Quick Comments: Reactions to External Blogs

This week while exploring the "blogo-cosm", I came across two posts that I found to be quite interesting and deserving of my written reaction. I was particularly interested in these posts because both expand upon the topic that I covered last week in my "Future of Music" post (as the image to the left portrays). The first post is found on the prestigious Ars Technica (art of technology) blog and is penned by Thomas Wilburn, a Washington D.C. based author who is no stranger to the music industry. This post consists of his reaction to and summation of the various viewpoints explored at the recent Future of Music Policy Summit. I found the ideas he relays to be interesting, revolutionary, and at times, even absurd. The second post I commented on is by Stephen J. Dubner and consists of a panel of music industry experts, each offering his own impression of the current state of the industry. Dubner is a New York Times blog contributer to the "Freakonomics" column and an award winning author. I responded to the section of Dubner's blog written by Koleman Strumpf, professor of business economics at the University of Kansas Business School. My responses to these two posts and the links to the original comments reside below.

Comment to Thomas Wilburn:
"I feel frustrated after reading this post because, unlike the subject matter discussed in most blogs, there is almost nothing present here that I can disagree with. It is inspiring to know that so many people see eye-to-eye on this subject and that people are working together towards a positive end result. I must admit, however, that in the last paragraph of your article, the statement quoted by David Harrell irks me. Being a musician myself, it is hard to agree that "musicians should start balancing the loss of revenue with the promotional value of direct communication with fans online." What exactly is the "promotional value" of direct communication with fans? One can speculate and say that increased contact with fans online will lead to more fans, leading to more paying customers at concerts, eventually leading to more revenue for the artist. Yet a musician has to eat, and these speculative values that Harrell associates with artists giving away their music for free are not reassuring in the least. What I am getting at here, is that revenue and promotional value are two entirely separate things. An artist needs revenue to generate great music, which if given away for free, may lead to an inherent promotional value in the art. It is true that greater promotion usually leads to increased revenue, but not always - record companies rarely recoup all of their promotion expenses on an album for newer artists. And there is no guarantee that playing more shows will generate more revenue for an artist because touring is a major expense as well, (think about transportation, food, and housing costs for months on the road). My point here is that if one wants to turn the artist into a small business, promoting itself through free goods to the public, then one will have to find news way to support artists financially. Creating, recording, manufacturing, distributing, promoting, and touring are costs that smaller artists will not be able to tackle on their own, especially if they give their art away for free."

Comment to Stephen Dubner:
"In the article, Koleman Strumpf claims that there is no direct relationship between the pirating of recorded music and the recent decline in CD sales, and that one explanation is that “the industry has failed to find genres that capture the interests of consumers" (par. 12-13). This seems highly counterintuitive because for so many years now, the Recording Industry Association of America has been suing the public on the basis of copyright infringement claiming that this causes a loss of money through a decline in CD sales. I must ask, can so many people have been sued and asked to pay thousands upon thousands of dollars for the wrong reason? Looking at Strumpf's paper, it becomes apparent that he fails to examine one crucial point: the fact that illegal downloads today (and in the last few years) consist mostly of singles rather than albums. People are just not downloading entire albums and this is why their downloads cannot be linked to a decline in album sales. Although it is true that with the recent rise in Bit Torrent technology, downloading entire albums with large file sizes is quickly becoming more common place. Yet, it still holds that the general format of illegal downloads via services such as Limewire and Kazaa is that of the single, not the album. Therefore rather than the consumer being forced to waste roughly eighteen dollars on a new album for a few singles, the intelligent (in terms of saving money) consumer is attaining those singles for free, without all of the filler songs he or she will not listen to anyways. This brings me to my next point which is that I agree with Strumpf that maybe the industry – for some time now – has not found a genre worth selling to the public. I feel that in general that the idea of creating an entire album as a continuous work that tells a story, was thrown out the window long before illegal downloading ever took place. The internet has provided a method for people to not waste their money on music they do not want to hear. This stems from musical decisions rather than promotional and marketing decisions. I believe that if artists and the people who collaborate to make music can create epic stories, (like Pink Floyd did in their 1973 release "The Dark Side of the Moon"), that take the listener on a journey of adventure and discovery, the end result will only be positive and the album will sell once again."

