting things with subscriptions and distro.fm may one day become something.

There's also 101 Distribution's mobile streaming service:
http://www.hypebot.com/hypebot/2012/05/101-distribution-launches-101-arena-mobile-music-streaming-with-100-ad-payout-to-artists.html

Simon Crabtree

Yes. And so? This has been said many times before. By you and others. This piece, while a good recap, adds nothing at hasn't been said many times over.

You left the company you founded. Or you were sacked.

Why?

More important: what now?

Zach Scott

You still fail to realize or acknowledge the reality that most new "commercial" music (i.e., where the real $ is made for artists AND the business) is STILL discovered or experienced through traditional FM/AM radio. What's the marketing solution or replacement for this for the independent artist? There isn't one.

Not to mention the other professional marketing, creative services, publicity, etc., that labels can and do provide. The fact is, is that most artists cannot effectively do it all to the level that it needs to be done. This is where labels and managers come in.

Also, this argument fails to realize or recognize the realities and business models that some of the new, successful labels are implementing. For example, instead of quick term profits or returns from first projects or releases, artist development and long term career growth is becoming more of a normal business model and way of doing things. Not even taking into account the financial and other risks involved on behalf of the artist by the label.

I agree that artists should (and the true and best artists DO) have skin in the game, however, the labels and managers also have a tremendous amount of skin in the game. The fact is that there is a tremendous amount of time, money and energy that is invested and not recouped, (regardless of the profits/losses) on behalf of the artist by the label, for artist development, marketing, etc.

The fact is that yes, most artists are not successful. However, most artists are not FORCED to sign anything. They don't have to give up their copyrights, etc., they choose to in exchange for some of the best artist development, marketing and promotion services that they can't possibly do on their own, and the chance to have a hugely successful music career.

brian

LIES LIST:
1. "transferring ownership of copyrights”
Should have been transferring ownership of “publishing rights, which can not legally exceed 50% of total copyrights and is how labels recouped the BET THAT THEY MADE which could be $250k per record which isn’t paid back under any other circumstance.
That doesn’t include any marketing or promo/publicity money which is expensive and non-recoupable.
You should have mentioned ALL that to be accurate.

2. “Gouging artists and music fans”
Well, artists have attorneys negotiate their contracts, so, no gouging the artist. Just a reasonable negotiated set of rates based on the investment and vehicle of recoupment.
$9 / record isn’t gouging. Can you accurately predict sales?
Didn’t think so.

3. SPOTIFY negotiated a rate so LOW that the only way labels could make money with them at all was to invest in them and BTW Spotify NEEDED the money.

4. "Recording an album of decent technical quality was just damn expensive; to realize the vision in their head, artists needed someone else to front the money for them. That's what labels did in the form of a loan to the artist that came with some serious strings attached: i.e., transfer ownership of your copyrights to us and agree to payback the loan at a rate of 12% of what your album sells for (we keep the other 88%), give up control etc. And mind you, this was only for the less than 1% of artists that the labels let in.”

In 1977 there were 7000 commercial releases. They mostly made a profit. in 2006 there were 198,000 releases and 2% made1 nickel or more, 7000 made a profit.
In 2011 there were 75,000 releases NONE of them made any profit.
Again, they didn’t sign away their copyrights, they signed away their publishing.
You think the labels should invest in a band and have no instrument to make money back from?
Try opening a biz that runs on hat principle anywhere else in any type of work. You won’t get a bank loan.
It wasn’t some 1% the labels let in, it was the people talented enough to make the grade. The conspiracy theory is stupid.

5. Most artists signed didn’t make a nickel and many got dropped, that’s the reality, and distribution, if you got that far, was totally dependent on when your act was out and touring, if you went out and you had a heavy hitter go out at the same time, GUES WHO GOT PRIORITY, because, with all the band bets losing money, only the heavy hitters made money and they funded the lesser bands as long as they could.

6. "85% of sales”
Yeah, but, you don’t mention that it was only until your recouped!
Then it’s all yours. Many bands didn’t recoup. That’s not the labels fault, many just couldn’t sell, no demand, no fans.

7. Technology made it so that someone who’d spent ZERO TIME learning and honing their craft of song and /or music writing, could put out an album and destroy by glut an existing music market and that’s what happened with the help of piracy.

8. The end result:
The end result is that “artists” and most of them ARE NOT ARTISTS OF ANY KIND, can’t afford effective promo or publicity and resort to desperate means, have no control of over-saturating their market and losing all sales, no control over distribution of their own product, they still need videos but with no sales can’t afford them, they have no artist development what so ever and thus show no growth and become boring after one or two runs, and now, THEY HAVE TO GIVE UP PERCENTAGES OF THEIR PREVIOUSLY UNTOUCHABLE TICKET MERCH AND SCHWAG SALES!
Are you happy with that? THEY aren’t!

