I've written about TuneCore many times in the past: it's a service for independent musicians that submits their recordings to iTunes, Amazon MP3, and other big online stores--and it's helping some artists make a good deal of money.
The fees are quite reasonable; they top out around $20 a year, although the precise pricing depends on what you're submitting and how many stores you want it in--and artists have had some substantial financial success using it. Earlier this month, an unsigned hip-hop artist named Drake sold 300,000 copies of his single through TuneCore in just 14 days; The New York Times listed him as having the No. 3 download in the U.S. For those of you keeping track at home, that probably means the artist earned around $150,000 in two weeks--that's take-home money, not a label advance that needs to be earned back through future sales.
(Credit:
TuneCore)
Drake's story is instructive: days after distributing the single through TuneCore, he signed a deal with the world's largest record label, Universal. Today, TuneCore announced its own deal with Universal; specifically, the TuneCore Store will resell services offered by Universal Music Group Distribution, such as mastering (the final step in a professional audio production) and album art. Guitar Center, a massive guitar retailer with more than 200 stores, will also cooperate with Universal Distribution to sell physical CDs by TuneCore artists at its stores.
But the real opportunity is more subtle. You have to ask what a big label like Universal gets out of the deal. Simple: this is a way to discover independent artists without doing the traditional boots-on-the-ground work of an A&R (artist and repertoire) representative. If a TuneCore customer buys Universal services, and then turns out to be a hot-seller, the artist and the label already have a relationship on which to build. Big-label contracts aren't--and shouldn't be--the goal of every indie musician, but for those who want a shot at reaching a large audience fast and are willing to give up some control to do so, they're still tempting.
Today, U.K. Internet service provider Virgin Media announced plans to begin offering unlimited song downloads for a monthly subscription fee. The songs will be DRM-free MP3 files, which means they will never expire, even if the user switches ISPs. Universal, the largest record label in the world, is so far the only label to sign on, but the other majors will probably follow.
The deal was announced along with a threat to crack down on illegal downloaders (perhaps through some sort of BitTorrent monitoring, although Virgin claims it won't be doing the monitoring itself), but the companies left the most important question unanswered: how much will it cost?
The labels won't want to settle for less than they're getting through iTunes and other download stores, so Virgin will have to guess how many songs will be downloaded per month, then divide that number by the number of subscribers. After some initial heavy usage, I can imagine users downloading about two albums per month. So I could imagine a rate of about $40 per month. That seems fair compared with subscription-based streaming services like Rhapsody, which starts at $12.99 a month.
But what's fair to the industry may not seem fair to users, who have been downloading free music for almost a decade now. People have proven willing to pay for downloads when they get some other tangible benefit--in the case of iTunes, it's the ease of transferring purchased songs to their iPod or iPhone. When the only extra benefit is a clear conscience and less chance of being sued, I think a lot of users will take the risk and stick with free.
Would you pay a monthly fee for unlimited downloads? If so, how much?
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Universal Music first floated the idea of Total Music in 2007 as a way to give customers an alternative to free MP3s available on file-trading networks and anonymous Internet sites.
At that time, the business model called for hardware manufacturers to pay some extra amount--perhaps $5 per month--and optionally pass this cost along to consumers. In return, consumers would get the right to download as much music as they wanted, for free, during a certain time period.
Nokia eventually launched a similar plan, Comes With Music, but Total Music (which became a joint venture between Universal and Sony Music) ran into some antitrust questions and eventually shifted its focus to ad-supported streaming and paid downloads.
Now it's dead, along with Ruckus, a college-specific music download service that Total Music quietly purchased last summer.
Blame the economy if you want, but the real reason for the failure of these services--and every other record industry effort to capitalize on the Internet for distribution--is revealed in two places in this blog post by Total Music's vice president of product management, Jason Herskowitz.
First, he built a mashup service called Friendp3, which takes his friends' Last.fm feeds, searches the Internet for the same song posted somewhere as a free MP3 file, and creates a playable playlist of those songs. On demand. Like the excellent Songerize service--which lets you enter a song name and hear it on demand--it uses the Seeqpod playable search engine on the back end. Very cool.
