Selling Music in a Digital Age: Recent Developments

Following up on my last post, I would like provide updates on some recent developments within the digital music retail world. First - and quite a personal dismay - is the new website Made Loud, which is a digital online music retailer for the independent artist / social networking site. Obviously, the developers of Made Loud read my most recent post that covered this exact business opportunity and stole the idea from me (wink, wink). Despite my personal resentments, after perusing the Made Loud site, its apparent that they have put a lot of thought into the project. Artists can create a page, upload their music and set a price-per-download rate, and then commence with reaching out to fans. It is a win-win situation for the artist who owns all of his or her own master recordings. In fact, according to the FAQs section of the site, "Artists keep 80% of all digital download sales and 85% of all merch sales. Artists also choose their own pricing." (par. 3). Purchasing is made almost too easy through Pay Pal. In a music world that has been dominated by conglomerates and umbrella corporations for decades, Made Loud and sites similar to it are paving the way towards the future of this industry.

The second exciting development that caught my attention is the new digital music retailer LaLa, which offers 10 cent downloads of songs as well as a full, free preview listen of the whole song prior to purchasing. The catch: one can only listen to his or her songs via a web browser, meaning an internet connection is required at all times during use. At first, this sounds like a major annoyance, but in a tech-obsessed world dominated by internet phones and computers, the idea makes a lot of sense. With all of one's data stored electronically on the company's servers, there is no need for the information to be stored on a personal hard drive; all one would need is a phone or computer with an internet connection. According to this article by Michelle Quinn, a staff writer for the LA Times, the company also offers an MP3 download for an extra 79-89 cents, which of course can be store on a hard-drive. Quinn further states that, "Lala has a deal with labels that lets it scan a user's music library and offer the user those same songs via any Web browser [...] That gives Lala information about a person's tastes so it can target music suggestions" (par. 15-16). Additionally, according to the "How It Works" section of LaLa's site, the service can "quickly match the songs on your computer to Lala's licensed catalog [...] Songs you already have and playlists you've created are instantly added to your Lala collection for free" (par. 2).

It is important that these sites continue to develop and spawn multiple imitators. For too long, the music industry and its consumers have had only one option for the purchase of music - the record store. With these recent developments, the industry and its constituents are finally adapting to new, simple methods of e-commerce, albeit light-years behind other industries. With the major setbacks brought on by the pirating of digitized music and the state of the U.S. economy in general, things for awhile were looking quite bleak. Yet, these exciting new websites prove that there is light at the end of the tunnel for the music industry.

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."