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Thursday
May122011

Here We Go Again: The bright new future ahead where we can all share music in the cloud, NOT..

By David Greenberg.  Learn more about this outspoken industry veteran at the end of the post.

To the cloud. Google’s created MUSIC, a here-to-fore hush-hush (though everyone seemed to know about it) service to shunt all your music up to a locker in the cloud. Apple will soon have a Cloud iTunes too. Then you can play your music everywhere and anywhere on just about any device that the gods of I.T. allow it to. Though, right now Google’s only on Android and Apple’ll probably stick to the iPhone.

Here’s the best part: You may be able to share your music with your friends, family, step-children, and even ex-significant others. There will be an App for that. Maybe.

I am keenly sure there are some Business Affairs people with legalese at the aim, ready to shoot these ideas out of the sky, or try to. I would think that Google and Apple are fending their way through the music industry to glad hand and make friends—the usually business dance of flirting with deal terms, bluffs and counter-bluffs and name calling when no one dances—in order to try and get these services to be all they can be, with all the legalities in place, dotted “i”s and all that, but like Napster and previous ventures in peer to peer, there are those in the music industry who want these things dead, doubly dead. Kicked in the head, dead. (Of course with Apple throwing its weight around like they usually do, maybe they’re not glad-handing, more like strong-arming.) To me, they are all going to miss out on a key tool that will help them to both make more money and help artists and entertainment conglomerates sell more downloads and albums than ever before, and especially more tstochkes for all those 360 deals they’ve hammered out, and heapings of more tickets, especially those VIP concert tickets where you can “possibly” meet Britney’s backup dancers for a cool thousand.

Face it, the people who run this business of music—those who really run it from their offices high above the fray, poring over contracts, tallying up profits, explaining away losses and fomenting lawsuits—are not hardcore fans of music. Heck, the suited and proverbial THEY, while they may like music, the fandom’s been drained from their blood by now. Music is something they listen to in order to figure out the next percentage point gain to their salary and their artists’ income. They don’t even pay for their music. They are comped with freebies, swag, and, horrors, THEY GET FREE INTO BEST SEATS AT CONCERTS.

I know I’m going to get crap for that one paragraph, but as one in the industry I know of what I speak: most, yes not all, of the professionals in the music business that I rub elbows with in my day-to-day are not true musical fanatics. They are at gigs because they have to be, like the wahoos I stood behind at a very intimate Elvis Costello concert at Gerde’s Folk City in NYC ages ago. I knew who and what the wahoos were and they were very successful dudes in the business. I wish I could have had their jobs and salaries, but not their sense of fandom. They did not shut up once while Elvis was doing a historic concert right within 50 feet of their banter. If I had a knife… Oh, the proverbial THEY profess to be music fans, like all the business affairs people at Rykodisc that I worked with, who really knew the who, what, where and why of our eclectic catalog. Don Rose, one of the founders of the label, ran a record store in his youth. Who else but a fan would even dare negotiate the rights to the Frank Zappa catalog when everyone else in the business saw those masters as equal to a soon-to-be-dead mobster, a great big fat liability, and viewed any negotiations with FZ and the gang, as those lead weights helping bring their whole enterprise quicker to the bottom, with a massive amount of returns and ill-will.  Only a company of fans would even dare to move ahead. Rykodisc did and became a successful enterprise able to go on to David Bowie, then Elvis Costello and others. I, myself, am a great fanatic who spent hours poring over lyrics in the depths of my room—back when you could read lyrics on a 12x12 inch inner sleeve—while my dad told me to turn down the FZ on my stereo, but all of us in the business have to come to the realization: we are not like the music buying public. Because we don’t really buy music, we’ve left our fandom behind. It’s our business, not our hobby.

Which is why the suits will expect, or need to make, the full sale at all costs, while not fully understanding the buyers and the inner workings of their minds and how they consume, and possibly, hopefully, purchase music. While I knew the workings of the suits from my days of being one at Rykodisc, this was excruciatingly painted out in broad strokes when a crew from Universal came to iCAST—the imploded CMGi entertainment website of yore—to present us with their vision of the pay download future. After the whizbang powerpoint deck, I asked what was their pricepoint for a single download? They noted, with all the legalities and costs, and royalties and such, they could not make a profit unless they hit around $1.35 or so. My memory is hazy here, it could have been higher, although I know it was not that much lower as I then noted to them that they would have to hit under 1.00 in order to lure the public into their fold. Since they were not getting the physical product, consumers needed the perception that they could get an albums’ worth of tracks for UNDER the cost of a full CD. The brightest minds in the bunch reminded me that included in the price WERE the extras of photos, liners, lyrics, yadda and yadda. They didn’t get it. That extra stuff was all well and good, but it was the final price that would induce the sale of such an ephemeral product as an Mp3 file, no matter how filled with additional geegaws. Where is Umusic’s download platform and where is Apple’s iTunes? And at what price point did iTunes launch? One penny under a buck. Not that I’m a genius—and neither was iTunes—they just understood the fan mentality. Fans needed the price to be 99 cents. The suits only saw the way to the full sale, the optimum profit, and couldn’t go any further than that. They ended up yielding the floor, and the bulk of the revenue, to Apple and iTunes.

