Digital Noise: Music and Tech

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.

It was just two months ago that Nine Inch Nails released its album Ghosts I-IV in multiple formats, from free nine-song download all the way up to a deluxe LP/CD/Blu-ray set. Today, the band started taking orders for free downloads of its next album, The Slip; like Radiohead did with In Rainbows, the band will subsequently release the album on CD and LP format.

The download era may see a return to the kind of prolific output we saw from The Beatles and other artists in the 1960s.

Everybody's interested in the business model--has free-then-fee already gotten old?--but when's the last time you saw a band release two albums in two months? Sure, Trent's interested in making a living, but he's also got lots to say and he wants you to hear it.

And over here in the other corner, we have Beck rumored to be following the Raconteurs and planning to "surprise" release his next album within the next four to six weeks--no advance copies to reviewers, no pre-release radio single, no preparatory wave of marketing hype. Across the pond, The Cure plans to release 13 singles over the next 13 months leading up to its next album release--and some of the B-sides won't appear on any albums.

This all sounds a lot like what the Beatles and other pop musicians and labels used to do in the 1960s--quick-release tons of music, mostly singles, and let the fans decide which sink or swim. Sure, there was a earload of marketing back then as well, but the ratio of hype to music was a lot lower. Perhaps the new model's going to be the same as the old model?

An update to yesterday's post: the $300 deluxe box set is sold out, according to the Nine Inch Nails Web site. The band made only 2,500 copies of the deluxe set, which means that they've already grossed $750,000. In preorders. In less than a day. That should be more than enough to cover the cost of manufacturing this set, and probably the initial runs of the lower-priced physical sets as well, plus recording costs (a high-budget major-label release might cost $100,000 to record). And since NIN is no longer on a label, every dollar of Ghosts sales from now on goes into the band's pocket.

Of course, not every artist is NIN, with a 15+-year career and a core of extremely devoted fans, but any artist with similar credentials in an unhappy recording contract will certainly be considering whether to follow Trent's lead.

Nine Inch Nails' surprise release of Ghosts I-IV today in five differently priced formats is the perfect example of how recorded music can, should, and inevitably will be sold in a world where free has become the norm.

Would you pay $300 for this? Depends on how big a fan you are.

(Credit: Nine Inch Nails)

I suggested several business models for recorded music in my post the other day, which was a response to Chris Anderson's Wired article about "free" as the future of business. Ghosts employs at least two of them.

First and foremost, it's a great example of the "freemium" model, in which the hardcore NIN fans subsidize the cheaper offerings--the highest-priced $300 edition is personally signed by Trent Reznor and includes the regular CDs, a data DVD with the entire album in .wav files, a Blu-ray DVD with a high-definition (24-bit, 96kHz) version and slideshow, four vinyl LPs, and more.

Implicitly, NIN is also using the cross-subsidy model. All the offerings include non-DRM-protected data files, and some even include lossless files, which offer the same quality as a CD. Trent Reznor isn't dumb--he knows that somebody will post these files online within seconds of receiving them. In fact, the band has even posted the first nine tracks (the free MP3 versions) to several BitTorrent trackers. But he hopes that casual listeners or one-time fans who haven't checked out NIN's recent work will be sufficiently attracted by these free files to check the band out when it comes through town, and may eventually become big enough fans to pay for future releases.

It looks foolproof to me. NIN minimizes the risk of unsold physical inventory by taking advance orders, and with downloads, there's almost no incremental cost of distribution. The only potential problem would be if the band doesn't sell enough to cover the cost of recording the album, which seems unlikely. Any label lucky enough to have an artist with a devoted following and decent live show should be paying attention--although they might find that selling a two-CD set for $10 makes it hard to pay for the upkeep on those private jets.

I've always preferred prognostication to nostalgia, so rather than replay the best of 2007, I'll use these late December doldrums to make 10 predictions for the coming year. Some editors will warn you that this kind of list is suicide--it's too easy for everybody to look back a year later and see where you were wrong--but it hasn't hurt Cringely, so here goes. In no particular order.

DRM will die. The trendline is clear--Apple's been selling DRM-free tunes on iTunes since May, Amazon's DRM-free MP3 store has three of the four majors signed up, and eMusic has become the second-most-popular music download service (after iTunes) thanks in part to its longstanding insistence on selling DRM-free MP3s. A year from now, DRM will be irrelevant and hardly used in digital music. All four labels will agree sell their songs without DRM on Amazon. Nearly every iTunes audio (but not video) file will be DRM-free, and Apple will get rid of the "Plus" designation. Some music subscription services like Rhapsody and Microsoft's Zune Pass might retain DRM so that users can't cancel their subscriptions and keep the songs they've downloaded, but they'll be the last holdouts--and some of them might try eMusic's approach of limiting monthly downloads rather than limiting compatibility and usage with DRM.

