Despite declining sales, they're not going anywhere -- as an object or an idea.
By Philip Freeman September 20, 2007
Back in 1979, rock critic Greil Marcus asked a bunch of his colleagues to answer the ultimate music fan's question: What one album would they want to have if they were stranded on a desert island? Just over 25 years later, I offered the same challenge to a new generation of music aficionados. Nineteen music writers, bloggers and scholars were up for the task -- indeed, they leaped at the opportunity to pick a favorite and gush about it at length. Weirdly, though, I kept hearing from doubtful outsiders that the project didn't make sense because the album was dead, that it was all about downloads and iPod playlists, that people didn't listen to music "that way" anymore. Those doubters are wrong.Yes, album sales for the first half of 2007 were down 15% compared with the same period last year, and the record industry has entered what seems like a perpetual state of panic. And yes, most music that's being downloaded legally is bought a la carte, song by song. But that doesn't mean albums, or even CDs, are doomed. Certain genres -- pop, hip-hop, dance music -- have always been, and will always be, about the perfect song. Albums are more contemplative, presuming and demanding both commitment and patience on the listener's part. But for those of us who love the idea of being permitted into an artist's world for an hour or so, that's how it should be -- and these are good times. Ambitious, personal music, frequently in lavish packaging, whether by arty metal acts such as Sunn O))) or rap mega-stars such as Kanye West, is reaching the fans it's meant for. Last week's new-album showdown, pitting West's "Graduation" against 50 Cent's "Curtis," is a prime example of how albums can still make a mass-market splash. (West, with 957,000 sold in one week, beat 50 Cent's 691,000, according to Nielsen figures, and 50's now muttering about possible retirement.) Beyond such stunts, though, the album lives because of what it delivers. There's more music available than ever before, and no matter what panicked record executives say, people are still grabbing it eight and 10 songs at a time, exactly as the artists intended.For a few years now, it's been possible to download leaked copies of new albums days or weeks before the official release date. That's worrisome to pop performers and the label execs backing them, who, like the producers of big summer movies, live or die by opening-week receipts. For more indie-minded artists, though, this sort of samizdat circulation of their work has become a valuable, even crucial, marketing tool because real fans treat a download like a test drive or a listening booth in an old record store. MP3s posted on blogs and message boards may get the word out, but as long as the music is good, serious fans will still head to their favorite record stores, in person or online, and lay out cash for something they can take home, hold in their hands and examine as they listen.Furthermore, many albums posted and downloaded aren't new. They're old and frequently out of print, abandoned by labels that didn't see a profit in keeping them commercially available. So they're shared, fan to fan, among small virtual communities obsessed with '60s avant-garde jazz, obscure '70s hard rock or regional hip-hop from the '80s. Ever heard an MP3 crackle like vintage vinyl? Or one in which the sound wobbles like a cassette on the brink of unspooling? I have: It's the sound of the album preserved. The album remains vital because musicians make it so. Shuffling -- the juxtaposition of songs at a computer's whim -- offers its own pleasures; hearing Ornette Coleman, then AC/DC, then Big Daddy Kane can really liven up a morning commute. But artistic intent deserves respect. If it's safe to assume your favorite band sequenced their latest batch of songs the way they did for a reason, then common courtesy demands that you listen "in order." The anonymous music fans uploading at websites mostly exemplify this respect; when downloading from a blog, you almost always get a zip file containing a whole CD, not an individual track. Some sites even offer scanned cover art and PDF files of liner notes. Finally, the album as physical object isn't going anywhere. Media types frequently fixate on "early adopters," their own unacknowledged class biases allowing the actions of the ultra-hip few to overshadow the slower progress of the poorer, less tech-savvy majority. Even in the U.S., not everyone has an Internet connection fast enough to permit downloading of albums. I still see more Discmans than iPods in my New Jersey neighborhood; vinyl retains hipster cachet; and outside the U.S., especially in Africa and the Middle East, a whole lot of music continues to be sold on cassette. Ultimately, albums will exist as long as artists, and fans, want them to. Philip Freeman is editor in chief of Metal Edge magazine and the editor of "Marooned: The Next Generation of Desert Island Discs."
Source: http://www.latimes.com/news/printedition/opinion/la-oe-freeman20sep20,1,2226261.story?coll=la-news-comment&ctrack=1&cset=true
maandag 24 september 2007
"Boometrics" Study Sees Billion Dollar Market Potential for Music Sellers
New consumer survey conducted by The NPD Group for NARM and AARP shows that baby boomers now account for one-third of all CD sales in the U.S.
PORT WASHINGTON, N.Y.; MARLTON, N.J; WASHINGTON, D.C., September 20, 2007 – More than 70 percent of the 76 million baby boomers in the U.S. report buying music in the past year, making it the most important buying segment for CDs and an increasingly important market for digital downloads, according to a new study. Consumer surveys focusing on music purchasing habits of baby boomers were conducted by The NPD Group for the "Boometrics" study, on behalf of National Association of Recording Merchandisers (NARM) and AARP.
"While the recording industry struggles with piracy and sharing among younger consumers, there’s at least one group with the income and inclination to pay for music," said Russ Crupnick, entertainment industry analyst for The NPD Group. "Most baby boomers are still buying only CDs, but many have also begun to add digital tracks and subscriptions to their music-buying mix."
The report clearly refutes common assumptions that interest in music wanes among a more mature audience. In fact, baby boomers (born between 1941 and 1964) now account for a third of all music sales. Additional highlights from the survey include the following:
· When purchasing music, more than two-thirds of boomers (68 percent) purchase only CDs, but 26 percent purchase both digital music and CDs, while just 6 percent purchase only digital music downloads.
· Nearly 40 percent of boomers report that they regularly visit the music retailers or the music section of retail stores.
· Most baby boomers surveyed listen to music while driving, and nearly half of the respondents expressed interest in buying new compilations from their favorite artists or genre.
"Music is central to the lives of a majority of baby boomers; however, like anybody else, they can become complacent, given all the music that surrounds them," said Jim Donio, NARM President. "This report proves that there is an increased need and urgency for the music industry to improve the way it communicates, merchandises, and markets to this age group. I believe that the retail community, in conjunction with the labels, can play a large part in shifting these perceptions, revitalizing music sales among those boomers who are not currently purchasing, and helping current purchasers discover even more music product."
NPD projects that improvements in available product and support for boomer buyers could yield conservatively $700 million to $1 billion in potential incremental sales of both CDs and digital downloads from baby boomers.
"The buying power of these consumers must be respected and their wants and needs must be understood and addressed by the industry," said Emilio Pardo, Chief Brand Officer, AARP. "This report goes a long way to show just how much the music industry depends on the baby boomer consumer. They are deeply connected to the music they grew up with, continually seek new artists, and are open to the latest digital delivery channels. The industry would do well to keep boomers top-of-mind when it comes to the music that makes its way to retail outlets – both brick-and-mortar and online."
Source: NPD conducted consumer focus groups in February 2007 (Paramus, NJ, & Tulsa, OK). This focus group information was complemented by online surveys conducted between May 30 and June 7, 2007. All metrics included in this press release have been calibrated to reflect U.S. population demographics, as outlined by the U.S. Census Bureau.
Source: http://www.npd.com/press/releases/press_070920.html
PORT WASHINGTON, N.Y.; MARLTON, N.J; WASHINGTON, D.C., September 20, 2007 – More than 70 percent of the 76 million baby boomers in the U.S. report buying music in the past year, making it the most important buying segment for CDs and an increasingly important market for digital downloads, according to a new study. Consumer surveys focusing on music purchasing habits of baby boomers were conducted by The NPD Group for the "Boometrics" study, on behalf of National Association of Recording Merchandisers (NARM) and AARP.
"While the recording industry struggles with piracy and sharing among younger consumers, there’s at least one group with the income and inclination to pay for music," said Russ Crupnick, entertainment industry analyst for The NPD Group. "Most baby boomers are still buying only CDs, but many have also begun to add digital tracks and subscriptions to their music-buying mix."
The report clearly refutes common assumptions that interest in music wanes among a more mature audience. In fact, baby boomers (born between 1941 and 1964) now account for a third of all music sales. Additional highlights from the survey include the following:
· When purchasing music, more than two-thirds of boomers (68 percent) purchase only CDs, but 26 percent purchase both digital music and CDs, while just 6 percent purchase only digital music downloads.
· Nearly 40 percent of boomers report that they regularly visit the music retailers or the music section of retail stores.
· Most baby boomers surveyed listen to music while driving, and nearly half of the respondents expressed interest in buying new compilations from their favorite artists or genre.
