Version: 2008

Comments on: The geeks were right; music labels bow to technology

In a week that saw EMI hire a former file sharer, the labels help launch a service that encourages people to share music, and Apple become the country's largest retailer, the only thing that can be said is technology reigns supreme in the music industry.

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They still don't get it.
by mobycat April 4, 2008 1:38 PM PDT
"Merrill said that a winning business model hasn't been found and that's what he's after."

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.
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I Agree 1 Trillion Percent
by Thomas, David April 4, 2008 1:50 PM PDT
I was a little surprised by the statements made as well. There IS
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.
BUSINESS model, kids, not FANTASY model
by McDover April 4, 2008 2:08 PM PDT
So many people that want digital music to reign seem to forget that the construct of the music BUSINESS exists for a reason. It's not just to turn a sick profit off the backs of poor starving artists as so many people seem to like to believe. I'm not saying the industry didn't turn into that at some point, but it's power and ability to do so these days is seriously waning.

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.
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What Change
by davidsmi April 4, 2008 2:08 PM PDT
Okay, wow, 10 years after your typical teenager gets it they music industry start to think about it.

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.
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No, you Fanboys don't get it
by wyly295 April 4, 2008 2:54 PM PDT
iTunes is a successful business model? You obviously don't know the first thing about business. iTunes is a successful means of supporting iPod sales...little more than a successful ruse, to be frank. I say ruse because as a business model it sucks, i.e. it barely makes a profit and was set up to mask what Jobs knew would be the primary source of music for his players -- illegally pirated downloads. Furthermore, it offers Apple's way or the highway. Except for the few files that are offered DRM-free all files are encoded in Apple's proprietary DRM, oddly mislabled "FairPlay", and will not play on any other device. More importantly, iPods will not play files unless they are DRM-free, which until recently primarily meant illegally pirated files, or its own FairPlay DRM files. Forget about it if you are a subscriber to Rhapsody or Napster. Apple won't let you play your music on the iPod. Lastly, Apple doesn't offer a subscription service. Again, it's Jobs' way or the highway. His disingenuous "Thoughts on Music" waxed endlessly about giving the consumer what he wants. What a clever guy, I wonder how he figured such language would add to his already inflated mystique? Well, Steve, do you have any plans on living up to your own words? If so, you'll open up FairPlay and give the world a truly interoperable digital music environment and you'll allow subscription music from other content providers to play on the iPod. I promise I'll buy at least one if you do.
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No more coffee!
by Thomas, David April 4, 2008 3:30 PM PDT
If iTunes was not providing what the majority of people want, then
they would not have surpassed all music retailers (not just the
online suppliers).

Everything else you said was merely a rant. You have issues.
View reply
No, you Fanboys don't get it
by jcconnor April 4, 2008 3:50 PM PDT
I have 20Gb of music that is playable on an iPod and 0% was illegally pirated. Unless you believe ripping it from my CD, storing it on my hard drive and copying it to an iPod is illegal piracy.

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?
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No, you anti-fanboys don't get it
by zmittie--2008 April 4, 2008 3:50 PM PDT
And you have clearly demonstrated that you don't understand
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
View reply
No, YOU don't get it
by mobycat April 4, 2008 4:19 PM PDT
Of course it is there to support iPod sales - but that "loss" is APPLE'S loss, not the labels. iTunes is a successful business model for the RECORD companies. If they say it isn't, they are full of it. CD's cost less to make than records or tapes...so why have they ALWAYS been more expensive?

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.
View reply
the ZUNE marketplace is the exact same thing
by NeverFade April 5, 2008 10:17 AM PDT
you could take out the word "iTunes" and replace with "Zune
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?!
View reply
iPod sales are on the decline...
by AppleSuxLeo April 7, 2008 12:31 AM PDT
And AmazonMP3 picked the perfect time to take a big bite out of the proprietary , overpriced , locked-in system Apple started. Amazon MP3 is the fastest growing and it just started about a month ago. Lower prices , NO DRM , works on any device , and much higher bitrate. And so easy to spend my money on Amazon since they hold the patent to "one click" shopping. Jeff Bezos IS the Apple killer !
yep
by doubleagame April 4, 2008 4:11 PM PDT
"music labels bow to technology"... Is this really news at this point, guys? You don't gots to rub it in!
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ok, we've got them bowing
by Sam Papelbon April 5, 2008 9:32 AM PDT
now we just need to get them turned around
An Artist's Point Of View
by artistjoh April 5, 2008 11:25 PM PDT
I am an artist. I don't need a third party in order to access an audience. The digital revolution has put (relatively) affordable tools for production and distribution into my hands (or affordable access to it)

