| 0:36 | Intro. [Recording date: March 8, 2010.] Past, then move to the present, then future. In the past, the music business was very different. Who made money and how did they make it? What did record labels provide that made them profitable? What record labels provide for the artist: not too much difference between what they do today and then. What's different is the structures of how they do it; that's changed dramatically. The old model, for years--came into the business in 1970 at Capitol Records, worked there 14 years before going to Universal's MCA Records, in 1983. Labels based on a model reliant solely on one or two things: either you had an established artist that was in the public light previously--literally from the 1950s Elvis Presley or Frank Sinatra--or everything was established via radio play. Radio really was the forefront and strategic partner; as radio grew, with the Top 40, and then later in the 1970s, when FM radio started playing albums, a second explosion. The model was based on securing radio play, marketing to the audience that was hearing records on the radio, and subsequent television as well. The distribution channels were very strong at retail. At that time, record chains--Tower Records, Warehouse Records, Licorice Pizza--great record stores people could walk in and buy music. Profitable till 1983, when the CD came around; and then it became even more profitable on the label side--more profit in CDs and people who had bought in vinyl, cassette, or 8-track cassette re-bought it in this new format. Labels could make a lot of money converting catalogs to digital without spending a lot of money on artists--reselling to the public a lot of the music they already had. As new artists broke, same plan was in effect--radio was in the vanguard. Now know that in the mid- to late 1990s everything started to change when a little website named Napster came along. |
| 4:17 | Stick with pre-digital world. Hard in some industries to predict success. With a new artist or new album, how accurate were the forecasts that the labels would make in predicting success? In movies, told that they are not very good at predicting what's going to be a blockbuster and what isn't. Effort obviously matters but is not decisive in that industry. In record industry? Sat down and had weekly meetings about new releases. Different marketing plan in effect for established artists. If you broke in an artist like Bob Seger when at Capitol, different plan than trying to break a brand new artist. Initial projections back then not that hard. Experience: an artist you looked at; went out and secured the talent. Pink Floyd: an album-based group; marketing plan completely different from for an artist who was a Top-40 mainstay group. Before they were a household word, did people know? Building process: when you signed an act--used to sign for 3-year deals, some longer depending on if from another label or in development already. Look at acts and say: if we sell 50,000 or 100,000, would have a base to go on to do a second act. There are always times when we under-projected or over-projected. Any pleasant surprises you remember? Picked all of Bob Seger's singles from Night Moves through 1983. Never really had a hit single, but toured relentlessly and built up a good album base. Didn't have that magic chance until 1976 with Night Moves. Went to management and said that was the cut that would work; need to get airplay outside of just Michigan. Became the first single; went top 5 nationally. Actual marketing process: after everybody agreed that Night Moves was the single, what did people do on the ground to get that music heard? From the promotion side, spiraled from going from station to station. Fortunate--had some major radio stations jump on the record very early in 5 or 6 major markets. From the minute that happened, we went into emergency mode, said: We need marketing. Had meetings subsequent to regular meetings. Made bombardier jackets that said Night Moves, with fur collars, and gave them out retail and to radio key programmers and general managers. Created posters for fans and general marketing. Did new radio spots. Marketing for whole tour; markets Bob was going to go and re-play; but now the venue was changing. Went into Defcon 4 status. When you get the nibble on a record like this, you are going to do everything necessary to bring the record in. You really don't know until you have weeks and weeks of sales; you hope you are going to reach that gold and platinum, even mult-platinum level. Once the record was a hit, on the radio for three months--12 weeks of airplay--already at platinum. Knew then from the album side what to pick for the second single. Now radio welcomed with open arms because they'd had a hit with the first single. Fortunate with that project--four singles. Doesn't always happen that way. Sometimes you get a single that is great radio but doesn't convey to album sales, or not proportionate. Ever have any singles that slogged and slogged and never made it? Yes; that's the one thing about the record business that nobody understands. Letters saying record labels only promote what they want, pick and choose. No record label cares where their hits come from. A hit is a hit. Would love every record they put out to sell. Every artist they sign gets some kind of advance. We could have some priorities; radio picked another record for their own reasons. |
| 13:30 | Profit margins in the business. CD came out; people were excited and wanted to recreate their own catalogs. Price went up or down? When CDs were first released, they were retailing for $19.99. Retailing in long, slim boxes. Hard to steal. Cardboard box. They sold. Michael Jackson's Thriller was one of the first CDs that ever went platinum just in CD sales--platinum is 1 million. Shortly after, long slim pack went away. Dealers gave feedback that that packaging wasn't working at all. Most of the labels co-opt the expense of converting all those record stores to bins that would work. Co-opt--mean paid for it? Yes, in advertising or gave an allowance. CD good for profit margins: most industries when you get an innovation like that, competition makes it stay the same price. Consumer gets the better deal. Was it cheaper to make CDs? Vinyl was cheaper then. Vinyl has come back as a huge niche market, but not many vinyl plants around, so it costs more to make vinyl today because there are not as many places that can make it. Back then, vinyl records cost only about a dollar to make; though some artists insisted on what we call "virgin vinyl," never been recycled; charged a dollar more for that at retail. Extraordinary royalty for some, like the Beatles, a dollar more for that. The CD varies based on royalties, negotiated for every artist. Company has to decide on distribution. Manufacturing cost for CDs was about $2.65-$3.00. Wish to get cost down; tried eco-path, with cardboard. Raw manufacturing; have to factor in the cost of the marketing, the promotion, and back then, when the CD happened, cost of making a video. Dealers were buying CDs for $6.99-$10.00, depending on whether it was a double CD or single CD; retailing for $15.99-$16.99, sometimes higher. As time went on, marketplace became more competitive. |