But the technology's not the point. Did you see what just happened there? There is free music on the Internet! Available with no advertising and no restrictions. That means that any new music service, industry-sponsored or otherwise, is not only competing with iTunes, or Pandora, or Last.fm, or MySpace, or the latest ad-supported-service-of-the-week. It's competing with millions of MP3s uploaded by users and easily findable, thanks to the rapid advances in Internet search technology.
Hold that thought for a second as we come to the end of his blog post:
But wouldn't it be cool if there was a way to do this on a platform that plays nice with everyone? And compensates those that deserve compensation? And somehow can magically cover the costs associated with all of the above (hint: this is the kicker)?
Yes! Yes, it would be cool! I would like a free pony and no more dental appointments as well. And a mint-condition low-mileage black 1997 Mercedes E Series. With tinted windows.
Not to be too flip, but this sentence gets right to the nut of the problem with industry-sponsored online services. Their primary concern is getting paid and making sure that everybody else in the traditional value chain gets paid. That's a laudable and perfectly understandable goal. But that's how they miss the point, again and again and again. In order to create a service in which everybody gets paid, somebody's going to have to be paying.
The only way you will get customers to pay more than zero when there's so much zero-cost unrestricted content out there is by offering them a compelling benefit they can't get anywhere else. This is why iTunes is successful--it offers customers the easiest way to find and buy new music to load on their iPod.
What did Ruckus offer? DRM-encrusted downloads that couldn't be transferred to a Zune, much less an iPod. What did Total Music offer? We don't know because it never launched, but I'm willing to bet it didn't have a clear and compelling customer benefit.
I don't know what the magic formula is. Forget advertising--the ads are so ignorable, and CPMs so low on these kinds of services, that they'll never cover the cost of the content, and users will absolutely reject more intrusive advertising like an audio ad every 10 songs. (Remember: you're competing with free.) So you have to get users to pay.
What are they willing to pay for? A bigger back catalog? Some sort of online storage locker for downloads, which would then let you play them from any Internet-connected device? The ability to share songs with a friend in a seamless electronic way--the equivalent of playing the record you just bought for them, only, you know, with computers and Internets and stuff?
The sad thing is that many of these things have been tried, and industry players have done everything in their power to stymie them with lawsuits (the original MP3.com, file-sharing networks), copyright fees (the battle over online radio), and unreasonable DRM restrictions (take the original Zune's "three plays, three days" restriction on device-to-device sharing, which killed what could have been an interesting feature). But perhaps it's not too late to try again.
It's so cute when the major labels do this digital thing--they're sort of like your doddering old uncle who once got a patent for a new kind of horse-and-buggy harness and now sits in the basement tinkering with bridles all day.
Today's example: the Universal Music Group, the largest of the big four record labels, is teaming up with BSkyB, a U.K. satellite TV network owned by News Corp., to offer a subscription-based music service by the end of this year. I don't have anything against subscription services: although none of them have been as successful as Apple's iTunes, which is a pure download service, Rhapsody has some devoted fans. Plus, it sounds like the service will be more akin to eMusic's subscription-plus-download plan, offering a set number of MP3 downloads for each subscription level. (Pricing and other details have not yet been announced.)
But the debate over subscriptions misses the point. The deal involves only one of the big four record labels. Music listeners don't know and don't care about record labels. They know their favorite songs and artists. If the songs aren't available on one service, they'll turn to another service--like iTunes or Amazon.com MP3--where they are available.
BSkyB says it's going to try and sign other labels up for the service. But this is what Nokia said last year when it announced its Comes With Music plan--essentially a pre-paid subscription for unlimited downloads to certain Nokia phones (the subscription's added to the price of the phone). And how's that working out? The service is delayed, EMI's still holding out (although it might come on board before launch), and there's nothing about the indie labels and unsigned bands that have helped make MySpace and eMusic and CDBaby.
Meanwhile, over at iTunes, more than 5 billion downloads have been sold.
If the major labels want to create a viable alternative to iTunes, they'll have to team up first, ideally bringing indies in on the game, then find a distribution channel. Not the other way around.
What recession? Right now, there are several hundred people in line at the Seattle Apple Store in University Village, waiting to buy and activate a 3G iPhone, which starts at $199 and requires a two-year commitment to a voice-and-data plan that costs at least $70 per month. The line was just long as last year's, despite the tougher economic climate and the fact that we've had more than a year to get used to the iPhone--seeing one in public isn't much of a surprise anymore.
