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5 Reasons for Optimism in the Music Industry

5 Reasons for Optimism in the Music Industry

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The Wrap.com recently published a list of “5 Ways to Save the Music Industry.” Hey, we’re always happy to hear of any wise perspective, but a few of the recommendations slightly missed the mark, or were unnecessarily pessimistic. So, in the spirit of the column and a friendly debate, here are five reasons for optimism:
 
1. Our product, music, remains as popular as ever. While other businesses may scrap to generate consumer interest in their product, music remains as popular as ever, according to our surveys, and is an economic catalyst for many other industries.  Think about some of the news in recent weeks: leading technology company Apple rolls out a new line of its phenomenally popular music-listening gadgets as well as a major upgrade of the iTunes music store. Videogame developers Harmonix and MTV Games introduce a seminal version of its Rock Band franchise featuring the iconic Beatles.
 
Meanwhile, two of the most popular television programs, "American Idol" and "Dancing With the Stars," are about music. And music is an essential, distinctive part of many hit shows like "Grey's Anatomy" and “Gossip Girl.” Last spring ABC even launched an online “Music Lounge” for fans to locate and purchase music played on its most popular programs.  The common thread is that all are platforms for music. We no doubt continue to confront serious challenges to fully monetizing the value of music, but the fundamental relevance of music to the human experience remains as powerful as ever.          
 
2. Long live the album. The album’s demise is exaggerated. CD sales may continue to decline (though the success of the Beatles’ remastered catalogue demonstrates an enduring appetite for compelling music in physical form), but so far in 2009, growth in digital album sales is again outpacing digital singles (17.5 percent vs. 11.7 percent).  Digital music is still a maturing marketplace, and fans are becoming increasingly comfortable buying not just the latest single online, but the entire album. Throw in the recent iTunes LP initiative from Apple and the major record companies and the album’s unparalleled significance is taken to the next level.
 
3. But it’s more than just the album. Too often, observers assess the health and vitality of the music business simply by comparing year-over-year unit sales. But that narrow analysis of yesterday’s music business fails to capture the whole story.  The modern music company is an increasingly diversified, full-service entertainment firm deriving revenues from a variety of different streams.
 
The success of a new album is not simply based on unit sales, but the cumulative revenues earned from album and single track downloads, online music videos, ringtones and other mobile phone content, digital radio performance royalties, video games downloads and licensing fees, background music to television shows and films, audio streaming sites, and countless other ancillary revenue streams. One example?  Revenues from digital platforms like satellite and online radio grew more than 70 percent in 2008 and should experience continuing significant growth this year and beyond.        
 
4. Record labels make or break the day.
A handful of well-known bands have elected to distribute their latest albums without the help of a record label. More power to them.  But, interestingly and tellingly, what connects the few oft-cited examples is that virtually all are established acts, with a devoted fan base and an established brand. That notoriety and fan support exists in the first place because of the unique marketing and promotional expertise of a record label.       
 
Digital technologies have indeed made it easier for an artist to “DIY.”  But more often than not, it is the music label that can uniquely help the artist cross the bridge between anonymity and artistic and commercial success. There were more than 100,000 different albums released in 2008 alone, yet only 950 of them sold more than 25,000 copies. There are more than 2 million hip hop artists on MySpace and more than 1.8 million rock acts. It’s a sure bet that most of these acts are hoping that a label will pluck them from the mass of aspiring, unsigned artists online and take their careers to the next level.
 
Breaking through, developing and cultivating an audience, working with the most talented musicians and top notch equipment, leveraging opportunities in a cluttered multi-platform digital media world -- all are the invaluable and irreplaceable functions of a modern record label.
 
5. Great music. TheWrap rightly plugged Jack White’s phenomenal musicianship.  He’s worthy of the accolades, but he’s hardly alone. This fall, fans will hear another great slate of albums from the world’s most talented bands and artists, including Alicia Keys, Nelly Furtado, Pearl Jam, Norah Jones, Bon Jovi, KISS, Leona Lewis, Tim McGraw, Shakira, Rod Stewart, Carrie Underwood and countless others. This is yet another encouraging sign of a music business that is energized, vital, relevant and here to stay.
 

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I think you make some great points here, but I do feel you are missing a main point which is that the record labels need to find a way to get in the online music game. The launch of Vevo, the new Hulu-equivalent for music videos, is a tremendous step in the right direction. It is time the record companies stopped fighting the changes in the industry because they are here to stay. In Vevo, the forces of Universal Music Group, Google/YouTube, and Sony Music Entertainment may have found a way to capitalize on their advantages in the online music channel. The major record labels can offer the promise of high quality, early releases, availability, and other features that cannot always be found on user-generated websites like YouTube. Meanwhile, Google is prepared to provide the labels with the technological resources to develop and maintain such a music video library and to introduce a loyal mass audience. While if successful Vevo will only address the monetization of music videos, it can pave the way for a similar experiment in music downloads by regaining the trust of the public and identifying the distinctions that ultimately give record labels the edge in selling music. The record industry cannot expect to ever have the power and control it once did, but there is no reason it cannot become a key player if it continues to test new partnerships and ideas to connect with users. As long as new artists need record labels, there is still an opportunity for them to make intelligent moves into the online space and rebuild a tarnished reputation.

