Music and Business: Now It's Everywhere

(Previously: Part 1 and Part 2)

3. Now It's Everywhere
The 21st century and increasing maturity of the Internet made it trivially easy to distribute all these albums. For fees ranging from zero to modest, one can make an album available worldwide, 24/7 in a wide variety of formats at any desired price point.

This is a profound change, making it dramatically easier to get heard. Prior to the Internet, you, the artist (or label) had to physically truck those CDs to stores and then directly manage collecting the revenues from these distributed locations. You either cut a distributor in on your "profit" to manage this for you and just focused on trying to get stores to order product - or you managed it yourself, which frequently meant spending hours on the phone trying to get record stores to pay you $7.50 for the 3 CDs they may or may not have sold.

In short, it was terrible. Managing distribution beyond the trunk of your car was huge time sink for the up-and-coming musician.

Today, there are many options for distributing your music. You can still do the good ol' car trunk and sell CDs or vinyl or cassette or whatever paleolithic format you want to push directly to your fans. You can still lug stuff to your local record store and see if they'll take a few on consignment. You can sell music in a variety of formats and packages off your website directly to your fans (Nine Inch Nails, Radiohead). You can partner up with companies like CDBaby or Tunecore who will handle getting your digital music into as many of the digital music services as you want.

There are a ton of legitimate, semi-legitimate, and totally illegitimate new ways for people to discover, find, or hear your music, too. There are fancy customized radio stations that will mix you in with other things. Or you can run your own internet radio station. You can give away a promo single or snippet totally free...or exchange it for an e-mail address. There are tons of MP3 blogs, aggregators, and sites all aimed at promoting music in specific genres to specific demographics. If you like music, it's hard not to be overwhelmed by stuff you actually want, not to mention the junk.

More importantly, it is now incredibly easy for people to buy music - there's no more "sold out", "out of print", or "where can I get it?". If you hear something you like, purchase is as close as an Internet connection. Buy it on your phone right now. Download it to your computer right now. Order the CD right now. The music is there.

Easy to make, easy to distribute, easy to purchase. That's good, right?

At this point, the veteran professional musicians usually come charging in and talk about how crappy all this new music is. They'll say it's poorly recorded, badly written, and lacks the wonderful packaging and "vibe" that good ol' vinyl records had. They'll talk about how no website feels as good as walking into a good record store (not that any are left anymore).

All they have to do is start with "...in MY day..." or throw in a "get off my lawn!" to complete the picture. People have been saying "this new music isn't as good as the old music" as long as there has been music.

The old guard are upset about the increased competition, to be sure, but I think they're really upset about something else...

Next: Part 4 - The Audience Isn't Listening
1. The Problem Nobody's Talking About
2. Too Much Music?
3. Now It's Everywhere
4. The Audience Isn't Listening
5. What The Internet Really Means

Music and Business: Too Much Music

2. Too Much Music
The last 20 years produced remarkable changes in the way music is created and distributed.

The 1990s effectively democratized music production. In 1989 making a record or CD almost certainly meant paying thousands of dollars to go to a recording studio for a few hours and hoping you ended up with something good.

By 1999 however you could make a record at home on your computer. In some cases the quality of the recording wasn't quite as good (limited by your gear and expertise), but you could spend a lot more time on it. From the ADAT to PC-based recording, by now (2010), anyone can make a "record".

Even iPhones can make records via apps ranging from simple instruments (the ocarina) to 4-track recorders. (I am awaiting the inevitable gimmick indie record made "entirely on the iPhone").

Not surprisingly, people are making lots of records: About 300,000 per year with the number steadily climbing. The product of the major labels (EMI, Sony, Universal, and Warner) represent about 10-15% of that number, but the bulk of that represents repackaging of their back catalog, not new artists.

Keep in mind this is a cumulative thing - every new album isn't just competing for ear space with the new albums from that year - it's competing with everything ever recorded - Radiohead's "OK Computer" and Nirvana's "Nevermind" and Run-DMC's "King of Rock" and Led Zeppelin IV and The Beatles and Hank Williams and Enrico Caruso. Every year, every minute it gets harder to be heard over the din.

In economic terms, the supply of music is vastly increasing - a result of dramatic drops in the costs of creation and distribution combined with many more creators. It is not unrealistic to assume that demand would fall as a result. And when demand falls, prices fall. Creators get paid less, as does everyone else in the value chain, because listeners are willing to pay less.

But that's still not the whole story.
Next: Part 3: Now It's Everywhere

1. The Problem Nobody's Talking About
2. Too Much Music?
3. Now It's Everywhere
4. The Audience Isn't Listening
5. What The Internet Really Means

Music and Business: The problem nobody's talking about

The "Information is Beautiful" graphic to the right is the latest buzz around the music community regarding the state of the business. It is attracting attention because it looks neat and is controversial.

But like many "infographics", it is showing incomplete information and only a piece of the picture. The reality is complex and nuanced.

It's based on this article, titled "The Paradise That Should Have Been".

1. It Must Be The Internet
The thrust of the article and graphic seem to be "wow, these digital music services really don't pay the artists enough - they should probably pay them more."

But between the time this article and chart were created and when they were published, Last.FM announced they were stopping all streaming. Why?

Because Last.FM can't make a profitable business out of streaming music - the royalties they pay are too high.

They're not the only ones. The entire last round of new entrants into the digital music business all flamed out last year - iMeem went out of business, iLike sold to MySpace for pennies, and Lala was purchased for a low price by Apple after announcing they could not make their business model viable.

The veterans have not fared much better. Rhapsody has had 10 years of barely scraping by and is now trying to be a start-up again. Nobody's seen Napster in months.

The only company that seems to be making money is Apple, and as I've previously discussed, Apple doesn't care about music - they created the iTunes Music Store (inevitably about to become the iTunes Media Store or something similar) purely as a defense against piracy accusations. Thanks to the industry and other factors, it has now become a powerful tool for perpetuating their near-monopoly on music consumption.

I will certainly admit some bias here, as I am in the digital music business myself, but I can't agree the problem here is the businesses aren't paying enough for content.

Based on what I've seen about consumer behavior from research and experience, it's also hard to believe these services can simply raise prices to pay more and pass the cost on to users. People already feel these music services are too expensive.

When the average annual per-capita spend on music in the United States is ~$35, even a $5 per month subscription seems pricey.

The problem isn't the Internet. The Internet has been a great boon for both musicians and the music business.

So what is the problem?

Next on Post-Cocious: "Too Much Music?"

[Note: I'm trying something new - rather than one really long post, I'm going to break this into sections and post it over the next few days.]

1. The Problem Nobody's Talking About
2. Too Much Music?
3. Now It's Everywhere
4. The Audience Isn't Listening
5. What The Internet Really Means

Coal is still bad

I am saddened by news of the recent coal mining disasters in China and in West Virginia.

Here is a link to my previous post about coal versus nuclear power, written in April 2006.