Did we like music more back when we had to pay for it in bulk?
That's essentially the question writer Nick Carr asks in yet another provocative post on his Rough Type blog. "Slanted and Enchanted" revels in the one-hit wonder but also asks if we are losing something by dumping albums for tracks.
I've suggested that artists may find new ways to more deeply engage their fans by focusing on singles rather than albums, but there's something to Carr's logic:
(Credit:
iTransistor)
Today, we're quick to dismiss those ancient days of "scarcity" and to celebrate our current "abundance," but scarcity had something going for it: it encouraged a deep engagement in listening to a particular piece of music, across the expanse of an album, and it also encouraged, in the artist, an interest in rewarding that engagement. I would like to get back the money I spent on records in my youth, but I would not give up the experience that money bought me.It's the deep, attentive engagement that the Web is draining away, as we fill our iTunes library with tens of thousands of "tracks" at little or no cost. What the Web tells us, over and over again, is that breadth destroys depth. Just hit Shuffle.
There is some truth to this, but I'm not sure it matters as much as Carr implies. For every Blonde Redhead ("Dr. Strangeluv" is a wonderful track) that I casually buy and then will probably forget, there's also the Band of Horses or Arcade Fire that I increasingly find myself deeper and deeper into, track by 99-cent track.
I'm simply not ready to invest in an album yet. But I've already spent the equivalent of an album, tasting around the edges of both bands, getting myself ready to hit the "Complete my album" button in iTunes.
The singles culture, in other words, is making it easier for me to experiment with a band, to "date it," if you will, before I "marry it." It's also letting me go very broad with bands that I already like: to pay the band to experiment. (I've never met a Radiohead /Thom Yorke or Morrissey single that I wouldn't buy, though the quality of the tracks varies wildly.)
I've never believed in albums as a complete "oeuvre" in the way that some artists insist they must be. Albums have long felt like a way for the music industry and artists to sneak in weak songs and get the consumer to pay for them. When was the last time you felt that every song on an album was equally great?
Yes, some like Pink Floyd's "The Wall" or Queensryche's "Operation: Mindcrime" are definitely meant to be listened to as a complete piece, but most albums don't fit this "rock opera" genre, and the singles world, while potentially shallow, is also a great way to enrich one's experience with a band.
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Radiohead frontman Thom Yorke has declared, in an interview with The Believer, that the band has no plans to record another full-length album, preferring instead to focus on singles. A one-off from a band that can afford to call the shots, or a sign of things to come in entertainment, not to mention software?
Yorke cites the creative burden of recording an album, but I have to think the decision is as much about marketing an album as it is recording it. As Yorke relates:
None of us want to go into that creative hoo-ha of a long-play record again. Not straight off. I mean, it's just become a real drag. It worked with "In Rainbows" because we had a real fixed idea about where we were going. But we've all said that we can't possibly dive into that again. It'll kill us.
"In Rainbows" worked on two or three different levels. The first level is just sort of getting a point across that we wanted to get across about music being valuable. It also worked as a way of using the Internet to promote your record, without having to use iTunes or Google or whatever...and it also worked financially.
To make it work, however, Radiohead went to great lengths to market the album, far less than it had to invest in distributing its latest gem, "Harry Patch." Regardless, while some music arguably makes more creative sense as part of an album, many songs stand alone and better fit the way music is being defined, distributed, and monetized.
This is perhaps best exemplified by comments, cited in a Wall Street Journal story, from singers Robert Earl Keen and Perry Farrell in the wake of the Lollapalooza festival:
"The music business is upside down," said alt-country singer-songwriter Robert Earl Keen. "You don't tour to support your record. You put out a record to support a tour."
"Do you see people going record shopping? No," said Perry Farrell of Jane's Addiction. "Downloading free music. Yes. Going out for live music. Yes. I love recorded music, but the best bang for my buck is the night I go out."
If you can accomplish this with singles, rather than the burden of an album, why not go that route? This is particularly intriguing given the continued pace of piracy, as a new study finds, because it requires a band to invest less in album creation and more time in monetizing the music through concerts and other "services."
Ditto for software. Google has already showed one way to get beyond the "album mentality" by providing its code on a perpetual beta basis. There is no big, once-and-for-all unveiling of Google's software, but rather a steady release of updates.
Open source is the same. Customers subscribe to a series of improvements and services around the software, rather than buying into a big licensing event. The emphasis is on what comes after the initial adoption of the software, not a bunch of marketing and hype to get people to use the software in the first place. The software largely sells itself.
In music and in software, we're moving to a services-based economy that relies less on DRM (digital rights management) and more on service-based connections between consumer and creator. The two blend ever more frequently in this digital age through the collaborative interplay between producer and audience.