These two gentlemen were brandishing their first-generation iPhones as they waited in line to buy their new 3G ones.
(Credit: Angela Rosoff)But apparently the promise of a faster data connection, GPS transceiver, third-party applications, and--probably most important--a lower retail price convinced a lot of folks that the 3G iPhone is worth lining up for. The people at the front of the line had camped out overnight, and when I asked the last person in line how long he'd been waiting, he replied, "Three hours, and it'll probably be another three before I get in." That's because Apple is activating the new iPhones on site in the store. According to a staffer there, the process took about 30 minutes when they opened this morning, but now is down to about 10, which is their goal.
I saw several people brandishing their first-generation iPhones in the line. A couple of them told me they intend to sell their old phones on eBay--or perhaps to the young man waiting at the front of the line with a "will buy old iPhone" sign.
Perhaps they'll sell them to this guy.
(Credit: Angela Rosoff)
A fascinating article in the current issue of the Harvard Business Review calls into question some of the now-accepted wisdom about the long tail.
I've been very satisfied with this relatively obscure compilation of Ethiopan jazz tunes (mostly by Mulatu Astatke). But I've had far more conversations about blockbuster recordings from the likes of U2, and those conversations are valuable to me in their own right.
A quick refresher: the long tail theory, popularized by Wired editor Chris Anderson, says that as digital distribution drives distribution costs to zero, businesses will be able to profit by stocking enormous numbers of obscure titles. These titles, which may only sell one or two copies a year, are the tail of the traditional demand curve--the "long tail."
The HBR study, by Anita Elberse, analyzes data from online music and video stores and suggests that digital distribution has actually had the opposite effect: while more titles are available than ever before, consumers are flocking in ever-greater numbers to the handful of very popular titles at the head of the demand curve.
Interestingly, consumers who buy both types of titles actually find the blockbuster titles to be more satisfying.
Why is that? Is it because the cream rises to the top, meaning that the most popular titles are necessarily some of the best? Tastemakers in the music industry would have you believe so, and at least one company, HSS, claims it can analyze songs with software to predict whether they'll be hits or not.
But I prefer an alternate theory: most people are sheep. (Not me, of course. Or you.) But seriously: a Columbia University study that I've cited before suggests that there's very little link between the objective "quality" of a song (as measured in a control group where none of the listeners could see other participants' ratings) and its popularity--the more popular a song appears to be in a particular subgroup, the more popular it becomes. The popular songs in one group had no relationship to the popular songs in another group.
Here's a nicer way of putting it: objective quality is impossible to measure, and people are driven by social inclusion--the desire to be accepted as part of a larger group, which defines itself partially by the media it consumes. This is why every indie rock fan between the ages of 25 and 35 in Seattle was listening to and talking about Outkast's "Hey Ya" when it came out. That song was unusual because it crossed over to lots of subgroups, paving the way for a humungous national blockbuster album. But in Seattle, the same thing happened for The Postal Service and the first Arcade Fire album, too. All of that music was good--there's a certain quality baseline below which something just won't become popular. But social inclusion is a huge reason why those songs and bands rose above dozens of others that were of more or less equal quality.
Given the tendency of people to flock to the big hits, Elberse recommends that producers do not change their business models to cater to the long tail. For the music industry, that means labels should continue to bet on a few releases each year, and market the heck out of any that show a glimmer of popularity. They may not sell 10 million records like they did a few years ago, but a few million-sellers per year can still support a hits-driven business, making it capable of taking chances on hundreds of smaller artists. At the same time, she recommends that retailers who want to appeal to hardcore customers--the ones who spend the most money--should stock the obscure stuff (I'd call that the Amoeba Records model), but keep costs for it as low as possible, and assume that the big hits will still draw most people into the store.
Some details are starting to emerge about Nokia's Comes With Music phones, which will come with the right to download music at no extra charge. According to a report yesterday on PaidContent.org, Nokia will pay Universal Music Group $33.50 per handset for the first 2.5 million sold, with the rate dropping after that.
Nokia will reportedly pay Universal about $35 per phone to allow users to download songs at no extra charge.
