New Trends In The Music Industry

Billboard PostPlay pokes out some good stuff gleaned from this.

The report starts off with the obvious: that stopping P2P sharing is like trying to keep teens from drinking alcohol. It's a battle for the witless.

Next, the report talks about alternative revenue streams currently being pursued by record labels. The longer people cling to this nostalgic idead that major record labels should be run by music lovers, the more the real problem will fester. The real problem is that the industry is mature in the midst of revolution. Big labels used to be big bank accounts for artists who needed the financial backing to undertake the expensive process of making and distributing a record. As this report notes, labels are increasingly functioning as marketing companies; how long until a savvy, established artist simply hires a marketing firm instead of an entrenched label to make distro happen? The White Stripes or Beck, who can and do record on a budget, probably don't need to be paying for A&R services. They'd be better off with a boutique shop who just cater to marketing and nothing else--distro is only about three years from making this a reality.

Podcasting: the revolution that isn't. Yet.

People such as Bob Lefsetz are very excited about iTunes version 4.9, which makes a big deal about Podcasting.

As usual, Apple's embrace of Podcasting isn't unique: they're just a huge company with a huge marketing budget, which allows them to market much more precisely to the masses. That they're bringing attention to a new technology is good news. That Podcasting is anything great is debateable

The Tao of Mac agrees with me. I really don't get the immediate appeal of Podcasting. Yet. It's supposed to be like Tivo for your radio--you can record radio broadcasts and then play them back at your leisure.

But what's new about that, really? And where's the demand for it?

I've been able to stream (and record) "The Morning Becomes Eclectic" for at least five years now, for example. Subscribers to Rush Limbaugh or Jim Rome have had the same opportunity. As for radio, isn't the point of buying your own music to be able to play what you want, when you want to? Other than a handful of notables, are you really excited to hear DJ patter? You think you're gonna be more informed by Nic Harcourt than, say, all the RSS feeds on music websites?

And if you've ever actually listened to a podcast, you'll see that so many of them are bad--the playlist might be passable but the DJ usually is horrible. Yep, for some people "subscribing" via podcasting to Limbaugh or Franken or Stern might be relevatory, but as of now, there doesn't seem to be a "killer Podcast" out there, one that will bring critical mass and a change of paradigm.

Radio, rest safe. You've probably dodged the bullet. Temporarily.

The ballad of the serious fan

I write today in what began, at least, as a conflicted mixture of resignation and alarm. Probably you do not recognize my name, but it' both embossed and encoded on my credit card, so possibly you should. I have been one of the staunchest defenders of your copyright ever since the virtualization of music distribution began to challenge them, and I've been one of your most dedicated personal patron since I was old enough to spend my own money. Originally I was a customer of necessity, of course, but I'm a computer and interne professional for a living, and have been fully aware of every iteration of the technical possibilities for acquiring music without paying for it. An yet, I have continued to pay. In a single year, not too long ago, I bought 1000 CDs, and most of them were yours. I continue to pay still. I bough two CDs this week, and will almost certainly buy more than 100 over the course of this calendar year. I have paid for legal downloads, as well. have stubbornly forgiven you your trespasses against everyone you nominally serve, and kept supporting the idea of music as a Big Business. have never condoned your numeric monopolies and tasteless denominator-lowering, but I support the dream of musicians being able to simpl make music for their living, rather than operating themselves as a business, and somewhere far back in history that was what Industry allowed
But I have also now started stealing your music...

Please read the rest of this post.

And then remind me why I should be spending hundreds of dollars on import or out-of-print items--buying them second hand from sellers who make an enormously larger profit than the copyright holder.

Grokster loses, surprising only the willfully blind

Most people who follow case law saw this coming, although as Billboard PostPlay notes, the unanimous decision is a bit of a surprise.

So since this blog is about the business of music, how will the Grokster decision affect the industry?

Not much. This is pretty much a non-story, other than the fact that the Court a) heard the case and b) they sided with copyright holders instead of the company who designed a product specifically to cheat copyrights. On face value, who believed that the Court would side with Grokster?

Granted, some of the dialog in the Court Opinion hints at how the Court and the law will test the facilitation of copyright infringement, but even with that, case law will need to be developed before we can turn the FBI loose on all the bad guys. And of course, that sidesteps the obvious: when P2P sites spring up in China, all bets are pretty much off. The FBI can't do anything about, say, BitTorrent tracker sites and it's still pretty unlikely that a court is going to be able to issue a subpeona with any teeth. Who will they go after if they can't get the IP host?