9. "Despite their best attempts, the supposedly "impossible" is happening as many "unsigned" artists top the sales charts of the music stores and sell millions of units of music - i.e. Civil Wars, Alex Day, Boyce Avenue, Hoodie Allen, Blood On The Dancefloor, Lecrae, Colt Ford, Ron Pope etc etc etc.”

I dare you to calculate the percentage of successful artists you can come up with from the 75,000 that are currently out there I DARE YOU!

This whole article is tripe!

jeff price

hi brian,

im sorry, but you obviously have a chip on your shoulder about something. some quick answers

1) I understand your confusion, copyright is complex. There are two sets of copyrights with any piece of recorded music. One for the recording of the songs (the (p) ) and the second for the person the song itself (lyrics and melody - the (c) ).

An artist was required to transfer his/her copyrights to the master recordings (the (p) 0 when he/she signed to a label. They ALSO had to transfer a % ownership of their publishing rights ( the (c) )IF they did a co-pub deal.

2) I disagree that charging an artist 88% of their revenue while requiring to give up their copyrights in their masters for life of copyright and then not accounting accurately is not gouging. I also disagree that charging a consumer $17.98 for a top line CD for the one song they wanted while prices for manufacturing and distribution were dropping was not gouging the consumer

3) Spotify - the majors are able to make money off the exit or value of Spotify at the expense of the artist. For example, they could reduce the amount of money being paid on the masters but make up the income on the equity position they get in Spotify,

4) Im not certain where you got your figures from, but they are empirically false. I think my favorite statistic is the claim that in 2011 there were 75,000 releases and none of they made a profit. Just dead wrong. I understand you did not have access to the data I did, but you should be careful about stating the information without backup. I logged into TuneCore's back-end system daily and saw the sales and revenue. You're just wrong.

skipping your #5

6) You're missing what the labels charged the bands for, the accounting methodology and how even if the band ever recouped they did not gain ownership of their masters.

7) Glut? Please explain to me how a song being available for someone to buy on iTunes if searched for stops Radiohead from selling. All this music already exists on hard drives. Digital allows it be found if searched for.

8) Yes, I am happier with a music industry that is democratized, that allows all in if they want to be while allowing them to keep their copyrights and make more revenue off the sale of pre-recorded music. Artists deserve choiche.

9) Im not sure I understand the dare you outlined. How about a different dare, i dare you to guess how many artists "unsigned" artists that used TuneCore made over $20,000 a month on music sales in 2011.

In regards to the % - not matter what the model, its always going to be less than 1% that become superstars.

Its a tough industry

jeff

jeff price

@simon

stay tuned.. info on whats coming next will be announced shortly

jeff

TonsoTunez

I think I made it clear that I believe there is no old world to go back to ... and, in doing so, I tried to emphasize that that also includes outcomes that new artists can realistically expect their careers to achieve.

It's reality check time for everyone because a shot at the 'big time' - and long term financially viable careers - not longer exists.

Artists are indeed left to fend for themselves and for the new middle men (such as yourself) that presents a real opportunity for some to take advantage of the huge number of would-be "artists" who don't yet get that they can never be the next Rolling Stones.

Your business model does not rely on artists becoming successful because successful artists will pay you substantially the same as everybody else. Your business model relies on the legions of largely untalented dreamers who will continue to pay you to chase a dream that now - more than ever - will never come true.

Your business model is upside down from the old business model and has the faint aroma of 'song sharking.' - Sell the dream and watch the cash roll in.

I implore all artists and songwriters to get a firm understanding of what is going on around them and how every action they take effects their future. They are now stand alone business people. Let me emphasize that - BUSINESS PEOPLE! They have to do everything.

Success is 10% talent and 90% business.

Yes, the world has changed and it's about time we ALL start being truthful about it!

Mike Corcoran

Completely agree, Jeff. I would also point out, TonsoTunez, that there are plenty of creators today who have achieved “legendary status”, while there are more artists today than ever earning an "OK living". This is definitely a good thing for the music world.

While I might agree with your prediction that the artists of “super stardom” may not make quite as much money as before, I think you would concede the Kanyes and Katies are still doing quite well. The difference today is there are many more artists than before who are earning an OK living, all because of the existence of the “new aggregators.” These aggregators are providing an opportunity for ANY artist to earn a living AND maintain control of his career, something that did not exist only 15yrs ago. As Jeff pointed out, artists can now record, distribute and promote their music completely on their own. That these new aggregators are successful should not be vilified, unless you believe all new music businesses using computers and software should be vilified. And it should not take away from the fact that they are providing artists a valuable service at a fair price. (If the prices weren’t fair, the new aggregators won’t be successful for long - believe me). There are more “winners” than ever before.