I believe the subsequentt decline in music qaulity and sales due to excessive file sharing is a knife wound that requires stitches that were trying to cover with a band aid. Trying to stream the digital universe into various revenue producing fields is tiresome, not to mention futile, when considering the all around advantages of simply encouraging major record labels to release CD's set with a precondition for sales that sharing, downloading and uploading the intellectual property should be rendered illegal.

I THINK THAT THE MUSIC INDUSTRY BASICALLY WORKS BESTS AS A TEAM WITH EXPERIENCED PEOPLE IN IT. THERE HAS TO BE GREAT MUSIC AND GOOD PROMOTING FOR THE MUSIC TO GET EXPOSURE. ALSO THERE HAS TO BE A POPULAR OR RECOGNIZED RECORD LABEL WORKING WITH THE ARTIST. YOU NEED A INTELLIGENT GOOD BUSINESS PERSON BEHIND YOU ALSO. IN THE MUSIC INDUSTRY YOU MUST MAKE DECISIONS LOOKING AT THE FUTURE OF THAT DECISION. MOST IMPORTANTLY ABOVE ALL SINCE THERE IS A LOT OF COMPETITION THE ARTIST MUST HAVE AMAZING TALENT TO BE ABLE TO

I THINK THAT THE MUSIC INDUSTRY BASICALLY WORKS BESTS AS A TEAM WITH EXPERIENCED PEOPLE IN IT. THERE HAS TO BE GREAT MUSIC AND GOOD PROMOTING FOR THE MUSIC TO GET EXPOSURE. ALSO THERE HAS TO BE A POPULAR OR RECOGNIZED RECORD LABEL WORKING WITH THE ARTIST. YOU NEED A INTELLIGENT GOOD BUSINESS PERSON BEHIND YOU ALSO. IN THE MUSIC INDUSTRY YOU MUST MAKE DECISIONS LOOKING AT THE FUTURE OF THAT DECISION. MOST IMPORTANTLY ABOVE ALL SINCE THERE IS A LOT OF COMPETITION THE ARTIST MUST HAVE AMAZING TALENT TO BE ABLE TO

The timeless music of say Elvis Presley will always be popular simply because he was the best. Of course the record companies call the shots when it comes to advertising and TV advertising is the most profitable form. Consumers will have to balance buying into new technology against a reduction in sound e.g. MP3. Overall I feel that DVD will become the major format of the record buying public.

I can sum all of the "optimism" up with a simple equation. I quote the Idea from the "beastie Boyz" but its a simple truth. population, tech, Evolution is part one, and "twelve notes a man can play, 24 hours in a day. I hope that makes sense enough. I Like music, I remember when I was more close minded to music. Now I have played music and it is very complex yet completely malleable and excepting, embracing and delivering music to the media is a virtu. Prevails Dynamically. plain simple nothing to even think about; aside from "what you Like"

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SanDisk has introduced their new product called SlotMusic. SlotMusic transistions the format of prerecorded music from vinyl CDs to solid state memory. What is the industries pereception of the effect that solid state memory will have upon the CD format?

New revenue streams for creators of songs and similar content should be backed by the government on behalf of creators because that is in the Constitution. And it shouldn’t require that a creator/writer turn into a merchandiser etc. Reasonable use of statutory rates will work fine in the background and the collective can consist of a democratically administrated group representing the members, industries and entities involved.

As the United States Defense Department moved to enable commercialization of the Internet there were meticulous considerations regarding The Domain Name System and related issues. ICANN, a nonprofit organization contracted by The Department of Commerce led the way in the administration and eventual privatization of the Domain system. By most standards this was an excellent model of transitioning from a government entity to privatization. The foresight in understanding the repercussions of NOT having a plan for Domains going forward is highly commendable.

But ironically, that same foresight was grossly absent in considering the repercussions that public use of the Internet would have upon the U.S. copyright system.

If the Betamax Case was a Supreme Court precedent setting event, what in the world were we thinking by unleashing the Internet without addressing the copyright issues beforehand? The Internet coupled with a personal computer is the most powerful copying and publishing mechanism man has ever known!

Therefore, it was the government’s responsibility to ensure that rights holders’ interests were protected before unleashing the greatest copying and publishing mechanism ever and it was the government’s responsibility to insure that ISP’s, (Internet Service Providers), would be in compliance or they would NOT be issued clearance to be an ISP.