"Music is central to the lives of a majority of baby boomers; however, like anybody else, they can become complacent, given all the music that surrounds them," said Jim Donio, NARM President. "This report proves that there is an increased need and urgency for the music industry to improve the way it communicates, merchandises, and markets to this age group. I believe that the retail community, in conjunction with the labels, can play a large part in shifting these perceptions, revitalizing music sales among those boomers who are not currently purchasing, and helping current purchasers discover even more music product."
NPD projects that improvements in available product and support for boomer buyers could yield conservatively $700 million to $1 billion in potential incremental sales of both CDs and digital downloads from baby boomers.
"The buying power of these consumers must be respected and their wants and needs must be understood and addressed by the industry," said Emilio Pardo, Chief Brand Officer, AARP. "This report goes a long way to show just how much the music industry depends on the baby boomer consumer. They are deeply connected to the music they grew up with, continually seek new artists, and are open to the latest digital delivery channels. The industry would do well to keep boomers top-of-mind when it comes to the music that makes its way to retail outlets – both brick-and-mortar and online."
Source: NPD conducted consumer focus groups in February 2007 (Paramus, NJ, & Tulsa, OK). This focus group information was complemented by online surveys conducted between May 30 and June 7, 2007. All metrics included in this press release have been calibrated to reflect U.S. population demographics, as outlined by the U.S. Census Bureau.
Source: http://www.npd.com/press/releases/press_070920.html
Richie Hawtin and Minus Go Green
Waxing poetic about the impending environmental crisis is common enough in Hollywood and the political arena, but electronic music is rarely found in the same sentence as phrases like "global warming," "green lifestyle," and "carbon neutral."
Enter techno icon and head of Minus and Plus 8 Records, Richie Hawtin. A quick peek at the label’s site reveals the following message from the DJ and producer:
For the past 17 years, Plus 8, Minus, and myself as a performer have been part of the continued development of electronic music, a music that prides itself in always looking towards the future. So in the spirit of this tradition, I urge us all to look towards the future of our planet and make the necessary steps in our lives to ensure a bright and safe future for our next generations.
Not one to blabber away without backing up his statements, Hawtin has announced Minus' plan to become a carbon neutral company, with the initial focus resting on artist travel and manufacturing practices.
Hawtin, in a recent press release, cites offsetting CO2 emissions from plane travel as one solution, as well as seeking other means of traveling to gigs (bus, train, bike, etc.). Minus has also implemented the practice of packaging releases in recycled, plastic-free materials and utilizing the digital realm as much as possible.
While these aren't necessarily revolutionary tactics, the mere fact that a prolific and much-respected figure has spoken out on a topic rarely broached by the electronic music community is pretty heartwarming. So if you see the likes of Matthew Dear, Ricardo Villalobos, and Lindstrom biking to their respective gigs, armed with CD promos packaged in paper, you'll know electronic music is catching on to the trend. Let's hope it does.
Jennifer Marston
Source: www.minus.com
Enter techno icon and head of Minus and Plus 8 Records, Richie Hawtin. A quick peek at the label’s site reveals the following message from the DJ and producer:
For the past 17 years, Plus 8, Minus, and myself as a performer have been part of the continued development of electronic music, a music that prides itself in always looking towards the future. So in the spirit of this tradition, I urge us all to look towards the future of our planet and make the necessary steps in our lives to ensure a bright and safe future for our next generations.
Not one to blabber away without backing up his statements, Hawtin has announced Minus' plan to become a carbon neutral company, with the initial focus resting on artist travel and manufacturing practices.
Hawtin, in a recent press release, cites offsetting CO2 emissions from plane travel as one solution, as well as seeking other means of traveling to gigs (bus, train, bike, etc.). Minus has also implemented the practice of packaging releases in recycled, plastic-free materials and utilizing the digital realm as much as possible.
While these aren't necessarily revolutionary tactics, the mere fact that a prolific and much-respected figure has spoken out on a topic rarely broached by the electronic music community is pretty heartwarming. So if you see the likes of Matthew Dear, Ricardo Villalobos, and Lindstrom biking to their respective gigs, armed with CD promos packaged in paper, you'll know electronic music is catching on to the trend. Let's hope it does.
Jennifer Marston
Source: www.minus.com
Onetime Ramone Sues Band, Digital Retailers
1-2-3-4! Richard Reinhardt-- better known as Richie Ramone, stickman for the iconic punkers from 1983-1987-- has, according to Billboard.com, sued Wal-Mart, Apple, RealNetworks, the long-retired band's management, and the estate of Johnny Ramone, claiming he's owed royalties to the tune of $900,000 on half a dozen songs he wrote for the group during his brief tenure as a Ramone.Those tunes-- "Smash You", "Somebody Put Something in My Drink", "Human Kind", "I'm Not Jesus", "I Know Better Now" and "(You) Can't Say Something Nice"-- ain't exactly Ramones classics, but that's not really the point. Reinhardt claims that the band, their subsidiaries, and these digital music providers have been getting rich off his fertile dome, as there were no stipulations pertaining to digital sales of the tunes in writing. Yeah, dude, 20 years ago the idea of buying a song online was roughly as crazy a notion as the lady who danced with the cat in that video going on to co-host the most popular television program ever. My, this post-modernism is something, innit?However this plays out, we'll keep an eye on it and let you know if it gets interesting. You, meanwhile, should keep an eye out for It's Alive 1974-1996, the forthcoming Ramones live DVD anthology.
Source: http://www.pitchforkmedia.com/article/news/45803-onetime-ramone-sues-band-digital-retailers
Source: http://www.pitchforkmedia.com/article/news/45803-onetime-ramone-sues-band-digital-retailers
The Record Industry's Decline
Record sales are tanking, and there's no hope in sight: How it all went wrong
Brian Hiatt and Evan SerpickPosted Jun 19, 2007 2:29 PM
Page 1 2 3
This is the first part of a two-part series on the decline of the record industry. Today we're including Brian Hiatt and Evan Serpick's report on where the music business went wrong, from the current issue of Rolling Stone, as well as an interactive graphic illustrating the industry's slide. Tomorrow, check back with RollingStone.com for interviews with industry leaders on the future of the music business.
Sales figures courtesy of Nielsen SoundScan
For the music industry, it was a rare bit of good news: Linkin Park's new album sold 623,000 copies in its first week this May -- the strongest debut of the year. But it wasn't nearly enough. That same month, the band's record company, Warner Music Group, announced that it would lay off 400 people, and its stock price lingered at fifty-eight percent of its peak from last June.
Overall CD sales have plummeted sixteen percent for the year so far -- and that's after seven years of near-constant erosion. In the face of widespread piracy, consumers' growing preference for low-profit-margin digital singles over albums, and other woes, the record business has plunged into a historic decline.
The major labels are struggling to reinvent their business models, even as some wonder whether it's too late. "The record business is over," says music attorney Peter Paterno, who represents Metallica and Dr. Dre. "The labels have wonderful assets -- they just can't make any money off them." One senior music-industry source who requested anonymity went further: "Here we have a business that's dying. There won't be any major labels pretty soon."
In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million. Digital sales are growing -- fans bought 582 million digital singles last year, up sixty-five percent from 2005, and purchased $600 million worth of ringtones -- but the new revenue sources aren't making up for the shortfall.
More than 5,000 record-company employees have been laid off since 2000. The number of major labels dropped from five to four when Sony Music Entertainment and BMG Entertainment merged in 2004 -- and two of the remaining companies, EMI and Warner, have flirted with their own merger for years.
About 2,700 record stores have closed across the country since 2003, according to the research group Almighty Institute of Music Retail. Last year the eighty-nine-store Tower Records chain, which represented 2.5 percent of overall retail sales, went out of business, and Musicland, which operated more than 800 stores under the Sam Goody brand, among others, filed for bankruptcy. Around sixty-five percent of all music sales now take place in big-box stores such as Wal-Mart and Best Buy, which carry fewer titles than specialty stores and put less effort behind promoting new artists.
Just a few years ago, many industry executives thought their problems could be solved by bigger hits. "There wasn't anything a good hit couldn't fix for these guys," says a source who worked closely with top executives earlier this decade. "They felt like things were bad and getting worse, but I'm not sure they had the bandwidth to figure out how to fix it. Now, very few of those people are still heads of the companies."