Lastly, I’m not sure how our new music world is creating losers out of the public while preventing the creative community from creating “glorious” music. Why should it? With the tools available today, we have more artists producing and distributing music, which provides the public with more choice. The creative community has few, if any, barriers that would prevent the creation of glorious music you claim to be a thing of the past. Indeed, we should all expect a continuing influx of glorious music, since there are no longer any old world gatekeepers allowing such music to slip through the cracks.

Mike Corcoran
MusicSUBMIT.com

Suzanne Lainson

The difference today is there are many more artists than before who are earning an OK living, all because of the existence of the “new aggregators.”

I'm not so sure about that. Clubs that used to have live music now use DJs. The same with weddings. DJs now rather than live music.

Musicians that used to have bands now go solo and back themselves up with a computer.

Musicians who had day jobs as music teachers in schools have seen those jobs disappear with funding cuts.

Local musicians who recorded their own music and sold it at $15 per CD at shows have pretty much lost that income. Many unsigned artists were doing pretty well selling from the stage. That's gone now because fans aren't buying like they used to.

Ask musicians who were also songwriters how their songwriting royalties are doing these days.

There are lots of musicians recording and uploading their music, but most of them aren't making any money at it. The decline of the major labels didn't open up more opportunities for musicians who were never signed in the first place. They always were outside that system and now they have to compete with more unsigned artists than ever.

Ask a local band that used to get paid summer concert dates from Chambers of Commerce who's getting those dates now: National artists dropping lower on the concert circuit to supplement their incomes. National acts are accepting the same kinds of checks that local acts used to get. And the local acts aren't getting them.

Rather than having lower income artists being pushed up in the system, I think you'll find now it's more about well-paid musicians now being pushed down in the system.

lez

Its not all good, im an artist and if you are a real artist, not just some desktop tune junkie. you need real studio's with real producers and mixers. that cost money. real money, all online uploads of original music is doing, is making everybody with a cheap sm58 and cubase, believe they can sell millions. record labels are there to pick out the good from the bad....all online is gonna do is flood(already has) the Net with badly recorded and boring attempts at making music.not good, its numbing society....it has its good points 360 deals we all deal with those now days. but if your good at your craft, those deal can be negotiated.

matthewsf

Great thread and extremely well-said here Suzanne.

At the end of the day, whether there are new technologies or not, the need to amplify your music to make it heard/stand out usually leads in two different directions: signing a record deal where a team who still controls old distribution can help cut through the clutter OR creating the next gimmicky YouTube parody or likewise to go viral.

The former more so than the latter is the ticket to success. Technology may be an enabler, but for most it's not a disruptor to reaching success.

...and I run a technology company in San Francisco focused on live music (not a musician here) and this is clear as day.

LostInDigital

Great article, summarising decades of music business in a few lines.
However, something needs to be outlined here: the emergence of digital aggregators like TuneCore or CDBaby or other similar companies, combined with relaxed content rules on digital retailers' side (the main focus being who's got the biggest - not best - catalogue to offer) widely spread poor quality music everywhere.
iTunes store is a like big "musical garbage" or more nicely said an iceberg, where only 0,xxx% of "artists" are visible to the public.
All the rest is everyday stuff, an immense mix of great, good, poor and terrible music (in terms of recording or "artistic" quality).
Record labels / companies had and still have a major role to play: they are a filter.
Everything with no commercial potential is ignored, thrown out.
The rare "artists" doing some "commercially viable" music can (if they're lucky enough or meet the good people) fit the door, get signed, get distributed (physically and digitally), promoted, touring and all marketing items are organised...etc.
Then if they are extremely talented or lucky or if their record label is running aggressive promotion campaigns, they may sell a few records / downloads / get streamed.
But there are only a few.
The other ones will never sell anything, and therefore will never recoup the distribution fees they'd have paid to their digital distributors, making them believe they could succeed by themselves, in DIY mode.
Let me be clear: I have nothing at all against TuneCore or similar companies, it's definitely a good business to run, very profitable and interesting as a work and human experience.
But looking from the other side, from the "artist" angle, digital distribution for the masses unfortunately serves the illusion from today's "new system" that anyone can succeed, which is obviously not true.
That being said, congratulations for what you achieved with TuneCore, it helped to move the lines between majors and artists.

Bas Grasmayer (@Spartz)

You can see this already in new electronic niche genres like moombahton or trap / trapstyle. It's just a small percentage of fans (but a huge number) and many of them start out by remixing tracks they like, then producing their own. Then they spawn their own fans who follow the same route.

It turns fans into artists and curators such as blogs into 'labels'.

I don't believe in the democratization as radically as you do, I think... In the end music is a discipline; you can democratize the means, but you still need some talent and a loooot of persistence and will power. But all in all, it's much more accessible.

