Monday, July 27th, 2009

Would someone please fix the music business?

Would someone please fix the music business?
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I love music and have paid for it handsomely over the years. I now own some of the same recordings on MP3, CD, cassette, and even LP. These days I find myself in a bit of a dilemma. I want to pay those who make the music, but not the people in between. Unfortunately, the current system doesn’t support that.

Calling Trent, or maybe you…

I’m a pretty busy guy, mostly because of how excited I get about new things. As such, there are only two ways for the following to happen. The first is that someone with industry experience partners with smashLAB on it. (If you know Trent Reznor, ask him to contact me. From his talk on Digg Dialogg I think he’d like this whole idea.) Alternately, you’ll have to do it. The fact is, I’d like to see this happen, even if I’m not involved, so, I’ll lay my idea out on the table.

When we look at the options available for accessing music, two are most clear. The first is to pay for it through a service like iTunes. Although many will argue with me, I find this to be a cumbersome process. I’m still pissed about the Twilight Singers album I paid CD price for there, but still can’t make play through Windows Media Player. I don’t want to “authorize” it for iTunes, or dink-around to listen to the music I already paid for. A process that should be slippery-smooth invariably leaves me cursing at the delivery device. I understand DRM has been removed now, and there’s an option to download in MP3 format, but my first experience keeps me from wanting to try again.

The second option is to steal it, which — let’s be straight here — doesn’t really feel like stealing. Whether the recording industry agrees or not, the moral imperative they place on legally accessing music is almost comical given their legacy of price-fixing. The truth is that they abused their power when it was a closed system. As an open one, they no longer hold the power. In ways, their past behavior almost validates that of downloaders who collect vast libraries of music without paying a cent. If the music industry feels okay stealing from listeners, why shouldn’t the opposite hold true?

The problem with this, however, is that the people who should actually get paid are instead screwed. This is a shame. While few of us care about the recording industry, no music lover wants to steal from the artists.

What’s wrong with this picture?

Bigger than my frustrations with the bloated iTunes application is the distribution of revenue. Put succinctly: my money currently goes to assholes I don’t care about. David Byrne’s 2007 article in Wired titled “Survival Strategies for Emerging Artists — and Megastars” discusses this issue, as well as many others surrounding today’s music business. The article is getting a little long in the tooth, but it’s still relevant and worth a read. In it he breaks-down how revenues are distributed today: a $9.99 iTunes purchase gives 56% to the label, 30% to iTunes, and a paltry 14% to the artist.

That’s right, for my iTunes purchase, Greg Dulli gets $1.40, while Apple gets $3.00 and Columbia gets $5.59. There was a time when this kind of a breakdown would have made perfect sense. The cost of getting that album produced was simply much higher than it is now, but, even then the wrong people walked away with the loot. For example, in his book “Losing My Virginity”, Richard Branson discusses how Mike Oldfield’s Tubular Bells funded a lot of other, less profitable, pursuits at Virgin.

Call me crazy, but I think this is completely backwards. Given the ease of getting music for free, purchasers of music should have more say in how their monies are distributed. Ultimately, today’s music purchasers aren’t so much buying those files as they are playing the role of benefactors to musicians. As such, this money should go to the artist, not the companies or technology-creators in between. I want as much of my purchase as possible going to the people who actually make the music. The people in between deserve to get paid, but not nearly as excessively as we currently see.

I started out as a painter and am friends with a few artists. I therefore feel I can safely say that it’s rare for such people to live opulent lives. Sure, there are the Top 40 acts that prosper, buying gold-plated Ferraris and that sort of thing; nevertheless, most artists just want to make a reasonable living from their work. This is what I keep coming back to: how do we get the music “business” out of the way, so that artists can be paid fairly and concentrate on what they do best?

A sensible system for those who matter

A lot of people claim that the music industry is slow to react due to a lack of awareness regarding the changes at hand. I’d be more inclined to think that they’re simply milking the cow for as long as they can. Sure, you and I may download music without paying, but our parents are still more likely to just pick-up a CD at BestBuy given the ease in doing so. For many, it’s just easier to pay $12 and walk away with something, instead of having to decipher the workings of something like BitTorrent. As a result, the music industry is likely wise to stay the course until the udders run dry.

My argument though, is that none of this really works for anyone aside from the intermediaries. The music industry has little desire to innovate, as doing so will only compromise profit. “Mom and dad” are still buying CDs at bloated prices and iTunes buyers are kind of being extorted by the proprietary nature of Apple’s hardware and infrastructure. Meanwhile, many BitTorrent downloaders are feeling guilty for stealing from their favorite artists to avoid paying these intermediaries. Surely, there must be a better way?

Cyndi’s song was close, but not quite accurate. Money doesn’t change everything, the web does. Through it, we can almost entirely push out those greedy middle-men, and connect artists with their fans. Frankly, those are the only two groups that should matter in this relationship anyway. The others are parasites that create little more than toll-booths. The tricky part here is that someone still needs to facilitate that exchange. The music industry certainly won’t, and my suspicion is that few artists have the wherewithal to make it happen; so, we find ourselves in need of an independent body that can bridge the gap.