(Credit: Nokia)It sounds like the download model will not be strict all-you-can-eat, but instead will be similar to eMusic--users will be able to download a limited number of songs over a certain time period, and those songs will be theirs to keep. It's not clear what happens when the period's up--the latest reports say that Comes With Music will not be a subscription model, so perhaps users will just be able to add a la carte downloads after their time expires.
As I've said before, any music service that's limited to a particular label will fail--music buyers don't shop by label, and often don't even know (or care) which label their favorite artists are on. So assume that Nokia signs the other majors and a few big indies for the same rate. Glenn at Coolfer estimates that such a deal would cost Nokia $116.32 per phone.
Hypothetically, imagine Nokia or the carriers subsidizes some of the cost to get the program rolling, and charges an extra $80 per phone. Most cellphone contracts are two years long, so it would make sense for the free music download period to last the same amount of time. So the last variable would be number of songs. How many songs would they have to offer to convince you to buy a Comes With Music phone?
My next phone's probably going to be an iPhone--the interface, apps, and browsing are excellent, and I seldom purchase music from iTunes anyway, so the $0.99 per song seems fine. To be swayed to buy another phone, I'd want enough content to fill it--say 1,000 songs. Otherwise, I'll just stick with my current MP3 players. But the labels are probably imagining a number closer to the $0.99-per-download paradigm that still rules the industry--say 100 songs.
MySpace is essential for independent artists. Every band I've played with in the last five years has had a MySpace page, and it completely changed how we did things compared with the pre-Internet days. Getting gigs, maintaining mailing lists, fliering--all of those formerly labor-intensive tasks could be accomplished by sitting in front of a computer. One group I played with got 90 percent of our gigs through other bands on our friends list. Another had a couple dozen teenage fans who'd come to every all-ages show when they read about it on our MySpace page. (We were all in our late 30s and 40s and had no idea that ska would appeal to that demographic.)
A truly killer MySpace music service would let users buy downloads and merchandise from any act on the site.
(Credit: MySpace)But there was always a major gap: if we wanted to sell downloads, CDs, or anything else, we had to guide fans to another site or service, such as our own home page with a PayPal account or CDBaby.
Today, MySpace announced a deal with three of the four majors (EMI is sitting out for now) to offer DRM-free MP3 downloads, ringtones, and merchandise through the artist pages on MySpace. This is long overdue: the music industry needs to go where their fans already are, and with 30 million people regularly listening to music on the site, it's a mystery why the labels haven't tried to reach these folks before now.
But major label acts are a small part of the MySpace experience. The only reason you ask The Police or Death Cab to be your "friend" is to show off your impeccable taste to your real friends, the individuals and small-time artists who you're actually connected with. These are the folks who leave individualized comments on your page and send you instant messages, and their gigs appear right alongside Radiohead's on your home page. MySpace is the ultimate long tail site for musicians, where bar bands and small-town heroes can appear in the same context as the biggest bands in the world.
So I'm not sure that MySpace Music will be a game-changer. Fans of big bands already know where to buy merchandise--the band's Web site, or Amazon's CD section, or iTunes, or their local retail store. Sure, big fans who count major-label acts among their "friends" might now stay within MySpace to buy new songs from these bands, and some MySpace users might discover (and buy music from) new acts via friends of friends. But a lot of fans don't know (or care much about) the difference between major and independent artists, and might wonder why only some acts make their wares available for purchase. The inconsistency will be confusing, and drive users back to the traditional music-buying sites (or free file-trading services, which aren't going away).
The real game-changer comes when MySpace offers a full e-commerce store--downloads, CD sales, the works--to every artist with a musician's page on the site. That way, users would never have to leave the site to buy any music they heard on the site. The challenge would be building the infrastructure, but once things like billing and provisioning downloads are in place for the majors, it might not be much harder to set up a CDBaby-like system for everybody else.
If you see a lot of live music in small clubs, you've probably had the experience of being blown away by a band that hardly anybody else knows about. Once in a great while, your instincts are validated by the masses--the band becomes popular and you get to brag about how you knew them back when. But more often than not, the law of averages kicks in, and the band continues to toil in obscurity for a few years before breaking up because the bass player's pregnant or the keyboardist got a high-paying corporate advertising gig. You ask yourself, "How come they get no love at all when [insert no-talent star band here] are famous? Is it all just luck?"
