Friday, November 9, 2007

The View from My Hotel in NYC

Am a sucker for abstract images. Here are a couple from my recent trip to Ad:Tech in NYC.

IMG_0092.JPGIMG_0088.JPGIMG_0093.JPGIMG_0085.JPGNew York City November 2007

There are more of these on Flickr.

Saturday, October 20, 2007

Chris Anderson on "the Music Industry"

Chris Anderson has written another excellent post about the music industry, "Everything in the Music Industry is Up! (except those plastic discs)." An excerpt:

. . . it's a big mistake to equate the major labels and their plastic disc business with the industry as a whole. Indeed, when you stand back and look at all of music, things don't look so bad at all.

Indeed, it appears that every single part of the music industry except the sale of compact discs is up.

Concerts and merchandise: UP (+4%)
Digital tracks: UP (+46%)
Ringtones: UP (+86% last year, but probably just single-digit percent this year)
Licensing for commercials, TV shows, movies and videogames: UP (Warner Music saw licensing grow by about $20 million over the past year)
Even vinyl singles (think DJs): UP (more than doubled in the UK)
And, if you include the iPod in the music industry, as I'd argue a fair-minded analysis would: UP, UP, UP! (+31% this year)
Only CDs are down (-18%). They're around 60% of the industry not including the MP3 players, but just around 25% if you do include them.

So the problem with the music labels is not that music is an industry in decline, but that they have a too-narrow view of what business they're in.


And from the comments on Chris's post:

Comments

And, for what it's worth, down here in long-tail retailer land at CD Baby, even physical CD sales are up 35% over this same month last year. I suspect that part (not all) of the decline of the top-40 CD sales are people buying more CDs directly from independent musicians and alternative outlets.

Posted by: Derek Sivers | October 19, 2007 at 11:07 PM

Then there's the content. I'd bet that # of bands, # of musicians, # of tracks being made and available somewhere, # of venues are all up as well. My gut feel is that there are more people making more music than ever before. Then how about streaming; Last.fm and Pandora up. P2P sharing; Up. Number of shoutcast servers; Up. Digital radio and radio over cable/satellite stations are Up.

It's highly likely that more people are listening to more (and more varied) music than ever before.

It's not really CD sales that are down. It's the Music Major's profits.

Posted by: julian bond | October 20, 2007 at 01:46 AM

Tuesday, October 16, 2007

Music 2.0 Meetup in NYC



Amie Street is presenting tonight at the Music 2.0 Meetup in NYC (Spreading Music Enjoyment Through Technology). Abby Schneiderman, Anthony Volodkin (founder and creator of The Hype Machine), Art Chang, Dick Huey, Taylor
McKnight (Hype Machine), Jordan Garbis, Juliette Powell, Myles Grosovsky and Phil
Schuster are inviting their tech, music, and VC friends to join us for an
evening of Music 2.0: Spreading Music Enjoyment Through Technology.
Their friend Drew Lipsher, a Partner at Greycroft
Partners has agreed to emcee. (They say that Drew is the only VC they know who is a
former label exec (Universal).)

Short presentations are expected from companies working on spreading our passion for music via the
Internet: Amie Street, Haystack Media, Hype Machine, Tourfilter and
Anywhere.FM.

Ted Guggenheim and I have signed up to attend, and I think our friends from Spotify.com, Daniel Ek and Niklas Ivarsson, may show up as well.




Powered by ScribeFire.

Monday, October 15, 2007

Back in NYC

Ted Guggenheim are back in NYC for another round of meetings. Tonight we had dinner at the Red Eye Grill and a round of drinks at Seppi's with someone who shares a remarkably similar perspective on what needs to happen in the music industry.



All three of us have managed artists/bands. Two of us have played in bands. All three of us think the industry is ripe for dramatic change, and we're prepared to seize the opportunity.


And that's exactly what Ted and I are doing in NYC.

Sunday, October 14, 2007

CTO vs. VP Engineering

Brad Feld has a great post up today about the difference between CTOs and VPs of Engineering.