More record executives now seem to understand that their problems are structural: The Internet appears to be the most consequential technological shift for the business of selling music since the 1920s, when phonograph records replaced sheet music as the industry's profit center. "We have to collectively understand that times have changed," says Lyor Cohen, CEO of Warner Music Group USA. In June, Warner announced a deal with the Web site Lala.com that will allow consumers to stream much of its catalog for free, in hopes that they will then pay for downloads. It's the latest of recent major-label moves that would have been unthinkable a few years back:
In May, one of the four majors, EMI, began allowing the iTunes Music Store to sell its catalog without the copy protection that labels have insisted upon for years.
When YouTube started showing music videos without permission, all four of the labels made licensing deals instead of suing for copyright violations.
To the dismay of some artists and managers, labels are insisting on deals for many artists in which the companies get a portion of touring, merchandising, product sponsorships and other non-recorded-music sources of income.
So who killed the record industry as we knew it? "The record companies have created this situation themselves," says Simon Wright, CEO of Virgin Entertainment Group, which operates Virgin Megastores. While there are factors outside of the labels' control -- from the rise of the Internet to the popularity of video games and DVDs -- many in the industry see the last seven years as a series of botched opportunities. And among the biggest, they say, was the labels' failure to address online piracy at the beginning by making peace with the first file-sharing service, Napster. "They left billions and billions of dollars on the table by suing Napster -- that was the moment that the labels killed themselves," says Jeff Kwatinetz, CEO of management company the Firm. "The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services]."
It all could have been different: Seven years ago, the music industry's top executives gathered for secret talks with Napster CEO Hank Barry. At a July 15th, 2000, meeting, the execs -- including the CEO of Universal's parent company, Edgar Bronfman Jr.; Sony Corp. head Nobuyuki Idei; and Bertelsmann chief Thomas Middelhof -- sat in a hotel in Sun Valley, Idaho, with Barry and told him that they wanted to strike licensing deals with Napster. "Mr. Idei started the meeting," recalls Barry, now a director in the law firm Howard Rice. "He was talking about how Napster was something the customers wanted."
The idea was to let Napster's 38 million users keep downloading for a monthly subscription fee -- roughly $10 -- with revenues split between the service and the labels. But ultimately, despite a public offer of $1 billion from Napster, the companies never reached a settlement. "The record companies needed to jump off a cliff, and they couldn't bring themselves to jump," says Hilary Rosen, who was then CEO of the Recording Industry Association of America. "A lot of people say, 'The labels were dinosaurs and idiots, and what was the matter with them?' But they had retailers telling them, 'You better not sell anything online cheaper than in a store,' and they had artists saying, 'Don't screw up my Wal-Mart sales.' " Adds Jim Guerinot, who manages Nine Inch Nails and Gwen Stefani, "Innovation meant cannibalizing their core business."
Even worse, the record companies waited almost two years after Napster's July 2nd, 2001, shutdown before licensing a user-friendly legal alternative to unauthorized file-sharing services: Apple's iTunes Music Store, which launched in the spring of 2003. Before that, labels started their own subscription services: PressPlay, which initially offered only Sony, Universal and EMI music, and MusicNet, which had only EMI, Warner and BMG music. The services failed. They were expensive, allowed little or no CD burning and didn't work with many MP3 players then on the market.
Rosen and others see that 2001-03 period as disastrous for the business. "That's when we lost the users," Rosen says. "Peer-to-peer took hold. That's when we went from music having real value in people's minds to music having no economic value, just emotional value."
In the fall of 2003, the RIAA filed its first copyright-infringement lawsuits against file sharers. They've since sued more than 20,000 music fans. The RIAA maintains that the lawsuits are meant to spread the word that unauthorized downloading can have consequences. "It isn't being done on a punitive basis," says RIAA CEO Mitch Bainwol. But file-sharing isn't going away -- there was a 4.4 percent increase in the number of peer-to-peer users in 2006, with about a billion tracks downloaded illegally per month, according to research group BigChampagne.
Despite the industry's woes, people are listening to at least as much music as ever. Consumers have bought more than 100 million iPods since their November 2001 introduction, and the touring business is thriving, earning a record $437 million last year. And according to research organization NPD Group, listenership to recorded music -- whether from CDs, downloads, video games, satellite radio, terrestrial radio, online streams or other sources -- has increased since 2002. The problem the business faces is how to turn that interest into money. "How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?" asks the Firm's Kwatinetz. "The model is wrong."
Kwatinetz sees other, leaner kinds of companies -- from management firms like his own, which now doubles as a record label, to outsiders such as Starbucks -- stepping in. Paul McCartney recently abandoned his longtime relationship with EMI Records to sign with Starbucks' fledgling Hear Music. Video-game giant Electronic Arts also started a label, exploiting the promotional value of its games, and the newly revived CBS Records will sell music featured in CBS TV shows.
Licensing music to video games, movies, TV shows and online subscription services is becoming an increasing source of revenue."We expect to be a brand licensing organization," says Cohen of Warner, which in May started a new division, Den of Thieves, devoted to producing TV shows and other video content from its music properties. And the record companies are looking to increase their takes in the booming music publishing business, which collects songwriting royalties from radio play and other sources. The performance-rights organization ASCAP reported a record $785 million in revenue in 2006, a five percent increase from 2005. Revenues are up "across the board," according to Martin Bandier, CEO of Sony/ATV Music Publishing, which controls the Beatles' publishing. "Music publishing will become a more important part of the business," he says. "If I worked for a record company, I'd be pulling my hair out. The recorded-music business is in total confusion, looking for a way out."
Nearly every corner of the record industry is feeling the pain. "A great American sector has been damaged enormously," says the RIAA's Bainwol, who blames piracy, "from songwriters to backup musicians to people who work at labels. The number of bands signed to labels has been compromised in a pretty severe fashion, roughly a third."
Times are hard for record-company employees. "People feel threatened," says Rosen. "Their friends are getting laid off left and right." Adam Shore, general manager of the then-Atlantic Records-affiliated Vice Records, told Rolling Stone in January that his colleagues are having an "existential crisis." "We have great records, but we're less sure than ever that people are going to buy them," he says. "There's a sense around here of losing faith."
Additional reporting by Steve Knopper and Nicole Frehsée.
Source: http://www.rollingstone.com/news/story/15137581/the_record_industrys_decline/3
Brian Hiatt and Evan SerpickPosted Jun 19, 2007 2:29 PM
Page 1 2 3
This is the first part of a two-part series on the decline of the record industry. Today we're including Brian Hiatt and Evan Serpick's report on where the music business went wrong, from the current issue of Rolling Stone, as well as an interactive graphic illustrating the industry's slide. Tomorrow, check back with RollingStone.com for interviews with industry leaders on the future of the music business.
Sales figures courtesy of Nielsen SoundScan
For the music industry, it was a rare bit of good news: Linkin Park's new album sold 623,000 copies in its first week this May -- the strongest debut of the year. But it wasn't nearly enough. That same month, the band's record company, Warner Music Group, announced that it would lay off 400 people, and its stock price lingered at fifty-eight percent of its peak from last June.
Overall CD sales have plummeted sixteen percent for the year so far -- and that's after seven years of near-constant erosion. In the face of widespread piracy, consumers' growing preference for low-profit-margin digital singles over albums, and other woes, the record business has plunged into a historic decline.
The major labels are struggling to reinvent their business models, even as some wonder whether it's too late. "The record business is over," says music attorney Peter Paterno, who represents Metallica and Dr. Dre. "The labels have wonderful assets -- they just can't make any money off them." One senior music-industry source who requested anonymity went further: "Here we have a business that's dying. There won't be any major labels pretty soon."
In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million. Digital sales are growing -- fans bought 582 million digital singles last year, up sixty-five percent from 2005, and purchased $600 million worth of ringtones -- but the new revenue sources aren't making up for the shortfall.
More than 5,000 record-company employees have been laid off since 2000. The number of major labels dropped from five to four when Sony Music Entertainment and BMG Entertainment merged in 2004 -- and two of the remaining companies, EMI and Warner, have flirted with their own merger for years.
About 2,700 record stores have closed across the country since 2003, according to the research group Almighty Institute of Music Retail. Last year the eighty-nine-store Tower Records chain, which represented 2.5 percent of overall retail sales, went out of business, and Musicland, which operated more than 800 stores under the Sam Goody brand, among others, filed for bankruptcy. Around sixty-five percent of all music sales now take place in big-box stores such as Wal-Mart and Best Buy, which carry fewer titles than specialty stores and put less effort behind promoting new artists.
Just a few years ago, many industry executives thought their problems could be solved by bigger hits. "There wasn't anything a good hit couldn't fix for these guys," says a source who worked closely with top executives earlier this decade. "They felt like things were bad and getting worse, but I'm not sure they had the bandwidth to figure out how to fix it. Now, very few of those people are still heads of the companies."