| 18:26 | A successful album--high end goal would be platinum, a million sales. First milestone would be gold--that's 500 units. Second, platinum. Each subsequent million is called multi-platinum. In the 1970s and 1980s, what would be a wildly successful CD? While at Capitol, from Bob Seeger, almost through 1983 almost all he did was a million plus. Pink Floyd, Dark Side of the Moon, over 10 million--not in four years. Thriller to date goes back and forth with the Eagles' Greatest Hits for being the number one best selling of all time; both about 30 million to date. Couple of others? Bruce Springsteen's Born in the U.S.A. did 10-15 million. Spice Girls. Now? Taylor Swift, two albums, 10 million plus. CDs, or digital? One of the biggest sellers now. A lot of people argue that you can't make any money today because everybody steals it. From the label side or from the artist? Both. Couple of hundred independent artists receive my newsletter; all say that if it weren't for the Internet, they couldn't make a living. What do they do? Market and tour relentlessly. None getting rich or have big hits; but all able to live. Internet has changed ability to make notoriety and generate revenues. Some complain that because of file sharing--Napster, Limewire and others--the Internet has helped them a lot. What about the more successful groups? Two different viewpoints; two sets of data supporting both. Report in 2009 by Forrester Research shows that the record industry in one decade, from 199-2009, went from $14.6 billion to $6.3 billion in revenues. Industry blames that on online piracy. On the other hand there are studies all over the world that have been done that have cited that those who download music illegally also happen to be the biggest consumers of legal music. There are studies backing that up. Difficult to measure accurately; prone to bias. Even without file-sharing, people were burning copies of CDs. Still going to be dark nets where people do this. From the artist side, if you look at the people who used the web to their success--one of the greatest examples would current be--before Lady Gaga released Bad Romance to radio, right before it went out, the single wasn't pushed at radio, almost simultaneously, overnight on YouTube almost 10 million views. Made no money from it? Might have; don't know arrangements with Universal, might be able to repackage it later. All media is a marketing tool. Some artists retain the rights to all their videos. Before the video was in the Top 10 it got up to 25 million views on YouTube. Knew record was destined to go to Number 1. Artists sometimes virally use the web--Wilco. Tremendous experience--went into label, wanted a better record. Took it back and offered it to all their fans. First downloaded album online. Band did it because they knew the money they were making from their record sales wasn't near what they were making from their live appearances. Worked; and Electro Records came to them--under the same Warner Music Group. Record still ended up sending 300-400,000 copies; probably gold. Next album sold more, and next sold more. Jeff Tweedy out there saying that the Internet is not my enemy. Great divide: labels versus aggressive or progressive artists. Labels never embrace the Internet; Steve Jobs. |
| 28:49 | Who is making money on iTunes? The revenue is split between iTunes and the labels, which break it down to the artist; and each artist has a different deal. Make less if you are selling a song for $1.99 than an album. Puzzle: record label revenue is way down, maybe half of what it was, and maybe falling--does that include iTunes? That's gross revenue, so it includes everything. So, normally, you'd think this is a change, it happens in markets; this new distribution channel is phenomenal. ITunes doesn't work so well as a gift; but it is easy and quick and lets you find new music. Why haven't they cut out the record label entirely? Why aren't they a label, letting the Internet filter out quality? If you are a new artist today, you submit your music to iTunes; write out the contract--they are not against signing new artists. They are hands down the number 1 online store all over the world. Incredible job of branding: Steve Jobs best innovator; plus he has an iPod to sell. iTunes is a store and an online store, but not a label, don't go out and secure talent. At what point does an artist say to a label, what are you doing for me? Steve Jobs has no vested interest in making CDs, strictly a digital market. Doesn't want to bother with the brick and mortar world, and doesn't need to. Cost of underwriting--everybody thinks all you have to do today is you make your record, and the label signs it and they just put it out and then if I'm lucky enough to get played, they just sell it and they keep all the money. That's just wrong. The label spends a fortune in marketing, promotion, videos. If you speak to an independent artist, they know how difficult that is because most of them are doing it on a local, regional level. Tremendous amount of money. Securing radio play today is harder than ever. New music first is being shared peer-to-peer and is going on YouTube. Artists first are developing themselves in front of radio play. Might already have sold 50,000-100,000 albums before radio play, and they know how to do it very well. |
| 34:23 | Is radio going to make it? Radio revenues are down; radio stocks are now below a dollar, penny stocks. If they want to make it, they've got to give a reason for people to be entertained. If you go into any market today, you hear the same 30-40 records. The argument from radio will be that that's the way it always was. But formerly you had personalities. If in Los Angeles and turned on KMET, knew I was in LA. If in NYC and turned on WABC, knew I was in NYC. Or WNEW. Today, all so cloned. Audio talent is minimal. Records 95-98% the same. The youth of today isn't waiting for radio. Online sharing files at age of 13-14. See something developing, can see the progress online. First question to ask when lecturing: How many of you listen to radio for new music? Maybe 1 or 2 hands go up. How many have iPods? online? Everybody. How many sharing files with friends--95%. How many buy music? Almost 70%. Still means 30% aren't; and how much? But this is the world that exists today. Cannot go back to the old model. ITunes is the number 1 branded store. Why hasn't every label created its own destination where they sell uniquely? Some have tried. Not just having a store where you click--store where you do something. The Beatles have--still not for sale digitally, and every day it's not people are stealing it--imagine what they could do by packaging it: if you buy this, you get this other thing. ITunes can't do that without the labels, because the labels have the content. |
| 38:34 | A lot of times industries have a sea change like this; obviously trouble adjusting. Why don't we see new labels springing up from scratch? Sounds like a profit opportunity. From this point forward, strategic alliances, Universal just did one with Bally's Fitness, sold 4.5 million for downloads. Encouraging people to join their clubs; going to get a free download from the Universal catalog. Starbucks' model? Didn't work. They have a whole lot of outlets: to a marketing person, first thought is there's 10,000 Starbucks; we'll put 5 albums in every one--that's 50,000--we put 10, it's 100,000. If you put them in China, that's a billion. Doesn't work that way. Why not put them in McDonald's? That might be the future. Eat the hamburger, chip in your brain, get a download. Starbucks thing didn't work. Worked with the Ray Charles album, but not with the Paul McCartney album. Critical element that's missing today is the great record store. People miss the emotional connection. Amoeba Records in Los Angeles--environment that was similar to what Tower Records was in its great days. People look and spend time there. Won't come back the way it was. Used to hang out in Tower Records. Do that at iTunes, too. Emotional connection different. |
| 42:55 | Shift gears: Quote from John Perry Barlow, lyricist for the Grateful Dead, recent article in The Atlantic: "What people today are beginning to realize is what became obvious to us back then--the important correlation is the one between familiarity and value, not scarcity and value. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn't regulate [taping at] our shows, and you can't online. The Internet doesn't behave that way. But here's the thing: if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead." Referring to the bootleg phenomenon, record and share with friends; and with the Dead, they encouraged it and tried to make it a profitable strategy of marketing. Quality not quite as high, but high enough that people enjoyed it. The Dead's idea was always that they were touring and that made a lot of money. Will touring continue that way? The amount of money that U-2 or Bruce Springsteen grossed from their concerts, after you take off their production costs, can still see that the net revenue to the artists is way higher than what it is from their record sales. If their albums sold a million and they made ten million touring, you have the answer. Then, licensing. Those artists who are able to deliver live--if Wilco's able to sell out those smaller halls, they don't have to sell x amount of dollars to try to sell those tickets. If their album is selling 400,000, and that's split among the band members and the record company, after that's split, the revenues are not going to be anywhere near what the touring and licensing and merchandising are. Is that new or has that always been true? Think probably--back in the 1970s and 1980s, Bruce Springsteen, in three or four years extraordinary--allowed him to play 30-50 markets or the Rose Bowl. In that one year his concerts outgrossed his record sales. The issue is, you are not touring every year. We don't have artists delivering album after album after album any more. Their catalogs--they are still getting royalty checks, making hits for the last 20-30 years. Ironic: extraordinary technology--digital music that lets people enjoy a better quality experience than a concert--different, but extraordinary fidelity; and then we turn the profit mechanism into standing live in front of 50-100,000. Wild thing. Used to be if you toured you sold the albums. Now, you are saying, if you tour you sell the albums. What U-2 did, they screened it on the Internet. Regardless of what everyone throws at me, glass half full not half empty. Opportunities online. If you are interested in keeping your CD in the marketplace for a longer period of time, lower your prices. Don't release albums with one or two good tracks. Not going to pay $10.00 for an album with one good song. |
| 50:08 | Never a better time in history. Ability to find music you once loved--don't have to go to NYC to find it in used CD market. Incredible feast. Worry is that that's now. Twenty years from now, as this generation pays less and less and feels more and more entitled to get it for free, the ability of that to generate returns that encourage people to go into the business isn't going to be there. May or may not be true. Factor we don't know: what will be developed in the future that will allow people to generate more revenue from online. People not in the habit today of purchasing music will have a hard time converting to it. On the other hand, see an artist like Susan Boyle in England, wins the x-factor and worldwide sells 10 million in 90 days. She sold 3 million in the United States alone. Record label will tell you it's an older demographic, they don't traditionally download, different audience. All of those things exist. But a lot of those people could have accessed it online; or having someone get it for them easier. Increasingly more difficult to generate the same kind of sales to give you a return on your investment. But the model that exists today in a year, two years, or three years, same as the labels will change. When I left in 1992, every record label had a full promotion staff of people who went to radio. They are gone. You don't need 30-40 people now because radio has changed. But retail has changed, too. Have friends selling a lot of music online. Friday Music, licenses music, sells new music, doing well, couldn't have done that previously--selling vinyl and selling CDs. Music as the big umbrella. Those models, 360 model--Live Nation signed Madonna to a hundred million dollar deal for 10 years. Guaranteed her 10 million dollars a year for 10 years; get her records, her tour revenue, her merchandising. Madonna signed that deal, think last year, age 50. They are not counting on her selling $50 million in records in the next ten years. They are counting on getting the revenue from all the other ancillary strains. Guarantee you that you will see Madonna music on commercials and in a myriad of other ways. |
| 55:19 | Susan Boyle example. Subtle point. Not a big TV watcher; in England, came in second on England's Got Talent. If just heard song I Dreamed a Dream on the radio--had a great voice; but thought about buying album because of emotional connection, clip on YouTube--staged? real?--wows the audience and judges. Not the same song as if you just heard it on the radio. Other aspects, glorious thing, Internet. TV as well. American Idol--like what they do or not, audience has emotional connection to the people for 6 months. What American Idol does is what radio doesn't do any more. Radio: If we like Sammy Hagar, we're going to play Sammy Hagar. Played the music because it was lifestyle-oriented music. That's what their audience wanted. The guys that programmed in those markets had huge numbers. Paralleled the biggest top-40 music station. We could take an artist and build it over to the hip singles side. That's gone now. No more album format. Radio isn't going to take somebody without having some reason to play it. Television making a connection every week. Journey song, Don't Stop Believing, Sopranos episode. Second life because of that, sold millions online in next few months; put the song on Glee and it sells again. Used to be able to browse and feel connection; whipping open the vinyl album and smelling that vinyl; don't get that sensory connection any more. "Your download is complete." |
| 59:45 | Had that connection with the DJs, too. WMET, WNEW--stable of disk jockeys. Hired by Capitol Records as "Regional Album Marketing Specialist"--in 1971, sent to NY, WNEW, WPLJ, and Long Island, WLIRFM, and down in D.C. and up in Boston, WBCN. Forerunners of what was happening. Allison Steele, etc. Personalities gone today. If you had that talent--you can't be a DJ today. The stations don't allow it any more. What are those people doing today? In the old days if you had a musical, 1600s-1700s, very limited. You could play for the King, for the Church. Today, as the profitability changes, some people aren't good at touring. Natural advantage that accrues to people who can't do that. One place that could accrue is movies. A lot of the most talented folks--thinking of Randy Newman--doesn't do that much any more, writes for Toy Story, Pixar, not writing for the King. Not writing symphonies or concertos or Sail Away. What other changes like that are coming? What happens with great music when coupled with great movies--Forrest Gump, sound track did great because of the movie, best from each decade. Song used at the end of an HBO series, Six Feet Under, song used in the last episode of that series. Had never heard it; immediately went online and found the song and got a hold of it--group called Sia, being used in brand new movie last night during the Oscars. That song, Australian artist, only known by some very progressive stations in the United States, Six Feet Under, spread virally. Yael Naim. Emotional connection--that's what film and television does. Article, TV show--Madmen--producers involved with the ¬Sopranos--inundated with artists who want to be on. American public has a voracious appetite for new entertainment. Flash Dance soundtrack, one of the first. Universal, largest TV soundtrack of all time, Beverly Hills Cop. |
READER COMMENTS
JJA
Mar 22 2010 at 10:06am
Russ,
Selection suggestion.
Read background info on Grooveshark. A fascinating tale of an economics student struggling to make ends met finding an idea that has worked: helping folks find any song in the world and listen to it for free as a stream. (Use at your own risk of getting dragged to court by a hot shot music industry attorney. Don’t worry if that happens though, just find the campus friendly legal representatives at your college. They will gladly assist you.)
Follow the link, http://www.grooveshark.com/about.
Send Sam, the CEO, an invitation for an interview.
Produce the interview.
The result is a great story shared with others.
VA Classical Liberal
Mar 22 2010 at 11:33am
I’m not worried about the future of music. The kind of bands I listen to make music because it’s in their blood, not because there’s a one in billion shot of them becoming the next Lady Gaga. These kinds of people have been with us since we first started banging on logs and will be with us till the end of the race.
The music industry and radio may be in trouble, but it’s their business model that’s broken. Not the future of music.
I worked peripherally in the music industry in the late 90s, early 80s. Just a Napster and downloading was really taking off. In that period, the CIO of AOL TimeWarner once told me, “The only artists who are afraid of downloading are the once who are afraid of their own filler.” He also said “Our problem is people have gone from pay $20 for one song to paying 99 cents.”