So, it is the government that should help fix this mess on behalf of creators of copyrighted materials which is protected by the Constitution of the U.S. Although our government may have missed this opportunity via the “first edition” Internet they can get it right this time with the “second edition” Internet - Mobile Networks. After all, in time there will be many more Internet transactions done via mobile networks and devices than tethered Internet transactions. Now’s the time to put these measures in place. Can we get some help? DataRevenue.Org has been unsupported in these efforts and its about time we reached out for help from those that are about actions beyond words. Can you hear us now?

It's easy for someone well-entrenched in the indy field of music to take an arrogant approach to what the labels have to offer. In fact, it's easy to understand their perspective. After all, there are a lot of new ways to discover music these days and there asre a lot of great unsigned artists.

However, I still have yet to be able to stream internet in my car...thus preventing my ability to access some of those great indy sites. I am still very, very reliant on terrestrial radio. Guess who has a 50-plus year relationship with radio? Record labels - the big 4.

So...what's an artist to do? The answer is dig. Dig for new ways to get the exposure you need to get yourself in front of the (new) right people. The game of the music business has changed. Not even everyone at the labels knows exactly what it's going to look like in 24 months. It is evolving as I write this. There are new people creating new ways to do things in light of the digital revolution.

So back to Mitch's article...

Point 1 - True. We love our music and that isn't changing and it's safe to say that it won't.

Point 2 - True. Just do the research to dig up the actual facts and you'll find that consumers are in fact buying albums online...a lot of them...millions of them.

Point 3 - True. #3 addresses what is now known as the 360-deal. Labels make a cut (varying percentages) of all parts of an artist. A successful album is still the goal, but it's not the only thing weighed when considering an artist's success.

Point 4 - True. The need to break an artist at traditional radio still remains a vital component...if not still primary. Not to say that other resources aren't used, but good old fashioned radio still rocks that party.

Point 5 - True. Part of the point being made here may be that the traditional label environment is still providing great results for artists developed and successful under the "old" way of the record business. Obviously there are new emerging artists that are making their way up the ranks, but it takes time.

Thanks for a great article, Mitch. I'm enjoying the new way of working in the music business. Independent A & R - that's where it's at for me. It mixes the old way of the business with the new reality of the digital age. Works for me.

Point four is pure hubris dressed up as an intelligent point. Record labels as oligarchic supply-chain controllers are dead and good riddance. What is the new reality is labels as marketing firms, just like ad agencies in the corporate world. You get them involved when you want a room of sleazy but brilliant people to help take you to the next level, in fact, if removed the funding from the labels and made a pay market for them the music industry actually might start gettting interesting.

This article was written with the past in mind, trying to hold on to a reality that is no more. You're not mentioning a single band that is as big as let's say U2 or Michael Jackson, simply because those days are over. The days of 3 tv-channels, a handful of radio stations and the cinema as the only places to get entertainment are over. You should read the Long Tail and get real.

Mitch:

Even though I'm not affiliated with a major label, I feel that we share very important goals regarding intellectual property and copyright.

Since I wrote my "Open Letter" regarding copyright (posted on my website's -- www.leighharrison.com -- "Upcoming CD" page) I've received feedback from musicians and artists worldwide, and most of it was supportive. I hope that one of the results of the legal victories the RIAA has recently had (even if the defendants declare bankruptcy rather than try to pay the fines) is that it will help teach people what the possible consequences of illegal file-sharing might be.

The next steps are to work (1) to create new curricula for the schools that help teachers by providing lesson plans about honoring intellectual property, and protecting copyright, and (2) to work to create new ways to see that music is paid for upon downloading, and (3) to see that
illegal file-sharing is prevented through digital means.

Leigh

Very interesting article Mitch. I will agree with your optimism however my major area of concern is point #5. For me it is all about great music. You mention all those artists, however none of them are new artists developed in the last 2 years.

I do believe the music industry will have to realize that #5 is the most significant point. In the end it is all about making great music. Didn't the Beatles sell 2.25 million CDs in 5 days? Decades later, the Beatles seem to attract buyers and video game enthusiasts. Where are today's Beatles?

My advice to the majors: Develop, develop, develop. Get some great music out. And I mean great music. Something that will give me goose bumps. I got the goose bumps the first time I heard Eddie Vedder sing. Then listening to Chris Cornell on BadMotorFinger. How about Smells Like Teen Spirit by Nirvana or the late Layne Staley singing the Alice in Chains song Would? Yes, that was the grunge era. Why can't we replicate something like that today? It does not neccessarily need to be grunge or rock. take U2 for example: The Joshua Tree, Rattle & Hum, Achtung Baby. Those were albums.