But it's amazing how easy it is to express oneself through music right now and how easy it is to be heard by a big audience - especially if you're very good.

TonsoTunez

Please... do no more harm.

Melissa Webster

Great article, and aptly put!

I'll be discussing this very topic (my point of view is in line with yours on this) on HuffPo Live Online today at 1:40pm EST as we debate the Universal-EMI merger and its impact (if any) on the music industry.

Personally, I think it's a power grab to dominate and control the music streaming market, which I think is really where the future of music is heading. Though the majority argument is concerned with lack of competition for digital sales in an effort towards price-fixing, like Amazon, which I think is a joke. It's all about streaming.

Mike McCready

Great post Jeff. I've been wanting to write something like this for HuffPo for a while now but just can't carve out the time for a piece as well laid-out as this one. Nice job!!

Nick Hiersche

Great piece! I would be interested in hearing more details about how the FM radio will fall and the fallout that will cause. I see them trying to grasp hold of the "Iheartradio" concept desperately, is this their last stand??

Also what about the touring aspect and companies like LiveNation trying to take hold of that industry and be the new gatekeepers??

Suzanne Lainson

What I see is the technology advancing to fill in the gaps where talent and training are lacking. And the technology is getting so cheap that it is accessible, too. The average person can create music that can be quite good and doesn't require much from them.

Photography is a good example of how an industry changed over time so that now with everyone having good cameras on them at all times via mobile devices, more of photojournalism is coming from citizens rather than professionals. And the photo sharing sites have greatly expanded the pool of available photos so that if you want to buy a photo to use for something, you can find what you need from a non-professional.

Sure, there are still professional photographers, but we've got a vast system in place now that doesn't really need them much anymore.

R. Weitz

As always..not everything is the truth.Two points, (one which you mention in your article) are the core of "great" music in these days when "good" is not enough anymore. First the music and lyrics have to resonate with the crowds in order to be outstanding and successful. Second, there`s no doubt in my mind that even if you have enough money to but top equipment to make a recording at home, you will never reach the quality, creativity and other factors that are ingridients to a first class recording, without an audio engineer and a professional studio behind the musician. Yes you will give me some examples of success reached without the aid of the above, but those are exceptions, not the rule. There`s to much junk out there and it will eventually saturate the market, so someone will come up with a way of finding and making selelections of "only" outstanding music.
I`ll sit and wait.

The Accidental Lyricist

"we've got a vast system in place now that doesn't really need them much anymore."

Yes, but is that a good or a bad thing?

The Accidental Lyricist

Because they need listeners, and listeners want to listen to things they know (or know of).

Suzanne Lainson

Yes, but is that a good or a bad thing?

That part I don't argue anymore. It just is.

Years ago I was a freelancer for national magazines. Magazines don't pay now what they paid then. I saw it coming quite awhile ago and decided I'd rather be a marketing person who can write than a writer.

I've never bitched about the fact that magazines don't pay well these days because the economics have changed. Magazines are struggling, too.

I'd like to find a way for talented creative people to make a living doing what they do. But the competition is so vast that it might be more practical to find ways to reduce their expenses so that while they don't make much being creative, they also don't need much to live on. That's why the shareable and tiny house movements and Occupy Wall Street intrigue me. If most of us are too broke to pay artists for their work, then let's find ways to give them free housing, free work space, urban gardens, low cost health care, etc.

And if most people don't have the money to buy art/music/entertainment, then let's expand their opportunities to make their own creativity.

Tim Olphie

Jeff;

This article was published by New Music Media back in 2002. I'm sorry to see you leave Tune Core after all the hard work as well. I was taught, "Never throw the towel in unless it is soaked in blood".

With that being said, my article fell on "deaf ears".

Keep the dream alive!

Sincerely,

Tim Olphie
President & CEO

1-888-336-8423 (Vibe)

Should Retail Prices of CDs Be Lower?


By Tim Olphie President & CEO of Vibe Records

First off, that is the question I've been wanting to address to the music industry for years. Having worked at both Sony Music and MCA Records as well as spent (5) years in the record retailing business and work for the largest independent record distributor, INDI, I have always felt this issue should have been dealt with years ago. It's about time!

The problem is, "who is going to cut their throats off to spite their face?" The (5) majors control the retail list price and selling price, therefore; what are retailers to do? I personally feel it is outrageous and I herald such an action. I always thought there were supposed be laws in this country that protect us against what I call, price gouging, not just price fixing!

Furthermore, as an independent record company today, I pay as low as 65 cents for a CD, inclusive of artwork, jewel box and shrink wrap and now that we own a fully automated (24) track digital recording studio, we record our own musical product in-house at bare minimum costs compared to the days of yesteryear. In addition, we are wholesaling CDs at $10.75 for a full length CD through our distributor.

