Thursday, April 10, 2008

Amazon Unbox vs hulu.com

Being someone who doesn't own a television, the ability to watch movies and TV shows on my computer is a boon. Either I do it legally or... I do it some other way ;-) (Although I do prefer the former.) When I discovered Amazon Unbox I was thrilled that there was such a service, but then hulu came along and promised free TV. However, so far it's been disappointing. Not only is the catalog limited and lacks regular new additions, but the quality of the video streams are blurred and sometimes sluggish (during shots with lots of motion), and worse -- much worse -- is that playback frequently stutters and hiccups (especially over the last 2 days, April 9-10, 2008) to the point that it's unwatchable.

So what do I do? I return to the Amazon...




Saturday, March 1, 2008

Music as a service, but serving who?

One of the business models proposed for digital music distribution is "music as a service" (think cable TV). This has been talked about for a few years now and the model is being put into use by companies like Napster and Rhapsody, who offer subscription-based services that provide digital music to the consumer for a monthly fee. Rick Rubin and other industry bigwigs have expressed support for this model, but it has yet to really achieve significant presence.

There is a fundamental problem: The simple but harsh truth is that it's not easy to get people to buy recorded music these days. Subscription models are very attractive to labels and artists alike, but consumers are still lukewarm to the idea. Most of the people I know age 30 and under have not paid for music in years and don't plan to anytime in the future.

That being said, let's take a look at another potential source of revenue that hasn't received much attention: the artist.

A couple things to think about:

1) Musicians tend to be obsessive creatures and they spend a lot of money on their craft. Think about how much guitarists spend on guitars and pedals, or how much your neighbor's band spent on recording their demo.

2) The music business is becoming democratized by technological advances and the indie market share is on the rise. There are going to be more and more self-produced and self-promoted artists. However, it's very difficult for a band or artist to do everything on their own. I believe this could potentially create demand for services that help independent artists pursue their goals, things like distribution, marketing, and production-related services.

Put these two things together:

Money + Demand

What do you get?

Business Opportunity

Sounds good, right? Now let's replace the artist with the consumer, which will reflect the subscription model most people are talking about today, and let's see what we get:

People Who Don't Want To Spend Money on Music
+
Services That Offer Music

= No Business


Now I know this is an oversimplification. The number of musicians compared to the number of music listeners is small, and at this point the demand for these services is questionable, not to mention the fact that most musicians are broke. However,
we can see that there is already demand for distribution with the example of TuneCore which seems to be doing a very good job at helping musicians get their music for sale online. At this time I am not familiar with any marketing services geared towards musicians -- is there demand for this? Do bands need help with promotion and getting their music exposed to listeners? I think they might. And if they're serious about getting their band exposure, they might be willing to pay someone to help them do it.

One benefit of this model is that it removes the tyranny of the label. It gives the artist choice. With the current label model, if the artist is unhappy with the way their album is being marketed, they can't do anything about it. With the independent model that we are talking about, artists have the option to switch companies if they are unhappy with the marketing services they are getting. And the same goes for distribution and production.

I'm sure there a few holes in my theory but I think it's definitely worth taking a look at.

Saturday, December 1, 2007

Pirates, Dinosaurs, and a Prince

Pirates

As a young music producer in Asia, I experienced first-hand the effects of illegal downloading and music piracy -- much worse than that which had been occurring at the same time in the West. I witnessed, within a period of 5 years, record sales decline by 75%. In 1997, a "success" for a major label was to sell over 200,000 units. By 2002, they were happy with 50,000.

I spent my formative years as a producer immersed in the chaos of this downward trend, pondering the state of the industry. I remember thinking to myself, that only if I had been born 10 years earlier, selling records wouldn't have been so tough, and that my career would have been much more fruitful. I thought long and hard about ways to stop piracy. I researched copy protection. I came up with mastering tricks to make CDs more difficult for pirates to rip into MP3s. I thought about petitioning the government to improve intellectual property laws and to better enforce them. But reality showed me that all efforts were futile. Copy protection could be cracked (or worse -- rootkit!), mastering tricks would eventually get figured out, and the government... well, you know the government. As technology evolved, so did piracy. Finally, I came to a conclusion:

It couldn't be stopped.

Downloading music was just too easy. It wasn't worth the fight. We had to stop looking at the past and look for a new way of doing business.

Dinosaurs

There are many people who say that downloading has ruined the industry. That label consolidation, major studios being turned into condos, bankrupt retailers, etc. are the ill effects of this new generation of ungrateful listeners, a generation of thieves who don't care about sound quality and have a false sense of entitlement. These dinosaurs want everyone to keep buying CDs so that things can return to how they were back in the good ole days.