CTO vs. VP Engineering [Feld Thoughts]





It's interesting how similar our experiences are on this point and how much his description (below) of "the great CTO's" reminds me of my dear friend, Niel Robertson, who served as CTO of Service Metrics.

In contrast, the great CTO’s usually can’t manage their way out of a paper bag, but have huge vision, the ability to pull an all-nighter and crank out a rough prototype of the thing they are thinking about, have the unique ability to translate complex / abstract thoughts into simple English that a non-technical end-user can understand, and a willingness (or even desire) to get up in front of 1,000 people and talk about the latest greatest thing they are working on / thinking about. They are also perfectly happy to work collaboratively with the VP Eng while leaving the engineering team completely alone.




This paragraph describes Niel perfectly. I remember a particular incident during the development of Service Metrics' first product offering when Niel had an insight about how he could illustrate the performance data in an utterly unique way. I think he managed to "crank out a rough prototype" within 24 hours. It blew us away. And it was exactly what Service Metrics (and the market) needed.

(Via Venture Capital.)

Radiohead May Not Need iTunes, But It Still Needs Record Labels - MarketingVOX

Radiohead May Not Need iTunes, But It Still Needs Record Labels - MarketingVOX: Radiohead May Not Need iTunes, But It Still Needs Record Labels...


Radiohead May Not Need iTunes, But It Still Needs Record Labels

Life in technicolor
Radiohead, which released its latest oeuvre on its site in a pay-as-you-wish format, still plans to push the album in stores — most likely with a Big Four label, reports Ars Technica.


Radiohead fans gave the group much love after i"


Social networking and the Geocities fallacy

Marc Andreesen has done it again. His blog - blog.pmarca.com - has been a treasure trove of information and commentary about startups, career building, platforms and much more. In nearly every case, Marc makes plain that the intellect and drive that brought Mosaic/Netscape into being followed by more than a few other substantial startups, including Loudcloud/Opsware (purchased by HP in September 2007 for $1.6B) and Ning, has not been dulled in the years since 1993 when Marc first developed Mosaic at NCSCA and suggested Tim Berners-Lee, the inventor of the World Wide Web, give it a look.

This time, Andreesen directs his attention to the suggestions - by such illustrious commentators as the Wall Street Journal and Microsoft CEO, Steve Ballmer - that Facebook and social networks are really nothing more than Geocities with a few updating bells and whistles. Um, no.

blog.pmarca.com: Social networking and the Geocities fallacy: "blog.pmarca.com
Often wrong, never in doubt.

Social networking and the Geocities fallacy
OCT 4, 2007

When I take someone through Ning for the first time, 49 out of 50 people look up at some point and say brightly, 'Oh! It's like I can have my own Facebook!' or 'my own Myspace!' or 'my own Youtube!'. And I say 'yes!', smile, nod, and continue.

But every once in a while, I'll take someone through Ning and he or she will look up at some point and say brightly, 'Oh! It's just like Geocities!' And I say nothing, fake smile, grit my teeth, and resist the urge to throw myself out of the window.

A Geocities analogy to Ning, or any modern social networking service, is so screamingly wrong that I thought time passing -- and more people using social networking services -- would fix the small but nagging problem automatically.

I was incorrect.

Sunday, September 2, 2007

Jazz Aspen Snowmass




It's all Ted's fault. During the past week Ted Guggenheim, iggli's VP Finance and Business Development, had been after me to take some time off this Labor Day weekend and head up to Jazz Aspen Snowmass. When I was slow about booking a room and purchasing tickets, he grabbed my credit card and did it for me. So here we are, Nanette and me, in beautiful Snowmass, CO, attending a great music festival and having a terrific time.

