Dave Kusek Of The New Artist Model Looks Back On 2014 [Our Virtual Panel]
Dave Kusek is the founder of the New Artist Model online music business school and former CEO and founder of Berklee Online. Kusek is also the co-author of one of the best selling music business books The Future of Music: Manifesto for the Digital Music Generation written in 2005, and has enjoyed a successful career as an entrepreneur in music, technology and marketing. He started the first music software company Passport Designs in 1980, helped bring MIDI to the marketplace, was one the of inventors of the Synare electronic drum and has shaped the digital music market for many years. Today, he shares with us his thoughts on how 2014 has shaped the landscape of the music industry for 2015.
1) Do you see the current debate questioning the effect of ubiquitous free music online leading to real change, or is the Taylor Swift rift just a short term distraction?
Taylor Swift and her management team at Big Machine Records have just executed a brilliant publicity campaign which lead to massive sales of her products and landed her on the cover of Time Magazine, front and center on the American Music Awards, on top of the Billboard charts and the featured spot on Barbara Walter’s 10 Most Fascinating People of 2014. Scott Borchetta is a master promoter and got himself a judge’s seat on primetime TV for the next season of American Idol. It was very smart business and the best campaign of the year. The media ate it up – and still are.
Artists who breathe the rarified air up there with Taylor, Beyonce, Rihanna, and Lady Gaga can pretty much do whatever they want as far as windowing releases and creating tiered offerings for their fan base. In many cases it does make sense to delay a release to free services in order to take profits, especially when you are at that level. But overall, in order for streaming services to dominate the ecosystem, the popular music needs to be on those services and the artists needs to be properly compensated for it.
The #1 thing holding streaming services back are their broken economics. Artists are not paid enough, labels and publishers are paid too much and the services overall are too expensive for most fans. Until these issues are addressed, there will be continued debates about the business models, more opportunities for publicity stunts and erosion of revenue for creators. If the streaming services were cheap enough, there would be little need for perpetual free services, except as a teaser to an ongoing subscription fee that was so low, that it felt like it was free.
2) How important is the entry of YouTube Music Key and the expansion of Beats Music within the Apple ecosystem? Will they lead to a much larger streaming audience by the end of 2015, or just fragment a steadily expanding user base?
The streaming audience is expanding every day and will continue to grow as all of these companies gain market share and help people switch their habits. Yes, the audience will be larger by the end of 2015. And it will be some time before we see a lot of shakeout in the streaming providers. The market is still nascent and the growth potential is simply staggering.
As we wrote in the Future of Music book in 2005, we will see “music as a service” become ubiquitous in the marketplace, but it hasn’t happened yet. The prices of the services are still to high and there are not nearly enough people on board to make it economically viable. Why the rights holders have to cling to past practices, and why services like Spotify have to lose so much money to get critical mass is beyond me. Once these businesses can align properly and run profitably, we will see things take off.
As far as Apple and Google are concerned, we should be very excited that two of the most valuable companies in the world are focusing their attention on music. Yes it may take some time for them to get the streaming offerings right, but each one of these companies makes more money in a quarter than the entire music industry does in a year, so we better pay attention.
I think Apple acquired Beats more for the headphone line than anything else. It becomes another iconic hardware brand for Apple. And Google already owns the #1 channel for music discovery with YouTube, so really, given time, how can they screw it up? Let’s all be thankful that these companies are continuing to shine light our industry. We need it.
What big shift or story took place in 2014 that will have a major effect on your business/sector in 2015? How will you feel and field the effects?
For my business, it is most definitely the disruption occurring in education and the emergence of alternative learning platforms. Khan Academy, Coursera, and Lynda.com among others, are rocking the foundation of traditional education and opening up access to many millions of people. Live video chat and low latency real-time online collaboration is also having a significant impact on the way we work and learn.
Today there are attractive and viable alternatives to spending years of your life in school and getting heavily into debt in pursuit of a formal education or online degree. As the music industry shifts and revenue flows continue to evolve, it is even more important to have access to real-time learning along with affordable and flexible educational options that address and adapt to the realities of the marketplace. This is what I am focused on with the New Artist Model.