Brandon R
Mar 22 2010 at 12:58pm
Interesting podcast. I for one am excited for the future of the music industry as the companies are forced to consider the tastes of grass-roots and regional consumers. The amount of music I have been exposed since the adoption of “high-speed” internet is oustounding.
By the way, I consider Wilco the best band in America. Their album “Mermaid Avenue” recorded with Billy Bragg that used previous unpublished Woody Guthrie lyrics was the best album of the 90’s. Some guest vocalists include Natalie Merchant, Vernon Reid, and Allison Krauss.
George Peacock
Mar 22 2010 at 6:19pm
Thought you’d all enjoy this blurb from The Onion.
http://www.theonion.com/articles/report-music-industry-made-18-in-2009,17051/
Justin P
Mar 22 2010 at 6:25pm
The Internet is a wondrous thing. The Internet as it stand right now is pure Laissez-Faire Capitalism, with no Government interference for the most part. (China can only censor content they can’t dictate content, yet.)
As a result of the pure market forces, consumers get more value for their money, prices come down as a result of fierce competition and consumers get enormous amount of variety. The music industry is a perfect example.
I totally agree with VA Classical Liberal; “The music industry and radio may be in trouble, but it’s their business model that’s broken. Not the future of music.”
Schumpeter told this story back in the 40’s, Creative Destruction. It’s Capitalism at it’s finest. Old businesses die out (record industry) and give rise to new businesses with consumers getting all the benefits.
I’m really surprised that there hasn’t been more articles or books on how the Internet and Pure Capitalism.
JJJ
Mar 22 2010 at 7:48pm
Hey, Justin P…
Are you absolutely certain that the government had a minimal role in establishing the networks; that this internet “thingie” resulted from the invisible hand that Smith envisioned? Call me a revisionist, but it would ludicrous to make that claim. Absolutely ludicrous actually. But, folks see what they want, believe what they want, listen to whomever they want: facts be damned.
Ray Gardner
Mar 23 2010 at 12:18am
Great podcast. I love anything looking at the inner workings of an industry or practice.
I’ve never shared a music file, and though I do use my iTunes a lot, it’s more for audiobooks, and podcasts and such.
Having said that, it does seem that the music industry is a little slow to to get on the right side of the internet curve. There’s just a seemingly unlimited amount of possibilities, and they’re still worried about selling the traditional album.
VA Classical Liberal
Mar 23 2010 at 6:21am
Ray,
The entertainment industry has always been slow to adopt new technology. From musician unions suing to stop the player piano in the late late 19th century to Jack Valenti’s famous comment while he was head of the MPAA “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”
They fought every innovation, yet profitted handsomely from each eventually.
Adam
Mar 23 2010 at 8:00am
I highly recommend Chapter 14 of Chris Anderson’s new book Free as a supplement to this conversation. In it, he goes into what’s happened to the Chinese music industry. In China intellectual property rights just de facto are not enforced, so that battle has already been fought and lost to a much greater extent than here in the United States. Yet their musicians and music industry are profiting; again I recommend reading the chapter to get the details. You can get the audio version for free here.
[N.B.: Thanks for remembering this related work by Chris Anderson. His advance interview on EconTalk about his work on Free is available at Chris Anderson on Free. I’d completely forgotten that this was related.–Econlib Ed.]
Justin P
Mar 23 2010 at 8:17am
JJJ,
“Are you absolutely certain that the government had
a minimal role in establishing the networks”
Yes they did, the Internet concept and early internet was developed under DARPA, I’m sure this is what your eluding too. But, the explosion of the internet as a marketplace was and is completely private.
Who do you pay for your internet service? Do you pay the State or a Private company.
Who developed high speed internet, the State or Private companies?
What web site do you go to to shop, a State run site or a private company?
What do you use to buy music online, a State run site or private company?
But I think your missing my point. I’m not talking about the development of the internet, but the internet as a marketplace.
As a marketplace, there is virtually no government interference or regulation. Sure there is government checks on the brick and mortar companies like Google or Microsoft, but on the actual Net, there is none.
It’s pure Anarchy on the internet, but rules have emerged, which is very Hayekian. Sure there is fraud and abuse, but no more than in a system with Top-down government control.
Yet as a market, the internet requires an enormous amount innovation in order to stay profitable. Firms can’t relay on Government regulation for competitive advantage like they do in the real world.
For example, Itunes can’t rely on zoning laws or licensing restrictions to create a market, like they might be able to in the real world to keep out competition. I know for a fact that this happened in Vegas by UNLV, where Tower Records had tried to get the city to revoke the business license of a popular used cd store. It was big news in the college paper, because the used store, Big Bs, was really popular with the students. Of course now, only Big Bs remains, because like Meyer was talking about, they sell vinyl.
Competitive advantage comes solely through market innovation and consumer satisfaction. It’s about as close as we can get to perfect competition, that they teach in principles. Itunes has to provide what the consumers want and at a competitive price to stay profitable. It can’t rely on Government regulations to secure a marketshare.
That’s my overall point. In the absence of Government regulation and interference, the Internet has thrived and offered more innovation and consumer “happiness” than anything in the real world. Of course me being a free-market type, I see that consumer surplus as a result of no government interference.
Erik
Mar 23 2010 at 10:35am
Super guest and eye-opening interview. Like Ray, I love it when you lift the hood on an industry, and Steve Meyer was just the person to do that with: experienced, forward-thinking, positive, open-minded, and very well informed about recent developments. One thing that never came up: does he like music? I wouldn’t be disappointed to find out that he doesn’t, but I find it sweetly ironic that this discussion could have left me uncertain as to the answer (though my guess would be yes).
I would have loved to hear what Steve Meyer has to say about the argument that the music industry was doing much better when it was animated by people with a passion for music and that it started to die when the bean counters took over. My friends and I, young fans of “non-commercial” music, found this argument appealing in the 80s and 90s.
Some validation for this hypothesis would be if the proportion of artists who go on to record four or five major-label album releases has gone down over time, because this would show a decrease in the willingness to weather low sales until an artist matures and grows a fan base. In order to have this freedom to develop artists, you have to believe in your product and you need to be persuasive to your hierarchy.
It has at least been widely reported that major labels have increasingly concentrated resources on “safer bets” over the last few decades. That said, I loved Steve Meyer’s vivid evocation of the uncertainty involved in picking artists for a label’s roster.
David Barber
Mar 23 2010 at 1:34pm
The next time you’re going to do a music thing, may I recommend talking to the band OK Go. Their lead singer, Damian Kulash, has been a semi-regular contributor to the NY Times on the topic, and just this month they dumped their music label to create their own. In addition, their use of YouTube has been… monumental.
Big Al
Mar 23 2010 at 3:34pm
Great show, and another vote for shows that feature someone who knows a specific industry really well. Would love to see other shows along those lines on, for example, the oil industry (if you haven’t done that already, but if so, I haven’t listened to it yet).
