Three conversations about music

In which I speak to three different (semi-fictional) characters to try and look at the problem of selling music online from several different angles.


Steve Jobs hammers home the £1 per track dilemma

‘How do you make money from music?’ is an increasingly complex question these days, and one that I keep getting different answers to, even from myself. The ground keeps shifting, and the context within which making money from music can occur is altered almost by the day.

Like I always say — the music industry has not changed, it is changing. And it will continue to do so at an increasingly accelerating rate. Trying to anticipate a future in which things will have resolved themselves and a new model will dominate is as senseless as trying to keep doing what you’ve always done as the walls crumble around you.

I was in London the past couple of days meeting with a bunch of different people for a number of different reasons. While I was there, Steve Jobs was elsewhere, launching the 160GB iPod, and that sparked a number of conversations with a number of different people.

1) The music consumer
This was a conversation about a problem solved. The music fan had a reasonably large music collection, and was looking forward to getting a new iPod because the old one would only take a proportion of it.

She’d long ago ripped all her CDs at 128kbps, then re-ripped them at 256kbps when hard drives had come down in price. She also had a lot of tracks from the collections of friends, several albums that she’d picked up from filesharing sites (though never Limewire or Kazaa, apparently — those things were for people who didn’t know what they were doing).

And she had come into possession of a number of albums and a lot of tracks by different means — compilations made for her, CDs that she’d borrowed, ripped and returned… that sort of thing.

She had a few tracks that she’d impulse purchased at iTunes, but she couldn’t believe for the life of her that anyone would have anything like the number of albums she owned on CD, if they purchased them directly through iTunes or similar.

And 160GB?

‘Nobody’s going to fill an iPod with £20,000 worth of music. The record companies are dreaming if they think I’m going to be spending that much money — but my new iPod’s sure as hell going to be chock full.’

The recording artist
The recording artist I met with is someone who regularly sells 15,000 copies of an album. He’s pulled that off three times. They sell in Japan, America and Britain predominantly, and he has different licensing and distribution deals in each of those territories.

‘There’s no way I’m going to ever be able to make a sustainable living out of selling records’, he told me. ‘In fact, I’m facing a real problem with this new record, because I’ve got to tour it in order to sell it, and I just don’t think I can afford to tour it this time around.’

The artist’s conclusion was that he should still record albums, and he should still sell them to people who want to buy them, but that publishing was the way forward.

‘I’ll pick up scraps through the sale of recordings, but sync is how I’m going to have to be able to buy groceries. Sync, and the odd remix job’.

And the 160GB iPod?

‘Yeah… cool, isn’t it? I’ve been downloading masses of old albums that aren’t available for sale in any form. These things were never released on CD, they were deleted in the 70s, and they just don’t exist anymore. But there are these guys who have collections that they’re ripping off vinyl, tidying them up and putting them up on their blogs at 320kbps.’

‘I’d never have got to hear any of this stuff otherwise — and it’s like archiving them, only backwards. It’s making sure they don’t ever disappear by releasing them into the wild, rather than locking them up in a vault. It’s crazy how much amazing stuff is just not for sale.’

‘Yeah, some of it’s forgotten back catalogue of existing labels, but most of this stuff is orphaned. The labels don’t even exist anymore.’

The digital service provider
‘I’m not quite sure what to tell these people sometimes,’ confessed the digital service provider. ‘Most of my customers are record labels. They’re looking for ways to make more money per unit. None of them want to be told they should be giving music away.’

‘The Crimea seem to have done all right out of it, but how repeatable is that? How much longer is a band giving their music away going to be a newsworthy story? And how big a band do you have to be in order to make that work?’

‘I reckon you’d probably have to spend just as much money marketing a single that you’re trying to give away as you would marketing a single that you’re trying to sell.’

‘It’s interesting… you’ve been talking about the charts recently. I have to be chart registered, because my customers want to be chart eligible. A lot of them don’t stand a chance of ever coming close — I mean, we’re talking classical, folk and jazz recordings, not just pop — but still they don’t want to be denied that chance just for administrative reasons.’

I didn’t talk about the 160GB iPod with the digital service provider. I probably should have, because it makes the question even more difficult: what do you tell these people?