Yesterday we saw Galactic, Joss Stone and John Legend. The Galactic show was great but the 2:30 pm start time was clearly too early for most of the festival attendees. The crowd didn't really reach a significant size until later in the day, when Joss Stone took the stage. Propelled by the polyrhythmic wizardry of Stanton Moore on drums, Galactic featured wave after wave of New Orleans influenced "fonk." The band, which has delivered some wonderful instrumental work and sizzling grooves over the years, has never been known for its vocal element. Nevertheless, the most recent Galactic recording, From the Corner to the Block, features contributions by a host of
guest MCs, including Lyrics Born, the Coup's Boots Riley, Chali 2na from Jurassic 5, Mr. Lif and Gift of Gab from Blackalicious, and more. The live show's tastiest bits were highlights from keyboardist Rich Vogel and sax player Ben Ellman punctuating a Stanton Moore groove-driven, MC-supported set.

What can you say about Joss Stone? For starters, how is it possible that the petite body of a 19 year old girl from the UK can produce a voice that sounds for all the world like it belongs to a black soul singing diva raised in Detroit, Michigan. In 1969. Damn this girl can sing! OK, so the most recent recording, Introducing Joss Stone, needed a little guidance. Her previous releases, The Soul Sessions, and Mind, Body & Soul, were extraordinary. "Introducing," well . . . not so much. But her voice! Wow! On stage, barefoot, pale and fragile looking, she stalked from one edge of the platform to the other and she just WAILED!! For those of you who remember Joss as a blond . . .


. . . well, you'll have to readjust your image just a bit. At this show, Joss was a brunette, with purple highlights - more like the second photo. And purple seemed to be the color of the day - gracing the clothing of nearly all the supporting musicians and backup singers. Incidentally, I counted 11 members in Joss's onstage entourage. Two keyboard players, bass, drums, guitar, two horns, and three backup singers. And, of course, Joss.

At the end of nearly every tune, Joss let loose a diminutive little "Thank you!" to the crowd, in a voice so small you'd have thought she had become an entirely different person. When she speaks, she's a 19 year old girl; when she sings, she's a 35 year old black Diva from the Motor City.

Then there's John Legend. This guy's a star. The whole package. Exceptional vocals. Great piano player - with all the gospel and R&B roots you could want. Oh, and the good looks that seem guaranteed to drive female fans wild. One of those female fans, Carolyn Powers (who, with her husband Bill was the named sponsor of the John Legend portion of the festival) joined John on stage for a little slow dancing. She seemed quite delighted. The show featured all the hits: Used to Love U, Save Room (for My Love), Heaven, P.D.A. (We Just Don't Care) and Ordinary People. And John was in great form. Too bad the sound techs couldn't locate the source of a short that periodically interrupted the performance with annoying and distracting static.




Today - Sunday - we're most looking forward to Michael Franti & Spearhead.
I got to know Michael a little bit during his making of Everyone Deserves Music. For awhile I had hopes of becoming involved directly with his career. That didn't happen. But during the course of the discussions - which took place in San Francisco and Beverley Hills - I learned a lot about Michael, his sense of mission and his operation. His manager, Catherine Enny, also became a friend. She's a sweetheart!





Wednesday, August 22, 2007

I Love New York

I'm in New York City this week with Ted Guggenheim. Once again we've scheduled a number of meetings with people in the entertainment industry - artist management firms, attorneys, software developers, etc. It has been cool, sometimes wet and mostly gray during the two days we've been here so far, but as always seems to be the case for me the pulse of this place, the rhythm of the streets and the buzz of the traffic and the people, raises my heart rate and buoys my spirits. I like it here. There was a time I actively planned to buy a place somewhere in Manhattan and see what a life lived in the heart of the city might be like. It never happened. Instead, I've popped in from time to time - usually staying at the Algonquin, but recently using the Guggenheim family's condo as home-base instead. And what's not to like, it's in the same block as Carnegie Hall! I walk a few feet down the street, and see posters for Mitsuko Uchida, one of my favorite pianists.