Surprisingly, I am currently asking our distributor about lowering the list price as an incentive for the retailers to bring in more of our product at lower prices therefore; increasing the purchase order quantities and sell more records at affordable list prices to the consumer. Great idea, right? Guess again.

Retrospectively for a minute, there used to be a term in the record industry called "new artist" development. That meant new releases for new artist's were released at a price point, for instance
@$5.98 list for an album, that was lower than normal for a full length (LP) record at the time, which at that time listed for $8.98. The first Guns and Roses album, "Eve of Destruction," was a perfect example. They were called EPs (extended playback). As the record sold through then the list price was increased and a few extra tracks were added. Basic supply and demand. Not Sound Scam as we know it today.

In today's standard, if a single CD costs me 65 cents and sells for $4.98 list and full length album costs the same, at $15.98 list, go figure. It's the same 74 minutes of music at the same cost @ 65 cents.

Then, if you minus the artist royalty's at an average 10% of retail list price @ $15.98 for full length CD as per the artist's contract, that equals $1.59 per CD plus (+) manufacturing costs of .65 cents, which equals $2.24 net for hard costs. If you (-) minus the costs against the wholesale price of $10.75, the net profit is $8.49 per unit, excluding recording costs, of course.

Respectively, at 50,000 thousand units @ $8.49 that's over $400,000 dollars net (-) minus studio costs. Which by the way is, dirt cheap if you own a keyboard, a computer and have real musical talent.

As Confucius says, "the answer sits in the middle and knows." Retail is caught in the middle basically due to co-op advertising and that is the numero uno problem! It's all about sale price and positioning! That is literally the name of the game at retail. It's a grocery store mentality, the (4) majors simply buy shelf space via co-op advertising and therefore control the pricing at both the retail and wholesale level. Doesn't anyone get it?

The conclusion, it is a trickle down effect as well, and I believe it is called, gross margin. The average record retailer gets roughly a (30%) mark-up on a typical $11.99 sale priced CD. In normal business practice, that's terrible. No business can survive on those margins. Furthermore, if you can only entice a consumer via a sale price, whether the retailer is on-line, i.e. Amazon.com or Cdnow, or your "A" retailer like Tower Records, how are they supposed to make any money? The (5) majors control wholesale and retail and it's been obvious for years. It is simply called price fixing and price gouging.

Therefore, if retailers and on-line providers literally make no profit as we see in today's music industry and it's getting worse by the day. Never mind the retailer that is in a mall space with astronomical rents and profit sharing, "Where have all the profits gone?"

Needless to say, they are at the mercy of the labels and those ad dollars which are the essentials for their survival. For the record, by the way, to coin a phrase, a consumer doesn't care what record label a record is on. So there really is no "brand" recognition either by such advertising, just sale price and positioning again.

To answer the above referenced question, it's sinful. In the beginning, years ago it was called (R & D), research and development, now it's called greed!

On a more positive side, I think it is a great time for independents. Our answer and solution to the problem here at Vibe Records is, we are offering 50/50 joint ventures to the artists we sign. The concept, they participate in the net profit. In truth, the artist puts up their music, we distribute and manufacture the product and we split the profits after the net and everyone wins! That's roughly the $8.49 split as mentioned above.

The results - our phone hasn't stopped ringing Off the Hook! Hypothetically, maybe someday via the invention of the inter net, cyberspace will become our retail partner and the distributors as we know today will listen to the cries of the consumer and the music will get to those who wish to hear it regardless of the future of distribution.

Sound crazy? Guess again, I believe it's called a download! Does that mean I am a supporter of Napster or MP3.com? No, especially if they are violating applicable laws of Sec 17 of the US Copyright Code. Would I like to bring down the list price and wholesale price that our distributor is currently charging our customers?

Absolutely!

Nagarayan

"What I see is the technology advancing to fill in the gaps where talent and training are lacking."

It can only go as far as producing recorded tracks. The challenge here is if the listeners demand a live performance Let's say a technology that could provide guitar licks that can't be done yet by an aspiring artist. He could just mix it in a recording software and sound great.

Suzanne Lainson

The challenge here is if the listeners demand a live performance.

Of course it is already being done. You have some DJs/EDM folks who have everything already programmed and ready to go. What is "live" anymore can be something not much different than watching a movie unfold with a person standing in front of the scene.

Right now there are still people somewhere creating inputs but as computerization becomes more sophisticated, we can probably remove people altogether and have music, video, lights, etc. entirely generated by machine.

Ramone

Thanks Jeff!! This article speaks on the same conversations I have been having for the past 5+ years.