Another great music/free enterprise story that might also have challenging political themes would be Ani DiFranco.
As always, thanks for a great show.
James
Mar 23 2010 at 8:08pm
Great, Great show. One of the best ever. These shows based around specific industries works really well.
Russ, you are missing out on aspects of the new economy by not watching TV. You never seem to talk about video games either. I know you can’t do everything, but dip into some of this stuff to see what is going on. There is a lot of interesting economics on American Idol and in MMOs like Eve Online.
On piracy. Piracy can be a great thing because it can be a knife in the back of all the useless parts of an industry. Piracy was a loud screaming way to tell the industry we did not like the way they were doing things. Music lovers don’t really want to pay for a plastic CD, shelf space, distribution, shipping, clerks, marketing, radio play, etc; all that stuff Meyer talked about. That is junk, music lovers want MUSIC. As you said on the podcast, they also don’t want the 9 crappy songs, they just want the 1 good song.
The internet has a way of cutting through all the unnecessary crap that accompanies so many industries. I see the effects in movies, TV, music, video games but also in other areas like academic publishing, newspapers, and electronics. It is almost maddening now when you have to go buy a non-internet product like a dishwasher. Where do you get information? Where do you find reviews? How do you get the lowest price? Where is the metacritic for dishwashers?
Piracy forces industries to cut the crap and just give us the good stuff at the minimum price, or else we will simply download it for free. They can’t just waste millions on marketing hype, because buyers will first download the product to make sure it is worth the price.
I realize that in principle this can be harmful, but it often works very well in practice. The parts of an industry that get harmed by piracy tend to be the parts nobody cared about in the first place.
I think the reason for this is that at base, pirates are fans. The more pirates you have, the more fans you have. Some of those million people who download your album for free are going to buy your next album, or buy a ticket to your next concert. At this point, I can’t imagine going to see a concert without first listening to an artist online. If the video games industry somehow went around the country and locked up everyone who pirated games, they would be locking up a good 20-30% of their customer base! For the music industry, it would be closer to 80%. It is crazy for an industry to attack and alienate its own core customers.
What I have really seen since the internet took off is an explosion of free market activity in a number of industries. I think this is what I am really talking about above. Higher quality product, lower price, less money going toward waste like marketing, packaging, shipping, buying the wrong product, buying songs you didn’t like, etc.
emerich
Mar 23 2010 at 10:14pm
It occurs to me that when “change” overtakes an industry for technological or other reasons, we’re bound to hear the complaints louder than the hosannas, and for familiar reasons. Those who benefit are busy enjoying themselves, those hurt want everyone to know the world is cruel and unfair.
Ralph Buchanan
Mar 23 2010 at 10:22pm
I think Napster provided a service the industry wasn’t providing. With the shift from vinyl to CDs, singles essentially became unavailable. There were a few CD singles released, but very few songs and fewer artists. People didn’t want to pay a lot of money for a CD with one good song, enter Napster.
I’d like to know what Russ is listening to!
A plug for my friend who makes a living playing live and selling his own CDs:
http://www.gregboerner.com/reviews.php4
Nick
Mar 23 2010 at 11:58pm
@Justin P,
The internet is most certainly not anarchy. It is governed by laws against fraud, and various forms of cybercrime. People are prosecuted all the time.
Additionally its interesting to note that the internet’s underlying technology was developed by the government. The markets solutions to networks were all proprietary and centralized (compuserve, aol, bulletin boards).
Joel Weyrick
Mar 24 2010 at 4:11am
Here’s a fascinating lecture on how Trent Reznor (Nine Inch Nails) changed his business model to be successful after bucking a major label. The RIAA was actually fighting against Reznor while Reznor was leaking his own music to fans. Reznor has been extremely successful selling other products relating to his music without relying on copyright on his music. At one point, he was able to bring in 1.6 million dollars in one week even though he was giving away his music for free.
It’s only fifteen minutes long…
http://www.youtube.com/watch?v=Njuo1puB1lg
VA Classical Liberal
Mar 24 2010 at 8:08am
Emerich,
The music/entertainment industry screams louder than most when faced with change. They’ve been trying to stop innovation for at least 130 years.
In the late 19th century, musician unions tried to prevent members from playing for player piano rolls, because they thought it would reduce their employment opportunities. They even went to court.
In ’76 former MPAA president Jack Valenti compared the VCR to the Boston Strangler. Today the major studios make about 1/2 their revenue off home movie sales.
The book “How the Beatles Destroyed Rock and Roll” has many other examples.
arc of a diver
Mar 24 2010 at 9:39am
Michael Jackson was mentioned as the first to have platinum CD sales. When I was a kid when Thriller came out, I heard of an analysis that showed he benefited greatly from people making tapes off of CD and LP to turn a hit into a sensation.
David
Mar 24 2010 at 11:40am
Good discussion, a couple of tangents I personally would have liked to have gone down. The piracy angle and perpetual copyright. Both of these topics would fill full podcasts in themselves so I can understand not really touching them.
Music will continue to be produced regardless of the recording industry surviving. Sadly with the lobbying in Washington they will survive longer than the market would allow otherwise.
Steve Meyer
Mar 24 2010 at 12:46pm
I thought I’d jump in here and respond to some of the comments from listeners. (Glad so many of you liked the interview! Thanks Russ!)
TO VA Classical Liberal: I too am not worried about the future of music. The music will survive with or without the industry as it’s now structured. The Internet has assured there will always be a vehicle to expose new music to millions.
To Brandon R: Wilco, in my opinion, is one of the best bands in the country. Jeff Tweedy is a great songwriter and he embraced the Internet while others still fear it.
To Erik: Yes, in my opinion the music industry did do better when there were more passionate people in leadership positions. Clive Davis is still a great music man, and the industry needs more people like that. Once the mergers started taking place and people were more interested in quarterly profits to drive stock portfolios, it hurt many music companies.
I never thought about making lots of money while I was in the industry…I just loved doing what I was doing, as did many others.
To James: As I mentioned in the interview, there are two sides to the piracy/free arguement…and while there is data to support people who download illegally buy more music, the music industry has lost half its revenues in a decade. (From $14+billion down to $6 billion) There is little doubt that online piracy is a primary reason. Yes, there are other reasons (CD prices should have come down a long timeago, etc.), but piracy has taken its toll.
—
I believe there are new models yet to be created that will provide artists and labels with new revenues from the Internet, and those who embracce technology and all it can provide, will benefit from it.