And the next time she plays Carnegie Hall? Mon February 25th 2008, performing Bartok's Piano Concerto No. 3, with the Chicago Symphony Orchestra, Pierre Boulez conducting. An excerpt from Andante's site on Boulez:

Pierre Boulez is one of the most important musical and intellectual figures of the twentieth century. As a composer, he wrote a new chapter in the history of music in the fifties, particularly with Le Marteau sans Maître. As a conductor, he gave contemporary music its rightful status and renovated many masterpieces of symphony and opera (Wagner, Bruckner, Mahler, Debussy, Stravinsky, Bartok and others). He taught musical analysis, composition and conducting. He was for several years a professor at the Collège de France (Paris) and is a highly valued lecturer. As a researcher, he organized IRCAM, l'Institut de Recherche et de Coordination Acoustique/Musique (the Institute for Acoustical/Musical Research and Coordination). He is also the author of many books and essays.


Ah, but that's New York. There are people like this on every street corner. I probably jostled a literary genius or two on my way through the crowded aisles of the marvelous Carnegie Deli during lunch, and as I glance out the window of the coffee shop, I see office workers mingling with Tony award winning composers and actors. That's what density - um, I mean population density - will do for you.

In any event, I love this place. Maybe one of these days I will bite the bullet and buy a place here. For now, though, I'm just happy to visit as often as I can, and I'm grateful that this business - iggli - has NYC as one of its gravitational centers. That's a wonderful thing!

Thursday, August 16, 2007

TechStars

I'm impressed. I just spent the morning at the ATLAS building on the campus of CU checking out presentations of several of the companies that are participating in TechStars. A program begun by David Cohen with help from Brad Feld, Jared Polis and David Brown - and the support of the local entrepreneurial community - including entrepreneurs, angel investors and venture capital firms - TechStars rocks.

This morning's presentations included Eventvue, Intense Debate, SocialThing, J-Squared Media, MadKast and Searchtophone. One of the remarkable things about these presentations was how consistently good they were. Not that there were no holes or flaws. But we're talking in most cases about two or three founders/entrepreneurs working their tails off for the past three or four months and coming up with results that are quite extraordinary. Kudos to the entrepreneurs. Kudos to David Cohen and the rest of the mentors and support that made this possible. I figure David Cohen must be exhausted.

Another amazing thing that seemed to impress everyone in the room that was a little older than 40: wow, these folks are really young! One friend, another entrepreneur, remarked, "I feel old. And expensive."

Finally, I'm quite stunned at the traction that at least one of the companies has been able to generate through its Facebook application. J-Squared Media reports revenues of $30K a month. They are already cash flow positive.

Again, congratulations to the entrepreneurs and to David Cohen et al. for putting all this together and pulling it off! And now I've got to go, I'm late to the afternoon session!

Wednesday, August 15, 2007

Facebook

Facebook

Wow! I just checked out iphone.facebook.com today. If you've got an iPhone and a Facebook account, you'll be absolutely amazed. Check it out (iphone.facebook.com)

Extraordinary use of the iPhone's features with Facebook's basic functionality. So far, it doesn't seem possible to access applications, but most everything else is readily available - photos, the Wall, profile, friends, etc. Just an outstanding job.

Saturday, August 4, 2007

Yes, I got the iPhone too . . .



It was a week before the iPhone was scheduled for release, and I was hard pressed to decide whether I'd go with the Blackberry Curve or the iPhone. I've been a Blackberry user for a long time. I still like them. More than that, I've been a Verizon customer for years. I like the quality of Verizon's network. I can connect from almost anywhere I happen to be, nearly any part of any city in the country, and I seldom had dropped calls. I wasn't wild about switching to AT&T's EDGE network.

So I hedged. I bought the Blackberry Curve the week before the iPhone was released, but only after someone at AT&T's retail store told me that if I wasn't satisfied with the Blackberry Curve I had 30 days to return it for a refund.

That clinched it. I bought the Blackberry, knowing that in just a week's time I would also have Apple's iPhone. That way I could effectively compare the two and make an intelligent choice.

As the date for the iPhone's release drew near, the hype was over the top. My friend Ted paid to have someone stand in line on his behalf. I ran into another friend, Brian, the day of the iPhone's release, and he told me that he had given several folks the day off so they could wait in line, buy iPhones, and hopefully sell them at a profit.