More record executives now seem to understand that their problems are structural: The Internet appears to be the most consequential technological shift for the business of selling music since the 1920s, when phonograph records replaced sheet music as the industry's profit center. "We have to collectively understand that times have changed," says Lyor Cohen, CEO of Warner Music Group USA. In June, Warner announced a deal with the Web site Lala.com that will allow consumers to stream much of its catalog for free, in hopes that they will then pay for downloads. It's the latest of recent major-label moves that would have been unthinkable a few years back:
In May, one of the four majors, EMI, began allowing the iTunes Music Store to sell its catalog without the copy protection that labels have insisted upon for years.
When YouTube started showing music videos without permission, all four of the labels made licensing deals instead of suing for copyright violations.
To the dismay of some artists and managers, labels are insisting on deals for many artists in which the companies get a portion of touring, merchandising, product sponsorships and other non-recorded-music sources of income.
So who killed the record industry as we knew it? "The record companies have created this situation themselves," says Simon Wright, CEO of Virgin Entertainment Group, which operates Virgin Megastores. While there are factors outside of the labels' control -- from the rise of the Internet to the popularity of video games and DVDs -- many in the industry see the last seven years as a series of botched opportunities. And among the biggest, they say, was the labels' failure to address online piracy at the beginning by making peace with the first file-sharing service, Napster. "They left billions and billions of dollars on the table by suing Napster -- that was the moment that the labels killed themselves," says Jeff Kwatinetz, CEO of management company the Firm. "The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services]."
It all could have been different: Seven years ago, the music industry's top executives gathered for secret talks with Napster CEO Hank Barry. At a July 15th, 2000, meeting, the execs -- including the CEO of Universal's parent company, Edgar Bronfman Jr.; Sony Corp. head Nobuyuki Idei; and Bertelsmann chief Thomas Middelhof -- sat in a hotel in Sun Valley, Idaho, with Barry and told him that they wanted to strike licensing deals with Napster. "Mr. Idei started the meeting," recalls Barry, now a director in the law firm Howard Rice. "He was talking about how Napster was something the customers wanted."
The idea was to let Napster's 38 million users keep downloading for a monthly subscription fee -- roughly $10 -- with revenues split between the service and the labels. But ultimately, despite a public offer of $1 billion from Napster, the companies never reached a settlement. "The record companies needed to jump off a cliff, and they couldn't bring themselves to jump," says Hilary Rosen, who was then CEO of the Recording Industry Association of America. "A lot of people say, 'The labels were dinosaurs and idiots, and what was the matter with them?' But they had retailers telling them, 'You better not sell anything online cheaper than in a store,' and they had artists saying, 'Don't screw up my Wal-Mart sales.' " Adds Jim Guerinot, who manages Nine Inch Nails and Gwen Stefani, "Innovation meant cannibalizing their core business."
Even worse, the record companies waited almost two years after Napster's July 2nd, 2001, shutdown before licensing a user-friendly legal alternative to unauthorized file-sharing services: Apple's iTunes Music Store, which launched in the spring of 2003. Before that, labels started their own subscription services: PressPlay, which initially offered only Sony, Universal and EMI music, and MusicNet, which had only EMI, Warner and BMG music. The services failed. They were expensive, allowed little or no CD burning and didn't work with many MP3 players then on the market.
Rosen and others see that 2001-03 period as disastrous for the business. "That's when we lost the users," Rosen says. "Peer-to-peer took hold. That's when we went from music having real value in people's minds to music having no economic value, just emotional value."
In the fall of 2003, the RIAA filed its first copyright-infringement lawsuits against file sharers. They've since sued more than 20,000 music fans. The RIAA maintains that the lawsuits are meant to spread the word that unauthorized downloading can have consequences. "It isn't being done on a punitive basis," says RIAA CEO Mitch Bainwol. But file-sharing isn't going away -- there was a 4.4 percent increase in the number of peer-to-peer users in 2006, with about a billion tracks downloaded illegally per month, according to research group BigChampagne.
Despite the industry's woes, people are listening to at least as much music as ever. Consumers have bought more than 100 million iPods since their November 2001 introduction, and the touring business is thriving, earning a record $437 million last year. And according to research organization NPD Group, listenership to recorded music -- whether from CDs, downloads, video games, satellite radio, terrestrial radio, online streams or other sources -- has increased since 2002. The problem the business faces is how to turn that interest into money. "How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?" asks the Firm's Kwatinetz. "The model is wrong."
Kwatinetz sees other, leaner kinds of companies -- from management firms like his own, which now doubles as a record label, to outsiders such as Starbucks -- stepping in. Paul McCartney recently abandoned his longtime relationship with EMI Records to sign with Starbucks' fledgling Hear Music. Video-game giant Electronic Arts also started a label, exploiting the promotional value of its games, and the newly revived CBS Records will sell music featured in CBS TV shows.
Licensing music to video games, movies, TV shows and online subscription services is becoming an increasing source of revenue."We expect to be a brand licensing organization," says Cohen of Warner, which in May started a new division, Den of Thieves, devoted to producing TV shows and other video content from its music properties. And the record companies are looking to increase their takes in the booming music publishing business, which collects songwriting royalties from radio play and other sources. The performance-rights organization ASCAP reported a record $785 million in revenue in 2006, a five percent increase from 2005. Revenues are up "across the board," according to Martin Bandier, CEO of Sony/ATV Music Publishing, which controls the Beatles' publishing. "Music publishing will become a more important part of the business," he says. "If I worked for a record company, I'd be pulling my hair out. The recorded-music business is in total confusion, looking for a way out."
Nearly every corner of the record industry is feeling the pain. "A great American sector has been damaged enormously," says the RIAA's Bainwol, who blames piracy, "from songwriters to backup musicians to people who work at labels. The number of bands signed to labels has been compromised in a pretty severe fashion, roughly a third."
Times are hard for record-company employees. "People feel threatened," says Rosen. "Their friends are getting laid off left and right." Adam Shore, general manager of the then-Atlantic Records-affiliated Vice Records, told Rolling Stone in January that his colleagues are having an "existential crisis." "We have great records, but we're less sure than ever that people are going to buy them," he says. "There's a sense around here of losing faith."
Additional reporting by Steve Knopper and Nicole Frehsée.
Source: http://www.rollingstone.com/news/story/15137581/the_record_industrys_decline/3
The Fall of the Record Business: What Next?
EVAN SERPICKPosted Jun 21, 2007 1:29 PM
>> Read Brian Hiatt and Evan Serpick's special report on the decline of the music business.
Theory 1: Ad-Supported MusicYahoo! Music General Manager Ian Rogers says all music will be free - paid for by ads - and any song by any artist will be accessible from anywhere in the world."I can imagine a future where you just consume a hell of a lot of music - just hit 'play' on any player, and hear music. There's an ad experience there, and we'll pay the labels a percentage of that ad revenue. All devices will be connected to a network and we can find anything we want and hit 'play' without connecting our device to our computer and dragging a physical file over. People are going to have the expectation that they can get to anything whenever they want to."
Theory 2: Peer-to-Peer Goes LegitEric Garland, CEO of digital-music research firm Big Champagne, says people will pay a monthly surcharge on their cable bill to download an unlimited supply of tunes."Tens of billions of songs are downloaded for free by people all over the world, representing a huge market - not in changing their behavior, but in creating businesses around that fact. People that provide access to networks are the logical place for payments to be administered: Today you pay your cable company, not only for bits and bites, but for services like HBO or a tier of basic cable. It's in everyone's interest to administer payment there, with royalty payments made from pools of money collected based on stat rates or voluntary rates. You'll have Time Warners and Comcasts and Verizons working with content companies to convert these marketplaces without trying to change customer behavior."
Theory 3: Endless Access Points for MusicDavid Pakman, President and CEO of the indie-minded download site eMusic, says the more outlets there are to buy music, the fewer people will turn to piracy."The future of the music industry is bright. The old way, you'd buy a CD because you heard it on the radio. Now we have 20 different ways to go out and sample new music, whether it's blogs, downloads, ring tones, full-length mobile downloads, Internet radio, personalized subscription radio, or on-demand on your cable box. Those will continue to proliferate. It's important to offer music for sale everywhere. Selling more music is the way to monetize it and compete with piracy."