Steve Meyer
Publisher, DISC & Digital Audio Technology
http://www.freewebs.com/stevemeyer
President/CEO – Smart Marketing Consulting Services
Editor, Digital Technology: http://www.allaccess.com/disc-and-dat
Las Vegas, NV
Justin P
Mar 24 2010 at 1:09pm
@Nick
I see where your coming from, I should have been more specific. I’m talking about business here. I am fully aware of how the internet got started, as I mentioned in my second post. Government has done little to do with the explosion of the internet as a market, actually on whole Government has tried its best to suppress the internet, and has so far failed (think Iran and twitter).
Fraud and copyright laws are all consistent with free market principles. And are one of the rightful functions of Government. Picking one firm over another is not a legitimate function of Government, though.
When I say anarchy, I’m talking about the lack of any defined rules governing behavior on the net, not chaos. I think people get mixed up with the definitions a lot of times. Anarchy does not necessarily mean chaos, must to the chagrin of my Liberal friends that always accuse Libertarians of wanting a Lord of the Flies society.
A normal business must face zoning, licensure, and other industry specific laws plus a litany of various government regulation that dictate some form of the firms behavior. It’s the lack of that kind of regulation and interference, that makes internet firms more competitive, more innovative and give greater consumer surplus than their brick and mortar counterparts.
Think of iTunes again vs Brick and Mortar music shop. For iTunes there is virtually nothing governing it except copyrights. While Tower Records had to face a zoning requirement, taxes, business license requirements, building codes, etc, all things that distract the business from pleasing the consumer. Not to mention the actual CD manufacturers and all the various EPA, state and federal regulations that go along with burning and packaging a cd. iTunes faces less regulation than the Tower. On an order of magnitudes I’d say it’s virtually zero compared to what Tower had to go through, which is why I say anarchy. Now think of Newegg.com vs going to a Best Buy or Frys. Which has better prices? Which has more variety? In essence which give the consumer more value?
Rules do emerge, just like Hayek said. We see that with Napster and iTunes. Napster was famous because, of what James said above, the fans didn’t like having to pay $15 bucks for two songs off a cd, so they resorted to piracy. Once a new business model was developed (a PURE market innovation) consumers flocked to iTunes to pay, for what they could otherwise get for FREE. Now think why would a person pay for something they could get for free. It seems to defy normal supply/demand analysis, right? But not so when you start thinking of spontaneous order and emergent non-governmental rules (see our newest Nobel Prize winner Ostrum’s work and Boettke’s Podcast on Ostrum), it starts to make sense. Why because it is a Market solution.
The Government approach (shutting down Napster) didn’t work; limewire, torrents, etc all took it’s place (substitution effects due to zero entry barriers). Why? Because there is no way for the Government to enforce those rules, everything is too decentralized (perfect competition).
Now think about Amazon, Ebay, Google, Monster thousands of companies that cater to the market on the internet, all free from regulations that would plague them in the brick and mortar world. Now think of all the innovation that accompanied all those companies.
How did they increase their market share? Barnes and Noblecan’t lobby a Senator or city councilmen to block, Amazon like it can in the brick and mortar world can it? How would Google lobby Congress to pass a law making it harder for you to use Yahoo? That kind of behavior is common in the real world, which is not lassiez-faire Capitalism.
Pingry
Mar 24 2010 at 8:42pm
Russ,
May I make a suggestion for a future EconTalk?
I have already suggested Frederic Mishkin to discuss monetary policy, especially inflation targeting.
I also would like to suggest Gary Gorton who has been very influential in describing the financial crisis.
He also has a new book* which I’m sure that he would like to hype.
*http://www.amazon.com/Slapped-Invisible-Hand-Management-Association/dp/0199734151/ref=sr_1_1?ie=UTF8&s=books&qid=1269470939&sr=8-1
Micah
Mar 25 2010 at 10:34am
Great guest and a great topic. Thanks. Even further pleased that the guest comes to visit the comments and respond directly to the listener/commenters.
One comment in response to Erik: is the current morass of the music industry a fault of bean-counters or a fault of dinosaurs in glass offices with too-dark tint? This corporate culture in this industry seems quite parallel to that of General Motors, which ignored the decline of its business model to its own demise.
Also, as the music industry has turned to tv, movie and commercial spots to introduce new music (and away from radio) don’t forget that music in the video game industry is likewise an important tool for placement of new artists or singles.
Gil
Mar 25 2010 at 2:24pm
I really liked this episode. Mayer offered an intelligent subtle position which was a nice change in these kinds of debates.
I can’t speak with much experience about the music piracy side of things, but I can definetly speak as someone with extensive experience in the movie piracy realm. There are some differences that I think are worth thinking about.
There are online private communities devoted to sharing pirated movies. I can tell you that the majority of the members of these communities are movie lovers. Most of these individuals understand that they are harming the current movie industry–that unlike music, most films require vast budgets and independent producers are limited by funding.
I’ve disliked the movie theater system for a long time, and can achieve a better viewing experience at home now. Rental stores greatly limit my selection and only give me the film for a short period. Buying movies in the HD format that I enjoy is far far too expensive and cumbersome. What I want is high quality digital movie files in containers with all the subtitles included that I can watch whenever I want and do not contain all of the warnings, previews, and other filler found on commercial content releases. The only place I can find these currently is on pirate communities.
There are problems of course with consistent quality and format, but it’s a cost I’m willing to incur compared to the current legal options. When a legal alternative is created that offers me the service I currently get (I can find literraly any movie ever made for the most part through the use of various private sites) and can give me consistent quality for a decent price (I’d pay about $5 max for a 720 or 1080p encode) then I will switch to that service.
I love film. I understand that piracy is theft and hurts the medium I love. But due to restrictive copyright and outdated distribution services I don’t really see a viable, equally valuable alternative to piracy.
I know a lot of people think like me.
Some of you would be amazed by the love and care put into building up the film database on some of the private sites. I’m thinking of one right now that has a library of about 75k files maintained by the membership. This comes at a real cost in terms of time and money to those involved. That cost just happens to be less than the costs involved in the legal arena.
(As a side note, I spend $50 a month on top of my current internet fees to rent a private server for this activity, this is money I’d much rather see going to the content creators)
Galenus
Mar 25 2010 at 4:49pm
[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconTalk.–Econlib Ed.]
Ray
Mar 26 2010 at 9:04pm
Great show. Thanks for bringing back the emotional connection of shopping for used vinyl records.
Is there economics theory on the value of giving away a service for free – such as a podcast? Does pod-casting help a professor to get tenure? … or more students interested in courses?
May I advertise for the podcaster who turned me on to Econ Talk? Bruce Carlson of “My History Can Beat Up Your Politics.”