I'm not much for lines. I waited until I got a call from Ted telling me that the lines had subsided. Then I walked into the Apple store, walked straight up to the counter, and the new 8GB iPhone was mine.

It took me two weeks time to conclude that I wasn't really going to use the Blackberry Curve. In that time, I managed to snap photos - on the iPhone - of two babies, a family reunion and a concert at the Fox Theater. I also experienced the satisfaction of being able to get directions on the iPhone via Google maps. But best of all, I became addicted to accessing the web to read news, search, etc. Even with AT&T's EDGE network, the experience was vastly superior to anything I'd been able to do with my Blackberry.

I've been amazed at how many people I run into are immediately captivated by the phone. They want to touch it. I usually have them go to photos and open the latest camera roll. They pictures of our grandson, Aiden Christopher. Or photos of Howard & Elizabeth's baby, Oliver. And when I reach in with my fingers and exapnd them to zoom in for a closer look, they're utterly hooked. Great technology, great user interfaces are magic!

A few weeks ago, I'd had enough of the Blackberry. I took it back to AT&T for my refund. But I also transfered my Blackberry's phone number to my iPhone. The number that I received through Apple's iTunes activation process has to have been the most random number I've ever seen. The number I received with the Blackberry, in contrast, was quite memorable. But that's hardly surprising. I picked it, and I knew when I chose the number that I wanted to maximize the number of repeating digits or patterns of repeating digits.

A final word about the iPhone. For all its flaws, this thing is just amazing. Utterly remarkable!

LA & NYC - The Music Industry Continued

In the past two weeks I've taken 19 meetings in LA and NYC. Some meetings were with managers, some with management firms, some with live music promoters, still others with entertainment industry lawyers. The purpose of these meetings was to outline what we were intending to introduce in the marketplace and learn what we could about what the reaction might be to our services.

First off, a huge thank you to my friend and VP Finance / VP Business Development, Ted Guggenheim, who arranged these meetings. Ted has been in the music business for nearly 20 years. And it was clear from our reception that he has a lot of friends in this business. Our dance card was full, and people took these meetings expecting to hear that we are about to do something significant.

We described an approach to the market that began with our target demographic, the audience that will be our focus as iggli launches its service. We went on to detail the basic elements of the service and articulate something about why we think the things we are doing are going to be interesting to all of the key players in the industry. The best part about all of this: people got it. With the exception of the first meeting in LA - a meeting that was more diffuclt than the others because our arrival in LA was at least an hour later than we'd planned (thank you United) - our connections with everyone in the industry had people nodding their heads in agreement.

So what are we planning? Without spoiling the launch, I think I can say that a couple of things. We're focused on the consumer. We want to deliver surpassing value in the context of the consumer's experience of connecting to music online. We're social network oriented. And we're planning to offer music to our customers but do it in a unique way.

We hear, over and over again, that the music industry - particularly with respect to the recording industry - is awash in gloom & doom. More than one of the persons we talked with has said to us that they believe this coming holiday will prove to be the season that shows the industry that they have gone "over the cliff." Not, mind you, that they are about to go over a cliff. Rather, that they are in freefall after having passed the point of no return. As the CD sales, on which the industry still depends for roughly 80% of its revenues, plummet, there will be nothing to cling to, nothing to break the fall.

And that's where we come in. Not that we think we can be a net or a parachute. But we think we do have a solution to a few problems. And based on our 19 conversations, the industry seems to think so too.


Wednesday, July 4, 2007

What's Up With the Music Business? (Almost Nothing. Unfortunately.)

The music business has fallen on hard times. This is hardly news to anyone - whether you're connected to the business side of music or just an interested bystander. The Rolling Stone, commemorating the 40th anniversary of the Summer of Love - ah, yes, that would be 1967 - is running a two part series that deals with the current state of affairs in the "record business" - The Record Industry's Decline, by Brian Hiatt and Evan Serpick. There aren't any revolutionary insights here, but the article does a reasonable job of surveying the landscape, and there are bodies everywhere. Unfortunately, they are mostly either lifeless or on life support, and there doesn't seem to be much consensus about how to reverse the deadly epidemic. Will the music industry be ruined? Well, yes. And no.