It is understandable why Record Companies look at the back catalog as revenue, since they financed the creation of said items, many of which have not returned a profit, yet. But in looking at these pieces of product, they don’t understand how essential this music is to the music fanatics well being. In a weird way, they do things bass-akwards in order to create revenue. They don’t release back-catalog, they don’t license tracks for compilations (don’t get me started on this one, I have a few good stories if you want to buy me a coffee), they don’t  reach back there into the vaults to really see everything they have and figure out how to get it out here to the music-buying public. I’m not talking the back-catalog of the known entities of rock like Supertramp or Olivia Newton John. Where is “Split” by The Groundhogs? A tour-de-force I wore my headphones out listening to in Jr High.  Or “We & The Sea” by Tamba 4? This was a little Brazillian Jazz something I found in the bins after being hipped to Creed Taylor and his CTI records by my Jazz friends.

Where can you find them? Nowhere.

Why do you think fantatics search out torrents? Why do you think Napster was such a success? These criminals want their music and will resort to downloading it illegally because we, in the business, are not giving it to them in the way they want it. Yes, there are those who will never pay for their music, and guess what? They WILL NEVER pay for their music. But how can you download a tee-shirt, a live experience, even an artist mug with a bag of their favorite artists’ favorite grind of coffee? You don’t sell those criminals up the river; you sell them the proverbial bill of goods. Okay, you can slap their wrists with a ruler if you want.

Napster would have been a fantabulous tool for finding out fans and their networks of friends: who was sharing what and how much and to whom. A treasure trove of data. Yes, it was peer2peer illegal swapping of copyrighted materials and I would think that the minds that put a man on the moon, or made it so simple that the grandparents of my kids—my 91 year old dad and 88 year old mom—could figure out how to get a Facebook account, those geniuses should be able to derive a system that could create revenue for all concerned. Not a full sale, but revenue. But the dang (insert a stronger word here if you must) BzAff departments are either hampered by the corner-officers, or they wear a mighty big set of britches and are looking for a full sale. Remember, the bulk of people who were on Napster were never going to buy the music, or couldn’t find the music they could buy. Either give them what they want—free music—or forget a full sale.

Big Music Label, consider this kind of service, the Google/iTunes cloud music thing (awaiting cool marketing term to insert here: Googlishous? iCloud? iPlay? goPlay? uPlay? weallPlay?) as a marketing tool. And not only that, this could be a piece of marketing that pays for itself. Someone at Rykodisc once told me, “a fan is someone who owns three albums by an artist.” Our mission was to get the next album into their hands, and get them to concerts, and keep them engaged so they keep coming back for more CDs. If you can find out the “Connectors” (as from Malcolm Gladwell’s “Tipping Point”), which would be the fans with the most-est shares, with so many friends checking out their music, you have found the way to penetrate great swaths of the music buying public. You’ve found the fans and you’ve found someone they trust. You should be making friends with connectors, not impeding them. Open up the hood at these services and you could find the whole series of movers and shakers key to Gladwell’s three rules of change in the tipping point of epidemics: the Connectors, the Mavens, the Salesmen at work. Get the webbies to write up some cool software and you could see all of this in action, in real time. You would see the fans you should know better, the ones with three or more albums by your struggling artist. Not hypothetically in a generic grouping inserted into a marketing plan. There, right in front of your face. Interacting with other fans of other artists. In real time! Sell ‘em a Tee Shirt!

As I’m not privy to information being discussed at the high-level meetings by the Music Suits and the Web Suits being held to discuss these services, I can only predict the worst. Music BzAff will hold out for strangling the service before it can gain momentum and go passed the tipping point. And, most undoubtedly on the other side, Web BzAff will hold out for some other stupid stuff that BzAff people hold out for. BzAff just does these things because they know how to do these things and they get their jollies, and their paychecks, by doing these things extremely well.