My question is where is the great music from brand new acts? If someone asked me to pay $100 for the equivalent to a Michael Jackson "Bad" album I would pay. I would say loads of people would pay too. Why on earth are the Beatles selling decades later? How on earth are they outselling everyone? The answer is: great music. Music that touches people. If you have great music, the money will follow. With all the new exciting ways of monetizing, I strongly believe the missing component is great music, a great act that kicks butt when they play live, as well as harnessing multiple revenue streams, not just relying on the CD.

You mention great music that is upcoming from the likes of Alicia Keys, Nelly Furtado, Pearl Jam, Norah Jones, Bon Jovi, KISS, Tim McGraw, Shakira, Rod Stewart and Carrie Underwood. My question is: "Which of these bands or artists are a product of the last 1-2 years? Where is the future of the music industry?"

The future of the music industry is quite simple: it's the music itself.

Constantine Roussos
.Music Domain Name Extension
http://www.music.us
http://www.twitter.com/musicextension

For many years the music industry has wasted millions of dollars in advertising and promotion to try to raise awareness of new and emerging artists. Many years ago the only way we could listen to new music is what was chosen for us to listen by radio stations. Now we have a mass marketing tool where the listener can access music from the last 40 years with a few simple clicks of a mouse.

A great opportunity for the music industry was created with the birth of p2p and the communities that sprung from them. Remember Audiogalaxy? That alone could have been bigger than facebook and allowed music fans all over the world to share and discover music which otherwise would have disappeared into obscurity. The music industry has had some challenges to overcome brought about by new technology but the way in which went about trying to overcome these challenges such as destroying the mass marketing tools that could have saved the industry, alienating it's customer base, corrupting and devaluing the product through DRM.

The biggest cause of the drop in sales revenue is the emergence of competing technologies for the entertainment dollar such as video games and DVDs. Spending $15 on a DVD for a top class movie with hours of additional content versus $20 for a CD in which there may only be a few good tracks on the album - which will give better value. The last innovation in music media is the CD which is now over 30 years old where the movie industry now has Blu-ray with high definition and 7.1 channel sound. The music industry have sat on their backsides and let other entertainment industries surpass them. The movie studio's also have the edge in that a blockbuster movie pays for itself at the cinema and the home DVD sales market is icing on the cake whereas the music industry has domestic unit sales as it's main revenue stream. Pricing is also a factor, to fill a 120Gb iPod would cost around $30,000 from iTunes. There may be people out there prepared to spend that kind of money to amass a huge CD collection but nobody in their right minds would pay that much for a bunch of digital files. I'm the sort of person who likes to have something tangible, If I can't hold it in my hand - I won't buy it. A digital file has no value unlike something tangible and can't be resold at a later time.

Through litigation of music fans (many of whom are large consumers of music) they have alienated their target audience - not the smartest of moves.

If the music industry chiefs were generals in a war they would be shot for treason or incompetence. Unless the old guard of the music industry can be removed the only way the industry will survive is if it is completely destroyed and rises like a phoenix from the ashed into a business model for the 21st century.

I used to blame the music industry for being asleep at the wheel when this Internet thing came about.....but now afer much research and soul searching I realize its not really their fault. All businesses affected by digitization had no clue of what was coming. Here's the truth...........
"As the United States Defense Department moved to enable commercialization of the Internet there were meticulous considerations regarding The Domain Name System and related issues. ICANN, a nonprofit organization contracted by The Department of Commerce led the way in the administration and eventual privatization of the Domain system. By most standards this was an excellent model of transitioning from a government entity to privatization. The foresight in understanding the repercussions of NOT having a plan for Domains going forward is highly commendable.

But ironically, that same foresight was grossly absent in considering the repercussions that public use of the Internet would have upon the U.S. copyright system.

If the Betamax Case was a Supreme Court precedent setting event, what in the world were we thinking by unleashing the Internet without addressing the copyright issues beforehand? The Internet coupled with a personal computer is the most powerful copying and publishing mechanism man has ever known!

Therefore, it was the government’s responsibility to ensure that rights holders’ interests were protected before unleashing the greatest copying and publishing mechanism ever and it was the government’s responsibility to insure that ISP’s, (Internet Service Providers), would be in compliance or they would NOT be issued clearance to be an ISP.

Basically, a statutory rate should have been established. Whereas, whenever copyrighted materials were downloaded, (this is a form of distribution and publication), via an ISP the rate would kick in to be deposited with a designated collective that represented the interests of ALL rights holders.

It is my guess that The Library of Congress was not privy to the conversation."

Max Davis - we can fix this for all

I appreciate your thoughts, but I disagree with your analysis. Major Labels do provide marketing muscle in the market place that indie artist/bands might not have access to, but marketing muscle does not automatically translate into Artists/Bands putting more money in their pockets. Time and Time again I have represented clients who have made far more money independently by maintaining control over their masters and budgets, than those clients I have signed to major label deals who gave up their ownership rights in their masters as well as lost control over their budgets.