Of course, what was once the "record business" is now the "music business" (so major labels can find new pockets into which they hope to put their hands and come up with more than just a penny or two). This is wishful thinking. Generally speaking labels are looking about for the most proximate source of new revenue (hopefully a source that has few alternatives and little negotiating leverage). In the past, that has been the Artist. Especially the developing artist. And that seems to be the place that labels are again hoping to turn to find additional dollars. The argument is pretty easy to understand: you wouldn't be the Artist you are if we hadn't invested enormous sums to record and bring your new release to market. We built your brand. We made you. Now that the industry has fallen on hard times, we need you to acknowledge that the model we created so long ago doesn't work for us any more, and we need you to give us a larger share of the great fortune you stand to earn when your brand becomes a BRAND. We'd like a piece of your touring revenues. (After all, you'd sell far fewer tickets if we hadn't recorded and promoted you.) And we'd also like a piece of your merch sales. (Who'd be buying those Tshirts if we hadn't made you a star?)

Unfortunately, the major labels are bound to find a few problems with their new approach. First, developing artists don't generally have much revenue to spare, and when they are no longer "developing," they have better lawyers and managers who are, it should come as no surprise, loathe to suggest that the Artist part with a percentage of touring or merch revenues without seeing some quid pro quo from the major label. But the second problem with the new approach is more fundamental. It doesn't get to the heart of the problem. Jeff Kwatinetz, CEO of the management company, the Firm, asks the telling question: "How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?" And he concludes, "The model is wrong."

Indeed it is. I hope to spend some time over the next several days and weeks blogging about this. But I'd also like to call attention to some possible solutions, some companies that I believe are headed in the right direction and even call attention to my startup, iggli, which is still very much in stealth mode but destined to become far more visible in the months ahead.

Until then, I'd like to see people's reactions to the Rolling Stone article and more particularly to the set of proferred solutions to the current music business crisis that Rolling Stone has outlined in "The Fall of the Record Business: What Next?"

Thursday, June 21, 2007

What Happened to the Stars? (Thoughts from the What Teens Want Conference, NYC June 2007)

I just returned from the "What Teens Want" conference in New York City. I'll admit, I was skeptical. Much of the agenda was filled with speakers who hadn't been teens for decades, people who care about what teens want but are in no better position to talk about what today's teens want than I am.


That said, here and there during the conference speakers delivered nuggets of real value. Max Kalehoff, VP/Marketing with Nielsen BuzzMetrics, provided valuable data about the size and character of the teen market. And Jason Flom, Chairman and CEO of Capitol Music Group, was brilliant as a comedian, if not as a source of insight about how the music industry might begin to solve its serious problems. As Jason put it: "The music industry isn't fucked. Well, I guess we're fucked right now, but we won't be fucked in the future as soon as we un-fuck ourselves."


You had to be there. It was hilarious. Jason also explained, in a wonderful little bit of round about thinking, how US drug laws killed the music business. That's not exactly how he put it. But that was the gist. "You see," Jason explained, "it's an established fact that a lot of the great artists, the stars, have been drug addicts. Given the level of drug enforcement in the US over the past few decades, a lot of the people who would have been stars are now behind bars." (There's a thought: a new twist on American Idol: "Stars Behind Bars." Do you think the networks will go for that one?)



As bright as Jason is, I think he (and many other major label executives) are missing the point (and the boat). Each of them seems to have someone or something to blame. Jason blames US drug enforcement and thinks that there just aren't any (or many) stars created by the culture today. Others blame piracy and illegal P2P downloads. But a big element of the problem faced by the major labels has nothing to do with these things. Rather, it is directly connected to the Long Tail phenomenon and to the virtual explosion of interesting music and video content during the past decade and a half.