Heh. That's the next big question, and likely, law enforcement woudl turn to ISPs. But that's proven very difficult before, and there's really no sense in believing that technology won't continue to sidestep efforts to curb P2P use.

And we all know that piracy is a much, much bigger hole in the dam than college kids ripping tunes in the U.S.

It's been noted before, but did anyone wonder why Microsoft wasn't in on Grokster or any of the other lawsuits against P2P? You'd think a company with that kind of resources would be a little angry at the P2P sharing of Office, XP, etc., a practice that has been going on since at least 1996 online and even further back when there were plenty of software makers who designed apps for duplicating software. The software companies are losing millions on P2P but they were mysteriously silent throughout this. Hmm. Hmm. Hmm.

Copyright is a slippery snake and getting much, much more slippery. All attempts to control P2P have miserably failed. The Prohibition movement is failing. At what point do we decide that if copyright laws are basically uneforceable, do we start to consider alternatives to DRM? Or are content companies simply waiting for a DRM silver bullet to save themselves?

The iTunes Phone

Billboard via Reuters: Cingular Considering Launching iTunes Phone

Hmmm.

The RAZR's been an undisputable hit for Motorola, though CEO Ed Zander told the Wall Street Journal last week: "In terms of the bottom line, sure we sold a bunch of RAZRs in the second half of the year. But in terms of the overall number of cellphones sold worldwide it was a very small fraction of it. What it really did do though was get Motorola in the minds of a lot of people around the world for being cool again.

This means that there's a lot of critical mass to be made before a $500 phone replaces the iPod and your current phone and iPod. Because right now, this is another paradigm jump for consumers. Oh sure, it makes sense to reduce the number of gadgets by combining them. But with a high price point, unproven reliability/useability, we're kind of in Apple Newton territory here.

Look at it this way: what competitive advantage does Apple, Motorola, and Cingular get out of this? Or more importantly, what is the replicability of that advantage?

Haloscan commenting and trackback have been added to this blog.

a temporary thanks to Blogger for the pics

one of my favorite albums of the year

PWC studies the present for the future and finds that downloads and phones are where it's at

Variety.com has the press release from PricewaterhouseCoopers

PWC says that digital delivery wil be 37% or more of all music sold by 2009--that's just four years away.

Consider the status of digital music four years ago; consider the number of homes with broadband four years ago (less than 10%); consider the number of portable digital music players four years ago (hardly any); consider the price of computing power four years ago (computers routinely shipped with 20gig hard drives); consider the economy four years ago (headed downward towards a recession that would be spiked by 9/11); consider mobile phone technology or even PDA technology four years ago.

Imagine then, if you actually paid PWC for this report that basically gave you the obvious. Imagine then, what PWC was reporting in 2001 and what sort of predictions they were making. Nobody--not PWC, that's for sure--foresaw the success of the iPod or iTunes. But combine the changing paradigm (digital delivery being accepted as the norm) with lower computing costs, greater broadband penetration, and a hungry market for portability and it's pretty obvious that PWC is erring on the conservative side with a figure of 37%.

Bob Lefsetz asks questions. He's supposed to be influential.

CelebrityAccess >Knock, knock, knock, knock, knock, knock, knock, knock, knock. Is anybody home?

There are a million obvious answers to the questions that Lefsetz poses. But the problem with all the obvious answers is that they involve a massive change in fundamental business operations, a change that would be expensive and risky. For example, Sony simply can't license everything they own: there are a million legal hurdles in the way, hurdles that a) Sony cannot control at all or b) hurdles with no economic incentive. If some washed up rocker or his lawyer won't sign off on a copyright, Sony can't open up some scarce B-side from 1972. Blame the labels all day long, but the legal fees (i.e. time needed to decipher multiple copyrights) alone are an enormous impediment to monetizing the money chain. Even with a huge investment in shaking out copyright issues, a case could be made that shareholders would get more value out of investing in new talent. Maybe the labels are better off just giving up on monetizing back catalog, rarities, etc. and instead, focusing assets on the future: write deals that embrace secure sharing, anticipate copyright issues for the next decade, and try to control the future instead of gerry-rigging copyright to capture water that's clearly over the dam.

The Big Picture: MPAA does the heavy lifting RIAA refused to do

The Big Picture talks about 35% of the CDs sold worldwide are illegal copies.

The RIAA is arguably spending millions (actual cost, opportunity cost, etc.) fining college students and others who illegally share files.

Meanwhile, labels are giving up 35% of sales to counterfeiters. Millions of these CDs are outside our borders, but for decades, illegal CDs have been sold on the streets of major cities. Every day of the year.