Selling individual tracks at a quid a pop does seem to fly in the face of reason in an age when 40,000 tracks will happily fit in your pocket. And yet, that’s what most people in the music business seem to want to do — whether it’s one copy to your grandmother, or a million in sales.

Bob Lefsetz is absolutely right to a point: a lot of customers would happily add a premium onto the price of an iPod to have it filled with the greatest albums of the 80s, or the history of jazz.

But they’d also want to leave some space to add more things. Nobody wants their music collection to be complete. They want to keep acquiring. But they don’t want to start from scratch and buy each individual track either.

A different answer each time
In amongst this, everybody on the other side of the equation wants to know the answer to the question ‘How do I make money from music?’

Unfortunately, the answer is ‘Well, it’s complicated.’

These days, the only way I know how to answer it satisfactorily is to sit down for a day with the person asking the question, get out a big piece of paper and start helping them figure out what their answer is.

And I seem to be doing that more and more these days.

Of course, If I ever stumble upon THE answer, I’ll post it here. Pull this lever, push that button, and success will follow. In the meantime, this seems to be the only way I can figure out to be more specifically helpful than the general discussions we have here on New Music Strategies.

Lucky I enjoy having those conversations so much…
_______________________

The message I came home with was a reinforcement of the idea that basing a career in the music business on the sale of recordings alone seems destined to be if not a marginal activity, then just one strategy in a portfolio of approaches that must be tailored to each individual case.

An off-the-shelf solution consisting of an online brochure with a cash register attached just will not work.

For the music fan, music is not something that exists in discrete 4-minute units, but is instead collectively representative or indicative of something personal that is negotiated through the activity of collecting, organising and listening.

For the musician, recordings are one part of an ecology of strategies that only become apparent when you look at the whole game plan and figure out what it is you’re trying to achieve. No point focusing exclusively on something that doesn’t work quite so well just because that’s the way you’ve always done it.

For the digital distributor, a business is made out of helping people do what they say they want to do in the way they say they want to do it. You can guide and suggest for all you’re worth, but at the end of the day, you’re providing a service and the customer gets to be right. If the customer wants to sell individual songs for a pound, then that’s what the customer gets to do.

It strikes me that the fourth person I should have been talking to was the record label owner. Because the really interesting conversation starts when you present those separate realities and ask: ‘So what, then, do you do for a living?’

________________________

Although these conversations actually took place, they’re presented here as fiction. Similarities to any persons, living or dead, are quite interesting.

8 thoughts on “Three conversations about music

  1. I can’t comment on the state of the music industry, it is very confusing to me and, I’m sure, to most people. I think artists should make money from live performances and release their albums for free or at cost. But that’s a whole different discussion.

    Regarding Apple’s offering, their 160GB iPod is actually labelled “the classic” and only makes up a minority of their line-up, most of which is still in manageable ranges. Certainly this is partly due to technical restrictions, but I’d also like to believe it’s because of design as well.

    When I went to university, piracy was all around, and it wasn’t unusual for people to have 10s to 100s of gigs of music. But was that music special? Even I, when I got my first 20GB iPod, was cramming it full of music, until I realised that individual songs became worthless to me. Only after I restricted myself to 5 albums each time, did I start really listening to music, recapturing the feeling I had back in the time of CDs.

    I think that size is worthless. The internet is one big 160GB hard-drive and has not affected our ability to capture information much, compared to reading newspaper-articles. We only have so much time in the day, and space in our brains to consume media.

    Instead of focussing on technology, media-producers should try and understand _how_ we consume their products, bring back the concept of value, not abundance, to their industry.

  2. John says:

    One innerestin’ point is the often hammered “give away your recordings for free and the rest will follow”, as in “build it and they will come” etc.,thus making certain (if not all) said recordings “marketing loss leaders” or some other dated sounding Madison Ave phrase. The problem here is that umm..
    recording music costs money! how about that! I know everyone has fabulous home studios based on their Macs with Neve input channels and Fairchild tube limiters (what.. you don’t?)..but for a lot of people (hmm, say drummers who need a studio space..or even shriek a string quartet), a recording costs real cash money. So..be prepared to spend a lot of money for a real recording that will not sell (because you gave it away).