Theory 4: Labels Change Their StripesRob Glaser, the head of Real Networks and Rhapsody, predicts that labels will operate more as managers, earning most of their profits from licensing, touring, and merchandise."The notion of a company that is only in the business of selling recorded music is an artifact of the physical world. In the next year or two, as physical growth continues to lag, the labels' pain will just get so great, they'll move to a more rational approach: The smarter way for music companies to work as venture capitalists, where they help to support bands through recording contracts, tour support, licensing, helping them artistically, essentially as business partners. If the artists succeed, the labels succeed. In a digital world that's the only way to align the interest between the label and the artists and it's been surprising to me how slowly the industry has been to embrace it."
Theory 5: Consumers Become RetailersTerry McBride, founder and CEO of Nettwerk Music Group, says social networking will be integrated with commerce."We'll be looking at a space where the consumer is the retailer. Within a text message, an email or an IM, I can say, 'Listen to the new Avril single,' you click on her name, you hear it, you like it, you hit pound-four, and you instantly bought it, but you bought it from me. And maybe it's for twenty-five cents, and maybe five of that twenty-five cents goes in my PayPal account, the rest of it goes through a payment system to the copyright holders. You've got your price point down to where it's not worth the effort of going online to find it, and you really tap into the social nature of how social groups work."
>> Read Brian Hiatt and Evan Serpick's special report on the decline of the music business.
Source: http://www.rollingstone.com/news/story/15152483/the_fall_of_the_record_business_what_next
>> Read Brian Hiatt and Evan Serpick's special report on the decline of the music business.
Theory 1: Ad-Supported MusicYahoo! Music General Manager Ian Rogers says all music will be free - paid for by ads - and any song by any artist will be accessible from anywhere in the world."I can imagine a future where you just consume a hell of a lot of music - just hit 'play' on any player, and hear music. There's an ad experience there, and we'll pay the labels a percentage of that ad revenue. All devices will be connected to a network and we can find anything we want and hit 'play' without connecting our device to our computer and dragging a physical file over. People are going to have the expectation that they can get to anything whenever they want to."
Theory 2: Peer-to-Peer Goes LegitEric Garland, CEO of digital-music research firm Big Champagne, says people will pay a monthly surcharge on their cable bill to download an unlimited supply of tunes."Tens of billions of songs are downloaded for free by people all over the world, representing a huge market - not in changing their behavior, but in creating businesses around that fact. People that provide access to networks are the logical place for payments to be administered: Today you pay your cable company, not only for bits and bites, but for services like HBO or a tier of basic cable. It's in everyone's interest to administer payment there, with royalty payments made from pools of money collected based on stat rates or voluntary rates. You'll have Time Warners and Comcasts and Verizons working with content companies to convert these marketplaces without trying to change customer behavior."
Theory 3: Endless Access Points for MusicDavid Pakman, President and CEO of the indie-minded download site eMusic, says the more outlets there are to buy music, the fewer people will turn to piracy."The future of the music industry is bright. The old way, you'd buy a CD because you heard it on the radio. Now we have 20 different ways to go out and sample new music, whether it's blogs, downloads, ring tones, full-length mobile downloads, Internet radio, personalized subscription radio, or on-demand on your cable box. Those will continue to proliferate. It's important to offer music for sale everywhere. Selling more music is the way to monetize it and compete with piracy."
Theory 4: Labels Change Their StripesRob Glaser, the head of Real Networks and Rhapsody, predicts that labels will operate more as managers, earning most of their profits from licensing, touring, and merchandise."The notion of a company that is only in the business of selling recorded music is an artifact of the physical world. In the next year or two, as physical growth continues to lag, the labels' pain will just get so great, they'll move to a more rational approach: The smarter way for music companies to work as venture capitalists, where they help to support bands through recording contracts, tour support, licensing, helping them artistically, essentially as business partners. If the artists succeed, the labels succeed. In a digital world that's the only way to align the interest between the label and the artists and it's been surprising to me how slowly the industry has been to embrace it."
Theory 5: Consumers Become RetailersTerry McBride, founder and CEO of Nettwerk Music Group, says social networking will be integrated with commerce."We'll be looking at a space where the consumer is the retailer. Within a text message, an email or an IM, I can say, 'Listen to the new Avril single,' you click on her name, you hear it, you like it, you hit pound-four, and you instantly bought it, but you bought it from me. And maybe it's for twenty-five cents, and maybe five of that twenty-five cents goes in my PayPal account, the rest of it goes through a payment system to the copyright holders. You've got your price point down to where it's not worth the effort of going online to find it, and you really tap into the social nature of how social groups work."
>> Read Brian Hiatt and Evan Serpick's special report on the decline of the music business.
Source: http://www.rollingstone.com/news/story/15152483/the_fall_of_the_record_business_what_next
Music Business Pioneer Says IPod Will Soon Be Obsolete
By Adario Strange September 04, 2007 8:25:55 AM
The man who bet his professional life on the future success of rap music has finally come forward to offer his vision of the future of music business in an iPod age. Legendary producer and record label executive Rick Rubin (Beastie Boys, Slayer, Johnny Cash, Run DMC, Jay-Z) told The New York Times that the future is not iTunes serving á la carte songs to your iPod, but music labels offering every song on the planet, anywhere, via subscription.
Rubin said, "You'd pay, say, $19.95 a month, and the music will come anywhere you'd like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home."
Such words won't be music to the ears of consumers who have become accustomed to the iTunes model, but if the creeping defection away from Apple being led by Universal Music is any indication, Rubin's words are probably more prescient than some in Cupertino would readily admit. Rubin went on to say, "Either all the record companies will get together or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done." Microsoft owning all your music? Such a scenario may sound unlikely today, but as music sales continue to plunge, it's not inconceivable that billion-dollar behemoths like Microsoft or Google might eventually snap up the major labels for (excuse us) a song and end up owning all the music you listen to... stranger things have happened.
Source: http://blog.wired.com/business/2007/09/music-business-.html
The man who bet his professional life on the future success of rap music has finally come forward to offer his vision of the future of music business in an iPod age. Legendary producer and record label executive Rick Rubin (Beastie Boys, Slayer, Johnny Cash, Run DMC, Jay-Z) told The New York Times that the future is not iTunes serving á la carte songs to your iPod, but music labels offering every song on the planet, anywhere, via subscription.
Rubin said, "You'd pay, say, $19.95 a month, and the music will come anywhere you'd like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home."
Such words won't be music to the ears of consumers who have become accustomed to the iTunes model, but if the creeping defection away from Apple being led by Universal Music is any indication, Rubin's words are probably more prescient than some in Cupertino would readily admit. Rubin went on to say, "Either all the record companies will get together or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done." Microsoft owning all your music? Such a scenario may sound unlikely today, but as music sales continue to plunge, it's not inconceivable that billion-dollar behemoths like Microsoft or Google might eventually snap up the major labels for (excuse us) a song and end up owning all the music you listen to... stranger things have happened.
Source: http://blog.wired.com/business/2007/09/music-business-.html
Jobs Will Never Offer Music Subscriptions
Leander Kahney 05.01.07 2:00 AM
Don’t hold your breath for music subscriptions from Apple's iTunes music store -- Steve Jobs will never offer them. Renting music flies in the face of consumer behavior. Consumers want to buy music, not rent it, and a big part of Steve Jobs' genius is his firm, intuitive grasp of how consumers behave, and tailoring Apple's technology to accommodate it -- not the other way around.
Nonetheless, there's a lot of speculation that Jobs may soon offer subscriptions, mostly because he's currently renegotiating contracts with the record labels, which love subscriptions because of the steady, predictable revenue stream.
Some speculate that the labels will force Jobs to offer monthly music rentals as part of new licensing terms, the same way they forced him to add DRM copy protection to music in iTunes' early days. Jobs may have been hinting at this scenario last week, when he told Reuters:
"Never say never, but customers don't seem to be interested in it," Jobs said. "The subscription model has failed so far."
Jobs is right. There's no mainstream demand for music subscriptions. The music business isn't built on long-term rentals; it's built on one hit after another. It's confectionary. Tunes are addictive for a while and then discarded. It's like the drug business: Users are always looking for the next hit.
I'm currently hooked on The Good, the Bad and the Queen -- it's all I want to listen to, all day, all night. I'm not interested in hearing any other music at the moment. There's no sense "subscribing" to this album. I'd much rather buy it.
I just canceled my subscription to Microsoft's Zune service after about three months as a subscriber. I finally realized that I'll never change my music-consuming behavior to fit its business model.
Like all subscription services, Zune is analogous to a cheap Vegas buffet. At first you stuff your face like a pig, but when you go back, there's nothing you want to eat. After an initial burst of activity where I downloaded everything I could find, my usage dropped off a cliff.
I thought the Zune subscription service would be good for finding for new music, but it isn't at all. I've found more music from TV ads than I found through Zune.
