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I Am Trying To Believe (that Rock Stars aren't Dead)

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Last Friday night I attended a Nine Inch Nails concert in Philadelphia with Chris Cera of Vuzit (thanks Chris for your help with this post). At 43, Trent Reznor can certainly still grab an audience by the throat and shake it. It was a fantastic show; the kind of show that has you checking to see if there are other tour dates within driving distance.

During a short break in the sonic and visual mayhem, Reznor spoke for a moment and told us emphatically to steal his music. Later, on my way to the car after the show, a member of the band Cube Head was handing out sharpie-labled home-burned demo CD’s in the parking lot complete with a hand drawn “copywrong” marking. It was an interesting contrast between established artist and emerging talent and how they are both figuring out how to make their way in the post-vinyl post-jewel-case economy.

I’ll come back to that theme in a second, but first a brief aside. Chris (who has some background in real time video processing) and I were blown away by the amazing stage show; it was geek manifest and a video processing tour de force. During about 1/3 of the show the band played sandwiched between at least two giant video monitors, the one in the foreground transparent when its pixels were dormant and opaque when lit up.

The source video for the display was sometimes heavily processed local camera inputs, sometimes it was prerecorded, and sometimes it was electronically generated. Whatever the source, it was frequently and heavily modified by the audio inputs or by the movements of the artists on the stage. With a sweep of his hand Trent would wave away the static hiding him from the audience and then moments later it would fill back in. It’s hard to explain but the effect was very cool. Cool enough that trying to figure it out started to distract both of us from the music. There are some videos out there of it in action but none that I found really capture the full effect. Let me know in the comments if you find one.

– “Steal my music” –

The next day, still curious about how the stage show was done, and with Reznor’s call to “steal my music” still in my head, I poked around on the web looking for more info. One of the most interesting things I found was this story about Nine Inch Nail’s Year Zero Alternate Reality Game. The way Reznor used this new gaming medium as an extension of his canvas rather than as a promotional stunt (and the nascent geekness it suggests) makes me think he has a much better than average chance to figure out the post RIAA world. Or, it may just be that with the state of distribution being what it is, he realized that while promotion might move more units, it would do it in a way so loosely coupled to monetization as to be pointless.

His comments in the story’s sidebar make me think it is probably the latter. In particular: “So a couple years ago I realized that music essentially is free now. I’d prefer, it wasn’t, but it is. And hey, I’ve had a pretty good run. I can still make a living touring.” …. “I feel that the right model hasn’t revealed itself yet.”

Here’s the thing, I’m not convinced it’s going to reveal itself. Or, more likely, it has revealed itself and he already knows what it is: “I can still make a living touring.”

When it comes to income, I don’t think there will be another Rolling Stones any more than I think there will be another Microsoft. Reznor’s creative partner Rob Sheridan hints at the same thing in his amazing piece on the state of the music business written last year. He does a masterful job of parsing all the deck chair rearranging going on in the industry today but what he is unable to do is offer a meaningful business model to replace it.

Everyone is fishing for the answer (see item #1) but more and more I think it’s just not there. After all “sell records” was not some complex business model come down from on high. I can’t help but think that if there was an equally effective replacement someone would have thought of it by now.

That’s not to say I don’t think new and better music distribution and monetization models won’t be invented, I just don’t think they will capture and concentrate as much value as the one that is dying before our eyes did. I suspect the balance between linear (touring) and leverage (selling stuff while you sit at home) has simply and irrevocably shifted toward the linear.

– Leverage is dead. Honey I shrunk the head of the long tail. –

When the Victor Talking Machine Company (their original factory seen here from my office window in Camden, NJ) made it possible for an artist to be in more than one place at the same time, they gave the performing artist the gift of leverage (e.g. Enrico Caruso booming out over the Ucayali River in Werner Herzog’s great film Fitzcarraldo. If you haven’t seen it, trust me, Netflix it).

Victor-Talking-Machine-Co.jpg

The key to the whole system was the low marginal cost of the recorded disk and the important fact that it still served to support a constrained distribution channel. The key constraint being that it enabled point of sale monetization of the entire value chain of production, marketing, and distribution. In fact, it worked so well, that it set up a system where recording companies were able to harvest higher than economic rents for their services and leave all but the most popular artists either on the outside trying to break in or in near-perpetual indentured servitude once they did. The long tail was neither; it was truncated and compressed by the recording company’s stranglehold on distribution. This established the long running artist’s resentment of their record company’s. Despite the compression though, the recording was such a leveragable medium that touring, the artists original source of income, was often reduced to promotion for the disc.

As everyone knows, the digital audio file is even more frictionless than the disk. It is even better at creating duplicate Enrico’s and freely distributing them around the world. It provides the performing artist near perfect leverage in their quest for attention; they can be anywhere in the world finding any audience. The musical attention economy has become a near-perfect meritocracy (of course merit is a slippery thing in this world). Unfortunately, and paradoxically, the digital audio file is in a sense too frictionless and it severs the connection between distribution and monetization. It’s not contained like the vinyl record or the disc that followed it and, therefore, it effectively snatches the gift of leverage back from the artist.