The Future of Music: How to Save the Business

Rick Rubin, an expert record producer and musical pioneer, believes that he has the key (free sign up to view the article) to saving the music business. Due to recent events, it is apparent to Rubin, (and everyone with an IQ of at least 80), that record companies are currently lost when it comes to choosing a direction for their businesses. The fact is, however, that the traditional business model of selling records as a tangible object is obsolete. The industry has shifted from the tangible to the intangible, with Apple's iTunes leading the way as the new business model; one that is primarily based on the sale of song singles, rather than entire albums.

While record companies insist that the drop in CD sales is due to online pirating of recorded music, and it is certainly true that the decline can be partially attributed to pirating, Rubin believes that the change is the result of something deeper. He maintains that record companies for many years have been signing and developing artists for the wrong reasons, (as the cartoon on the right depicts), and that due to the recent shift in the industry, the “old way of doing things is obsolete.” In general Rubin feels that no matter what happens, the most important thing is to create great music that will influence and inspire people for “ages” and this in turn will lead to consistent sales.

Rubin's ideas certainly make sense, yet in general much more can be accomplished to allow traditional record companies to compete with, or at the very least, survive alongside Apple.

The most important first step is to abandon traditional distribution of recorded music. My personal message to record companies: STOP SELLING CDS! If consumers are not shopping for CDs in retail outlets, do not sell music in retail outlets. Rather, sell music in online music retail stores such as iTunes, music.com, and others.

Jeffrey Webber, another well known producer and professor of music industry at UCLA, spoke to a class I was in last year called “The Record Producer”. He put forth an interesting new business model for record companies that incorporates iTunes and the singles sales model. His proposition, and I am loosely paraphrasing here based on what I remember from a year ago, is that record companies should not only abandon CDs, but abandon albums altogether. For those unaware, recording contracts between record companies and artists, allow for record companies to commit to the funding of one initial album, with additional “options” (usually in the 3-5 range) to record additional albums after the initial release of the first album. Webber thinks it will be to the record companies' advantage to commit to only to singles, say three up front with options for more if the initial three are successful sellers.

In my opinion, this could make things much more efficient while saving money and producing enormous profit for record companies. All the record company has to do is send the singles to iTunes or another online distributor, pay a marketing and promotion fee, and provide the accompanying liner notes and album artwork to satisfy consumer demands.

One might ask, however, what happens for the small number of consumers who want to own the tangible object rather than the MP3? I believe such a consumer will have two options in that case: a) burn the album for oneself OR b) I propose Apple incorporates a service that manufactures and ships out CDs as they are ordered. Kind of like how Jack in the Box does not make its food until it is ordered. This would save record companies the trouble of wasting money on manufacturing CDs that will not sell.

It is apparent that what is taking place is a metamorphosis of an entire industry. The change is brought about by technology and its ability to promote globalization and ease of communication, (anyone heard of web 2.0?). As Rick Rubin so eloquently puts it, “the world has changed [...] the industry has not.” If people do not adapt to the change, the once great record companies will eventually fizzle out and smaller, more genre-specific, so-called “indie” labels will take their place. Not only this, with the recent advance in home recording technology, it is easy to see the artist as not only an artist anymore, but as a producer, recording engineer, and distributer as well. Essentially artists will take the sale of their music into their own hands – a process that has already begun. Due to recent technology, the ability to create and share music with others has never been easier, and if these changes do occur, it is plausible that a diversification and of music will ensue. Maybe genres will cease to exist as styles and attitudes are mixed and shared at an exponential rate. No one knows for sure exactly what will happen, but these are very feasible predictions of future events.

In a way, Rick Rubin is very wise in his claims that music - especially good music - is valuable and it is important to promote the advancement of musical ideas. And no matter what happens to the industry, music will always be present. It is therefore that what we need above all else is continued and lasting support for artists. We must cherish them and cherish their art because music, no matter how it is packaged and sold, is essential to our survival as human beings.