A lot of people tell the same story. Even die-hard fans of subscription services don’t use them for music discovery. They use Pandora or Last.fm, they hear tunes on the radio or read about bands in magazines. Then they go to their subscription service to download it. I've yet to find anyone who uses a subscription service to find new music.
Subscriptions make sense in a group setting, like an office, where a lot of people want to listen to a lot of different music, but not for individuals.
The Zune service is pretty slick. It's all you can eat, and has a surprisingly deep catalog. The online store is nicely designed and easy to navigate.
But I just didn’t use it.
Source: http://www.wired.com/gadgets/mac/commentary/cultofmac/2007/05/cultofmac_0501
Don’t hold your breath for music subscriptions from Apple's iTunes music store -- Steve Jobs will never offer them. Renting music flies in the face of consumer behavior. Consumers want to buy music, not rent it, and a big part of Steve Jobs' genius is his firm, intuitive grasp of how consumers behave, and tailoring Apple's technology to accommodate it -- not the other way around.
Nonetheless, there's a lot of speculation that Jobs may soon offer subscriptions, mostly because he's currently renegotiating contracts with the record labels, which love subscriptions because of the steady, predictable revenue stream.
Some speculate that the labels will force Jobs to offer monthly music rentals as part of new licensing terms, the same way they forced him to add DRM copy protection to music in iTunes' early days. Jobs may have been hinting at this scenario last week, when he told Reuters:
"Never say never, but customers don't seem to be interested in it," Jobs said. "The subscription model has failed so far."
Jobs is right. There's no mainstream demand for music subscriptions. The music business isn't built on long-term rentals; it's built on one hit after another. It's confectionary. Tunes are addictive for a while and then discarded. It's like the drug business: Users are always looking for the next hit.
I'm currently hooked on The Good, the Bad and the Queen -- it's all I want to listen to, all day, all night. I'm not interested in hearing any other music at the moment. There's no sense "subscribing" to this album. I'd much rather buy it.
I just canceled my subscription to Microsoft's Zune service after about three months as a subscriber. I finally realized that I'll never change my music-consuming behavior to fit its business model.
Like all subscription services, Zune is analogous to a cheap Vegas buffet. At first you stuff your face like a pig, but when you go back, there's nothing you want to eat. After an initial burst of activity where I downloaded everything I could find, my usage dropped off a cliff.
I thought the Zune subscription service would be good for finding for new music, but it isn't at all. I've found more music from TV ads than I found through Zune.
A lot of people tell the same story. Even die-hard fans of subscription services don’t use them for music discovery. They use Pandora or Last.fm, they hear tunes on the radio or read about bands in magazines. Then they go to their subscription service to download it. I've yet to find anyone who uses a subscription service to find new music.
Subscriptions make sense in a group setting, like an office, where a lot of people want to listen to a lot of different music, but not for individuals.
The Zune service is pretty slick. It's all you can eat, and has a surprisingly deep catalog. The online store is nicely designed and easy to navigate.
But I just didn’t use it.
Source: http://www.wired.com/gadgets/mac/commentary/cultofmac/2007/05/cultofmac_0501
Audiophile-Approved Guides to the Digital Underground
the Digital Underground
Angela Watercutter 05.22.07 2:00 AM
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Used to be you showed the world your killer taste in music with a Clash T-shirt and a Ramones pin. Then came blasting your iPod playlist at parties and boasting that some obscure artist was your "friend." But now that MySpace is overrun with posers, you'll have to go elsewhere to impress audiophiles with your musical savvy. Just don't tell them who sent you.
Your Guide to the Digital Underground
Fuzz.comLaunch March 2007A hybrid fan site and boutique label, Fuzz lets indie acts and their devotees set up profiles, share music, and chat. Member bands can track their sales and pinpoint listener locales on Google Maps. Help your faves generate enough buzz and they may land a deal with Fuzz.It's a hit with Armchair A&R reps.
Mog.comLaunch March 2007Described as a musical "nudist colony," Mog — in beta since July 2006 — scans your music library, then matches your taste to similar "moggers." A recently launched TV arm provides high-quality video streaming. A subscription service is in the works.It's a hit with The famous (Ben Gibbard) and nonfamous High Fidelity-esque purists.
iLike.comLaunch October 2006iLike scans your iTunes library and uses a MySpace widget to automatically update your friends on what you're listening to. Also suggests music from under-the-radar acts, available for free download through GarageBand.com.It's a hit with Cubicle wonks who can whittle away hours browsing, sampling, and critiquing their friends' music tastes.
Eventful.comLaunch September 2005Like an interactive Tourfilter, Eventful scans your iTunes and Last.fm lists, then fires off an email alert when your heroes come to town. Users can also "demand" a band, allowing artists to gauge their popularity by location and book gigs accordingly.It's a hit with More than music fans — one of the most requested "performers" is Barack Obama.
Finetune.comLaunch September 2006Aimed at gaming geeks and music lovers. You click on an artist's name and Finetune instantly crafts a compilation that streams through your Wii. A desktop app lets you launch a playlist without firing up your Web browser.It's a hit with Top 40 loving techies with Wii tennis elbow.
GroupieTunes.comLaunch April 2005Allows indie acts to upload tracks for ringtones or full-song downloads. Buyers are billed directly on their cell phones, and artists get a percentage of the profits. Bands can send SMS messages to fans about upcoming shows in their area.It's a hit with Hardcore music nerds who plan to be first in line for the iPhone.
Source: http://www.wired.com/entertainment/music/magazine/15-06/pl_music
Angela Watercutter 05.22.07 2:00 AM
Play
Previous: Designers Use Laser to Grind 3-D Art Into Skateboard Decks
Next: Porsche Conjures Carrera 205 for Luxury Boat Design
Used to be you showed the world your killer taste in music with a Clash T-shirt and a Ramones pin. Then came blasting your iPod playlist at parties and boasting that some obscure artist was your "friend." But now that MySpace is overrun with posers, you'll have to go elsewhere to impress audiophiles with your musical savvy. Just don't tell them who sent you.
Your Guide to the Digital Underground
Fuzz.comLaunch March 2007A hybrid fan site and boutique label, Fuzz lets indie acts and their devotees set up profiles, share music, and chat. Member bands can track their sales and pinpoint listener locales on Google Maps. Help your faves generate enough buzz and they may land a deal with Fuzz.It's a hit with Armchair A&R reps.
Mog.comLaunch March 2007Described as a musical "nudist colony," Mog — in beta since July 2006 — scans your music library, then matches your taste to similar "moggers." A recently launched TV arm provides high-quality video streaming. A subscription service is in the works.It's a hit with The famous (Ben Gibbard) and nonfamous High Fidelity-esque purists.
iLike.comLaunch October 2006iLike scans your iTunes library and uses a MySpace widget to automatically update your friends on what you're listening to. Also suggests music from under-the-radar acts, available for free download through GarageBand.com.It's a hit with Cubicle wonks who can whittle away hours browsing, sampling, and critiquing their friends' music tastes.
Eventful.comLaunch September 2005Like an interactive Tourfilter, Eventful scans your iTunes and Last.fm lists, then fires off an email alert when your heroes come to town. Users can also "demand" a band, allowing artists to gauge their popularity by location and book gigs accordingly.It's a hit with More than music fans — one of the most requested "performers" is Barack Obama.
Finetune.comLaunch September 2006Aimed at gaming geeks and music lovers. You click on an artist's name and Finetune instantly crafts a compilation that streams through your Wii. A desktop app lets you launch a playlist without firing up your Web browser.It's a hit with Top 40 loving techies with Wii tennis elbow.
GroupieTunes.comLaunch April 2005Allows indie acts to upload tracks for ringtones or full-song downloads. Buyers are billed directly on their cell phones, and artists get a percentage of the profits. Bands can send SMS messages to fans about upcoming shows in their area.It's a hit with Hardcore music nerds who plan to be first in line for the iPhone.
Source: http://www.wired.com/entertainment/music/magazine/15-06/pl_music
zondag 16 september 2007
The history
The music industry is a term used to describe a range of music-related businesses and organizations. When the term "music industry" is used in a narrow sense, it refers only to the businesses and organizations that record, produce, publish, distribute, and market recorded music (e.g., music publishers, recording industry, record production companies). This corresponds to the International Standard Industrial Classification (ISIC) that includes sound recording and music publishing activities (J-59).
