“Old model: get signed or get lost. New model: fan relationships create a value pipeline…(The new artist) revenue pie chart: gigs 35%, merch 17%, digital sales 11%, CDs 6%, royalties 9%.” – Jed Carlson, ReverbNation
The Future of Music Coalition (FMC) held its annual music policy summit earlier this month, right in our backyard at Georgetown University. The FMC is a national nonprofit organization working “to ensure a diverse musical culture where artists flourish, are compensated fairly for their work, and where fans can find the music they want.
The three-day event hosted some excellent speakers from various positions in the music industry. Bertis Downs, “fifth” member of R.E.M., as well as Mike Mills gave very interesting interviews and panel discussions. Peter Jenner, who has represented the likes of Pink Floyd, T. Rex, the Clash and Billy Bragg, gave excellent commentary on copyright issues, as did Hank Shocklee of Public Enemy, and media prankster Kembrew McLeod. Ian MacKaye, and Daniel Elk from Spotify also spoke.
The panel discussions were engaging, and the high turnout of musicians and other aspiring music careerists seeking alternatives to mainstream industry, was definitely encouraging. Some sessions were even highly contentious. The jabs thrown by Tim Quirk, creator of internet music service Rhapsody, and Steve Marks, Executive Vice President and General Counsel for the Recording Industry Association of America (RIAA), showcased the most significant ongoing conflict in the music industry. Their obvious disapproval of the other’s position demonstrated the huge ideological gulf between opposing stakeholders. In that crowd, Steve Marks’ comments disparaging artist’s rights and consumer demands, didn’t win him any friends.
Generally speaking, the buzz and energetic idealism that comes with discussion of truly compelling issues was in the air. And yet after the Monday and Tuesday sessions I was surprised to find myself sauntering home after the day’s events, feeling decidedly underwhelmed, contemplating what I could report that might be of value. Although I found the panel discussions interesting and the people knowledgeable, I hesitate to claim they were groundbreaking.
Senator Al Franken (D-Minn) and Federal Communications Commission Chairman, Julius Genachowski, gavekeynote speeches promoting net neutrality. Both gentlemen made a great showing and it’s good to know these media issues are at the top of the administration’s agenda. But you might say their presence added a somewhat stale wonkiness to an otherwise youthful and vibrant set. Chairman Genachowski’s speech was peppered with unabashedly corny word plays referencing Bruce Springsteen, far exceeding the number of Boss references allowed in one sitting.
The FMC gave exposure to some newer technologies and revenue generating services, like Kickstarter and Sellaband, and to significant players in independent music. The summit also provided great networking opportunities for musicians and other stakeholders. But the variety of talks mostly boiled down to the same essential issues, too often devolving into a rehash of longstanding problems.
1. Record industry business models are deeply flawed, negatively impacting artists and consumers.
2. Copyright legal framework is deeply flawed, negatively impacting artists and consumers.
3. For various social, political and economic reasons, these are firmly entrenched; however, they must be revamped to achieve a more equitable music industry.
Even for those not fluent in the drudgeries of copyright, or the details of music business, the underlying narrative coursing through the panel discussions is a familiar one. I think we all know what shenanigans and outright exploitation can occur when there is money to be made, and when industry practice encourages non-transparent, lop-sided dealing and significant power disparities.
And if you’re a fan of All Our Noise, you certainly know how digital technologies can empower consumers, versus traditional economic models, with fewer, more centralized entities maintaining near exclusive control over content, its price, and ultimately over content producers.
Summary of the deeper subtext
1. Corporate interests made a mess of radio and Intellectual Property law. (See: 1996 Federal Telecommunications Act; Digital Millenium Copyright Act.)
2. If we fail to protect Net Neutrality, we’d allow TelCos to do something potentially much worse.
Corny politicians and Suits in casual costume should probably be expected at a policy summit in DC. No one with a new product/service/idea would deny the opportunity to gain exposure. However, my greatest frustration wasn’t with the summit itself, but with how little the discussion of music copyright has progressed, and that many a conversation lead back to this painful fact.
In the intellectual property panel on Monday, Scratch That: The Sample License Clearance Process and Artist Compensation, Michael Petricone of the Consumer Electronics Association noted the backwardness of the mainstream music industry; and captured my sentiments exactly. “I feel like this is Groundhog Day. I wish we’d spend less time trying to figure out how to filter and control, and more time on building sustainable business models by which everyone can profit.”