1.Many don't understand how you leveled the playing field of sorts with TuneCore or understand what it is. Tunecore gives an artist/talent a great WORLDWIDE DISTRIBUTION access PERIOD. An artist success or lack thereof is not predicated on the distributor but a strategic plan and FUNDS or time for organic fan building.

2.In laymen terms a "major label" is a bank that (loans)"record deal" to a "artist/talent" in hopes of making an immense return. Many have forgot that the BUSINESS OF MUSIC is just that..Bottom Line"allocated budgets" still apply,"ROI" various clauses and ownerships(i.e publishing,merch,etc). If an investment is no longer yielding returns as a business you have to seek out other means.

3. Lack of artist/talent development(lack of true A&R departments) that have now resorted to charts and numbers.No longer out in the mix getting true feelings for an artist. Which has led to very short lived and earnings barring careers.

4.The "Industry" has and is changing rapidly. Music will forever be around. The way its delivered and purchased will change.

THIS IS STILL A BUSINESS...THE BUSINESS OF MUSIC NOT THE MUSIC BUSINESS

Broken Record

Jeff Price writes long blog about 'gatekeepers' and the 'new' and 'old' music industry with equally long replies for anyone that disagrees with him.

Good to see he's learnt NOTHING after getting fired from his own company for this behavior.

Please Jeff, move on and get a new cause.

Clyde Smith

This is a blog about the music industry where we post content and are glad when people respond.

We're lucky to have folks like Jeff Price sharing their perspective.

Notice that a lot of people have participated indicating this is a worthwhile topic.

Maybe you should heal your broken self and move on, son.

Mike_UK

Sigh, these long long drawn out "back in the day" posts are one reason I turned off from the Pho list. There is only so much you can dig up from the past, re-summarizing the "way it was before" in 5000 words and then kicking in a 140 character conclusion at the end.

The crux of Jeff's article (and for that matter, his entire marketing theme while at Tunecore) is artists should be paid for their "work" and that labels and mostly everyone else in the industry (expect Tunecore) takes advantage of the "poor helpless innocents."

While I don't disagree with the latter, artists have to decide what side of the fence they are on. Either they want to create and play and money is unimportant (or it would be nice to be able to make something along the way) or, they are in it to make money and be famous. If artists want the latter, then join the queue of every other businessman/woman, startup, entrepreneur out there in every industry around the world and prepare to roll your sleeves up to get creative, and dirty.

If I create a new widget and pay for a lawyer to set up my business (see above where the poor artist has to pay for a lawyer) and then I finance from my own pocket the prototype, then pitch it to buyers or manufacturers, and then hope some mass retailer like Walmart picks it up then I've spent money and time as well. I don't expect a retailer or distributor to buy it or give me millions in advances, why? because I know how normal business works and I certainly don't feel "entitled" to a free and easy ride where no one rips me off or steals my idea. That's business.

And for all you "well music is not a product, its not a tangible thing" well same for if I started up a web service. I don't sit there and cry if no one buys it or if I have to spend 500$ on lawyers fees and $1000's on webservers, You get on with it, you have a dream and you hope that everything falls into place. Oh and the whole "piracy thing?" Well come and sit on the software couch and let me tell you something about software piracy. But you know what, if you create a great product, at the right price, most customers will pay you for it. Also, compare to good old web designers who sweat and toll away only to be screwed over by the client (a good 30% of the time)

What the above scenarios don't have is a Jeff Price saying "hey, all entrepreneurs, I'm your savior, everyone else are rip off merchants and scammers." In other words, TuneCores entire marketing angle was based around a bait and switch. It's easy to use "everyone else are crooks come and join our group hug" when you're surrounded by a community of bands and artists who play the victim all the time.

The sense of entitlement of some of today's musicians is disgusting compared to the fact that many of them make absolutely no effort to think like business people (oh sorry, they're "artists" and therefore have an excuse)even with the simplest economics marketing, selling and buying. I've worked with bands who can't even be bothered to spend money on some decent band photos or others who upload their music onto streaming services like Spotify and then bitch and complain about it cannibalizing their iTunes sales. Well Jesus, its no different to me selling my product into a specialty store and then wondering why those sales plummet after I blow the same product out in Walmart for 99 cents.

Yes this blog is about the music industry and mostly read by the music industry but can we all please please move on from "the good old days." And Jeff, no disrespect to you, as you've provided the Pho list with some good discussions over the years, but its time to move onto your next project which I hope won't come with the same manifesto from TuneCore. After a while, its easy to look like the "old school music industry guy" who's always talking about the past and just ends up looking like he's taking the helpless young music generation for a ride.

jeff price

@Mike

My goal is to make things better for musicians. Its a short "manifesto" but a good one

I do understand we would all like change to happen more quickly, it does take a bit to dismantle then rebuild a $30 billion media industry.