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.
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A Listener/Consumer's point of view
by rdunn April 6, 2008 1:54 AM PDT
I'm a music consumer... the audience. I/we don't need third parties telling us what we can/should listen to, or how we can/should listen to it. We don't need so many canned/packaged so-called "artists" and compilations shoved down our throats so as to monopolize the playlists on (radio?) stations, to the detriment of the diversity of the art. If the Google advertising type is ready to really listen to the audience (and artists) and try different things, like he says, then maybe he can do some good. Electronic distribution/promotion should cost less than the old ways... that shouldn't mean simply that the middlemen make more money, but that now -global- consumers have more direct access, more a la carte choice, lower prices, and freedom to play their digital files as they see fit. (They will anyway.) And allow for a certain amount of sharing among friends and family... -not- the mass distribution and -mass- copying that piracy laws should pertain to. "Fair Use" is a valid, reasonable, logical concept... not something for middlemen to sue over, limit, and kill off. Family and friend sharing isn't the problem... -mass- copying/distribution is the (mostly middlemen's) problem. We, the audience -really- enjoy finding new artists/music... really want to see them perform live, and see them prosper to create more music/art... that's part of why we want to share, and for the diversity we learn from our family/friend's choices. What's really objectionable is attacking the audience rather than the mass distribution systems, and trying to restrict where/when/how we listen to music that we've paid for... and to a great extent, the concept of music/art as a rental/utility. If I pay for a tune/book/whatever... I'll darn well listen to it on an underwater speaker if I want to... and nobody will make me pay additionally to do so... if I have to make my own intermediate analog copy. Independence is a good thing, the new digital model has to include freedom for artists and the audience to share with each other, middlemen ahve to -add value-, not sets of restrictions... finally, the artists should get compensated, and compensated more than any middlemen/promoters. Some form of promotion/mass exposure can still help over just word of mouth or mouse. Artists can still produce compilation sets as an art form... just not the static package kind from the 'labels'. Ideally, it might just be artists, the Internet, and the audience... however, some promotion/selectivity can still be a good thing, if it's done cooperatively, and not punitively.
Another artists point of view...
by cidman2001 April 6, 2008 7:08 AM PDT
These two posts sum up some very good points in this argument. As an artist myself, I'm pleased to hear that consumers understand the value of music and do believe it is the artist that should be compensated, not the middleman.
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!
A listeners point of view
by chash360 April 7, 2008 3:15 PM PDT
I am an avid listener of non-Mainstream music. Until this digital music era, such music was hard to come by, because the big labels decided what you will listen, what is popular, and truly believe that they can tell you what you like, and make you like it. I have, in the past, been on the fringes of the music industry, making independant professional recordings for local bands. Even with that, I still prefer live music, over recorded, especially when it is improvised to some degree. Live performing artists will retain their following and continue in this new environment as it has always been the mainstay of most artists and hopefully their will be more diversity now, but now the studio artist can actually produce and profit without having to be a live performing artist, with the demise of label controlled distribution. I think this is an important aspect of the digital music revolution. I have played folk guitar for many years having developed a very unique style, but have never wanted to try to make a living as a musician or performing artist. Now in this new age, people can have a chance to enjoy that music, where as before you would not ever have a chance to hear it.
what?
by trd1282 April 5, 2008 11:43 PM PDT
iTunes is a bad business model? Are you kidding me? They sell the most, period... thats business, go back to your computer games.
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Not degraded value but more efficient delivery.
by vpdura April 6, 2008 12:01 AM PDT
You wrote: "The reality is that recorded music will probably never produce the kind of revenue it once did. Digital technology has degraded the value." I say that technology has not "degraded" value. It has made delivery of the product more efficient and less costly to the consumer. I has eliminated the overhead of CD production and distribution which was a significant part of the total product cost. It has also allowed purchase only the part of the product the want (i.e. tracks) and not extraneous pre-packaged dross. That is a second and significant efficiency introduced by technology.
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Music 2.0?
by neutrino23 April 6, 2008 2:39 AM PDT
I think the mp3, or any other DRM free format, should be given away as a marketing tool. If a band is good enough, if the tracks are good enough, people will pay money to see them live. The new model will have to break the stranglehold the ticket companies have and share more of that revenue with the record companies and artists. The Grateful Dead encouraged boolegging, at least until recently, and I think they made a good living at it.. sold tickets etc. So whaddya think folks? The end of studio only bands? A return to live concerts as the test of a band's worth?
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Do artists want to be wandering troubadors?
by sandonet April 6, 2008 9:30 AM PDT
Neutrino23,
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
View all 3 replies
I hear all yap and gloat.
by Wupta April 6, 2008 2:53 AM PDT
It seems there is this deep jealousy towards the traditional record business. People are gloating over it's assassination. It isn't that technology degraded the value of music it was that it facilitated the biggest theft of intellectual property ever. 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.

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.
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Dude...
by cidman2001 April 6, 2008 7:15 AM PDT
Your argument has some merits, but you negelct to take into account the fact that without artists to exploit, there would be empty desks with no phones ringing, no street teams etc... There is also a declining need for all the traditional hype and marketing associated. Disc burning costs have gone to next to nothing and digital distribution has begun to erode the logic of even burning discs. The pencil tells the factory what to do when nobody needs pencils anymore...we all use pens now!
blah blah blah
by Mercury23 April 7, 2008 7:17 AM PDT
Probably the most mainstream act on my iPod is Dido, Norah Jones and Radiohead. The rest are bands most people have never even heard of. There are tons of great bands out there on small indie labels that don't have all this publicity, support, street teams and other crap you claim goes into the inflated price of a CD.

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.
showing your hand
by Dalkorian April 7, 2008 11:42 AM PDT
Wupta had the audacity to claim:

"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.
MUIS LOVERS AND ARTISTS
by MARKWIDERSTROM April 6, 2008 5:16 AM PDT
Keep fighting the RIAA let the artists do better deals than getting messed over by the record companies, they steal your soul and your honor. AND YES THEY HATE US cause they aren't going to make the BILLIONS like they did on cd's.
MARK
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The New Era
by tjandt April 6, 2008 8:31 AM PDT
This truly is just the beginning...like Sanctuary tried a few years ago, but a little early...Takeover Digital is now setting the pace. I heard some "majors" were chasing them down in the digital space...I wonder if MySpace is going to try to buy them? Have you heard anything like that?
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What Era?
by celticbrewer April 7, 2008 12:15 PM PDT
Sorry, there is no ONE answer- No ONE model that everyone should or will follow.

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.
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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.
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