For my part, I hope that Radiohead will release new singles early and often, with an emphasis on getting them out quickly to test their appeal, then fine-tuning them over time. The same holds true for software. My only question is if at some point in the future we'll see Linus Torvalds and Thom Yorke jamming together on stage.
Now that would rock.
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Even as the decline in DVD sales--both in the U.S. and abroad--has accelerated since 2006, DVD rentals through services such as Netflix (adding 25 percent more customers since 2008) and Redbox (adding 500 machines per month) have been booming.
The reason, as The Economist surmises, may be a shifting view on how consumers prefer to consume entertainment:
The real worry (for the movie industry), then, is not that people are abandoning DVDs but that they are abandoning the notion of owning them.
This is perhaps exacerbated by an industry that can't seem to make up its mind by what it means by ownership, as Ogilvy Group U.K.'s Rory Sutherland writes in The Spectator:
(The) piracy debate is far from one-sided. The very same record industry which today bleats on about intellectual property seemed conveniently blind to the concept back in the early 1990s when they charged us 19 pounds (about $31) for every CD they reissued--even when we already owned the very same album on vinyl....
The BBC often commits the same offense. Why should I pay full price for a DVD boxed set of "The Office" when I have already paid for the series through my license fee? Either the value lies in the physical packaging or in the content itself. Publishers try to charge for both; to have their cake and sell it. This is questionable.
Indeed, it is. Whether we're moving to a rental market or finding new ways to apply ownership to digital goods through digital rights management (DRM) and other means, those industries that sell digital content (movies, books, news, software, music, etc.) need to get their story straight. Is the value in the content, or is it in the packaging?
For Apple, it's both. Apple has long insisted that consumers prefer to own rather than rent, and it has sold more than 6 billion songs through its iTunes Store to prove it. But arguably, the value in Apple is in its distribution service (iTunes), more than the bits and bytes of the songs themselves. I can download Bob Marley for free, but I elect to buy through iTunes for a fee. The service justifies the price.
In software, it's increasingly packaging and ancillary services that drive purchasing because the "content" (i.e,. the software) is a free download. That packaging, like Apple's iTunes, is worthless without the content, but together, they're a good deal.
Is this the future?
Trent Reznor seems to think so. You?
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(Credit:
Doigy Media)
For those who have yet to grok the Open Core business model, Trent Reznor of Nine Inch Nails fame will sing it to you. In a series of forum entries, Reznor explains exactly how to build a music business on the Web and, in the process, classically defines Open Core, the primary business model for open-source software, too.
Forget thinking you are going to make any real money from record sales. Make your record cheaply (but great) and GIVE IT AWAY. As an artist you want as many people as possible to hear your work. Word of mouth is the only true marketing that matters. To clarify:
Parter with a TopSpin or similar or build your own Web site, but what you NEED to do is this--give your music away as high-quality DRM-free MP3s. Collect people's e-mail info in exchange (which means having the infrastructure to do so) and start building your database of potential customers.
Then, offer a variety of premium packages for sale and make them limited editions/scarce goods. Base the price and amount available on what you think you can sell. Make the packages special--make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters...whatever.
Having trouble following that? Well, the excellent TechDirt simplifies it:
Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model
In the software world, "Connect with Fans" is the community download. It's the software made freely available for anyone to download, tinker with, and share (if they wish). As noted in a recent MindTouch post, word of mouth is an open-source project's best friend, and word of mouth depends upon giving people something to talk about.
Unfettered discussion. Highly usable code. These are the key ingredients to driving word of mouth.
As for Reznor's "Reason to Buy," that is the enterprise version. Importantly, it's not really about lock-in so much as it is about (temporary) lock-out: Open Core, just as with Red Hat's licensing model, isn't about forcing customers to stay so much as giving a convenient, compelling reason to buy. Once the customer is in the door, every open-source company I know makes it easy to leave and depends upon a subscription offering that forces the vendor to deliver continuous value to earn the customer's loyalty.
Community is for the geeks: it's all about code, code that average consumers could not possibly care any less about ("I thought that obsessing about an OS in 1993 was depressing; why are we still doing it in 2009?").
Enterprise is for users who just want to get on with their day, and want software to be part of that day without consuming the day.
You need both but, as Reznor accurately describes, you must have a compelling reason to buy. Charitable urges don't count.
I was listening to MGMT's "Kids" today on iTunes, and by the end of the song I found that I had shelled out roughly $6 for a few more songs by Arcade Fire, Sonic Youth, Band of Horses, and MGMT.
All of those songs are available for $0.00 on LimeWire, which I have installed on my computer, but which I haven't used in at least a year. I haven't needed to. Everything I want to buy is a click away and, better yet, as happened Monday, Apple keeps helping me find more things to buy with its brilliant Genius service.
