Interview: Rob MacArthur Of IOUmusic

Recently, I spoke with Rob MacArthur, who describes himself as a music fanatic and entrepreneur; he is currently overseeing operations at the online crowd-funding site IOU Music and Rock Garden Jam Spaces. In this interview, Rob talks about the willingness of the record indusry to emabrace new technology and chaos in general and the disruptive nature of these times.

Kyle Bylin:"When a new technology arrives, it has to get integrated into society somehow," Clay Shirky writes in Cognitive Surplus. Between the traditional record industry and the "new" or next music business there is a certain degree of dichotomy in their attitudes toward new technology and their willingness to integrate it into their industries.

The traditional record industry, to say the least, does not take kindly to would-be radicals trying to revolutionize any aspect of the business model that they have spent decades perfecting, improving upon, and protecting. On the other hand, in the next music business, they are urging companies and consumers to stop clinging to old models and embrace what Shirky calls "as much chaos as [they] can stand" in adopting new technologies.

From your perspective, how would you characterize this dichotomy between the traditional record industry and that of the next music business and their perspectives on embracing new technology?

Rob MacArthur: In general I see the current music industry as tech adverse, or slow to adapt at best, while the next music business is one flat out built on technology and data that addresses the needs of artists.

Well I think the next music business will be entirely artist focused and centered. But within that consideration, right now I think both are pretty much on the same playing field. While there are certainly many artists successfully embracing the next industry, and there are people at the majors trying to make the best of their situations, I think right now many artists are just as – if not more so – confused than the labels. Particulary the ones trying things on their own.

"Artists are stuck dealing with this dichotomy."

A friend received some local press for his new album. In the interview he mentions that he asked a number of people for advice on promoting his release but he wasn’t very satisfied with the responses. At best he got examples of what some other artists were doing. At worst he got a straight “I don’t know”. And I understand why he finds that frustrating.

KB: The great paradox, as Shirky views it, is that, "people committed to solving a particular problem also commit themselves to maintaining that problem in order to keep their solution viable." Thus, he argues that we "can't ask people running traditional systems to evaluate a new technology for its radical benefits; people committed to keeping the current system will tend, as a group, to have trouble seeing any value in anything disruptive."

What ways does this paradox factor into the traditional record industry's attitude toward new technology and have they had trouble seeing value in anything that potentially disrupts their core-business model?

RM: I think that paradox explains the traditional industry’s take on technology perfectly. They are looking to maintain their control they have had the past few decades – it doesn’t matter what potential tech offers, if they have to give up control, forget it.

So I think it comes down to vision. If you have a clear vision driving your business, you would use whatever technology you have available to achieve it, improve it wouldn’t you? What is the vision of purpose for the major labels today?

Contrast the majors with Apple. I don’t own a single Apple product. Not a hater or a fanboy. But I do have some amazing entrepreneurial respect for the company. The recent issue of Fast Company with Jobs on the cover, contains a great summary of the ten reasons Apple is Apple. One of the key things they do that most companies do not, and the music industry certainly hasn’t, is what writers would call killing their darlings. In the article, they make this point under the heading “Kill the past”. In my mind they have internalized the creative destruction that will occur in their product lines by someone else at some point anyways, thereby taking control of their markets instead of having to respond the way the music industry has been forced to,  and failed to do adequately, for years now.

For anyone not familiar with the saying kill your darlings, it means to remove parts of your writing, whether a chapter, a small section, a setting, a character – could be anything. The key though is that it may be very well something you really like. It might even be great. But by killing it, you make the whole stronger.

"Apple has and will kill entire product lines other companies would dream of having to milk for years."

Which pretty much sums up the music industry and their constant reissues. The record industry has been investing in life support systems for the past decade – it’s expensive and the end result unchanged. Change will happen. Things end. It is a much better position to be controlling that change, than simply following it.

What indie label or independent artist wants to copy Warner or EMI? Apple is the company lots of folks want to be and has built an eco-system around its products – something the music industry seems intent on preventing.