What it looks like

My proposal is for a company to create a fair service. Instead of looking solely at profit, such a group would have to be in it for the artists and their music first. There would still need to be a fair profit earned by the company, but that should be all; otherwise, we’d simply be trading one parasite for another. A moral contract would have to be entered by the company that created this solution, in which it wouldn’t unduly profiteer from the efforts of the people with the actual talent.

Many tools exist for artists to connect with their audiences, but I suggest that these are still too scattered and time-consuming for many to use. I ask whether we could create a simple conduit that concentrated on two things: Providing artists the tools to manage the electronic distribution of their music, and giving music buyers an easy way to support the artists whose work they appreciate. Meawnhile, why can’t a Lulu like approach be applied to music? You want to get it in CD form? Fine, we burn a disc on demand for a few bucks and ship it to you.

My vision for this is a set of tools that could be licensed to artists or traded for a small commission on sales. This would allow the price paid for a track to be much lower than it is now, with the artists still taking home more than their current cut. I don’t know what the costs of such an operation would be; however, I suspect small percentage of sales would cover those costs and return a reasonable profit, given that most of the actual marketing would be handled by the artists themselves.

This company would afford the systems with which artists could upload and sell music and merchandise. Artists would set their own prices for their tracks; just like in the Apple allows with software in the App Store. Some might price tracks at ten cents a piece, just to encourage people to give them a try, those with greater followings might ask for more, or allow users to pay what they want. This might be in the form of a “try now, pay later” system, making it easy for listeners to sample some music and determine if they like it enough to pony-up. Meanwhile, I like the idea that fans could just donate to the band. I, for example, really like Blue Rodeo and would like to send them $20 for some of the songs I’ve downloaded in ways that I probably shouldn’t have. If I had an easy way to do so, I certainly would.

At the same time, such a system could be built with a basic content management system and set of tools tailored specifically for artists. This would allow them to work with independent designers of their choosing to craft the look and feel of their online presence. Perhaps it would have an API allowing them to also partner with developers and build tools with added functionality as might suit their needs. (They might then license these to other interested musicians.) I believe the tools provided would likely become transparent to the user. The concentration here would be on the band, not some cumbersome software gumming up the works.

This is just the beginning

Given that a system like this would be built for a very specific clientele, I imagine that all kinds of other tools could be integrated. Perhaps they’d allow fans to watch videos, buy tiered-offerings of their releases, integrate email management systems, have access to advanced analytics, and tie into social networks facilitating easier spreading of catchy new songs. Maybe it would feature its own marketplace allowing users to easily discover similar offerings from new artists. I could likely go on for some time here, but I suspect that my general point is clear enough: get the middle-man out of the way so that musicians and appreciators can readily interact. That’s it.

Some might argue that such a system is already in the works in a site like MySpace, but unfortunately, MySpace sucks. Sure, they’re well positioned to do something like this but they’re moving in too many directions. This needs to be a ground-up solution centered on the artists. I get the feeling that I’ll receive a few comments regarding systems that do what I’m suggesting here. I eagerly wait for such services to be brought to my attention, and, I’d love to connect with these people. If someone’s doing this and a music-lover like me doesn’t know, we really need to work together on marketing their service better.

Music industry folks might feel somewhat threatened by what I’m proposing here, but they need not be. There’s plenty of room for promoters, marketers, representation, management, design, and all the associated services that musicians might benefit from. The thing is though, there are plenty of people capable of doing such things, and I challenge you to explain why 86% of the take needs to be carved out for such services unilaterally. Plus, once this system is built, more jobs will become available. The current music industry model is a throwback to the days of blockbuster hits and Top 40 radio. These may persist but are largely irrelevant given the digital world we live in; meanwhile, they always got in the way of less commercially-viable acts that just made great music. Instead of a great profit made in managing a few, I suggest a reasonable profit may be earned by supporting the many in need of such assistance.

Perhaps this system is where all of this is brought together. As a young band, you’d log into SuperMusicCo (or whatever it’s called), create an account, upload your songs, and set your prices. Meanwhile, you’d have access to a vast database of people who concentrate on specific aspects of the industry and are ready to help you out. You’d determine the deal you wanted to make, and hire them as it suited you. Such a system would be predicated on the notion of peers working together, instead of a paternalistic pimp of sorts, divvying out small cuts while using your revenues to fund his other interests.

Pick-up the phone Trent… Call me…

My suspicion is that this whole thing is in the works, or already exists, even if those of us at smashLAB have nothing to do with it. Meanwhile, those in the music industry will continue to truck along happily until this system supplants them from their rather comfortable chairs.

So, if you choose to take on the project, I wish you the best. I’d love to see this thing come to fruition. In the meanwhile, if you’re Trent, I’m sitting right beside the phone. Seriously, let’s do this.  ;-)

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