I have to disagree with point 3. Lots of recordlabels today take a share well not worth the results of their work. While most artists definitely need help with business decisions, a lot of the work a label does can be done by the band itself or be outsourced. But, without a clever businessguy behind them, most bands fail.

Great post! Leveraging revenue through litigation has cause a lot of new industry to form. The unfortunate side is it would seem all executives disconnected with a growing number of fans and a complete generation unwilling to buy their music. The music industry doesn't really belong to sales numbers anymore. The proliferation of musical success is far beyond what the RIAA or Soundscan can track or even speculate. Keep up the encouragement. You're going to need it if you keep looking at false pictures of success.

All I can say Mitch is you can lead a horse to water.....Sure you can tell us how GREAT things are, and what we have to look forward to but, I think before you start touting your optimism, you should start doing a bit of PR cleanup and realize that pissing off your own customers with "sue 'em all" campaigns is NOT the way to go! Music can survive without the major record labels (Progressive Rock has been doing that for years), and if you keep clinging to an outdated business model (the record store is gone, deal with it!) fighting the file sharers, keeping download prices high and focusing on "easy marketed" audiences by promoting mediocre acts by trying to tell the public "what is cool" instead of letting them think for themselves, you will end up loosing.

This is a great article, Mitch, and it's really encouraging to see the RIAA willing to engage discussion in this medium.

I particularly like your reference to the myriad other revenue streams that exist for monetizing any particular piece of music, and I'm definitely with you on the contention that success of a particular artistic effort is based on looking at all these other factors as a whole.

I'm sure you're aware that the main criticism levelled against the RIAA has been with regard to some of its specific anti-piracy initiatives. Many point to the adverse public relations aspect of such a campaign, however I know that any business entity will always do whatever it can to protect its revenue streams and intellectual property, and that the music business is only one of many industries in which litigation can be a part of a larger overall strategy.

That said, my question to you would be whether or not you think there is any hope that the huge existing body of shared files that continues to flow through cyber space might some day be leveraged into new revenue streams that preclude the need for litigation.

Reasons To Be Cheerful, Pt. 3

http://www.youtube.com/watch?v=rD9AFG1GdgI

Comments

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I think you make some great points here, but I do feel you are missing a main point which is that the record labels need to find a way to get in the online music game. The launch of Vevo, the new Hulu-equivalent for music videos, is a tremendous step in the right direction. It is time the record companies stopped fighting the changes in the industry because they are here to stay. In Vevo, the forces of Universal Music Group, Google/YouTube, and Sony Music Entertainment may have found a way to capitalize on their advantages in the online music channel. The major record labels can offer the promise of high quality, early releases, availability, and other features that cannot always be found on user-generated websites like YouTube. Meanwhile, Google is prepared to provide the labels with the technological resources to develop and maintain such a music video library and to introduce a loyal mass audience. While if successful Vevo will only address the monetization of music videos, it can pave the way for a similar experiment in music downloads by regaining the trust of the public and identifying the distinctions that ultimately give record labels the edge in selling music. The record industry cannot expect to ever have the power and control it once did, but there is no reason it cannot become a key player if it continues to test new partnerships and ideas to connect with users. As long as new artists need record labels, there is still an opportunity for them to make intelligent moves into the online space and rebuild a tarnished reputation.

I believe the subsequentt decline in music qaulity and sales due to excessive file sharing is a knife wound that requires stitches that were trying to cover with a band aid. Trying to stream the digital universe into various revenue producing fields is tiresome, not to mention futile, when considering the all around advantages of simply encouraging major record labels to release CD's set with a precondition for sales that sharing, downloading and uploading the intellectual property should be rendered illegal.

I THINK THAT THE MUSIC INDUSTRY BASICALLY WORKS BESTS AS A TEAM WITH EXPERIENCED PEOPLE IN IT. THERE HAS TO BE GREAT MUSIC AND GOOD PROMOTING FOR THE MUSIC TO GET EXPOSURE. ALSO THERE HAS TO BE A POPULAR OR RECOGNIZED RECORD LABEL WORKING WITH THE ARTIST. YOU NEED A INTELLIGENT GOOD BUSINESS PERSON BEHIND YOU ALSO. IN THE MUSIC INDUSTRY YOU MUST MAKE DECISIONS LOOKING AT THE FUTURE OF THAT DECISION. MOST IMPORTANTLY ABOVE ALL SINCE THERE IS A LOT OF COMPETITION THE ARTIST MUST HAVE AMAZING TALENT TO BE ABLE TO