When the term is used more broadly, it refers to a range of sub-industries that come from a number of different industrial classifications, including Information and Communication (which includes sound recording and music publishing activities), programming and broadcasting activities (e.g., radio stations), education (e.g., music training schools), Arts, entertainment and recreation, and manufacturing and retail sales (e.g., of musical instruments). In this broader sense, the term usually also encompasses not-for-profit organizations such as Musicians' Unions and writers' copyright collectives and performance rights organisations.
Until the 1700s, the process of composition and printing of music was mostly supported by patronage from the aristocracy and church. In the mid-to-late 1700s, performers and composers such as Wolfgang Amadeus Mozart began to seek commercial opportunities to market their music and performances to the general public. After Mozart's death, his wife (the soprano Constanze Weber) continued the process of commercialization of his music through an unprecedented series of memorial concerts, selling his manuscripts, and collaborating with her second husband, Georg Nissen, on a biography of Mozart.[1]
In the 1800s, the music industry was dominated by sheet music publishers. In the United States, the music industry arose in tandem with the rise of blackface minstrelsy. The group of music publishers and songwriters which dominated popular music in the United States was known as Tin Pan Alley. In the early 20th century the phonograph industry grew greatly in importance, and the record industry eventually replaced the sheet music publishers as the industry's largest force.
Just as radio and television did before it, the advent of file sharing technologies may change the balance between record companies, song writers, and performing artists. Bands such as Metallica have fought back against peer-to-peer programs such as the infamous Napster, and the arguments for and against technology to circumvent them - digital rights management systems - remain controversial.
With the re-launch of Napster as a legally licensed download site in 2003 (in the US), along with the advent of Apple Computer's iTunes online music store in the same year, the major record companies have begun to embrace digital downloading as the future of the music industry.
Both Napster and iTunes, with the support of the majors, are promoting a digital music subscription service. This may lead to a fundamental change in the way music is consumed, as a utility that "flows" into a person's house rather than as a commodity that is bought one-by-one. Music may well become purchased 'like water' (Leonhard, 2004), in that people will pay for their monthly consumption of music
source: http://en.wikipedia.org/wiki/Music_market
When the term is used more broadly, it refers to a range of sub-industries that come from a number of different industrial classifications, including Information and Communication (which includes sound recording and music publishing activities), programming and broadcasting activities (e.g., radio stations), education (e.g., music training schools), Arts, entertainment and recreation, and manufacturing and retail sales (e.g., of musical instruments). In this broader sense, the term usually also encompasses not-for-profit organizations such as Musicians' Unions and writers' copyright collectives and performance rights organisations.
Until the 1700s, the process of composition and printing of music was mostly supported by patronage from the aristocracy and church. In the mid-to-late 1700s, performers and composers such as Wolfgang Amadeus Mozart began to seek commercial opportunities to market their music and performances to the general public. After Mozart's death, his wife (the soprano Constanze Weber) continued the process of commercialization of his music through an unprecedented series of memorial concerts, selling his manuscripts, and collaborating with her second husband, Georg Nissen, on a biography of Mozart.[1]
In the 1800s, the music industry was dominated by sheet music publishers. In the United States, the music industry arose in tandem with the rise of blackface minstrelsy. The group of music publishers and songwriters which dominated popular music in the United States was known as Tin Pan Alley. In the early 20th century the phonograph industry grew greatly in importance, and the record industry eventually replaced the sheet music publishers as the industry's largest force.
Just as radio and television did before it, the advent of file sharing technologies may change the balance between record companies, song writers, and performing artists. Bands such as Metallica have fought back against peer-to-peer programs such as the infamous Napster, and the arguments for and against technology to circumvent them - digital rights management systems - remain controversial.
With the re-launch of Napster as a legally licensed download site in 2003 (in the US), along with the advent of Apple Computer's iTunes online music store in the same year, the major record companies have begun to embrace digital downloading as the future of the music industry.
Both Napster and iTunes, with the support of the majors, are promoting a digital music subscription service. This may lead to a fundamental change in the way music is consumed, as a utility that "flows" into a person's house rather than as a commodity that is bought one-by-one. Music may well become purchased 'like water' (Leonhard, 2004), in that people will pay for their monthly consumption of music
source: http://en.wikipedia.org/wiki/Music_market
maandag 10 september 2007
The Music Business and the Big Flip
First published January 21, 2003 on the 'Networks, Economics, and Culture' mailing list. Subscribe to the mailing list.
The first and last thirds of the music industry have been reconfigured by digital tools. The functions in the middle have not.
Thanks to software like ProTools and CakeWalk, the production of music is heavily digital. Thanks to Napster and its heirs like Gnutella and Kazaa, the reproduction and distribution of music is also digital. As usual, this digitization has taken an enormous amount of power formerly reserved for professionals and delivered it to amateurs. But the middle part -- deciding what new music should be available -- is still analog and still professionally controlled.
The most important departments at a record label are Artists & Repertoire, and Marketing. A&R's job is to find new talent, and Marketing's job is to publicize it. These are both genuinely hard tasks, and unlike production or distribution, there is no serious competition for those functions outside the labels themselves. Prior to its demise, Napster began publicizing itself as a way to find new music, but this was a fig leaf, since users had to know the name of a song or artist in advance. Napster did little to place new music in an existing context, and the current file-sharing networks don't do much better. In strong contrast to writing and photos, almost all the music available on the internet is there because it was chosen by professionals.
Aggregate Judgments
The curious thing about this state of affairs is that in other domains, we now use amateur input for finding and publicizing. The last 5 years have seen the launch of Google, Blogdex, Kuro5in, Slashdot, and many other collaborative filtering sites that transform the simple judgments of a few participants into aggregate recommendations of remarkably high quality.
This is all part of the Big Flip in publishing generally, where the old notion of "filter, then publish" is giving way to "publish, then filter." There is no need for Slashdot's or Kuro5hin's owners to sort the good posts from the bad in advance, no need for Blogdex or Daypop to pressure people not to post drivel, because lightweight filters applied after the fact work better at large scale than paying editors to enforce minimum quality in advance. A side-effect of the Big Flip is that the division between amateur and professional turns into a spectrum, giving us a world where unpaid writers are discussed side-by-side with New York Times columnists.
The music industry is largely untouched by the Big Flip. The industry harvests the aggregate taste of music lovers and sells it back to us as popularity, without offering anyone the chance to be heard without their approval. The industry's judgment, not ours, still determines the entire domain in which any collaborative filtering will subsequently operate. A working "publish, then filter" system that used our collective judgment to sort new music before it gets played on the radio or sold at the record store would be a revolution.
Core Assumptions
Several attempts at such a thing have been launched, but most are languishing, because they are constructed as extensions of the current way of producing music, not alternatives to it. A working collaborative filter would have to make three assumptions.
First, it would have to support the users' interests. Most new music is bad, and the users know it. Sites that sell themselves as places for bands to find audiences are analogous to paid placement on search engines -- more marketing vehicle than real filter. FarmFreshMusic, for example lists its goals as "1. To help artists get signed with a record label. 2. To help record labels find great artists efficiently. 3. To help music lovers find the best music on the Internet." Note who comes third.
Second, life is too short to listen to stuff you hate. A working system would have to err more on the side of false negatives (not offering you music you might like) rather than false positives (offering you music you might not like). With false negatives as the default, adventurous users could expand their preferences at will, while the mass of listeners would get the Google version -- not a long list of every possible match, but rather a short list of high relevance, no matter what has been left out.
Finally, the system would have to use lightweight rating methods. The surprise in collaborative filtering is how few people need to be consulted, and how simple their judgments need to be. Each Slashdot comment is moderated up or down only a handful of times, by only a tiny fraction of its readers. The Blogdex Top 50 links are sometimes pointed to by as few as half a dozen weblogs, and the measure of interest is entirely implicit in the choice to link. Despite the almost trivial nature of the input, these systems are remarkably effective, given the mass of mediocrity they are sorting through.
A working filter for music would similarly involve a small number of people (SMS voting at clubs, periodic "jury selection" of editors a la Slashdot, HotOrNot-style user uploads), and would pass the highest ranked recommendations on to progressively larger pools of judgment, which would add increasing degrees of refinement about both quality and classification. Such a system won't undo inequalities in popularity, of course, because inequality appears whenever a large group expresses their preferences among many options. Few weblogs have many readers while many have few readers, but there is no professional "weblog industry" manipulating popularity. However, putting the filter for music directly in the hands of listeners could reflect our own aggregate judgments back to us more quickly, iteratively, and with less distortion than the system we have today.
Business Models and Love
Why would musicians voluntarily put new music into such a system?