Yes, in fact. Duncan Watts proved it.
I don't care if anybody likes it, I just want to be popular!
(Credit: MusicLab)He's a former network theory researcher at Columbia University who now works for Yahoo. An article about Watts in the February issue of Fast Company is getting some attention because he strongly disputes the theory, put forth by Malcolm Gladwell in The Tipping Point and beloved by marketers, that a select group of so-called "Influencers" are the main force behind fast-moving trends. But to me, the most interesting part of the article is when he discusses an experiment he set up at Columbia in 2006, and which he wrote about last April in The New York Times Magazine. In this experiment, he set up a site featuring downloadable music from unsigned or otherwise obscure acts. 16,000 participants signed up and downloaded all the songs. He divided them into several groups. The control group was asked to rate the songs with no input from the other members. Seven other groups were also asked to rate the songs, but were allowed to see how other members of their group voted.
Two findings emerged. First, the variation in popularity in the control group was much smaller than in the other groups. In the groups where they could see their peers' opinions, people voted for the same acts that other people voted for, suggesting that popularity breeds more popularity, which should be no surprise to anybody who's been through high school.
The more interesting finding was the complete randomness of the songs that became popular in each group. There was almost no connection between "objective quality" (as measured by the control group) and popularity--the song "Lockdown" was ranked number 26 in terms of quality, but its popularity in the other groups ranged from number 1 to number 40. True, the very bad songs almost never finished near the top, and the best songs seldom finished near the bottom. But overall, finishing in the top five in quality only guaranteed a 50% chance of finishing in the top five in popularity in any given group.
Record company executives and marketers hated the study because it seemed to invalidate their genius at picking hits. But it's great solace for the countless talented songwriters and musicians who've received little reward apart from the music itself.
Yesterday, Nokia announced a new initiative, Comes With Music, that will offer "free" music to purchasers of certain cellphones. It's the first outgrowth of Nokia's Ovi brand, which the company announced earlier this year. It also seems to be the first implementation of Universal's Total Music plan, in which device makers bundle a music subscription on new devices and add the cost to the price of the device, rather than forcing consumers to pay the monthly fee.
(Credit:
Nokia)
As with all such services, the devil's in the details. According to Ars Technica, there's an awful lot of deviltry going on.
First, the good points: unlimited downloads, yours to keep and play forever, playable on both a computer and your cellphone.
However...the downloads are protected with DRM. (Ars Technica reports that it's Microsoft's PlaysForSure system, but this doesn't sound right to me: Microsoft has a phone-specific DRM system, PlayReady, and Nokia was the first customer for that system, so it would seem odd for Nokia to use a three-year-old DRM system designed for portable and in-home devices instead.) Regardless of which system it's based on, the DRM will reportedly not allow users to burn tracks to CD unless you buy the download again--this closes the analog hole by which users could download a million tracks, burn them, re-rip them to MP3, and post and share wildly. Also, any track protected with a Microsoft DRM system almost certainly won't be transferable to Apple's iPod, and might not be transferable to other types of MP3 players either.
But here's the oddest part: after your year's up, the subscription expires. You get to keep whatever music you've downloaded, but if you want to continue downloading new releases, you'll apparently have to buy a new phone. And Nokia's not yet saying how much extra these Comes With Music phones will cost.
As Saul Hansell points out in the New York Times, Comes With Music/Total Music is at least a good stab at an alternative business model. The current model's certainly not working for the industry. But these "free" tracks have to compete against millions of MP3 files that are already out there, and are actually free in every sense of the word--no cost (free like beer) and no usage restrictions (free like freedom).
Here's an alternate suggestion. Remove the DRM restrictions, but put a monthly limit on downloads so users can't download every song ever recorded then cancel their subscription and keep the music. Maybe 500 songs or 50 albums--that's a very generous amount for even the heaviest music fan. When a certain time period's up--say, a year--start charging for the subscription. A plan like this would still offer significant advantages over file-trading networks--over-the-air downloads, no legal risk, sound quality assurances, no false file names--while being "free" enough in both senses of the word to keep users around.