I THINK THAT THE MUSIC INDUSTRY BASICALLY WORKS BESTS AS A TEAM WITH EXPERIENCED PEOPLE IN IT. THERE HAS TO BE GREAT MUSIC AND GOOD PROMOTING FOR THE MUSIC TO GET EXPOSURE. ALSO THERE HAS TO BE A POPULAR OR RECOGNIZED RECORD LABEL WORKING WITH THE ARTIST. YOU NEED A INTELLIGENT GOOD BUSINESS PERSON BEHIND YOU ALSO. IN THE MUSIC INDUSTRY YOU MUST MAKE DECISIONS LOOKING AT THE FUTURE OF THAT DECISION. MOST IMPORTANTLY ABOVE ALL SINCE THERE IS A LOT OF COMPETITION THE ARTIST MUST HAVE AMAZING TALENT TO BE ABLE TO

The timeless music of say Elvis Presley will always be popular simply because he was the best. Of course the record companies call the shots when it comes to advertising and TV advertising is the most profitable form. Consumers will have to balance buying into new technology against a reduction in sound e.g. MP3. Overall I feel that DVD will become the major format of the record buying public.

I can sum all of the "optimism" up with a simple equation. I quote the Idea from the "beastie Boyz" but its a simple truth. population, tech, Evolution is part one, and "twelve notes a man can play, 24 hours in a day. I hope that makes sense enough. I Like music, I remember when I was more close minded to music. Now I have played music and it is very complex yet completely malleable and excepting, embracing and delivering music to the media is a virtu. Prevails Dynamically. plain simple nothing to even think about; aside from "what you Like"

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SanDisk has introduced their new product called SlotMusic. SlotMusic transistions the format of prerecorded music from vinyl CDs to solid state memory. What is the industries pereception of the effect that solid state memory will have upon the CD format?

New revenue streams for creators of songs and similar content should be backed by the government on behalf of creators because that is in the Constitution. And it shouldn’t require that a creator/writer turn into a merchandiser etc. Reasonable use of statutory rates will work fine in the background and the collective can consist of a democratically administrated group representing the members, industries and entities involved.

As the United States Defense Department moved to enable commercialization of the Internet there were meticulous considerations regarding The Domain Name System and related issues. ICANN, a nonprofit organization contracted by The Department of Commerce led the way in the administration and eventual privatization of the Domain system. By most standards this was an excellent model of transitioning from a government entity to privatization. The foresight in understanding the repercussions of NOT having a plan for Domains going forward is highly commendable.

But ironically, that same foresight was grossly absent in considering the repercussions that public use of the Internet would have upon the U.S. copyright system.

If the Betamax Case was a Supreme Court precedent setting event, what in the world were we thinking by unleashing the Internet without addressing the copyright issues beforehand? The Internet coupled with a personal computer is the most powerful copying and publishing mechanism man has ever known!

Therefore, it was the government’s responsibility to ensure that rights holders’ interests were protected before unleashing the greatest copying and publishing mechanism ever and it was the government’s responsibility to insure that ISP’s, (Internet Service Providers), would be in compliance or they would NOT be issued clearance to be an ISP.

So, it is the government that should help fix this mess on behalf of creators of copyrighted materials which is protected by the Constitution of the U.S. Although our government may have missed this opportunity via the “first edition” Internet they can get it right this time with the “second edition” Internet - Mobile Networks. After all, in time there will be many more Internet transactions done via mobile networks and devices than tethered Internet transactions. Now’s the time to put these measures in place. Can we get some help? DataRevenue.Org has been unsupported in these efforts and its about time we reached out for help from those that are about actions beyond words. Can you hear us now?

It's easy for someone well-entrenched in the indy field of music to take an arrogant approach to what the labels have to offer. In fact, it's easy to understand their perspective. After all, there are a lot of new ways to discover music these days and there asre a lot of great unsigned artists.

However, I still have yet to be able to stream internet in my car...thus preventing my ability to access some of those great indy sites. I am still very, very reliant on terrestrial radio. Guess who has a 50-plus year relationship with radio? Record labels - the big 4.

So...what's an artist to do? The answer is dig. Dig for new ways to get the exposure you need to get yourself in front of the (new) right people. The game of the music business has changed. Not even everyone at the labels knows exactly what it's going to look like in 24 months. It is evolving as I write this. There are new people creating new ways to do things in light of the digital revolution.

So back to Mitch's article...

Point 1 - True. We love our music and that isn't changing and it's safe to say that it won't.

Point 2 - True. Just do the research to dig up the actual facts and you'll find that consumers are in fact buying albums online...a lot of them...millions of them.

Point 3 - True. #3 addresses what is now known as the 360-deal. Labels make a cut (varying percentages) of all parts of an artist. A successful album is still the goal, but it's not the only thing weighed when considering an artist's success.

Point 4 - True. The need to break an artist at traditional radio still remains a vital component...if not still primary. Not to say that other resources aren't used, but good old fashioned radio still rocks that party.

Point 5 - True. Part of the point being made here may be that the traditional label environment is still providing great results for artists developed and successful under the "old" way of the record business. Obviously there are new emerging artists that are making their way up the ranks, but it takes time.