It used to be that I'd download music without paying. I didn't want to steal the songs--I simply didn't want to have to go to a CD store to buy the songs that I knew I could be listening to right now. Making customers wait unnecessarily doesn't pay, as The Guardian recently pointed out.
Dave Kusek points to a number of reasons consumers happily pay for otherwise free products: authenticity and immediacy are two.
Software, music, movies, and other digital goods each require new business models, models that assume free transfer of bits and charge for other services that are not easily replicated.
For instance, in open-source software, Red Hat's business model depends upon certification of a closed, Red Hat Enterprise Linux binary, but doubly so on its Red Hat Network that delivers patches and other updates to the software.
Somewhat similarly, Google's depends upon value-added services (search, news, etc.) that aren't related to the underlying open-source software at all.
Free (as in liberty) software has become secondary, in other words, to the generally non-free (as in liberty) services that run on top of it. Tim O'Reilly was right: we truly are in the land of Open Sources 2.0 or, if you will, the post-open source world.
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While the music industry desperately searches for ways to stem the tide of piracy that threatens to engulf it, new data from the BI Norwegian School of Management suggests that music pirates actually buy more music than others. A lot more.
When it comes to P2P, it seems that those who wave the pirate flag are the most click-happy on services like the iTunes Store and Amazon MP3. BI said that those who said they download illegal music for "free" bought 10 times as much legal music as those who never download music illegally.
How can this be explained?
I've written before that piracy is a great way to help the music industry gauge the tastes of its prospective customers and that there are a host of new adoption-based business models lurking in this rampant piracy.
But these perhaps explain solutions to the piracy problem. They don't explain why music thieves may purchase more music than others do.
One way to explain it is simply to acknowledge that piracy may precede purchase. People may be downloading songs in anticipation of buying those worth their 99 cents. In this way, most of the downloaded songs will never be followed by a click-to-purchase.
For me, the frequency of downloading songs off peer-to-peer service LimeWire has trickled to a halt over the years as Apple's iTunes library has expanded. At 99 cents, I can afford to squander money on songs that I may delete a few days later. But I'd prefer to listen to a full song before I buy it, if that were an option.
Yes, I know I can use services like Pandora and Last.fm (operated by CNET News publisher CBS Interactive), and, yes, I know that iTunes and Amazon.com offer brief preview clips, but this latter option is almost never a great way to evaluate music. It's too brief.
I doubt that many people deliberately want to steal music. They simply don't want to buy in inconvenient formats (who wants a physical CD?), or they don't want to pay for casual listening to music that they really don't like enough to buy. So the download becomes the equivalent of listening to music over the radio.
There are ways to monetize this casual interest, as I link to above. But the music industry is going to have to experiment to discover them. Ultimately, it's going to have to grapple with piracy as an opportunity, not a threat.
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Digitization has a disruptive effect on a wide range of industries, from music to software to publishing to...you name it. If it can be digitized, it can be disrupted.
It's therefore encouraging to see the music seemingly converging on a cool new-old model: an ASCAP (American Society of Composers, Authors, & Publishers)-like tax from one's Internet service provider that allows unlimited downloading of music.
Gerd Leonhard's recent presentation on the subject is the best I've seen yet, one that I'd recommend you review, even if you never stray from the software world to think about music:
Leonhard argues that digitization has made a control-based music economy impossible, forcing the industry to seek other ways to monetize music--ways that conform to digitization's abundance, rather than to the old idea of scarcity.
In a sign of things to come, the Isle of Man just approved "a single blanket fee (that) will cover unlimited download activity for all 80,000 or so...residents," as Ars Technica reports.
This follows a new trend toward "free" services, in which the music industry hides the cost of the music in the price of a separate service or device. It's oddly similar to trends I'm seeing in software.
This isn't the only model. As the Future of Music blog points out, some musicians, like Corey Smith, are finding that giving away music to drive more concert ticket sales can be a winning recipe. But while $4.2 million last year for Smith is a great return for an individual artist or band, it's not a great way to build an industry. I'd liken it to "lifestyle" software businesses that generate great revenue for their founders but provide little in the way of equity for other participants in the company's success.
So I think the "adoption tax" model is promising. The future is flat-rate: you subscribe, you forget about paying for individual transactions, you enjoy more music than you ever have before.
CD sales dropped 20 percent in 2008, as reported by The Wall Street Journal. But this isn't the whole story.
As Ars Technica points out, the music industry as a whole grew in 2008, with online sales accelerating. But this, too, doesn't tell the whole story.
The real story behind this creative destruction is called out by rising revenues for organizations like ASCAP, and underlined in the Media Futurist blog, where Gerd Leonhard points out that the real shift in the music industry is away from copy-based license business and toward flat-rate, attention-based business models. What is an attention-based model?
It's a model in which the creator's brand offers more protection than digital rights management because you can't counterfeit a live performance, for example. But it's more than that. It's also about customers liking and trusting one's brand enough to subscribe to a steady stream from the creator, not just partaking in dribs and drabs (i.e., licensing copies to the music).
