The geeks were right; music labels bow to technology
Apple's iTunes helped digital music go mainstream
(Credit: Apple.com)Some of you out there can pat yourselves on the back. You've been shouting for years on Web sites, message boards, and blogs that the music industry would one day bow to technology.
That day has most certainly arrived.
Take a second to gaze out over the music landscape. Technology reigns supreme. Not only have the four largest record companies begun killing off digital rights management and adopting unprotected MP3s, but this week they sidled up to file sharing like never before. There isn't any question that the labels have raised a white flag after being overwhelmed by the digital age and the desire of fans to share songs.
Consider that this week the EMI Group hired Douglas Merrill, Google's former Chief of Information, to run the label's digital unit. He is a self-described geek and former file sharer. He has no previous music-biz experience. "There's a set of data that shows that file sharing is actually good for artists," Merrill told me on Wednesday during a phone interview.
A year ago, you would have never heard a music exec utter such a thing.
On Thursday, MySpace Music was announced. This is the music service that the big record companies started with News Corp. to allow fans to buy downloads, listen to streaming music, and yes, by God, share music. MySpace users won't be sharing files, but they will be passing music to one another a la social networking.
And which retailer is sovereign over music sales? I'll give you a hint. It's not Tower Records or Sam Goody (both defunct). It's not Target, Amazon, or Wal-Mart. Not anymore.
The No. 1 music retailer in the land is Apple's iTunes, an online store and dealer of digital music. How do you like them apples?
But this isn't the time to gloat. The digital music revolution is in its infancy. Nobody knows what works yet.
In our an interview, Merrill said that a winning business model hasn't been found, and that's what he's after.
"I think there are going to be a lot of different models," said Merrill, who starts his job as president of EMI's digital arm on April 28. "You can imagine supporting music through relevant targeted ads, the Google model. There are a dozen other things... We should try them all. We should see what the data says and whatever it says, we should follow the data, and follow our users, and let them help guide us. We should engage in a broad conversation about art."
How this plays out is anybody's guess. In the near term, we're likely to see more job cuts and shrinking revenue in the sector as we transition into what Forrester Research analyst James McQuivey calls Music 2.0. The reality is that recorded music will probably never produce the kind of revenue it once did. Digital technology has degraded the value.
There's nothing that says the labels will be part of the final equation, but I wouldn't bet against them--especially if they continue to embrace new technologies and business models. They've got lots of money. They still know how to find and create stars.
But the record companies are going to have to morph into smaller entities that represent fewer acts and then oversee their total output: music, video, concerts, and merchandise. This is the model that Live Nation is using to attract major artists, including Madonna, U2, and Jay-Z.
I say long live Music 2.0.
Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at http://twitter.com/sandoCNET. 
What a load of garbage. iTunes DOES work. The music industry doesn't like it because they don't reap the profits they once did with records, tapes and CD's.
The digital revolution in music is NOT just starting. It started when Napster came long. iTunes pushed it further.
What's the REAL winning formula? Artists being able to negotiate with the distributors on their own. The Rolling Stones don't need EMI. They could, if they wanted, negotiate directly with Apple and Amazon and Google and all the rest.
What about the emerging artists? Sure, they don't have much power to negotiate like the big boys...how is that any different than the current situation? That might be where the social network comes in - word of mouth...like it used to be.
a winning business model, and it's not one they control. Of
course, that is exactly why he made that statement. If it isn't
theirs, it does not exist. How truly sad.
And the thing about Artists working with Apple, they don't need
to wrestle with over contracts. I would be surprised if any
single artist could not get a 70/30 deal with Apple. Artists
already have, and many more will.
I'm all for having music distribution simplified into systems that are cost-efficient, accessible and relevant for all consumers. CD distribution in brick and mortar stores alone clearly is no longer cost-efficient or as relevant (hence the lack of stores). While one revenue supply chain has decreased drastically, something will need to help support the making and distribution of product.
It costs significant money to record a good quality album. There is the cost of the good quality recording studio, recording engineers, a producer, the mixing and mastering studios, the mixing and mastering engineers. Or you can skip all of that, record in your basement on the equivalent of a 4 track and have sound quality suffer. Sure, big artists can buck the norms if they like because they can afford all of that. But not so for baby bands. They need the funds to put their best foot forward. Good music will attract a fan base which will give a band a touring base which, after much effort, will finally get them some money.
Very few bands traditionally start out at the top. The ones that do? Well, they're spoon fed to audiences by the very expensive machine of the music industry (radio, retail, music videos, marketing, ads, etc.).