Thanks for a great article, Mitch. I'm enjoying the new way of working in the music business. Independent A & R - that's where it's at for me. It mixes the old way of the business with the new reality of the digital age. Works for me.

Point four is pure hubris dressed up as an intelligent point. Record labels as oligarchic supply-chain controllers are dead and good riddance. What is the new reality is labels as marketing firms, just like ad agencies in the corporate world. You get them involved when you want a room of sleazy but brilliant people to help take you to the next level, in fact, if removed the funding from the labels and made a pay market for them the music industry actually might start gettting interesting.

This article was written with the past in mind, trying to hold on to a reality that is no more. You're not mentioning a single band that is as big as let's say U2 or Michael Jackson, simply because those days are over. The days of 3 tv-channels, a handful of radio stations and the cinema as the only places to get entertainment are over. You should read the Long Tail and get real.

Mitch:

Even though I'm not affiliated with a major label, I feel that we share very important goals regarding intellectual property and copyright.

Since I wrote my "Open Letter" regarding copyright (posted on my website's -- www.leighharrison.com -- "Upcoming CD" page) I've received feedback from musicians and artists worldwide, and most of it was supportive. I hope that one of the results of the legal victories the RIAA has recently had (even if the defendants declare bankruptcy rather than try to pay the fines) is that it will help teach people what the possible consequences of illegal file-sharing might be.

The next steps are to work (1) to create new curricula for the schools that help teachers by providing lesson plans about honoring intellectual property, and protecting copyright, and (2) to work to create new ways to see that music is paid for upon downloading, and (3) to see that
illegal file-sharing is prevented through digital means.

Leigh

Very interesting article Mitch. I will agree with your optimism however my major area of concern is point #5. For me it is all about great music. You mention all those artists, however none of them are new artists developed in the last 2 years.

I do believe the music industry will have to realize that #5 is the most significant point. In the end it is all about making great music. Didn't the Beatles sell 2.25 million CDs in 5 days? Decades later, the Beatles seem to attract buyers and video game enthusiasts. Where are today's Beatles?

My advice to the majors: Develop, develop, develop. Get some great music out. And I mean great music. Something that will give me goose bumps. I got the goose bumps the first time I heard Eddie Vedder sing. Then listening to Chris Cornell on BadMotorFinger. How about Smells Like Teen Spirit by Nirvana or the late Layne Staley singing the Alice in Chains song Would? Yes, that was the grunge era. Why can't we replicate something like that today? It does not neccessarily need to be grunge or rock. take U2 for example: The Joshua Tree, Rattle & Hum, Achtung Baby. Those were albums.

My question is where is the great music from brand new acts? If someone asked me to pay $100 for the equivalent to a Michael Jackson "Bad" album I would pay. I would say loads of people would pay too. Why on earth are the Beatles selling decades later? How on earth are they outselling everyone? The answer is: great music. Music that touches people. If you have great music, the money will follow. With all the new exciting ways of monetizing, I strongly believe the missing component is great music, a great act that kicks butt when they play live, as well as harnessing multiple revenue streams, not just relying on the CD.

You mention great music that is upcoming from the likes of Alicia Keys, Nelly Furtado, Pearl Jam, Norah Jones, Bon Jovi, KISS, Tim McGraw, Shakira, Rod Stewart and Carrie Underwood. My question is: "Which of these bands or artists are a product of the last 1-2 years? Where is the future of the music industry?"

The future of the music industry is quite simple: it's the music itself.

Constantine Roussos
.Music Domain Name Extension
http://www.music.us
http://www.twitter.com/musicextension

For many years the music industry has wasted millions of dollars in advertising and promotion to try to raise awareness of new and emerging artists. Many years ago the only way we could listen to new music is what was chosen for us to listen by radio stations. Now we have a mass marketing tool where the listener can access music from the last 40 years with a few simple clicks of a mouse.

A great opportunity for the music industry was created with the birth of p2p and the communities that sprung from them. Remember Audiogalaxy? That alone could have been bigger than facebook and allowed music fans all over the world to share and discover music which otherwise would have disappeared into obscurity. The music industry has had some challenges to overcome brought about by new technology but the way in which went about trying to overcome these challenges such as destroying the mass marketing tools that could have saved the industry, alienating it's customer base, corrupting and devaluing the product through DRM.

The biggest cause of the drop in sales revenue is the emergence of competing technologies for the entertainment dollar such as video games and DVDs. Spending $15 on a DVD for a top class movie with hours of additional content versus $20 for a CD in which there may only be a few good tracks on the album - which will give better value. The last innovation in music media is the CD which is now over 30 years old where the movie industry now has Blu-ray with high definition and 7.1 channel sound. The music industry have sat on their backsides and let other entertainment industries surpass them. The movie studio's also have the edge in that a blockbuster movie pays for itself at the cinema and the home DVD sales market is icing on the cake whereas the music industry has domestic unit sales as it's main revenue stream. Pricing is also a factor, to fill a 120Gb iPod would cost around $30,000 from iTunes. There may be people out there prepared to spend that kind of money to amass a huge CD collection but nobody in their right minds would pay that much for a bunch of digital files. I'm the sort of person who likes to have something tangible, If I can't hold it in my hand - I won't buy it. A digital file has no value unlike something tangible and can't be resold at a later time.

