Update, 3/24: An SXSW organizer contacted me to let me know that the show included 14 panelists from major labels, as well as 20 panelists from independent labels. The truth remains that I didn't see, hear, or meet any--but of course I couldn't attend every panel. I've corrected the post accordingly.
Almost a year ago, I posted about how two executives from major Web companies had taken new positions related to digital music: Douglas Merrill left Google to become EMI's president of digital operations, and Ian Rogers left Yahoo Music to become the CEO of Topspin, a then-new company specializing in direct-to-fan marketing.
A year later, Merrill's gone, following Guy Hands out the door. (Hands was the CEO of private-equity firm Terra Firma, which bought EMI in 2007.) I'm not sure what he did there, but imagine he was behind the portal site that EMI launched last year...to no effect whatsoever.
Contrast that with Topspin, which oversaw successful launches of several albums and was just at SXSW to announce a major update to its automated marketing platform.
Sure, EMI's taking in far more revenue than Topspin--it's still got The Beatles' catalog, after all, and Topspin's just a start-up--but look at the momentum, the level of excitement, the bottom line. There's no comparison.
At SXSW, the conventional wisdom from every panel I attended, every business meeting I had, and every artist and fan I spoke with, was that the major labels are technological dinosaurs with no chance of survival. I didn't meet a single major label employee in the entire four days I was there, though at the Guitar Hero-Metallica event, the PR coordinator spent a long time explaining to a TV crew that all interview requests had to be approved by the band's label. Ah, the good old major labels we know and love--barriers, not enablers.
(Aside: as much as Metallica may represent the old record industry, its SXSW set absolutely slayed, consisting almost exclusively of pre-Black Album material, and so fast and tight and loud and awesome in the original sense of the word that it seemed like it--and we--were all 17 again. Pitchfork's take is absolutely right; it's not fair to compare them with any of the other bands at SXSW. Long may they rock, with or without the recording industry as we know it.)
I'm rambling, but keep looking. U2's second-week sales dropped 75 percent--nobody cares. Sony hired Rick Rubin to come up with a digital strategy, but nothing's happening (although Rubin remains a successful producer).
The RIAA seems to serve no purpose except to sue customers and try to get damages that are many thousands of times the value of the product infringed. Warner CEO Edgar Bronfman Jr. took home a $3 million bonus after his company lost $35 million and earned his spot on the CEO wall of shame.
Established artists are going independent as soon as their contracts expire--the latest is Counting Crows--and reporting, again and again, how much better they can do without a label.
A year ago, there were still some arguments for the necessity of major labels to handle marketing, promotion, and other tasks. Not anymore. The conventional wisdom now: if you're interested in the music business, and you want to change the world and make lots of money, go anywhere else.
If you're a musician, and you want your music to be heard, go anywhere else. If you're an investor looking for a business with a lot of upside, go anywhere else.
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If you think John and George were the only psychedelic members of the Beatles, recall that Paul wrote "Helter Skelter" (although John played that bassline) and check out some of the tracks from his first solo album, Ram. If you're still not convinced, head on over to The Fireman site and take a listen to Electric Arguments. This is Paul's second collaboration with Killing Joke producer Youth, and it's the wildest music he's made in years.
(Credit:
The Fireman)
Like the recent David Byrne/Brian Eno record, Topspin Media is handling promotion and distribution for Electric Arguments, and a few days ago they made it available in several different packages, including one with vinyl for $29.99.
This is exactly how music distribution should work: you know exactly what you're getting--no Chumbawamba factor--and have different options depending on how big a fan you are. I'll be shocked if in five years the labels are still hoping to convince us to pay $15 or $20 for a full CD based on one radio single.
Back in August, I noted that the new David Byrne/Brian Eno album, Everything That Happens Will Happen Today, was available in its entirety as a free streaming audio file.
They also put up a free download of one track, "Strange Overtones." Later, they offered several packages to purchase--from downloads-only for $8.99 to a deluxe package with a hardbound book, screensaver, and extra songs for $69.99.
Turns out that this release and marketing strategy was driven by Topspin Media, which is led by former Yahoo Music Vice President Ian Rogers.
A couple weeks ago, Rogers spoke at a Grammy-sponsored event in Seattle and, as Idolator reports, the results of the Byrne/Eno experiment have worked out quite well for the artists. After eight weeks of digital-only sales, the duo have already grossed what they would have earned from a typical record company advance for artists of their expected sales profile. And that's without any physical CDs--they don't drop into retail stores until November 30.