3G iPhone and iTunes. A 3G iPhone is a fairly safe prediction, given that AT&T CEO Randall Stephenson already let it slip, but I think there'll still be a small surprise embedded in the announcement: iTunes 3G, a service that will come with the phone and give users anytime-anywhere downloads of any audio content in the iTunes Music Store. Impulse buying will go through the roof.

No Zune phone. Microsoft won't release an iPhone competitor this year--at least not one with hardware designed by Microsoft. The company might release some sort of software update or client application that allows Windows Mobile users to play songs from the Zune Marketplace and transfer them from the Zune PC client software to their phones, but even that probably won't happen until 2009. And it'll sink like a lead balloon against v3 of the iPhone, at which point Microsoft will bend to the inevitable and start building its own phone from scratch.

GarageBand will win a Grammy. Not the program itself, but somebody will make a record using Apple's Garage Band--which comes included with every Macintosh sold--as their primary recording and mixing tool, and that record will win a Grammy award. There's already been a critically acclaimed movie, Tarnation, made exclusively with iMovie, so now it's time for all those bedroom musicians to get into the do-it-yourself spotlight.

Mashups will go mainstream. Have mashups already jumped the shark? The controversy about The Grey Album, in which DJ Danger Mouse combined lyrics from Jay-Z's Black Album and The Beatles' untitled white album, is almost four years old. There was a burst of experimentation from big-time artists like David Bowie and Beck around the same time, but not much since 2005. Nonetheless, I predict that artists and even some labels will begin re-releasing their back catalogs as standalone instrumental and vocal tracks, and fans will recombine like crazy using programs like Garage Band and Splice. At least one mashup will get significant radio play, with the complete approval of the original artists. (Although you might say that Puff Daddy accomplished this 10 years ago.) They might even be incorporated into video games like Rock Band--imagine the challenge of having to sing Abba while the rest of the band plays Judas Priest. By the end of 2008, putting a mere song on your social-networking profile will seem hopelessly old-fashioned.

The campaign--don't call it "marketing"--that preceded Nine Inch Nails' Year Zero release will become the gold standard for building audience engagement for tours, albums, or new artists.

Year Zero will become the precedent. On the plane trip home from visiting family over Christmas, I read Eric Davis's analysis of Led Zeppelin's fourth album, part of the 33 1/3 book series. While a lot of it seemed like a stretch--as is the case with any highly intellectualized deconstruction of rock music--it did remind me of a certain sensation created by certain artists and albums, a sense that the listener is more than a mere consumer, but is in fact an active member in a secret club that only other members fully understand, a sort of musical Masonic society. Think of that Zeppelin album, the Grateful Dead, the Residents, or Secret Chiefs 3. In 2007, Trent Reznor, working with 42 Entertainment, took this kind of mystical clubbishness and updated it for the digital era. USB drives with leaked tracks from the upcoming Year Zero record were surreptitiously placed in bathroom stalls at concert venues. Phone numbers with frightening secret messages were encoded in bursts of static or out-of-phase audio signals. Cell phones were distributed to fans who figured out some of the clues; a phone call placed to those phones summoned them to a secret concert. In 2008, we'll see more of these kinds of musical events that use digital technology to break down the wall between audience and artist.

The world's best offline record store will go online. There's nothing else like Amoeba Records. Its three locations in Berkeley, San Francisco, and Los Angeles offer unsurpassed selection--including cellophane-packaged vinyl I've never seen anywhere else--and seem to be curated by music fans with amazing depth and breadth of knowledge. In 2007, Amoeba took its first tentative steps into digital distribution, releasing exclusive recordings from Gram Parsons and Brandi Shearer in both MP3 and CD formats. In 2008, I predict Amoeba will finally go online in a huge way, offering an unsurpassed quantity of MP3 downloads from every imaginable source: major labels (like Amazon MP3 and the other high-profile stores), independent labels (like eMusic), and do-it-yourselfers (like CDBaby). Look for the nascent Amoeba label to offer distribution on terms never before seen in the recording industry--more of a non-exclusive commission model like CD Baby than a typical all-inclusive marketing-recording-publishing-distribution deal like most labels have favored--and for several high-profile artists who've recently quit their labels to sign on.