KB: In a desperate attempt to preserve existing cultural and social norms or potential damage to the current social institution, the traditional record industry has went to war with everything from the phonograph to home-taping, claiming that these new technologies would kill music. All of these, only re-engendered enthusiasm for music.

How might the traditional industry be better off if they let any would be revolutionary try anything they like with new technology, without regard for existing cultural or social norms or potential damage to their current social institution? Are there other ways in which the industry might actually be worse off?

RM: Well the key way the record industry will potentially come out of all this worse off is the damage it has and continues to do to their relationships with artists. And there is a technological slant to that angle as well as the EMI and OK Go situation showed in regards to simple issue like video distribution online.
I was hoping when Terra Firma purchased EMI we were going to see some drastic experimentation and changes with no regards to industry norms. We had a private company, with no ties to the old industry. While once again viewable, I sum up the changes at EMI with emi.com going unavailable to anyone except residents of the US and UK for a number of years. Actually years. No hyperbole at all. They somehow went backwards faster than other labels were able to resist change. But EMI had the opportunity to act without regard to those norms for the industry had they wanted to. I believe had they done that – focused on their artists, they wouldn’t necessarily be in the position they are now.

"I think if the industry took some control of
the situation they could definitely be better off."

Others have mentioned similar ideas to this but if I ran a major I would offer start-ups a blanket licenses for say 2 years. They’d have unfettered access to the catalogue with no upfront fee – or at least not something significant, maybe a small enough fee to act as a screening tool or buffer. But also upfront, the label would provide a fee for ongoing rights after the 2 year period. This would eliminate costly fees upfront for the start-ups, give them music to work with and place the responsibility fully in their hands to make it work or not knowing what it would cost after the grace period. Add a clause that if the service isn’t self sustaining the label has a right of first refusal to purchase the technology developed.

The industry would be better off if they allowed this to happen in the sense that they could officially be outsourcing the creative destruction of their industry and able to plan for the changes coming, incorporate them into their own plans or at worst benefitting financially after the grace periods.
I read a stat that the IFPI spent over a $130 million dollars on fighting piracy. If they put a similar amount into a fund for developing new ideas it’d be a different industry. Imagine commissioning university students like Shawn Fanning to develop the next Napster for them instead of fighting against them when they do it anyways.

The record industry sees all these tech companies and revolutionaries as competition. I think that is backwards. If they saw these companies as potential partners or independent revenue sources to be supported and worked with from the start, the industry as a whole would benefit. As would music fans and artists. Too many lawyers.

KB: The argument goes that these revolutionaries wouldn't be able to create more change than any members of society and the traditional record industry can imagine anyways. So too, they will be "unable to correctly predict the impact of the eventual ramifications because they have an incentive the overstate the new system's imaged value and because they will lack the capacity to imagine the other uses to which the tools will be put."

Putting forth the notion of embracing chaos, through and through, do you believe that so-called "music revolutionaries" wouldn't be able to create more change than we can imagine? What new technologies on the horizon have the potential to induce more chaos the traditional record industry can withstand?

RM: They can definitely create more change than we can imagine. No doubt about it.

Of current technologies I know even the slightest about, I am still waiting for some mobile development that will be the equivalent of Napster, and throw the labels for a loop once again. That is one area where I think there is still great potential for labels, due to the issues of dealing with carriers and various manufacturers.

"They have the resources to deal
with all that and build something great."

I would say the new technologies that are most likely to produce more chaos are simply ones we aren’t unaware of yet, but ones that will be developed in response to the industry’s whack a mole approach of shutting down sites and services that are current, such as torrent sites currently. They could embrace torrents as an amazing online fan supported distribution system. Or they can continue to attack such sites until people develop a delivery method that is even more difficult to trace and crack. As long as the industry takes such an adversarial position to technology they are going to come out on the losing end regardless of how much they throw at fighting piracy.

So the ball is in their court, they can start working with the folks developing these great new technologies, or they can be ambushed again and again by what is developed in response to their current course of actions.