But apparently, I’m not the only one growing weary of having the same conversation for ten years. It might be endemic to all music conferences. One of the panelists discussing IP described the existential crisis he had at SXSW this year, when he realized he’d been attending or giving the same panel discussion for nearly a decade. And a review of one of this week’s CMJ panels, “But How Do I Get Paid?“ notes, “The CMJ Music Marathon got straight to the point this year with the topic of its first panel discussion… It turned into an arcane discussion of publishing royalties.”
“…but the bigger question remains: What are working musicians working toward?”
WHAT IS ON THE TABLE FOR ARTISTS?
The Rise of Service Models and Giving Music Away
Some people don’t really understand the Internet, particularly those who can’t see it beyond a revenue source that will mitigate the decline of traditional revenue sources such as manufacturing. Peter Jenner insisted that “we have to stop thinking of the Internet like a shop and more like a radio station.” The Internet is not a store. Nor is it a library, or a well. It’s not even really a highway–or a Thunder Road, for that matter, although the highway metaphor conveys the speed of innovation and the advantages conferred by access.
One panelist stated, “say goodbye to the world of scarcity”… “not Tower records but iPods, not shelf space but Netflix, I mean we’re going from scarcity to abundance to ubiquity of music and that is what we have to license, rather than control. We need to license access bundled into the networks, into devices, where we can get away from the scarcity idea that a copy needs to be paid every time a copy happens.”
Peter Jenner: “The industry is clinging to a business built on mass-produced “small bits of plastic” sold inside physical stores.
DIY 2.0: The Consumer as Collaborator, The Band as its own Label
The most obvious example of the consumer as collaborator is in sampling and remixing. But more generally, the contemporary consumer has more control over the music experience.Â And like we’ve been hearing, the move away from product based marketing is leading into relationship oriented marketing, where fans have more direct contact with bands and with each other.
In this landscape, it’s harder to get people’s attention. Artists must gain and keep trust, rather than rely on distribution monopolies. Streaming services like last.fm are more personalized than terrestrial radio. Rhapsody and some other services provide editorial content, with much greater flexibility, and a wider breadth of content. Social media means the fan herself is the ultimate promotion tool.
Wired.com’s Eliot Van Buskirk reminds us that, it’s not about sales, you have to be a community organizer. It’s about the number of engaged fans.
Despite the phenomenon of Myspace (which is almost exclusively the domain of bands these days it seems) , the Internet itself has not and most likely will not solve the problems plaguing the music industry. In her FMC panel discussion, publicist Ariel Hyatt delivered some sobering statistics demonstrating some issues with the glut of music available. Out of 5 million bands on MySpace last year, 105,575 released albums. 110 bands sold 250,000 or more copies of their album. 1,515 bands sold over 10,000 albums and 5,945 bands sold 1000 albums or less.
Despite the myriad new developments there are certain realities that may not really change. Like Mac McCaughan, of Merge Records/Superchunk said, “I feel so old fashioned having a label.” That might be, but the fact is artists may not want to do certain tasks or may simply not be as effective as an agent in matters like promotion.
From what I gathered, the FMC’s conclusion for now is that…. Artists need to work hard. I didn’t find that particularly innovative.
Same Old Song…
I also didn’t buy them dressing up old practices to fit the new mold, like the session focusing on NPR’s All Songs Considered. I love All Songs Considered. I’ve found several artists I like through the show and site, and the effort to promote unknown/little known artists is laudable. However, the journalist-serving-as-curator doesn’t exactly scream innovation. Despite that it seems nearly everyone considers NPR one of the good guys as far as broadcasters go, the format of All Songs Considered largely reasserts the longstanding history of the media figure as tastemaker, albeit a reformulation.
NPR may not directly profit from pushing certain bands the way music journalists historically have by pushing bands for labels. But NPR does benefit from the “reverse promotion” that comes with airing the bands’ music, and that should be considered. A non-profit organziation named Weathervane is looking to adopt this model.
Several talks showcased alternative ways of promoting and distributing music, like the popular European internet streaming service, Spotify. They deliberated at length about how the consumer has demanded changes from day one of the file haring debate. Namely, a-la-carte, on demand access to digital files. However, they failed to mention how Spotify has yet to tackle the tangle of intellectual property laws in the U.S.. Furthermore, Spotify is showing a similar collusion with industry in its lack of transparency regarding its dealings with Google, etc.