Good news is, with the final tech pieces in place, things will be moving even more quickly

jeff

Suzanne Lainson

My goal is also to make things better for musicians. But in the process of writing about it, I came to the conclusion that you can't separate music and creativity and their creators from the global economy at large. If their fans have no money, there is no money to pay for art. So you either find ways to support the artists in other ways (e.g., free goods and services to cover their needs) or you find a way to let the world's population make their own art so that it becomes separated from economics altogether.

Talking about the fate of the traditional music industry doesn't matter anything to me in the greater scheme of things.

And when I read about musicians being encouraged to build direct-to-fan business models, it strikes me as essentially the same old business model on a smaller scale. We're still talking about artists hoping to extract some money from fans so the artists can survive, and there are still middle men hoping to take their share.

Therefore I like to push the envelope a bit and encourage people to think of the next step beyond where we are now. Imagine a world where technology is so smart and so cheap that everyone has the capability to create for themselves exactly the music they want to hear. We have already seen the transformation in the kinds of music we are listening to and the kinds of musicians we are going to listen to. As I mentioned before, a lot of it is preprogrammed and what the audience is really there for is a big event where they can dance, get stoned, and meet each other. They are there for each other and the experience rather than watching a "live" music event. Package up that technology and give it to every group that wants it and you reduce the need for any "stars."

Suzanne Lainson

Burning Man might be a good example of the future of music. The event is the participants themselves. They spend money to create art, but no one there sells art. It's a world where everyone gives and no one takes.

Of course, to exists Burning Man depends on the participants having outside jobs to allow them to survive the rest of the year. And that is what music already is for most people. They have day jobs and music is their outlet, not their source of income.

Burning Man doesn't bill itself as a place where people come to show their art to land jobs or gain paying fans. I wish we'd drop the pretense that giving away music will lead to income streams for those who do it. For most people it never will and it isn't necessarily for lack of talent. Talent and the ability to survive as a musician are related, but not necessarily directly related. There are talented musicians who don't make enough money to live on and there are successful musicians making a lot of money but aren't musically talented by most definitions. It's like the movies. Blockbuster movies are often not great movies, but they are well marketed movies pitched to a paying demographic.

Mike_UK

At the moment for artists, the music industry seems to be similar to that of higher education. It doesn't matter how much money you spend(and get in debt for), or how much work you put in, there is no guarantee you'll get anything out of it in the end.

daznez

Nicely balanced comment. Totally agree. Even worse for an artist if you sign up to a monthly fee type deal (I did with ditto music - avoid - poorest communication on the internet) decide you don't want to pay any more (because you're not maing money,) then can't get your songs taken down from itunes. who gets the money from the handful of sales then?
There is still no solution. I have moved to direct to artist (minus paypal fees) but this still leaves the problem of noone's ever heard of me. Sorry, regular radio isn't going anywhere, and i'm listening to the We Are Augustines album right now. on CD. that i bought 2 weeks ago. Why? Cos i can play it at home in most rooms, in my car, and it doesn't break up and i don't have to sync anything. Maybe the future is a balance?

daznez

Not just to Nick, but to every one of us: There is a whole other world out there offline.

People going about their business hardly interacting with the web. Listening to the radio at work and in their cars, vans etc. People in record stores buying CD's.

You write off the real world too easily. Like I said, the future is probably a balance.

RouteNote

Aren't you that scam artist that used to run WaTunes? Now you're operating under Xeinge Group? Wow.

LostInDigital

"...similar to that of higher education. It doesn't matter how much money you spend..."
Exactly. You don't purchase a diploma, just like you can't purchase talent or success.

MYK

Jeff, interested in another project? I'm working with a music startup that is redefining the relationship between an artist and his fans. We need someone with your expertise. Give us a shot? 1 hour a month as an advisor?

Derk Cyborg

A line from a recent song of mine "Who's gonna pay us if everybody's famous?" I agree with your insight...Cheers D.C.

Steph (@StephBarrak)

Suzanne - couldn't agree more, thanks for the great insight

David Grunga

Why do people have to pose as other companies? Also RouteNote, aren't you a little to small to be belittling a larger player in the industry?

Kevin Rivers

Wow. I never thought a CEO could ever stoop this low. Do you have any ethical proof that I scam artists (other than Makell Bird)? Also, if I were such a scam, then shouldn't I be out of business? Also why are my current users satisfied with my business?

I'm going to assume that this is Makell Bird (of ADE Distribution) being that I gathered hes been using Steve Finch message board tactics for his own company + Creating videos of how bad CD Baby & TuneCore suppose to be.

Its a shame that you still bash others to make yourself look good. You have a long way to go until you build a viable and reputable business. Using Blogger as a way to distribute music only discredits you. Serious artists won't take you seriously with that kind of a business plan. Before you can write a comment like that, please get up some achievements of your own company.