What bothers me most about dinosaurs is that they fail to realize that today's technology allows us to disseminate content like never before in human history. This is profound. We are no longer bound by the constraints of physical media. There's no longer a need to create a physical master, have it mailed to the manufacturing plant, have it mass-replicated, packaged, then shipped to stores, where they have to pay a lease, insurance, utilities, staff, and advertising just to get a record into the listeners hands. We are now free from the encumbrance of the physical world. Potentially everyone everywhere can have access to everything at very little cost. (Chris Anderson talks about this in detail in his book, The Long Tail.)

Not to say that there aren't economic challenges, however, failing to embrace this has not been very beneficial to the industry. Dinosaurs do not appreciate this "democratization of distribution" and, in general, despise digital music. When I was a kid, I'd hear adults talking about how their parents hated their music. I think that parallels today, except today it's more like, "my parents hate my format." Dinosaurs rigorously view file sharing as stealing and they think it's important that they "protect" their assets. But when you look at what is capable with today's technology, and what is most efficient for the consumer, you'll see that really the record labels have been failing to give the consumer a product that is contemporary with today's technological capabilities. No wonder people would rather download from LimeWire. I believe things have gotten better over the past few months (finally DRM-free MP3s! Although, I'd prefer AAC compression), but there are still too many dinosaurs in the music industry if you ask me.

Prince

In July, Prince (is that still his name? I can't keep up) gave away nearly 3 million CDs for free in the UK. He cut his label and retailers out of the equation and got his music to his fans cheaply and efficiently, it was an excellent way to promote the album, and he sold out over 20 shows within two weeks. Like gang bosses, the label and retailers were angry that they didn't get a piece of the pie.

Other front-line artists, such as Madonna, Nine Inch Nails, Radiohead, and even the Eagles, are also circumventing their labels, setting up deals directly with retailers, selling music directly to fans, or leaving their labels completely.

This seems to give new meaning to the term "independant artist".

What does this mean for record labels? Will new artists even want to sign deals with major labels when they see that all the big artists are leaving? If they continue status quo, will labels become museums only to exhibit music from the pre-artist independence age?

Maybe we should break this down. What exactly happens when an artist signs a deal with a label? In the past, it was very expensive to record, distribute, and market an album. Recording budgets were often 6 digits and CDs cost money to manufacture and ship to stores. People don't generally have that kind of money to invest on their own. So basically, the label gives the artist money to record and produce their album, and once it's done the label markets and distributes it. The artist has to pay this money back (recoup) , the label takes a large cut of the sales, plus the artist loses some control over their music, as the label can interfere with the creative direction and production of the album.

Today, recording equipment is affordable enough that an artist can record an album in their own home if they wanted (what they're calling "democratization of production"). Music is digital, so you don't need to spend tons of money on manufacturing and shipping CDs. Companies like TuneCore are offering digital distribution services to anyone at affordable prices ("democratization of distribution"). Artists can market themselves on the internet and by playing live shows. So... what do you need a label for?

I've oversimplified things, but you can see my point. Artists are becoming empowered to self-produce, -distribute, and -market their music. While it might be harder to sell albums, artists today definitely have control over their music like never before. Anyone can record and release an album today. You don't need to hope and pray for a "big break" like you used to. You can now take things into your own hands.

So what does this mean for labels?

I think a possible solution is for labels to go from seeing artists as assets to seeing artists as clients (more on this in a future post). Instead of being companies that dictate which artist's music gets recorded and released, labels could become service providers to artists. They could build platforms and tools that facilitate production, distribution, and marketing of music. Why doesn't Universal have a Myspace-like website where anyone with a band can create a profile, post songs, and display tour schedules? Why doesn't SonyBMG offer a service like TuneCore? They already have the infrastructure for it. (To SonyBMG's credit, they did offer Sony Internet Mastering, an affordable digital-only mastering service that met its demise when Sony Music Studios in New York was tragically shut down.)

This is an exciting time as the industry goes through severe upheaval. We are looking at the "democratization" of the music business as major labels lose their tyrannical rule over what gets released and what we listen to and industry controls fall into the hands of the artists and the listeners. Consumers are enjoying increased selection and availability of music like never before. Of course there are drawbacks: an increase in the amount of BAD music available, poor sound quality, choice saturation, etc. but these are growing pains we must endure as our industry evolves into something new and, hopefully, better.