Archives For music biz
Reading TechCrunch, Gaga manager Troy Carter says the next technology disruption in music will happen in terrestrial radio.
“I think the opening right is figuring out terrestrial radio, that’s the one space that Sirius could have done it with subscription radio, but you look at Clear Channel and CBS, it’s not what people want. People just get in a car and turn on a local station. It’s going to be interesting when you get in your car and you’re listening to a 17-year-old kid in Russia.”
TuneIn in the dash, problem solved, no?
Here’s the thing, the music industry doesn’t have a tech problem, it has a fundamental business model problem.
That’s much, much harder to fix and I agree with Carter’s sentiment:
“I don’t think tech has screwed the music industry, the music industry has to adjust to change. When people in remote villages throughout the world can access music, it’s a good thing.”
Consider this, aggregated rights owners use copyright to restrict legal access in a world without borders (the internet) under the mistaken belief that doing so protects their business, when the opposite is true. More on that another day.
Paperless ticketing is a controversial subject. People on StubHub’s side of the debate want consumers to exercise freedom with their tickets, and they are hesitant of any technology that allows a ticket issuer to command the resale marketplace. People on Ticketmaster’s side of the debate – which includes many artists and venues – want to limit resale on the secondary market and allow fans to have a better chance at securing tickets to in-demand events at face value.
— Billboard, California ticketing legislation favors Live Nation
Emphasis mine. First up, ticketing isn’t something I’ve thought about for a very long time. Nonetheless, here we are and so if I’m missing fundamental industry dynamics in the following hit me up in the comments ;-)
The problem isn’t that secondary ticketing marketplaces exist, it’s that the event routing, booking and/or ticketing process is so broken that secondary marketplaces exist at all. If Billboard’s assertion is true, that Ticketmaster wants to give fans a “better chance” by limiting resale, it is incumbent upon them to to fix the underlying event business* rather than rely on the legislature to embed market inefficiencies.
AB329 (to which the Billboard article referred), if it in fact advantages Ticketmaster over, say, StubHub, appears to be regressive, disadvantaging consumers who want to offload tickets whilst creating an opportunity for Ticketmaster’s TicketsNow to establish a secondary ticketing monopoly. Creating monopolies ought not be in any legislature’s remit.
Where it gets really interesting though is that AB329 says that a ticket might not actually be a good at all, but instead could be deemed by the seller to be a license to attend an event. That’s not an insignificant designation and means consumers no longer own their tickets. It also means that the seller can change their licensing terms at any time, and where that goes is anyone’s guess.
* Since Ticketmaster is owned by Live Nation that’s eminently do-able.
Wow! Seriously funky soul from 1974. Shuggie Otis is currently on tour.
Unfortunately Fear of a Black Planet isn’t on Spotify, so Fight the Power from this Def Jam compilation will have to do. Great song, fantastic recording.
Ah, while I’m at it:
It’s 2003 and Apple launches the iTunes Music Store. The un-bundling of the album format that started with Napster in 1999 has become official. The then ~$40 billion record music industry is on its way to ~$16bn within a decade.
The bigger point is that digital pays less, the margins just aren’t as good as physical. And the energy pored into digital produces fewer returns. So bore me with all the zero-cost, infinite distribution arguments, it’s just a low-margin format that doesn’t bundle well, doesn’t have the benefit of scarcity, and is far more prone to redistribution (also know as theft).
— Paul Resnikoff, Digital Music News on CD vs digital revenues.
The missing $24bn fractured in many directions:
- albums distorted the natural music acquisition market and hence consumers gravitated to singles rather than (high margin) bloatware albums.
- entertainment substitutes continued to gain market share.
- some people then and to this day choose free over paid via “illegal” filesharing.
- the app-conomy ;-) put a rather large nail in the recorded music revenue coffin (I realized this when I happily spent $5 on an app but thought twice about buying a song).
Plus subscription models continue to drive revenues toward zero, even for aggregated rights owners such as the recording labels who are the only entities for whom sub models make any sense (apart from Spotify).
All that said, I think that within roughly five years it will be clear how much of the $24bn was lost because the recording industry refused to do the hard work of monetizing the sharing economy. Suing BMG, who took a large stake in Napster in 2000, was always an absurdist Pyrrhic victory.
The Daily Gieselmann also takes into account data from iTunes: the App Store, eBooks, Movies and TV purchases. (Gieselmann [of e.ventures] says he’s not that interested in music, which is why the dashboard doesn’t also track music sales.)
I often get asked about rights deals with the music industry, particularly as they relate to my startup. I’m with Tom Gieselmann. It’s way too hard, with too much cash needed up front for so little return, when one can prove MVP with other entertainment rights sectors.
I have no idea how many times over the past decade I either heard or read a person in tech say that major record label execs were luddites incapable of adapting to the digital transformation of their industry. Too many to count for sure.
I’ve long argued that while there may have well been a deep lack of understanding about the new reality, or worse an unwillingness to push a few important boundaries, transitioning a multi-billion dollar business in the face of tectonic shifts in the underlying industry model, while also protecting what will eventually become a legacy business (yet which still produces 90% of ones’ revenues) is no easy task.
Whatever you need to do, you have to keep the current business going while you are experimenting with your new one. He didn’t do that. What he did was put a bullet hole in his current business and went about trying to create a new one. And when the new one went down, well think about it, 25 percent? It’s a multi-multi billion dollar company. It’s a disastrous thing.
No matter where I was, you always think about how you limit the downside as you are making product transitions. He didn’t do that at all.
That’s exactly the challenge faced by the major recording labels since ~2000. Could they have done things differently? Definitely. Did they make serious strategic errors. Definitely, again. But I certainly didn’t (and still don’t) envy the peeps trying to adapt those business to a new reality.