Fundamental Changes are Organic, Incremental, but also Accelerated in the Digital Context
Last Jenner quote, regarding the RIAA’s reluctance to budge on copyright. “It’s an enormous bit to get the turkeys to vote for Christmas.”
True to his form throughout the summit, it’s succinct, pithy, and perfectly British, capturing the crux of the issue quite adequately.
However, I think a consideration of what role organizations like the FMC play, and what progress comes from big, periodic conferences like the Policy Summit, CMJ, and Public Media Camp is necessary. The FMC and the summits undoubtedly spark ideas and interactions which ultimately make a difference. But often times the scheduled presentations are not where the real solutions are found. Revolutionary change usually occurs through more organic processes, springing from the interaction of creative stakeholders who are well positioned and willing to take risks–and frankly, who get lucky. The tectonic plates of existing legal, financial and political systems aren’t themselves compelled by great ideas, even those pithily espoused in a British accent by Peter Jenner. (Incidentally, I suspect he was drunk. I think he’d proudly admit to it.)
Digital technologies transformed the industry with speed and power that was startling. The resulting legal challenges came quickly. We will never actually know how much piracy went on, or what role the industry’s anti-consumer behavior played in encouraging piracy. It’s also arguable whether the transformation would have been as rapid and pervasive if the market power of the industry had not been challenged by consumers. As Peter later added regarding consumer demand for digital music, “…we [consumers] don’t care if it’s on EMI or Universal, NOBODY GIVES A DAMN.”
Innovations for a more egalitarian music economy, won’t occur in the vacuum of academia or in the molasses of legalese. I also don’t think they occur at conferences, although they may be popularized that way. At a CMJ panel this week, Peter Kirn, editor-in-chief of createdigitalmusic.com stated, “the key word that started with ‘A’ at these things used to be album. Now, it’s app.
As the FMC itself states: Technology creates possibilities but the market structure that emerges is a product of business models built on the technology, and those models reflect the political and economic power of the players in the market; in this case, consumers, artists and record companies. Technologies will advance further. And new entities will arise, as independent labels have developed in the last ten years, to meet artists’ needs and consumer demands in a way that labels haven’t.
We should expect advances in intellectual property law to follow, like it did in the 1930s for radio legislation allocating spectrum. And like we’ve recently seen. The music industry response to digital technology moved through stages, from complete hostility toward digital distribution; to DRM-wrapped, device-tied usage fees; to unwrapped, first sales (use anywhere).
Public Performance Rights Act
Radio pays songwriters but not artists, arguing that promotional value is payment enough. However, internet streaming which is 32 times more diverse and arguably, a more effective promoter of more artists, do have to pay royalties, driving many legitimate entities out of the market, or into serious debt, like Pandora. There is a bill in the House on this issue.
Low Power FM radio in Rural Communities
Consolidation has mostly done away with local programming. LPFM gives people a voice and a venue to discuss local issues. ex: LPFM stayed on the air during Katrina when no other stations did.
New Investment Mechanisms
The 360 degree deal, allowing labels to offset diminishing revenues from declining record sales, by obtaining a percentage from tours and promotional ventures.
There are also many new direct Investment arrangements allowing fans to support bands directly, like Polyphonic, Kickstarter, Sellaband.
Other third party partnerships, like songs made for advertisements are also being explored.
At the CMJ conference ongoing this week in New York, there was a lot more discussion of mobile, and the possibilities presented to consumers experiencing and interacting with music in spaces and circumstances that were previously impossible. There are ways in which it can also translate to revenue, as it already has in Japan’s use of mobile music. For example, About 8% of Shazaam inquiries end in a purchase according to Will Mills. Michael Schneider of Mobile Roadie also discussed new technologies that would allow artists, through their phone applications to send out to send out files/messages based on the users location (e.g. at their concert).
Importance of Meta-Data
Companies like BandMetrics and Bands in Town, aggregate information available from ticket sales, website traffic, mp3 sales, and other available data to help bands better promote themselves, and also to ensure royalties are properly paid. prvide artists with and ReverbNation, a company that provides Music 2.0 marketing technology to Artists, Labels, Managers, and Venues.
Nowadays, band should seek to cause enough of a splash independently, so they can command better terms with a label in the future. Soulja Boy proved he was a good investment using data acquired from sales in iTunes, data organized and available to them as TuneCore artists, and then prove themselves a good investment to a major.
Photos: Caroline “Puck” Deutermann for FMC