Justin P
Mar 26 2010 at 10:37pm
@Micah
Excellent comment. Guitar Hero and Rock Band have done a lot to help music as well as turn some on to new music. I remember playing guitar hero II and thinking, man I like this band (Shadows Fall). It made go and get some of the stuff. “Thunderhorse” not only turned me onto Dethklok’s albums but the show as well.
How many copies of the Grand Theft Auto soundtracks sold?
Scott M
Mar 26 2010 at 11:06pm
Excellent topic, Russ. I enjoy listening to interviews with people “in the trenches” of economic activity; viz., business people. Your knowledge and background provide a good context for the meeting of theory and application. Keep ’em coming.
Don Tillman
Mar 26 2010 at 11:43pm
Thank you, Russ and Steve, for a great interview.
Those of us who spent our formative years growing up near New York City in the early 70’s have been known to speak fondly about the quality time spent listening to WNEW-FM and DJ’s like Scott Muni and Alison Steele. It’s a cultural connection. You can hear it in Russ’s voice here, both at 35:20 and at the end.
A little over a year ago I wrote an article describing my proposal for a new direction for the music industry, one that leverages the culture of musical tradition and the listening experience, and has some business potential. You may appreciate it:
A New Business Model for the Music Industry
http://till.com/articles/newalbum
— Don
Steve Meyer
Mar 27 2010 at 2:43am
Jumping in again…
– Guitar Hero & Rock Band have indeed spurred more interest in music, though I don’t know how labels would measure any specific inreases in catalog sales of artists featured on the games. On the other hand: both artists and labels can earn anillary revenues ala royalties from licensing music to those and Grand Theft Auto, etc….and these games have sold hundreds of thousands.
– As I mentioned in the interview, labels don’t care where there hits come from – they all wish more of the records they released would sell more. As much as the mega-mergers and corporate mentality hurt the labels, ultimately it’s the public that finds what they want and they will do everything they can to spread their discoveries via the Internet.
Thanks to all who’ve commented…glad to answer any and all specific questions any of you might have.
Steve Meyer
Publisher, DISC & Digital Audio Technology
http://www.freewebs.com/stevemeyer
President/CEO – Smart Marketing Consulting Services
Editor, Digital Technology: http://www.allaccess.com/disc-and-dat
Las Vegas, NV
AHBritton
Mar 30 2010 at 12:21am
A couple of related resources people might be interested in:
http://www.archive.org/details/WhoOwnsCulture
Lawrence Lessig and Jeff Tweedy (from Wilco) discussing similar issues to this podcast.
http://www.wired.com/entertainment/music/magazine/16-01/ff_byrne
David Byrne (from the Talking Heads) discussing the changing music industry.
I hope people find these interesting.
Country_Prof
Mar 30 2010 at 7:12pm
First, I can’t believe anybody who habitates this site listens to Billy Bragg or Woody Guthrie — they are both communists and very anti-liberty. Y’all need to find the full set of lyrics to “This Land Is Your Land.”
Second, I love this podcast series and I want everybody to know that I think the world of Russ, so please put this next comment in its Hayekian context. This interview reminded me a lot of the scene in “Back to School” with Rodney Dangerfield where he confronted his business professor. Russ is great with the economic theory, but Meyer — who is not a trained economist — basically demonstrated how things “really get done in the business.” It was as if two people were talking about the same things but in entirely different languages. This is very Hayek in that despite not knowing all the laws of economics and such, non-academics go about solving a myriad of difficult problems with just their day-to-day interactions. Meyer was all about Hayek without probably having read a paragraph of the Great Austrian. For me the most interesting thing of this podcast was not the content, but the dynamics of the interchange.
Here is the link for the Dangerfield clip:
http://www.youtube.com/watch?v=YlVDGmjz7eM
Country_Prof
Mar 31 2010 at 10:19am
In relation to this podcast, I have a mild puzzle related to the release of the new Alan Jackson CD “Freight Train” (no Billy Bragg or Wilco for me — I like my country and folk with a high respect for capitalism).
Jackson’s CD was released on March 30 and I ran to Amazon.com thinking that they would be doing a promotional price on the first day for $3.99 for the downloadable MP3 version. This is a common practice for several new album releases and when I know one of my favorite artists is releasing a CD, I like to get it the first day. I can only hypothesize that this low price is to create an “informational cascade” and get the CD up high on the charts.
HOWEVER, on both the 30th and 31st, the MP3 album was offered for $10.99 whereas the physical CD (with jewel case and booklet) was offered for $8.99. What’s the deal here? Why was the MP3 version more costly than the tangible CD? Why not just equalize the two prices at $8.99?
Steve Meyer
Mar 31 2010 at 2:56pm
Country Prof –
Thanks for your comments…I tried to do my best with Russ…I too, think highly of him, and I was thrilled to do this when asked.
RE: The Alan Jackson question.
The $8.99 CD price at retail is there specifically to move CDs in big quantities. In almost all cases, prices that low become “loss leaders” for the retailer, and the label will earn less since they have to discount their price to their retailers so they can sell it that low.
The higher price for digital downloads is due to several reasons. It could be: a) The revenue earned from digital sales is less to the labels and artists because the online ditsributor (iTunes, Amazon, etc.) takes a charge for doimg their part; b) songs individually are sold online between 99 cents and $1.29, so an album online can end up being more in some cases when sold digitally; c) No discounts were given to the online distributor, so the price is higher.
I have no inside info specifically as to why the pricing issue in this case occurred, it could be any one of the reasons, or something else entirely.
Now that UMG (the Universal Music Group) has dropped CD prices to $10 or lower, I expect you will see more instances like this.
Steve Meyer
Publisher, DISC & Digital Audio Technology
http://www.freewebs.com/stevemeyer
President/CEO – Smart Marketing Consulting Services
Editor, Digital Technology: http://www.allaccess.com/disc-and-dat
Las Vegas, NV
AHBritton
Apr 5 2010 at 4:35am
To Country_Prof,
“First, I can’t believe anybody who habitates this site listens to Billy Bragg or Woody Guthrie — they are both communists and very anti-liberty. Y’all need to find the full set of lyrics to ‘This Land Is Your Land.'”
I hope when you make this statement you are joking, if not I think it is an example of a very common and I feel ridiculous line of reasoning.
Obviously everyone is entitled to their own tastes, but to consider music, art, or even literature on such grounds is distressing. I personally believe even with critical subjects it is good to immerse yourself in opposing views. I more often than not read, listen, and watch things that I don’t agree with to a great extent. I feel it helps to overcome confirmation bias and to develop good critical evaluation skills.
I also believe that it is less important (although not unimportant) to look at people’s individual ideas and not assess everything on ideology. For instance Hitler was a teetotaler (abstained from alcohol) and a vegetarian. Does that make these beliefs akin to Nazism? No. Therefore even someone as despicable as Hitler cannot have ALL of his beliefs thrown out simply do to his obviously monstrous beliefs and acts. Mind you I neither abstain from alcohol or meat as Hitler did, but I still do not denounce people who do as Nazis.