    So..next week at the Future of Music Coalition meetings in Washington DC (for which I will be one of several intrepid reporters for NMS) I will be asking the same question of some of the hoi poloi, the movva’s and shakka’s, etc. Just how would a musician/composer go about making a living in the 20 teens? Let’s see what the “experts” have to say..hopefully more than the usual viral marketing blather that seems to have spread over the net like so much..viral marketing.

    Personally, I think as Andy sez above ..it’s different horses for different courses..but one thing I know is if you call yourself a musician, you better be prepared to go out and play music for people.

  3. John says:

    ahh..and while I am at it..why does anyone need 160 GB of music? Because it has really struck me that lately collecting music like this is just another one of those consumer driven I have more than you do things..I have no idea about how much one should have either..but jesus’ christy ..you know that nobody ever listens to it all..and probably doesn’t know what they have either..but boy- they sure gots a LOT.

  4. Milton says:

    The previous post from Vincent pointed out something very interesting; The design aspect of the various capacities of the iPods available. I think how we listen to music does play a part in the design and that the 160Gb iPods will find themselves used more for video and general storage…for those who have the additional income required to indulge in such a luxury. The practical people (maybe even making up the majority!) will see the sense in a 60Gb iPod as a way to digest their favorite music.

    As for the musician…well thats a whole other thing. However, I do think that rather than spend large amounts of money for studio time it would be a smarter investment to save that money to purchase the proper gear to record yourself. With exception to hired gun, instrument specific musicians and regular touring bands…Any musician that is paying to record in a studio (rather than get paid for being there!) needs to honestly consider spending that money on constructing their own recording environment. Become self reliant in the coming digital age. Use the emerging technologies to cut 75% off the overhead of your operation compared to the cost of self distribution in the analog age!

    Sorry to rattle on. These are just my singular opinions and perspectives and I imagine some folks may not agree with them. This seemed a good place to offer them.

  5. Aron Wright says:

    I don’t have much to say about the new iPod, except that I would love to have one.
    In response to the question,”How do you make money from music?” Record some songs, put them on iTunes and sell them, you’ll make some money. It may only be $10 you make, but you’ve definitely just made some money. I’m sure that’s not what we’re talking about, right? If we’re talking about making a LIVING from music, it’s a totally different subject. Most musicians are so passionate about music they neglect the fact that once they choose to make a living at music, what they are really doing is starting a small business. How many independent musicians do you know that have made a business plan? done a market analysis? researched demographics? done any of the things any normal entrepreneur would do? my guess is next to none.
    If most small businesses don’t turn a profit for 2-3 years at best, and most small businesses fail, why would musicians be any different?
    In an age when everyone and their mother can make a sweet hip hop number on their macbook, you had better have some solid songs and be prepared to play live shows…a lot of shows. If you don’t want to do that, great, get a nice day job and have fun with your hobby when you get home.
    I live in Nashville, Tn, Music City USA, everyone I know is a musician and I have seen it happen countless times. People will make these brilliant records and will just sit on them. It’s easy and fun to write songs and make a record, the hard part (which distinguishes those who make it and those who don’t), is getting through the dip of creating an infrastructure by which your music can penetrate the market(not fun).
    Give your songs away, and sell them too! If people aren’t buying songs, use the songs for marketing and benefit from increased concert attendance and merchandise sales. If people buy the recordings, great! Big artists of the past never made much money from selling albums, the record labels did! Musicians made their money from touring and merch. Don’t just sell one t-shirt, sell 10 different kinds (not everyone likes the same color, you know). Get your music in TV and film, make vinyl records, create demand for yourself by touring and building your brand.
    Sorry for being long-winded.

  6. Jason Kemp says:

    Another great post. I was looking at rate your music top albums of all time
    http://rateyourmusic.com/charts/top/album/all-time

    and only the Clash, Wu Tang, the Pixies, Smiths made it into the top 30.