Through litigation of music fans (many of whom are large consumers of music) they have alienated their target audience - not the smartest of moves.

If the music industry chiefs were generals in a war they would be shot for treason or incompetence. Unless the old guard of the music industry can be removed the only way the industry will survive is if it is completely destroyed and rises like a phoenix from the ashed into a business model for the 21st century.

I used to blame the music industry for being asleep at the wheel when this Internet thing came about.....but now afer much research and soul searching I realize its not really their fault. All businesses affected by digitization had no clue of what was coming. Here's the truth...........
"As the United States Defense Department moved to enable commercialization of the Internet there were meticulous considerations regarding The Domain Name System and related issues. ICANN, a nonprofit organization contracted by The Department of Commerce led the way in the administration and eventual privatization of the Domain system. By most standards this was an excellent model of transitioning from a government entity to privatization. The foresight in understanding the repercussions of NOT having a plan for Domains going forward is highly commendable.

But ironically, that same foresight was grossly absent in considering the repercussions that public use of the Internet would have upon the U.S. copyright system.

If the Betamax Case was a Supreme Court precedent setting event, what in the world were we thinking by unleashing the Internet without addressing the copyright issues beforehand? The Internet coupled with a personal computer is the most powerful copying and publishing mechanism man has ever known!

Therefore, it was the government’s responsibility to ensure that rights holders’ interests were protected before unleashing the greatest copying and publishing mechanism ever and it was the government’s responsibility to insure that ISP’s, (Internet Service Providers), would be in compliance or they would NOT be issued clearance to be an ISP.

Basically, a statutory rate should have been established. Whereas, whenever copyrighted materials were downloaded, (this is a form of distribution and publication), via an ISP the rate would kick in to be deposited with a designated collective that represented the interests of ALL rights holders.

It is my guess that The Library of Congress was not privy to the conversation."

Max Davis - we can fix this for all

I appreciate your thoughts, but I disagree with your analysis. Major Labels do provide marketing muscle in the market place that indie artist/bands might not have access to, but marketing muscle does not automatically translate into Artists/Bands putting more money in their pockets. Time and Time again I have represented clients who have made far more money independently by maintaining control over their masters and budgets, than those clients I have signed to major label deals who gave up their ownership rights in their masters as well as lost control over their budgets.

I have to disagree with point 3. Lots of recordlabels today take a share well not worth the results of their work. While most artists definitely need help with business decisions, a lot of the work a label does can be done by the band itself or be outsourced. But, without a clever businessguy behind them, most bands fail.

Great post! Leveraging revenue through litigation has cause a lot of new industry to form. The unfortunate side is it would seem all executives disconnected with a growing number of fans and a complete generation unwilling to buy their music. The music industry doesn't really belong to sales numbers anymore. The proliferation of musical success is far beyond what the RIAA or Soundscan can track or even speculate. Keep up the encouragement. You're going to need it if you keep looking at false pictures of success.

All I can say Mitch is you can lead a horse to water.....Sure you can tell us how GREAT things are, and what we have to look forward to but, I think before you start touting your optimism, you should start doing a bit of PR cleanup and realize that pissing off your own customers with "sue 'em all" campaigns is NOT the way to go! Music can survive without the major record labels (Progressive Rock has been doing that for years), and if you keep clinging to an outdated business model (the record store is gone, deal with it!) fighting the file sharers, keeping download prices high and focusing on "easy marketed" audiences by promoting mediocre acts by trying to tell the public "what is cool" instead of letting them think for themselves, you will end up loosing.

This is a great article, Mitch, and it's really encouraging to see the RIAA willing to engage discussion in this medium.

I particularly like your reference to the myriad other revenue streams that exist for monetizing any particular piece of music, and I'm definitely with you on the contention that success of a particular artistic effort is based on looking at all these other factors as a whole.

I'm sure you're aware that the main criticism levelled against the RIAA has been with regard to some of its specific anti-piracy initiatives. Many point to the adverse public relations aspect of such a campaign, however I know that any business entity will always do whatever it can to protect its revenue streams and intellectual property, and that the music business is only one of many industries in which litigation can be a part of a larger overall strategy.

That said, my question to you would be whether or not you think there is any hope that the huge existing body of shared files that continues to flow through cyber space might some day be leveraged into new revenue streams that preclude the need for litigation.

Reasons To Be Cheerful, Pt. 3

http://www.youtube.com/watch?v=rD9AFG1GdgI