When we were trying to compile some esoteric Nonesuch track for some not-quite-so-esoteric Rykodisc compilation, the guy on the other end of the phone at Warners, who wore some pretty big britches, guffawed and said, as I recall; “for that kind of money, I don’t get up from my desk to even find the file.” In other words, our spare change of a few thousand didn’t smoke his shorts. One could counter that having the track on an album that we were going to market could have given interest into more of the Nonesuch back catalog and driven more sales of that. One could if one didn’t mind another round of guffaws. I could see their point then, this was before iTunes and downloads. But even today, Big Music Co is not considering the whole picture. A few weeks ago I was told that Big Jazz Label had a whole warehouse of masters not finding their way to iTunes. I gave Big Jazz Label a handy idea that would again, be a kind of marketing that paid for itself—although they would have to shell out the shekels to start the campaign. They came back with, what I would term, a short-sighted reply; they would be most interested if someone licensed the material to do the same thing. Yeah, sure thing, invest in a product that is going to just about turn a profit, but makes someone else a handsomer profit as free marketing for their back catalog. Like my Dad would say, “If you like that, I’ve got a bridge in Brooklyn you might be interested in.”

As a marketer, I would love to be able to use the backend of these services to triangulate fans; fans of A who love B could also love E, and then find ways to pull the fans of A + B to be interested in E. Other parts of the industry—Merchandisers, Concert Promoters/Ticketing, Artist Managers, would gladly (okay, begrudgingly) pay to use this service to peer into the musical buying habits of the members. We treat the music buying public as homogeneous groups, cutting and slicing them into distinct segments so we can market to them. If we had that software, I noted above, during the days of Napster we could have seen odd pairings we could have explored and exploited: fans of A level artists also love B and C level artists of other genres, if you know which ones, then you know how to get more sales of the C level artists; or which C level artists should go on tour with which A Level artists and then really help sell more tickets for the tour. There, I thought of that in under fifteen minutes. Put the Brightest Minds in the Biz in a room to white board it out and you could have a few hundred ways to create B2B revenue from this service; cold cash which could help pay the Big Labels their due. And Big Artists could siphon something off the top to make themselves happy. But, I’m guessing both BzAffs will start at the top, with all expecting their best percentages out of the deal but ending up with an untenable solution, like the pay-outs needed to the Grannies in “The Producers.”  

So here we go again. It’s going to be interesting to watch how these Cloud Music Sharing services wind their way through the BzAff wranglings. Over the years, I’ve seen BzAff at their finest and this is surely going to be some kind of show, even from the outside. Unfortunately, I think everyone is going to wrangle this thing so much it may not survive.

One more story to end this on even a lower note. Henry Frayne, one of the artists I product managed at Rykodisc, went through a bitch of a contract negotiation with our BzAff team. Back and forth the paperwork went, until one day Henry was given “congratulations” for having the lengthiest negotiation in the history of the label. This seems ridiculous. Instead of shoving all sorts of “zingers” into the contract in order to be taken out when noted by other legal experts and lengthening the process, it should have been cut and dried. If the record went on to sell zillions, Henry would be renegotiating the contract anyway and it would make sense to spend good money after good money to work on renegotiations. If it flopped, then all that time in Zingerville was wasted. Henry’s wonderful and dreamy soundscapes entitled “Lanterna,” sold moderately well. (With marketing senses still intact, you should all check out on iTunes right now.) Then Rykodisc was sold to Palm and I was out of there. The zingers still embedded into the contract also denied Henry from making any additional albums for a certain number of years. If you pause to think about this logically, this was a stupid thing for Henry to sign (Henry!) and for Rykodisc to want at all. More albums by Lanterna would have given more exposure to, and interest in, his back catalog—our one album, owned by Rykodisc then Rykodisc/Palm, and now the legalities embedded in the contract lay in some dusty box somewhere in the mighty Warner Bros basement. So they/we cut Henry off from his making more of his music to spite their bottom line.

I believe all the parties involved with the different Cloud Music Sharing Schemes will do the same. They can’t see the possibilities, only the loss of revenue. But without the possibilities, they will lose revenue.

Based in Boston, David Greenberg is Director of Marketing for one of the most influential artist booking and management firms in the United States specializing in artists who epitomize excellence in music. The notions embedded in this article in no way represent the views of anyone other than he, though Greenberg may have nicked some expressions from his favorite artists of all time: Frank Zappa, David Bowie and Elvis Costello and comedian, Bill Hicks. You may say it was a good thing he landed at Rykodisc, where their releases lived. It was, but his years there represents just one ping in the frenetic Pachinko game that is his life to date, best read on Facebook or his LinkedIn profile. In addition to everything else in his life, Greenberg runs the internship program at the agency as well as writes bloggetts for the Berklee College of Music website. If you pop over to GreenbergBlogs on Facebook, you can find a rundown of those musings about the music biz, life in the marketing lane, and other tidbits on how to successfully intern out here in the real world.