As Nine Inch Nails has already shown, the key for established artists is to reach out to their "superfans" and give them opportunities to feel like they're part of an exclusive club. In the case of Byrne/Eno, it really worked: of the people who entered an e-mail address, more than 50 percent opened the subsequent e-mail, and more than 20 percent eventually purchased music through the site.
I'm a David Byrne fan--I've bought most of his solo CDs (which range from OK to great), and have seen him in concert a few times (always outstanding). Sure enough, as soon as I found out that I could buy a physical CD through the site, that's what I did. I guess I'm not a superfan, as I didn't spring for the $70 deluxe package, but I did buy tickets for Byrne's Seattle stop as soon as I heard they were going on sale.
Maybe it's just coincidence, but this week two executives have left major Web companies for roles in the music industry.
Earlier this week, Google VP of Engineering Douglas Merrill left to lead EMI's digital music initiative. According to his Google bio, his core background is in finance--not music and not really technology, although apparently he has done a lot of work in information security. Apparently, singing the Sex Pistols' anti-label song "EMI" to EMI head Guy Hands helped him get the job. Too bad MCA's gone--maybe I could have gotten a job by singing Lynyrd Skynyrd.
This morning, Yahoo Music head Ian Rogers announced that he's leaving for Topspin Media, a mysterious startup that apparently hopes to "help artists earn a living through software"--based on the old Wired article that Rogers links to, I'm guessing Topspin is trying to pioneer some new form of digital distribution or rights tracking. Rogers has expressed some interesting ideas about standard labeling for downloadable music files, and while Yahoo might have been a great venue to help push these standards through, the attempted Microsoft acquisition throws everything into doubt. In fact, one of the first moves Yahoo made after the acquisition announcement was to scrap its own music subscription service and move customers to Rhapsody. I honestly can't see how a pure Web-based music service like Yahoo's could survive in a Microsoft that seems devoted to pushing its own Zune ecosystem as a competitor to Apple's iTunes.
Two pieces of news don't make a trend (although if you go back two years, I guess they're following MSN Music's Hadi Partovi, who left to help his brother start iLike). Even so, it's interesting that executives are leaving Web companies to make waves in an industry that's supposedly dying. The obvious answer: music isn't dying, but the current distribution models are, and whoever figures out the next distribution model stands to make a lot of money.
Ian Rogers, Yahoo's VP of Video and Media Applications, didn't get much chance to speak on the five-person panel I saw at Billboard Live. However, he gave a very interesting presentation at Aspen Live, a conference for music industry types sponsored by talent agency Creative Artists Agency (CAA), and he's paraphrased the talk in its entirety--complete with slides--on his blog.
Most of his arguments ring true to me: scarcity has been replaced by abundance, and spending incremental dollars on improving quality (while difficult and highly subjective) will provide much better returns in the long tail era than spending incremental dollars on marketing. In English: people are going to download the stuff their peers say is great, not the stuff that marketers push. He also namechecks Yngwie Malmsteen and quotes Neil Peart by way of Geddy Lee, suggesting he's a fellow refugee from the suburban 80s hard rock universe.
But I'm not sure I agree with his final point, in which argues for a new set of standards for labeling media files (the hAudio microformat), playlists (XSPF), and sharing user information and other data among social-networking and user-generated-content services (he offers no specific suggestions here). In essence, he's saying there need to be the types of open standards that enabled the Web, like HTTP and HTML, only for digital media.
The trouble with this argument is that the Web has been the exception, not the rule. Most "standards" are not predetermined by a committee or industry consortium and then miraculously adopted by all participants. Rather, most "standards" are proprietary technologies that become ubiquitous through end-user behavior.
Look at music. MP3 is considered the standard for compressed digital audio. But it's a patented technology, developed by private corporations (Fraunhofer, mostly), and licensed through the Motion Picture Experts' Group (MPEG). The Red Book standard for audio CDs was developed by Sony and Philips and must be licensed.
Companies dream about having a patented technology become a standard. That's why Microsoft, and Apple, and Sony, and everybody else on the technology side of digital music have fought so hard for so long to make their digital audio technologies ubiquitous. (It's also why companies play games with standards...like sitting on standards committees while quietly trying to achieve market ubiquity with their own proprietary alternatives...or trying to get their own patented technologies approved as a standard...or enthusiastically supporting open standards when the alternative is a de facto but proprietary standard owned by a competitor.)
It's hard to be the grump who argues against open standards, but in this case I'm not sure who would create these standards for digital media, or who would listen once they were created. Unfortunately, that means a harder landscape for content owners: they might have to pay attention as competing formats emerge for these needs, and bet on a winner based on actual user behavior.
Whether you agree with his point about standards or not, the rest of the speech is great and well worth a read.
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