My point is really this: lighten up, people. It will take time for an entire industry to change. Nothing big in capitalism is designed to turn on a dime. The great news is, the change is a happening.
Sell music for the same prices, but no product costs and DRM isn't getting it.
Talk about the next industry to NOT GET IT - electronic books - cost more and you get DRM.
they would not have surpassed all music retailers (not just the
online suppliers).
Everything else you said was merely a rant. You have issues.
While I agree that iTunes and the iPod provide a mostly closed system for Apple to sell hardware with a nice user experience that model has worked for 5 years with increasing sales of both.
What does the music industry have to show for their efforts of the last 5 years? Lost costumers, customers that believe that you're just short of evil, consumers that would rather steal your product than pay for it because you made it difficult to get and use like they wanted to?
Now which business model is more successful?
business either. The upshot of your rant is that Apple should
open FairPlay so that everyone else can use what Apple spends
time and money to develop and maintain. Do you propose that
to be sound business practice?
Apple developed the infrastructure to deliver digital music in a
way that the big labels would agree to. Apple migrated huge
libraries of music to that infrastructure. Apple continues to
maintain an extensive infrastructure through which the music is
delivered. And the record labels continue to agree to deliver
their product through Apple's infrastructure according to Apple's
terms. That's how business works. Here's your little part in it.
You don't like Apple's way of doing it? Don't buy an iPod, don't
use iTunes, don't buy from iTunes Store. If you can convince
enough of your friends to do the same, Apple will fall from
grace. Good luck with that.
There are many other ways to get digital music on to a music
player. I buy the CDs, rip them and copy the music to my iPod.
DRM free and not pirated. Rhapsody, Amazon, Wal-Mart,
eMusic, until recently Yahoo (why did Yahoo shut down their
subscription service, anyway?). The problem that anti-fanboys
like wyly295 have is that iPod/iTunes is popular. Apple got the
price point right (don't argue, the proof is already there) and
made it very easy to use. iPod/iTunes/iTunes Music Store is a
very tough team to beat. No one has been able to do it yet.
Maybe some one will at some point but it will not be easy. Apple
likes its dominate position and Apple understands what it takes
to maintain it.
Smittie
As far interoperability with other devices - I am tired of that completely WRONG argument. You can EASILY change them to play on any device. It's simply out of pure laziness that people don't.
Subscriptions - that is a model that will NEVER work. People want to have their music any time they want. Did you ever wonder why Circuit City's DIVX system was a complete failure? Rhapsody sure is making a dent in iTunes, isn't it? ...oh wait...no it's not. Amazon is about the only one who could possibly put a dent in iTunes. Google may be able to, as well...but not with a subscription model.
And Jobs already has lived up to his own words - by offering DRM free music on iTunes. The ability to do that wasn't his choice - it was up to the labels to allow it.
Marketplace" in your paragraph. All of your ranting is the same
thing that MS has got too, with their zune crap.
This thing is though, that iPods and iTunes is successful...
zune and that store, are not. So, why are you getting on Apple,
when Urge, Turtle, and MS Zune Marketplace are the same
thing!? Just not nearly as good?!
What I don't need is some Google advertising type trying to make decisions for artists any more than I don't need a traditional record exec doing it. These people think only about money. As an artist I think about art first. Most artists are the same.
The record company's will survive for a long time because they own the rights to a lot of music from the past, although they run the risk of destroying the love of that music by a lot of people by witholding it from the audience because they still want to restrict restrict restrict.
Their business model for themselves is irrelevant. For the long term the only business model that matters is the one between the artist and audience (we producers, they consumers). As middlemen they have little to offer that economic reality as they no longer are the sole keepers of expensive equipment etc.
For artists the biggest money earner is always live performance. Giving music away for free and file sharing is a logical way of building an audience that will want to pay money for live performance. We don't in the long run actually have to sell recordings or can do it on a mixture of sales and give-aways. What we do have to do is work the net. Blog Blog Blog! Talk to our audience directly. They want that. Record execs don't have any role here. Lets not get carried away with their need to keep their own jobs at our expense. They aren't really needed any more. Indie is the future.
I think both artists and consumers have been thinking about these issues a lot lately. I see a definite trend in the way attitudes are changing about this subject. No longer are artists thinking, "I'm not giving anything away for free. It's bad enough I've been getting screwed by my label.". Consumers are also coming around by changing their attitude from "It should all be free, They've been screwing me for years" to a more reasonable, "Yeah I see the value in that. I would pay a reasonable amount for that as long as you don't restrict my use once I buy it."