    There is no doubt that a list like that shows up lots of great albums that should be re released or made available as digital tracks. The other issue is that music compression onm some of the labums of the past 15 years has screwed them up and I would rather remix them to be less compressed. See http://www.austin360.com/music/content/music/stories/xl/2006/09/28cover.html for more details.

    The short story is that while I ditched most of my vinyl some time in the ’80′s I did keep a few albums and I’d still like to listen to them. I no longer have a turntable.

    I know how to digitize them and they will never be released on CD so what do I do?

  7. Bruce Warila says:

    Andrew,
    Thought provoking post you have here…
    I manage artists, run a small label, write a blog and build software that helps artists promote recorded music. Every day I wonder how are we going to make money in three years from music? I read a lot of blogs written by smart people, and we are all (assuming I am one of them) wondering the same thing… My current best advice goes something like this:

    1. Give your songs. (recorded music) away.
    I believe I am building a decent presentation on why every artist should do this on my site (unsprungartists.com)

    2. Sell your songs.
    50% of the world may still buy them for now. The other 50% never will.

    3. Make friends with a filmmaker and a writer; they are everywhere these days. A band is not a band any more. To survive economically a band has to be about entertainment. To thrive a band has to be entertaining on the Internet (think script and film). If you just have music, you are competing against 4,000,000 artists doing the same thing.

    5. Forget about spending a ton of time on MySpace. Stop giving everything (pictures, video, blog entries)away on MySpace just to sell music. You need to bring all your great stuff back onto a web/blog site you own so you can start figuring out how to make money from the ad impressions that you are giving to MySpace now. Use MySpace and FaceBook to drive traffic to your own site, and not the other way around.

    6. Remember the filmmaker? Learn how to be EPISODIC. Release something (music, a new mix, a short film, a new episode) every week or month. Don’t forget to feature your music in the film…

    7. When you are re-building your website, shooting your film, writing your songs, choosing your wardrobe, taking your pictures, and etc. know exactly who your audience will be, and who your SPONSORS will be.

    8. Look into sites like Revver where you can make money from your video content.

    9. Learn how to make your band into a brand. If you want to make money you cannot be just a band anymore. You need to be a mini television network. Did you know that Spielberg once said that 50% of every movie is the music? Think the inverse of this…

    10. If you do all of this, within three years you will be able to charge fans a small annual fee to access your network, or you will pull in proportionate revenue from advertising.

    It’s time to stop calling it the music industry people; you are in the entertainment industry now!

    OK, this is a bit long. Thanks for letting me think out loud…

    Cheers,

    Bruce

  8. Stretch says:

    I don’t have an MP3 player, or an ipod. I can’t get itunes on my PC (because our operating system is Windows Millenium and it won’t work on it). These things are just the format, the media and always tend to confuse the issue. Besides that, I hate sticking those little earpiece things in my ears. I think recorded music should be heard through great big SPEAKERS!

    When we set up our band/label ‘cooperative’ we knew that we had to ignore the way it had all been done before and operate in an entirely new way.

    We manage a band/artist and we’re also the label. The artist is the A & R director of the label. People tell me that there is a conflict of interest if the label also manages the artist – but I’ve never worked out why that might be … we’re all working to the same end!

    We own a recording studio, and a cd publishing machine. So we sell merchandise and cd’s online and at gigs. We sell downloads off our sites and through digital stores. The artist occasionally gets paid for live gigs. We have also made money out of producing & recording other artists, duplicating & printing cds for other people, & making websites.

    We’re working towards closing the loop. In our ‘team’ we already have pr/marketing skills, music production & studio skills, business skills and internet skills. We want to team up with an internet radio show e.g the excellent Brumcast, and a promoter to form the complete package.

    We are working on this. Then we (as a label) will be able to get our music and that of other – initially local – artists played, promote our own gigs (ignoring the ‘signed/unsigned’ debate by just putting on great bands) grow our ‘audience’ by involving them in what we do as a team. Our ‘label’ will become an ‘umbrella’ for other artists to operate within.

    At the moment the money is coming in at a dribble, but our costs are low. Most of us are doing this and something else (to make a living) too. Only time will tell if this approach works. We know that we need huge amounts of publicity to really get the ball rolling but we’re working on it!

    Stretch