I'll sum it up this way: (1) quality content is cheaper to create and produce than ever before; (2) content is also cheaper/easier to store and distribute than ever before; (3) as a result, the supply of content has grown at an exponential rate since the early '90s. In contrast with this "big bang" generated, expanding universe of content, our available attention - the time we have available to give undivided attention to an audio track, movie or video - has remained pretty much fixed.


The major labels grew and prospered during an era in which content was scarce. They sat atop the one-to-many distribution machine and controlled nearly every element in the distribution chain. They had the content everyone wanted. That was then. Now the labels control the content that 13-15 year olds want. Yes, they have older acts, stars from days past who still have a following (created during that earlier, pre-Big-Bang era), but they no longer have a lock on distribution and no longer have exclusive access to "stars." For an articulate, highly readable and often emotional take on the decline of the major labels and the music industry as a whole,
read Bob Lefsetz.


So what's the problem here? Major labels haven't yet grasped that in a world where content has exploded, the demand curve for content spreads out and flattens. The hits come less frequently and are far more difficult to predict. And they aren't as big. Think about it. Suppose the universe of content is 1,000 songs, and the demand for that universe of content is expressed in the tens of millions. In that world, the odds that any single song will be a hit are pretty good. Now suppose the universe of content has grown to 3,000,000 songs, and the demand for songs has increased only a little. As demand is distributed along the curve, we begin to see manifestations of Chris Anderson's arguments in "
Long Tail." (For a more theoretical and mathematical view, I'd recommend an exploration of Zipfs Law and Zipfian distributions.)


Last December, I attended a Aspen Live, a music industry conference that attracted a number of music industry participants including those from the ticketing, promotion, label, and other parts of the business. During a dinner conversation one evening, I asked Jason Flom how many artists his label (Virgin, at the time) were actively supporting at any given time. His answer, if I recall, was "about 30." Then I asked Sean Gold, the Chief Marketing Officer of MySpace, the same question. (Of course, this is not really an apples to apples comparison; when Virgin signs an artist, its investment in that artist, at least historically, could be expected to be substantial; MySpace does not invest millions of dollars to develop/market an artist.) Sean noted that MySpace was home to artists numbering in the tens of thousands. MySpace captures far more of the entire Zipfian distribution, both the head and the tail, than any major label can hope for.



Ironically, the new economics of the music business demand an approach that looks more like MySpace than EMI. When Apple's iTunes made the single track the basic unit of purchase, it sucked the very life out of the major label marketing budgets. I don't know if they saw this coming. It doesn't matter. In the past, if an artist had a hit song on a recording that sold a million copies, the label could count on at least $10 million in proceeds. This is because in the days before iTunes, songs were seldom available on an ala carte basis. Now if an artist has a hit song that sells a million copies, they are likely to sell only $1 million of product. This decimates the major label marketing budget. And it makes the up front investments in artists a far more risky proposition than was previously the case.



What have the major labels done to address these issues? Ironically, they are like the animal caught in quicksand. They're struggling, and sinking faster, deeper toward an inexorable and ugly end. How are their struggles causing them to sink more quickly? By failing to properly assess the reasons for their current malaise and continuing to blame anything that comes to mind (drug laws, piracy, tech companies, fans, anything will do) for their declining fortunes, they have missed innumerable opportunities to leverage the marketing and distribution vehicles afforded by technological developments. By holding fast to the CD as to a punctured lifeboat, the labels have missed, again and again, the opportunity to take the lead in the developing digital distribution strategies that might have given them the opportunity to survive and even prosper in today's market.



Jason is still looking for stars. And he's a smart guy. Much smarter than I am. After all stars are what the music business has always been about. Or at least that's how it looks to the folks who run today's (yesterday's???) music business.



But maybe it isn't about stars anymore. Maybe it never was about stars. Maybe today its about more about music and the people who listen to it and share it. Maybe it's about what I like and you like and the millions of others like us who are listening to music and recommending it to their friends. I don't know where the major labels fit in a many-to-many model. Maybe they have a place. And maybe not.