Money is one answer, of course. Several sorts of businesses profit from music without needing the artificial scarcity of physical media or DRM-protected files. Clubs and concert halls sell music as experience rather than as ownable object, and might welcome a system that identified and marketed artists for free. Webcasting radio stations are currently forced to pay the music industry per listener without extracting fees from the listeners themselves. They might be willing to pay artists for music unencumbered by per-listener fees. Both of these solutions (and other ones, like listener-supported radio) would offer at least some artists some revenues, even if their music were freely available elsewhere.
The more general answer, however, is replacement of greed with love, in Kevin Kelly's felicitous construction. The internet has lowered the threshold of publishing to the point where you no longer need help or permission to distribute your work. What has happened with writing may be possible with music. Like writers, most musicians who work for fame and fortune get neither, but unlike writers, the internet has not offered wide distribution to people making music for the love of the thing. A system that offered musicians a chance at finding an audience outside the professional system would appeal to at least some of them.
Music Is Different
There are obvious differences here, of course, as music is unlike writing in several important ways. Writing tools are free or cheap, while analog and digital instruments can be expensive, and writing can be done solo, while music-making is usually done by a group, making coordination much more complex. Furthermore, bad music is far more painful to listen to than bad writing is to read, so the difference between amateur and professional music may be far more extreme.
But for all those limits, change may yet come. Unlike an article or essay, people will listen to a song they like over and over again, meaning that even a small amount of high-quality music that found its way from artist to public without passing through an A&R department could create a significant change. This would not upend the professional music industry so much as alter its ecosystem, in the same way newspapers now publish in an environment filled with amateur writing.
Indeed, the world's A&R departments would be among the most avid users of any collaborative filter that really worked. The change would not herald the death of A&R, but rather a reconfiguration of the dynamic. A world where the musicians already had an audience when they were approached by professional publishers would be considerably different from the system we have today, where musicians must get the attention of the world's A&R departments to get an audience in the first place.
Digital changes in music have given us amateur production and distribution, but left intact professional control of fame. It used to be hard to record music, but no longer. It used to be hard to reproduce and distribute music, but no longer. It is still hard to find and publicize good new music. We have created a number of tools that make filtering and publicizing both easy and effective in other domains. The application of those tools to new music could change the musical landscape.
The first and last thirds of the music industry have been reconfigured by digital tools. The functions in the middle have not.
Thanks to software like ProTools and CakeWalk, the production of music is heavily digital. Thanks to Napster and its heirs like Gnutella and Kazaa, the reproduction and distribution of music is also digital. As usual, this digitization has taken an enormous amount of power formerly reserved for professionals and delivered it to amateurs. But the middle part -- deciding what new music should be available -- is still analog and still professionally controlled.
The most important departments at a record label are Artists & Repertoire, and Marketing. A&R's job is to find new talent, and Marketing's job is to publicize it. These are both genuinely hard tasks, and unlike production or distribution, there is no serious competition for those functions outside the labels themselves. Prior to its demise, Napster began publicizing itself as a way to find new music, but this was a fig leaf, since users had to know the name of a song or artist in advance. Napster did little to place new music in an existing context, and the current file-sharing networks don't do much better. In strong contrast to writing and photos, almost all the music available on the internet is there because it was chosen by professionals.
Aggregate Judgments
The curious thing about this state of affairs is that in other domains, we now use amateur input for finding and publicizing. The last 5 years have seen the launch of Google, Blogdex, Kuro5in, Slashdot, and many other collaborative filtering sites that transform the simple judgments of a few participants into aggregate recommendations of remarkably high quality.
This is all part of the Big Flip in publishing generally, where the old notion of "filter, then publish" is giving way to "publish, then filter." There is no need for Slashdot's or Kuro5hin's owners to sort the good posts from the bad in advance, no need for Blogdex or Daypop to pressure people not to post drivel, because lightweight filters applied after the fact work better at large scale than paying editors to enforce minimum quality in advance. A side-effect of the Big Flip is that the division between amateur and professional turns into a spectrum, giving us a world where unpaid writers are discussed side-by-side with New York Times columnists.
The music industry is largely untouched by the Big Flip. The industry harvests the aggregate taste of music lovers and sells it back to us as popularity, without offering anyone the chance to be heard without their approval. The industry's judgment, not ours, still determines the entire domain in which any collaborative filtering will subsequently operate. A working "publish, then filter" system that used our collective judgment to sort new music before it gets played on the radio or sold at the record store would be a revolution.
Core Assumptions
Several attempts at such a thing have been launched, but most are languishing, because they are constructed as extensions of the current way of producing music, not alternatives to it. A working collaborative filter would have to make three assumptions.
First, it would have to support the users' interests. Most new music is bad, and the users know it. Sites that sell themselves as places for bands to find audiences are analogous to paid placement on search engines -- more marketing vehicle than real filter. FarmFreshMusic, for example lists its goals as "1. To help artists get signed with a record label. 2. To help record labels find great artists efficiently. 3. To help music lovers find the best music on the Internet." Note who comes third.
Second, life is too short to listen to stuff you hate. A working system would have to err more on the side of false negatives (not offering you music you might like) rather than false positives (offering you music you might not like). With false negatives as the default, adventurous users could expand their preferences at will, while the mass of listeners would get the Google version -- not a long list of every possible match, but rather a short list of high relevance, no matter what has been left out.
Finally, the system would have to use lightweight rating methods. The surprise in collaborative filtering is how few people need to be consulted, and how simple their judgments need to be. Each Slashdot comment is moderated up or down only a handful of times, by only a tiny fraction of its readers. The Blogdex Top 50 links are sometimes pointed to by as few as half a dozen weblogs, and the measure of interest is entirely implicit in the choice to link. Despite the almost trivial nature of the input, these systems are remarkably effective, given the mass of mediocrity they are sorting through.
A working filter for music would similarly involve a small number of people (SMS voting at clubs, periodic "jury selection" of editors a la Slashdot, HotOrNot-style user uploads), and would pass the highest ranked recommendations on to progressively larger pools of judgment, which would add increasing degrees of refinement about both quality and classification. Such a system won't undo inequalities in popularity, of course, because inequality appears whenever a large group expresses their preferences among many options. Few weblogs have many readers while many have few readers, but there is no professional "weblog industry" manipulating popularity. However, putting the filter for music directly in the hands of listeners could reflect our own aggregate judgments back to us more quickly, iteratively, and with less distortion than the system we have today.
Business Models and Love
Why would musicians voluntarily put new music into such a system?
Money is one answer, of course. Several sorts of businesses profit from music without needing the artificial scarcity of physical media or DRM-protected files. Clubs and concert halls sell music as experience rather than as ownable object, and might welcome a system that identified and marketed artists for free. Webcasting radio stations are currently forced to pay the music industry per listener without extracting fees from the listeners themselves. They might be willing to pay artists for music unencumbered by per-listener fees. Both of these solutions (and other ones, like listener-supported radio) would offer at least some artists some revenues, even if their music were freely available elsewhere.
The more general answer, however, is replacement of greed with love, in Kevin Kelly's felicitous construction. The internet has lowered the threshold of publishing to the point where you no longer need help or permission to distribute your work. What has happened with writing may be possible with music. Like writers, most musicians who work for fame and fortune get neither, but unlike writers, the internet has not offered wide distribution to people making music for the love of the thing. A system that offered musicians a chance at finding an audience outside the professional system would appeal to at least some of them.
Music Is Different
There are obvious differences here, of course, as music is unlike writing in several important ways. Writing tools are free or cheap, while analog and digital instruments can be expensive, and writing can be done solo, while music-making is usually done by a group, making coordination much more complex. Furthermore, bad music is far more painful to listen to than bad writing is to read, so the difference between amateur and professional music may be far more extreme.
But for all those limits, change may yet come. Unlike an article or essay, people will listen to a song they like over and over again, meaning that even a small amount of high-quality music that found its way from artist to public without passing through an A&R department could create a significant change. This would not upend the professional music industry so much as alter its ecosystem, in the same way newspapers now publish in an environment filled with amateur writing.
Indeed, the world's A&R departments would be among the most avid users of any collaborative filter that really worked. The change would not herald the death of A&R, but rather a reconfiguration of the dynamic. A world where the musicians already had an audience when they were approached by professional publishers would be considerably different from the system we have today, where musicians must get the attention of the world's A&R departments to get an audience in the first place.
Digital changes in music have given us amateur production and distribution, but left intact professional control of fame. It used to be hard to record music, but no longer. It used to be hard to reproduce and distribute music, but no longer. It is still hard to find and publicize good new music. We have created a number of tools that make filtering and publicizing both easy and effective in other domains. The application of those tools to new music could change the musical landscape.
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