Attention-based revenues (i.e. not just advertising-as-we-knew-it but also revenue sharing of flat-rate offerings, next-generation advertising, up-stream selling and marketing, sponsorships and branding, linking and referring, etc.) will very likely surpass copy and unit sales revenues.
A future where many content creators of all kinds, in all locations, and within all levels of accomplishment will make more money based on what their brand stands for, based on their fans, aka users, having real, meaningful experiences with or through them, and based on who pays attention to them, when and where....
In our immediate future as content creators and companies that serve them, it's all about gathering and converting attention--at least until the world is so well-served with feels-like-free content in return for attention that physical copies become desirable again (and they will).
What does this have to do with software? Much, if you're an open-source or SaaS business, but I think it also applies to Microsoft and Oracle. Whether open-source or proprietary software, however, I think it's particularly germane to the big providers in these categories: Red Hat, Sun Microsystems, Salesforce.com, Oracle, and Microsoft.
Why do enterprises pay Red Hat for a Red Hat Enterprise Linux subscription today? In part, it's to get a license to use RHEL on a particular server for a particular application at a particular time.
But really, it's to tap into an ongoing value stream, as Red Hat CEO Jim Whitehurst intimated to me several months ago. It's a subscription to the Red Hat experience, in other words, not one copy once and for all.
Today, that Red Hat experience is somewhat limited: it's an operating system, and it's an application server. I suspect, however, that Red Hat's future lies in becoming an ASCAP of open-source software, rather than The Police of operating systems. Customers will look to Red Hat to provide a steady stream of open-source value, not a few big "songs."
The same thing is happening elsewhere. Oracle has set itself up as a broad brand that can provide value on a wide array of fronts, following Microsoft's lead. Salesforce? It clearly has set its sights on becoming more than just a CRM player with a novel delivery model. It aims to be the ASCAP of SaaS-based software delivery. And Google? Well, looking at its top 10 applications, it's clear that it, too, is building a broad Google experience, not simply one-off applications.
This is the near-term future of enterprise software. It's not about protecting individual copies of software so much as delivering a strong brand that can command broad-based subscriptions to one's overall value. For open-source vendors like Red Hat and Sun, it may mean that they need to start aggregating a wider array of open-source products into their subscriptions sooner rather than later.
Is music modular enough to make music production social, Linux style? Minimum Noise, premised on the idea that music creation can be crowdsourced, thinks so, but I doubt it.
Robin Wauters at TechCrunch gives Minimum Noise the benefit of the doubt, then suggests it is unlikely to work. It's not hard to guess why: creativity is rarely a social activity, at least, not in this way. Creativity is an individual's response to the world.
This is not to say, however, that individual responses couldn't be aggregated into a complete work, as Minimum Noise seeks to do, and as regularly happens in open source. However, using open source as an exemplar is problematic because the majority of open-source software tends to get written just like proprietary software: by a small core of dedicated professionals. True, they may not be employed by the same company, but the importance is in the close, dedicated relationship of the core contributors.
Minimum Noise would need to replicate this, but it's hard to imagine a group of like-minded musicians discovering each other and then collaborating online. Call me romantic, but I still believe in bands creating music in the studio or somewhere together. While the different instruments are modular, in the code sense, which is a critical element of open source success, the proper synthesis of the disparate parts won't happen well over the Web.
Minimum Noise may be a noble effort, but I can't see it working. Some authorship can be relatively social, like open-source software, but music...? I don't think so.
As reported in Friday's Wall Street Journal, the music industry has apparently given up on suing 13-year olds and dead people in its quest to stem music piracy. Instead, it plans to work with ISPs to identify and notify copyright infringers of the need to come clean:
[T]he Recording Industry Association of America said it plans to try an approach that relies on the cooperation of Internet-service providers. The trade group said it has hashed out preliminary agreements with major ISPs under which it will send an email to the provider when it finds a provider's customers making music available online for others to take.
Depending on the agreement, the ISP will either forward the note to customers, or alert customers that they appear to be uploading music illegally, and ask them to stop. If the customers continue the file-sharing, they will get one or two more emails, perhaps accompanied by slower service from the provider. Finally, the ISP may cut off their access altogether.
Cory Doctorow, among others, has sharply criticized such an ISP partnership in the past, but I see it as a big step up from the industry's current tactics, and one that could lead to other possible solutions like a music tax at the ISP level. TechDirt doesn't like this option, but it's unclear what other (good) options the industry has.
Throttling downloads at their source - i.e., the ISP that provides the bandwidth - is at least the right area in which to target the activity. Whether a tax or some other solution ends up working matters less than that the industry is now focused on the right piece of the piracy puzzle.