That being said, I think music and aesthetics is a completely different subject in a sense. You once again are in a position to evaluate ideas and not so much ideology. This includes musical ideas, melodies, rhythms. Now as opposed to political ideas, disagreeing as to which melodies are the best does not necessarily lead to loss of life, or other “real world” consequences.
Would you harangue someone for listening to Wagner because he was an anti-semite? What were Beethoven’s politics? Or any other ancient artist? Would knowing change your tastes? What about the Beatles? The band that wrote the extremely anti-taxation song “Taxman,” the albeit anti-Maoist but still leftist “Revolution 1,” etc. Does this mean you can only enjoy Revolver era Beatles, but not White Album era Beatles? Or only George Harrison Beatles songs? Do you have to know the political philosophies of all the band members or just the lead singer and maybe the lead guitarist? Isn’t it possible that people have complex social and political beliefs not entirely captured in their music?
I happen to enjoy various Christian songs and songs about Jesus even though I am an atheist, do I have to stop liking these just because I disagree with their original intent? Should we abolish the pledge of allegiance to the flag (I actually might agree with this one) because it was originally written by a Christian socialist?
If Alan Jackson suddenly developed anti-market personal beliefs (frankly I wonder how you know WHAT his views on the market are) would you stop listening to him? COULD you stop enjoying his music? As far as I can tell Jackson is rather apolitical.
I could go on and on about why this is irrational.
Personally Alan seems like a nice enough guy, but I don’t listen to his music because I think it frankly kind of sucks, although I do not claim that he is not a skilled musician. I simply do not care for his style or or sound, not because of politics. He does not sing about politics, and neither does Wilco.
Jeff Tweedy from Wilco, as presented in the link I gave, has actually argued for very libertarian ideas about copyright restrictions. Now granted in many was the whole left-right dichotomy, market/anti-market network of beliefs get very confusing, diverse, and tangled once you exit mainstream political theories. But is that any less reason to like the music? or on the other hand, if he agrees with you is that a reason to like it more?
Personally I am a bigger fan of Wilco’s guitarist Nels Cline than Wilco itself, but I never took into consideration the politics (granted Billy Bragg’s music is highly charged with politics, but not Tweedy or Wilco’s). Can’t someone have respect for a musicians artistic ability? Is a Di Vinci any less beautiful if he was a socialist/communist (I know these weren’t around then, but I’m sure the basic ideas were)?
I’m sorry if I come off as overly passionate about this, I was a music major 🙂
AHBritton
Apr 5 2010 at 4:43am
Sorry, one more thing. Even if you find no satisfaction and agreement with someone like Woody Guthrie’s political views. Can’t you find anything interesting in his life story and experiences? After all isn’t part of Hayek’s idea that human experience and knowledge are dispersed,diverse, and innumerable? Meaning each of us has some fraction of the truth in us, no matter how small, and even if you don’t agree with someone such as Martin Luther King Jr.’s views towards capitalism, you can still find inspiration in his words.
Tim Lee
Apr 6 2010 at 7:12am
The thing I found interesting was that both Roberts and Meyer seemed to operate on the assumption that paying for music would continue to be the future of the music industry. It seems to me that basic economics suggests that competition will sooner or later push the price of music down to its marginal cost, which in the Internet age is essentially $0. I don’t think “piracy” is even the main factor–ordinary market competition is all you need to get price down to marginal cost.
I hope a future episode of EconTalk will feature Mike Masnick, who IMHO is doing some of the most interesting work in this area:
(Full disclosure, Mike sometimes pays me to contribute to his blog)
Steve Meyer
Apr 6 2010 at 6:37pm
Tim –
I believe that people will pay for music in the future, but how much, and it what format(s) I don’t know, and whether or not that means there will still be a muisc industry is another issue. As I said in the interview, the music industry as it exists today will be reconstructed with a new model if it exists as a real “industry” at all. The MUSIC will survive, but I don’t know about the music industry.
I have little doubt that music will become more of an inexpensive commodity in the future, but there are endless opportunities for both labels and artists to generate revenues from their content via strategic alliances, licensing, merchandising, etc.
One can expect also that as technology continues to evolve on a daily basis, intellectual property law will change as well to protect all those in the creative fields. (Music, film, art, literature, etc.)
Piracy is actually the reason music has become cheaper…it is “the competition” you refer to. When your competition is FREE, it means you either create an alternative, or you fold.
Steve Meyer
Publisher, DISC & Digital Audio Technology
http://www.freewebs.com/stevemeyer
President/CEO – Smart Marketing Consulting Services
Editor, Digital Technology: http://www.allaccess.com/disc-and-dat
Las Vegas, NV
Edwin Franks
Apr 11 2010 at 10:16am
Well after all this talk I will go and download some Wilco. I haven’t heard of them before but I recently downloaded some Allison Krauss. I did not know she existed until I down loaded Appalanchian Journey as it featured Yo Yo Ma. I found econlib as I was looking for Mozarts Marriage of Figero in English. The liberty fund online library includes a copy. Unfortunately I could not find any torrents for performances in English. The music department at UCSB performed it during the 70’s. I will try again in a few years.
I totally understand Gil’s comments about movies. I have lots of music and also lots of British television. I would pay for this if it were easy and inexpensive. I have often thought that there should be software which you could voluntarily download which would determine who owns copyrights on the files on your computer and then organize for you to voluntarily pay royalties. If the royalties were comperable to the amount copyright holders receive per viewer for commercially supported television, then I think many people would be willing to pay. Afterall, even downloading requires some effort and is for the most part done by people who love the content and realize that there are costs involved in its production. Artists and studios could be paid and distribution of content could continue over the highly efficient perr to peer networks.
Thanks for the great talk.
Steve Meyer
Apr 13 2010 at 4:34am
Edwin –
I hope you find Wilco as enjoyable and talented as I have. I think Jeff Tweedy (the lead singer nd songwriter) is one of the best artists in the country today.
Your idea about software to calculate royalties is indeed intriguing. The only problem would be convincing tens of millions of people who own computers to load i, or use it. I think most would suspect any such software might also be able to tell what intellectual property was on their PC nd not paid for, etc. It would ertainly open a technological can of worms. (No pun intended…those tech worms are viruses!)
Steve Meyer
Publisher, DISC & Digital Audio Technology
http://www.freewebs.com/stevemeyer
President/CEO – Smart Marketing Consulting Services
Editor, Digital Technology: http://www.allaccess.com/disc-and-dat
Las Vegas, NV
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