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The Future of Music: Manifesto for the Digital Revolution

June 11th, 2006 · 1 Comment

“We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products.”

Picking on Clear Channel is like beating a dead horse these days, but the above quote — from former Clear Channel CEO Lowry Mays, in a Fortune magazine article — stuck in my head when I came across it while reading The Future of Music: Manifesto for the Digital Revolution. The book, which I recommend to all readers, discusses the music industry and how the advent of digital music and the widespread availability of broadband has forced the industry to rethink how it markets music, how it treats artists and consumers, and also what is more than likely in store for the major labels in the next few years.

You should read it for yourself, but an interesting part of the book is the authors’ top 10 truths of the music industry. I discuss a few of them below.

Music matters more than ever: the music market is alive and vibrant.

Okay, so maybe this isn’t the most Earth-shattering revelation, but their point is that music now proliferates our culture more than ever. Music is everywhere — from Starbucks and Wal-Mart to video games to streaming radio (such as woxy.com, which you should check out if you haven’t yet), we are constantly hearing music, a lot of which we’re not familiar with. How many people do you think know who’s on the latest Volkswagen or AT&T commercial?

The authors ask, “Why mourn the record business when we will have much bigger fish to fry in the music business?”

The record business is not the same as the music business.

This is probably not news to most readers or most musicians, for that matter, but a lot of people equate the volume of album sales with the value of the industry as a whole. The authors write that this is a myth due to the fact that the record industry is just one slice of a much bigger pie. For instance, “Music and event merchandising, concerts and touring, and live entertainment in general account for some $25 billion globally, while music publishing is a $12 billion business… record companies make nearly $2 billion every year in ‘special products,’ such as give-away CD sets, corporate marketing items, and various business-to-business licensing activities.” What this means, the authors write, is that a musician doesn’t necessarily have to rely on being a performer to make a living in today’s market.

The artists are the brand, and entertainment is the main attraction.

We all know that rabid music fans often are devoted not only to a particular band but also to the label that releases the band’s music. This is a rarity, really. According to the book: “Nobody buys a Britney Spears CD because BMG puts it out, and few people cherish Columbia Records because it’s the home of Carlos Santana.” True — most mainstream music listeners couldn’t care less about things like that. I feel a small label that caters, as best it can, to its artists first and fans second is admirable.

The authors write that most people today consider their connection to a particular artist to be the greatest value. This is mostly a mental thing — no, not because anyone who listens to Britney Spears or modern Santana is clearly mental, but because they feel (or need to feel, as the case may be) some emotional bond to the artists whose music they enjoy. I think this is 100% true. Some people claim lyrics don’t matter — I had an editor tell me it’s the music that matters most. Explain Celine Dion or mainstream country’s popularity if that’s true. People want to relate to what they listen to, and if they’re alienated by it they’ll turn off and move on.

A guy I went to college with once told me that he liked Stone Temple Pilots’ music until he saw singer Scott Weiland in a video. Since this guy thought the singer was so odd (I think the spiky red hair did it), he lost his connection to the band’s music and therefore chose not to like it anymore. Sure, this is insane but it obviously happens. The guy was a former frat guy and a golfer and probably didn’t want to be associated with anything out of the ordinary. (The fact I later found out he was a crack smoker and had to go to rehab is irony on a base level.) And also irrelevant…

Anyway, the book also states that because of the internet and digital technology, musicians have more power than they have had in the past and no longer need the power of corporate record labels to get their music heard outside their hometowns. One just needs to look at the popularity of MySpace to see the truth in their statement.

Take, as an example, The Octopus Project. This relatively unknown band was thrust into the national spotlight after winning a contest on MySpace. Their prize? A slot at this year’s Coachella Festival in Indio, CA. Amazing. Surely their record sales and popularity have skyrocketed as a result. At this year’s South By Southwest, the group played several shows to packed clubs. They may not have a huge record deal, but it’s tough to argue that they’ll need one to sell records and book gigs across the nation.

Publishing income is a crucial income stream.

Another friend of mine from college has been in a few bands, two of which have gone through the ups-and-downs of bring signed to a major label. On one hand, the bands were able to get on national tours they probably wouldn’t have been on otherwise, thus exposing their music to new audiences each night. On the other hand, they never played the corporate game (as it were) and never received the proper promotion. They were, however, on a few movie soundtracks, TV shows, and video games, which helped them gain more fans.