Now if this is really Steve Finch of RouteNote, then I am very disappointed in your unethical comment. As a CEO, you're only making yourself and your company's reputation look terrible. From what I've gathered, people are already seeing you as a person who trolls message boards your company and many don't take you very seriously.

Its a shame how people will go to great lengths to discredit competitors (posting on messages boards, creating videos, trolling on comments, etc.) instead of focusing on what's really important: Helping Artists!

Helping artists succeed should be your central focus, not "trying" to discredited me. And to point on gesture with Jeff Price, it is imperative that artists are aware of the opportunities presented to them (whether its CD Baby, TuneCore, Venzo Music, RouteNote, or even ADE Distribution). Technology is changing the way artist sell music and its up to the distributor to be that leader.

Question is: Does an artist wants to be represented by a CEO who can only bash other companies, trolling message boards, creating YouTube videos, and soliciting their company? Or one who is extremely well respected and doesn't need to bash other companies because he/she is truly driven in making the artist succeed?

Which CEO are you?

Kevin Rivers
CEO, Xeinge Group
kevinrivers@xeinge.com

Lowestofthekeys

One other detail regarding the marketing back then was that when the labels shipped the CD units to retail stores like Target and Walmart, they essentially lost any control in how these stores marketed the artist (details here - http://www.digiave.net/piracy-didnt-kill-the-music-business/).

The linked article brings out how grass roots marketing was exchanged for marketing that focused on which artists the retail stores thought were the most popular. For example, the article says, "...retailers like Target only put about 300 titles per year on shelves out of 3000 or more possible releases..."

skinnycandy

Well, not everybody is quite as convinced by this I'm afraid. I've still got adherents to the old school music experience; those that like to have something physical/tangible and want product on CD and - yes - vinyl too. Bear in mind that these things are cyclical aswell: just when the 'digital mafia' think they've 'won the war' or whichever one it is they think they're fighting - there'll always be those that hanker for the tangible, and - shock! - will be prepared to pay for it, and continue to demand it. Far better I think that consumers had a CHOICE and artists/creators some CHOICE of means by which their expertise/talent can be re-munerated/monetised and still enjoyed that is not restricted to a digital environment. Also I'd argue that sound quality IS compromised in the digital environment. It doesn't sound the same. I've been at this game for 20+ years and trust me, even though we have released digital formats of our music, you can't beat the physical thing. As open as I am to all styles and sounds of music - and I am, truly - sound quality and content (talent aswell?) has unfortunately deteriorated to such an extent now that even newer 'creators' (fans aswell?) will eventually want to know how to recreate the sound of, say, Phil Spector or 'Pet Sounds' and wonder how the hell they got that and furthermore want to at some point and then...wonder where all the musicians went. "They were destroyed by digital son. Once upon a time instruments were played by people but now machines do it all son." A dystopian future does indeed await Jeff....and you can take pride in your involvement in the destruction of livelihoods, and worse still, craft. Such a shame, I think.

weedy

Nutshell:
you guys (songwriters, musicians, producers, engineers) should MAYBE make a living but basically forget about making much, so that we (the tech industry - google, apple, spotify, etc.) can make a lot by bundling and distributing your work.

we can't pay YOU much for it, but we can become billionaires from it.

"information should be free" but we can charge you plenty to deliver it to you.

weedy

examples please: of artistes who achieved "legendary status" via the "new model" ALONE.

they record at home, market themselves, were never on a label, etc.

Mike/M.T.L

Hey Jeff, great article.
Your never gonna believe this fluke...

I'm a young artist from Montreal Canada, and
recently had some success with my band "M.T.L" :
www.facebook.com/mtlband . We had 3 top
5 radio hit singles within the last year... and according
to my pay checks, I can atest
to what your saying first hand.

Anyways the fluke is that I just read this amazing
book "The Sabbatical" and it's an exact replica of your life!
It's identical to your story with "Tunecore" It's like the book was written
About you but 2 years ago before your departure from Tunecore...It's crazy!
Everything you've done and write about is the main
Characters life As an artist I can truly relate to the book and your personal
Experience. Seriously just check it out it's basically your story with TuneCore
With sex drugs and rock n roll mixed in lol. Heres the link to the book: http://www.thesabbaticalbook.com/ seriously my favorite book right now! Cheers Jeff
Keep doing what you do cuz need ya buddy!
-Mike/M.T.L

jelly andrews

I think that’s the trend nowadays in most artists. They put their pre-recorded music in CDs. And music fans can purchase it their favorite record stores.

clark

He missed one VERY important thing! Internet piracy still needs to be fought like rape and pillaging on a new wild west frontier! Or it will take those of us who create music down!

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