Reader Comments (9)

This is so freaking annoying it hurts. Personally, I think we should start fresh. Let the record labels have the people on contract now and just stop dealing with them regarding new music. Get an actual cloud service going with new, independent artists. Have Socan or some other non-profit organization set up an actual cloud service where ALL artists upload their music into. Individual service providers then create web based subscription service GUIs that feed from that cloud. Money will be made from subscriptions and ads on the sites and then Socan (or other) calculates what monies go to the artists. Let the labels flounder about with what they have and just by-pass them with all the new music out there. Eventually they will cave and allow their catalogues into the cloud.

Get an actual cloud service going with new, independent artists.

It's a nice thought, but music services that provide a wide catalog to listeners usually find they need major label (i.e. "popular" and expensively-marketed) music to prosper. Selection is key. Most listeners are not actively looking for undiscovered indie music. Instead, they're usually looking for something they already know about.

iTunes would not have been very successful if it launched with only independent and unsigned artists. They needed major label material. The same holds true for Spotify, Rhapsody and the others. Long Tail businesses can't always just contain the tail.

May 12 | Unregistered Commenterscottandrew

Yes, but that's still because most people are using the old model which requires the marketing power of the big labels to keep momentum going with the well known artists. If people were ONLY interested in those they already know, why the heck are new bands coming up all the time? It's just easy for the labels to whine about this and not move with the times, so it's time to move away from the labels. Let's take that power away from them using social media. More and more bands are taking advantage of this and it's amazing how fast their music can travel the globe with the right mix of media. I'm certainly not saying it will be easy, but we have to get the system we have out and get a new model in place.

I previously worked at a major label affiliate in Austria - short anecdote from that time:

General Manager of the company i worked at, comes to the concert of a band with a current #1 hit - this band was distributed by the company i worked at at that time:
GM: "wow, great concert - I wish these guys were under contract with us."

i know, music is also a business, but there's definitely another dimension to the music market as well. at least these guys should show some respect for the artists they work with.

I don't often say this on posts on here as mostly they seem to be written based on an idea written on a rizla down the pub, but that was a bloody good read, interesting, engaging, sensible and insightful.

Cheers

EyeSeeSound

May 13 | Unregistered CommenterEyeSeeSound

Great points. Being 27, I look forward to the future where a lot of artists today are indie and own their masters. We will be able to do what has not been done on a grand scale and thats have artists get "paid" for their catalogs and also have total creative freedom doing so. It is so absurd to work with artists whom have hits from the 60s/70s, yet can not reproduce their music, all the while said record company gets to release the same music into new models like video games.

This was an excellent and enlightening article. The control and disrespect the majors have for their artists is slowly and slowly withering away. Greed fueled their actions and blinded them from actually doing better business for themselves and their artists. Let them shun cloud services like they did Napster, killing future business for themselves even more. Guess what? Musicians will STILL be making great music they care about AND the playing field will become more leveled!

Free album download at http://www.facebook.com/chancius

May 13 | Unregistered CommenterChancius

scottandrew put it very well. He understands the business.

The masses buy music for a lot more than the music. Pure music lovers (a minority, I think) buy for the music.

But the masses buy for things like the artist's image, being in the cool "tribe", and who they feel they become by listening to that artist and being a fan.

Those last big things take BIG marketing/advertising budgets to create the illusions that power the sales.

Do-it-yourselfers don't have the cash to invest creating that.

May 13 | Registered CommenterGlenn Galen

Syd Schwartz from EMI once told me that Big Labels like his WANT to be able to jump on new technologies as they emerge, but getting a machine that big to maneuver at the speed of Moore's Law is simply impossible.

The overall lesson that I took from that conversation is that record labels are too damn big, but that's not the greater force at work here.

The last decade or two has seen the major labels hemorrhaging control of the entire process, mostly due to technology. For a while it looked like the control would fall into the hands of the musicians actually making the art, but as I've learned and articulated in a recent Manifesto it's really the fans that control the music now. Nobody likes to run a business on a reactionary strategy, but the fans that pay for the entire system dictate the terms with increasing power every year.

As a result, they will get their music however and wherever they please.

The only trend that I see transcending new technologies and developments is one of a connection between artist and fan. The fans don't want to pay for a bloated corporate structure, so they will refuse to pay for art they perceive to be saddled with that kind of load. In that case the artist and the Big Label suffer equally. Show me an artist that's actually seeing most of the benefit from the fans' dollars, though, and I'll show you an artist with an engaged, dedicated following.

I'll be posting an article on "The Re-Humanization of the Music Business" early next week at www.matthewebel.com - hopefully that will help clarify a bit more.

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