Thursday, February 8, 2007

Chris Anderson - "This is What I'm Talking About" - Michael Wesch Video

Chris Anderson, author of "The Long Tail: Why the Future of Business is Selling Less of More," has a great recent post about the power of digital/hypertext/web2.0/socialnets. This is actually just a pointer to a YouTube video created by Michael Wesch, Assistant Professor of Cultural Anthropology at Kansas State University.

As the Kansas State University site indicates, Wesch is currently launching the
Digital Ethnography working group at Kansas State University to examine the impacts of digital technology on human interaction. The first outcome of this work was a short video called "Web 2.0 ... The Machine is Us/ing Us." The video was released on YouTube on January 31st 2007 and quickly became the most popular video in the blogosphere.

This is just a marvelous illustration of the use of video/media to illustrate a collection of key points that would otherwise have taken multiple courses to teach. Some of the points are practical/technical. Some of them are quite philosophical. But taken together, the presentation is profound. Great stuff!

Thoughts on DRM

My friend Ryan McIntyre has a good follow up post today about Steve Jobs's "Thoughts on Music." Most of this post is an extension of a comment I posted on Ryan's blog.

There were several interesting points in Steve's "Thoughts on Music," which my son Justin accurately points out would more accurately have been titled "Thoughts on DRM." Of course, Steve suggests that there are three possible alternatives: stay the course (which means that there will be multiple proprietary music services that interoperate seldom or never); license Apple's FairPlay (which could mean that Apple's DRM system become dominant, but as Steve spins the argument means something very different [more on that]); or abolish DRM completely.

Although licensing Apple's FairPlay DRM technology is referenced by Steve as an "alternative," what really caught my attention was this:
[i]f our DRM system is compromised and their [the Major label's] music becomes playable on unauthorized devices, we have only a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store.

This is followed by Steve's adamant assertion that if Apple is forced (e.g., by consumer agencies in the European Union) to license FairPlay to others, all bets are off:
Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies.
This has the effect of reducing Steve's "three alternatives" to two: (1) maintain the status quo of proprietary systems (Apple, Microsoft, SONY) that do not interoperate; or (2) abolish DRM altogether.

I think Jobs is right to suggest that DRM is a lost cause and therefore misguided. The major labels have required it as a condition of their licensing deals with Apple, but they know better than to encumber their own CDs with DRM technology, never mind that ripped CDs produce digital content that is blissfully unencumbered by any DRM scheme. This means, as Jobs points out, that a large percentage of the digital content that floats around in the musical universe comes originally from unprotected CDs. To pretend, then, as the labels do, that DRM applied to iTunes, Rhapsody, eMusic, Napster et al. solves a big problem . . . well it just doesn't. What it does do is create a set of interoperability problems for digital sales and distribution, problems that those in the music industry would do better to put behind them. The big Myth is that DRM is protecting the music industry from theft. But in reality as long as CDs remain free of DRM, there's nothing to stop the unscrupulous from redistributing the ripped content. And because a ripped CD track will play on pretty much any device, those tracks have more value than their otherwise identical counterparts downloaded from iTunes or Rhapsody. When CD sales are falling so dramatically, and digital sales are increasing (but not fast enough to make up for the decline in CD sales), it makes little sense to do anything that reduces the demand for digital distribution or creates the perception that a digital track has less value than the tracks on a CD.

Steve says something else with which I wholeheartedly agree:
So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies. [emphasis mine]
In his blog, A VC, Fred Wilson says the same thing in plain words:
We've been locked in DRM wars and format wars for too long. And the online music business has suffered from walled gardens that don't interoperate the way web services do. It's time to change those things. Apple has led the way to date. They must finish the job.
I'll be thrilled to see what happens in this space if the major labels decide that it's finally time to get smart and play the digital game rather than fight it. To rights holders, taking the step to provide open access to proprietary content can seem threatening, something to be resisted and avoided. But when the horse you're riding is exhausted, out of breath and about to go down, well, it might just be time to saddle up a fresh horse.