The loudness wars will end. It's been repeated so many times, it's become a cliche: today's recordings are mastered too loud, eliminating dynamic range and making it hard to listen to a complete album. In 2008, artists and producers will finally begin to demand a return to proper mastering, and radio stations and record execs will be in no position to contradict them.

The concert business will follow the recorded music business down. It's a bad time to be a big rock concert promoter like Live Nation. According to a recent story in Pollstar, the concert business actually declined in 2007, despite high-profile reunion tours by The Police and Van Halen and David Lee Roth--two acts with so much internal strife that nobody expected to see them on stage again. I say the 15 percent drop in ticket revenues from 2006 to 2007 will be followed by the same or greater drop next year. Music fans are fed up with exorbitant ticket prices, false scarcity, and quasi-legal scalpers, and there are only so many more nostalgia acts to trot out. Where are the young bands that can sell out 20,000-seat arenas for the next 5, 10, 20 years? (And before you call me out on the Arctic Monkeys, let me just counter with Oasis. Huge in the U.K., briefly popular in the U.S., and irrelevant to all but the die-hardest of fans 10 years later.) In other words, the concert business is about to suffer from the main problem that's hurting the recording industry--not MP3s, not piracy, but lack of interest and investment in artists with long-term (as opposed to instant) commercial potential.

Led Zeppelin will play again, but not tour. Speaking of nostalgia, it won't be 1973, but the reunited Led Zeppelin will play a handful of shows in the U.S., focusing on a multi-night stand at New York's Madison Square Garden timed around Robert Plant's 60th birthday on August 20.

Pollstar magazine asks a good question: why aren't more artists recording their live concerts to CD and selling them at shows? I recall that the Pixies recorded most of the shows on their reunion tour in 2004, but I haven't seen many bands do it since.

Pollstar notes that some venues retain the rights to sell anything recorded there, while others charge artists a fee for the privilege of recording their own shows for resale later. (Fair enough--the venue has probably invested heavily in sound gear, or at the very least in acoustics, which may have an effect on the final product.) Copyright issues surrounding co-written songs and label/publisher ownership can also be an issue.

But another reason is technology: rigs that can burn lots of CDs simultaneously cost several thousand dollars, and the artist has to haul this gear as well as blank CDs and jewelcases around. One possible answer is memory sticks. They're more expensive per unit than blank CDs, but they're smaller, file-transfer is faster, and they don't require dedicated equipment--just a computer, which you're probably already using to record the show.

At least one high profile artist is already doing this. Last summer, I spoke to Seattle P-I reporter Todd Bishop (who maintains an excellent blog on Microsoft) right after he got back from seeing Willie Nelson. Willie was selling USB wristbands of the day's concert for $25 a pop at the show--in fact, you can still buy them through his Web site. Trent Reznor also made some very creative use of memory sticks to promote Nine Inch Nails' last record, and given his recent split with his label, I wouldn't be surprised if he starts selling music this way as well.

The dam's breaking open: first Prince released a record as an insert in daily newspaper. The Eagles went direct through Wal-Mart. Radiohead announced plans to release its new album without the assistance of a major label, and rumors about Oasis and a couple of other British bands followed.

On Monday, Trent Reznor posted a gleeful announcement that Nine Inch Nails' record contract had ended, and that he would be experimenting with direct distribution to fans in 2008. This isn't surprising, given that Trent recently told fans at an Australian concert to steal his music. Yesterday, the Wall Street Journal reported that Madonna is about to leave Warner Brothers and sign a $120 million deal with Live Nation, the concert promoter and owner of many large venues around the U.S. (Live Nation was spun out of Clear Channel when the radio giant got out of the concert business.)

The Madonna deal would be a little different than the do-it-yourself approaches being taken by Radiohead and NIN. Instead of no label at all, Madonna would actually be signing what's known as a "360 deal," in which her label gets a cut not only of record sales, but of merchandise and concert grosses. Only the "label" isn't a traditional label at all, but rather a company whose specialty is concert promotion. But the business model's probably going to be similar to the label-less acts: sell the album cheap, or give parts of it away, and charge a premium for the concert experience.

As I've said before, this approach might make sense for established artists, but if giving recorded music away becomes the norm, the road from local hero to rock star could be a lot harder. Beginning musicians tend not to have a lot of resources, and need a label (or some other backer) to help fund early tours. If labels have nothing to sell, who picks up the slack? Concert promoters and management agencies? Perhaps, but the economics are different--they can't rely on a highly profitable hit to fund the ten unprofitable artists still under development.

(Side question: can Madonna really play the guitar, as the picture in this article implies? Or does the soundguy turn her channel all the way down?)