The fact that their debut album was released at the height of Napster’s popularity undoubtedly impacted their record sales, but they have been able to scratch out a living with their publishing royalties — a grocery store ad here, a TV show there. It probably helps to pay off the credit cards for trips to London and Amsterdam, and lets them buy equipment in order to produce their own music instead of having to pay other to do it for them.

The book states that in the U.S., a royalty fee (approx. 8.5 cents at the time the book was published) is paid to the writers/publishers for every song on a CD sold. I thought it was much less than that, but they obviously researched it so I’ll give them the benefit of the doubt. I once read that Alanis Morrisette received $1 for each copy of Jagged Little Pill sold, which I believe at the time was an unheard-of amount. She sold millions, so that’s good for her. Most musicians don’t fare as well — read producer/musician Steve Albini’s The Problem With Music… if you have any doubts that it’s an extremely uneven proposition for bands signed to major labels.

Radio is no longer the primary way that people discover new music.

Probably another no-brainer for anyone who turned off mainstream radio years ago, but this is important. iTunes, Napster, eMusic (which is a GREAT way to cheaply discover new music), AOL, and others are leading the way for music lovers worldwide to discover bands they would have never heard of — ever. Surely, if you’re reading this, you probably have already shifted the way you both purchase and hear new music. Maybe it’s Amazon or Insound. Maybe it’s Sirius or XM satellite radio. Maybe it’s any of the seemingly endless streams of online music that’s available today.

Why listen to 15 minutes (or more) of commercials an hour when you can hear none? Sure, it may cost you — but people used to say they’d never pay for TV service. Right now, I say I won’t pay for Sirius even though I have tons of friends and co-workers who swear by it. Thing is, I’d much rather pay woxy.com for one or two channels of music I’d listen to than 50 or 500 channels I’d ignore. I also have an iPod, and am my own favorite DJ… But it’s the same reason I don’t have cable anymore (well, that and Optel sucks). But that’s why some people don’t mind Best Buy while some people choose to support the little guy.

The traditional radio format is losing its hold. Talk radio is more popular than ever, and with a war going on, news radio gets a decent portion of the listening audience. Again, the personal connection wins out.

Customers demand — and get — increasing convenience and value.

The authors’ gist here is that CDs aren’t viewed as being a good value anymore. People spend their money in a lot of different, technologically related ways. Video games, iPods, PDAs, cell phones, etc. all compete for the CD dollar. It’s a losing proposition for the record labels. The book claims that, “once the record industry shifts to copy-protected CDs that cannot be ripped to a computer’s hard disk, you will see entire populations of music fans leave the CD behind, for good.” I’ll have a few CDs that won’t play in my computer — basically, they’re worthless to me.

A friend of mine was/is one of the record label’s favorite types of customers, those who hear a song on the radio and buy the album simply based on that one song. In fact, he has admitted to me before that he’s sometimes only ever listened to that one song. iTunes will kill that concept. Why spend $15 at the mall when you can stay home and get the track you like for under a buck? Even at $2 or $5, it’s a bargain. Which leads us to this point…

The current pricing model goes out the window.

“Today’s pricing scheme,” the authors write, “will be ripped to pieces by the deep habit changes within the music-fans’ cultures, and by ever-increasing competition from other entertainment products.”

Think about how much you spent on DVDs and video games last year. Each one of those was an album or two…

Apple’s pricing model for iTunes is great, in my opinion. $7-$10 isn’t too much to ask for an album. But I am still a fan of the tactile experience so I want the actual CD (or vinyl), for the most part. I make exceptions for singles and limited-edition EPs that are available on iTunes and also albums I find via eMusic. The authors claim that “as much as 50 to 60 percent of the future revenues will come in from selling other products and services, and from advertising, sponsorship, and marketing tie-ins. The music itself may often only be the default ingredient in the mix, rather than the sole purpose of the transaction. The days of making lots of money from selling 100 percent ‘content’ are over for music. As a consequence…the artist deserves a great deal more of the revenue…”

I hope they get it.

I’ll write more about this book in a future post. The authors also discuss popular myths, such as music is a product and file-sharing is killing the music industry.

Feel free to post your comments below or in the message board.

Off to prepare to watch Mexico versus Iran

Tags: Music

1 response so far ↓

  • 1 Luciana // Jul 4, 2006 at 12:21 pm

    With their second album, One Ten Hundred Thousand Million, The Octopus Project has added a few more crayons to the fire: it’s the same band that produced 2002’s Identification Parade.

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