If you watch closely to blog posts and article discussions you'll see the debate maturing on both sides. Of course you will always have to endure the occasional "F**k the RIAA!" comment, but you must admit, it's still rather amusing to see the consumer so vividly pissed off at the labels....Heheheheeee!
I agree with you that it would not be an enormous loss to the culture if Britney Spears and her ilk were to be marginalized (just my opinion). We want talent, not publicists and studio tricks, right? But what happens to ticket prices if live performances are the only way an act can make a living? Does this mean ticket prices go up? I'm not sure but it seems to me prices have been climbing the past several years. Some band managers, including U2's, have remarked about how prosperous concert performances have been of late.
That's good for the artist and I'm all for that but I worry about whether we're headed back to the time when musicians performed only for the very rich. And what happens to artists who must hit the road to earn their keep. I'm not saying it's a bad thing. I don't know how that impacts them or the music.
If anybody has any insight into this I for one would be interested.
GS
The artist that have made it got there because there was a professional structure that brought them to market. This structure isn't for free. The cost of the cd manufacturing wasn't where the expense was. It was always in publicity. Which encompasses all the activity of the band for several years before they got the name. For example; tour support, print-media-radio campaigns, street teams, graphic artist. The recording costs the list is huge. The staff at the office who follows up on all this require a desk phones office space, and more and more and more. So when some idiot says the price of the cd is less then a dollar he is not only clueless but stupid in his arrogance! The artist can market themselves... hah! that is a laugh... they don't need distribution companies...maybe some should tell that to Amy Winehouse. She really seems to be up to the task.
The labels will never die, the artist isn't where the power lies it never did. Only for a few at the top who got there because of the label. The labels are the music business and music is what they sale, which ultimately is only a commercial product just like a pencil. Since when did the pencil tell the factory what to do.
There is a solution. This solution is in the technology but that all depends on how smart the idiots are at the major labels after all they handed their own heads to Apple on a platter. That is another story for some other time.
Last CD I bought was an EP made by the band. The artwork and tracks were LightScribed on the disk, the CD book was done on their printer and I prefer that to the big label premanufactured b.s. forced into top 40 year after year. I am sure Folium would love to sell more CDs, but their style of music isn't something you would hear on the radio, see on MTV/VH1 so they will be rather nameless and faceless to the masses. But for me, I will happily by their full length CD directly from them as I did the EP. Same goes with Saltillo, Sunday Munich, Leaf, Sissy, Jem, DJ Cybo and so on.
I'd rather by my music directly from the artists themselves so I know they get the money.
Since you know so much about the music business, maybe you should enlighten us as well as the record companies.
"Every single person on this board I can guarantee has music
which they didn't purchase. In fact most of what is on the Ipods
isn't purchased."
Try to tell me that kind of idiocy doesn't smack of RIAA tripe.
But hey, if you keep repeating the same LIES over and over again
maybe someone will start believing it, right?
Unless you have some FACTS to back up your idiotic rant. Do
you? I didn't think so. Crawl back under your rock.
MARK
Some people will get their "free" ad-supported music from the radio or streaming.
Some prefer their CDs or even vinyl.
Some will yank their stolen tracks from the net or from friends.
Some bands will give away their music and find revenue in other places. I know a lot of bands that allow taping of their concerts for non-profit use. I believe the Grateful Dead has a million dollar merchandise business with that model.
Me- I still buy CDs (ownership) and rip them to MP3 for my personal use. I don't have a mp3 player and if I get one, it sure won't be an iPod. I also often listen to ad-free digital music stations via cable (which essentially is like a subscription model) which gives me cheap variety without having to pay for an actual song/album. When I find something I like, I buy their tshirts, dvds, etc.. and shell out money to see them live. Lastly, I rather see my buddy acoustically cover a U2 song at the neighborhood bar than get front row seats to U2.
A lot of artists do need record companies- mostly because their "music" is so cookie-cutter that it wouldn't self itself on its own. Other artists can get by on their talent without any external marketing. Other just have no business sense. And, still, others (sell-outs) are all business and no art.
All-in-all, I say it should be the artists' call how they want to distribute and represent their work. It's up to the consumer to say what it's worth, monetarily.
- Itunes data misleading
- by lavern April 10, 2008 4:00 PM PDT
- Wasn't Itunes the number one retailer for a short period of time and isn't there some data comparison issues when you compare one song to a whole CD purchased? Very misleading.
- Like this Reply to this comment
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