The value that people might pay for in distribution now (higher bit rates, convenient discovery, etc.) will attract some dollars, but the music loving consumer in aggregate is never going to pay as much for music in the future as they did in the past. Back then they were paying for the binary decision of having music or not. Incremental qualities simply won’t monetize at the same rate even if a replacement mechanism to capture it is created.

Value isn’t being added in traditional distribution and consumers know it, they aren’t going to pay for what they aren’t getting. Also, since the long tail of attention is no longer truncated by the music industry’s artificial barriers, some of the revenue that does remain in the system is going to shift away from the artists at the head toward those down at the tail. There is going to be less money spent on music and what’s there is going to be distributed more broadly.

As an aside, the electric production companies should thank their lucky stars that electricity won’t fly through the ether as easily as music moves across a network. Here we are after deregulation and the electric generation companies are still getting paid. Their product is unbundled from transmission, but transmission still makes a nice point for collection and monetization.

For the artist seeking attention this seems like a bittersweet time. Make great music and be discovered. Instead of assailing the gate keepers with demo tapes, find an audience through this new frictionless medium and new alternatives to the traditional marketing machine like Pandora, Last.fm, and various p2p networks. But, when you get the attention, then what?

– The Rock Star’s life style is going to go the way of Sun’s multiples —

For the artist trying to make a living welcome back to 1890. Cube Head and Reznor are both wage slaves now and the tour isn’t about promotion, it is the product again. The linear / leverage balance is leaning back to linear and if you want a model for how you will make a living, look no further than Adelina Patti. She was a typical opera singer of the 1890′s who made her living touring in the last years before the Victor company changed the rules of leverage. She toured all over the world and as she got more popular the venues presumably got bigger. It was artistic piece work but with good pay and decent perks.

By the way, If you’re a future Polyphonic Spree with all those mouths to feed in the split, I think the post-leverage music business is going to be especially difficult for you. You might just be screwed.

Leverage is dead and frictionless distribution killed it (“video killed the radio star”… and audio files killed the rock star). Well, maybe leverage isn’t dead, but if it’s still alive, it’s alive the way that guy in the wheel barrow is still alive in The Holy Grail. Picture iTunes in the wheelbarrow and you get the idea. Even if it’s not dead, what Reznor is acknowledging is that it has shrunk to the point where it is no longer going to be the driving force in an artist’s income.

Reznor has an open mind and is clearly preparing himself for a transition into a post RIAA world, but I can’t help but think he’s going to find a world that is changing as much for him as it is for the record companies he assails. The music industry is clearly a dead man walking, but what I think I’m realizing is that rock stars as we know them are relics too.

It’s the same mechanism that is happening to proprietary software companies. The huge valuations of proprietary software companies are based on the leverage inherent in the proprietary software business model. But when a Red Hat comes along selling services and giving away the IP (to over simplify a bit) they are implementing a “cut the legs out from under the old guard” strategy. They will win, or at least force the old guard to shift models. When it’s over though, they’ll have a business model that will never achieve the same enterprise value per unit of distribution that the old model did. It’s easier now for a software company to find and reach an audience, but the subsequent monetization won’t achieve the same multiples on units shipped.

The sad truth is that even with the shift to a services model, the Red Hat’s of the world probably preserve more leverage than a recording artist does in this new open IP paradigm. They can always hire more people to provide the services that are the key to monetization in their new model. They don’t have to try to clone the software’s original developer.

However, unless all of us music fans start liking NiN cover bands as much as the real thing, Reznor’s leverage in an era where touring is his primary source of income is near zero. He’s not the infinitely duplicatable Blue Man Group, he’s a modern opera star whose income will be capped by the number of seats in the auditorium and the number of dates he’s willing to do on the road (On the other hand, it would be hilarious if he franchised the NiN concept and sent cover bands to small clubs all over the place).

So, what does all of this mean for Trent and Cube Head? I don’t really know as this whole post is mostly conjecture. What I do know is that Trent has already made his money so he’ll be just fine. Touring is where his art is expressed and he can still get paid doing it so life should be good. He’ll probably be paying his taxes with tour income while he’s lifestyling off the golden egg the old system laid right before it went to goose heaven.

If Cube Head is good enough, they might just take advantage of frictionless distribution to ride up a more meritocratic power curve in the attention economy. If they are great, they might even find themselves at the head of the curve. When they get there though, they’ll likely find themselves on a hill instead of the mountain they remember from all those episodes of MTV Cribs. Oh, and they’ll probably be touring their asses off. Pretty much exactly like that 19th century opera star. I really don’t think they’ll be sitting at home between tours watching the point of sale scan numbers and cashing their royalty checks.

With the disaggregated production -> marketing -> distribution channel value chain I have absolutely no idea how Timbaland is going to get his pay on. That remains a mystery.

By the way, if I’m right and Trent Reznor is a bit of a closet geek, I bet he also has Google alerts set up for himself. So, just in case,… Hey Trent, awesome show the other night. Absolutely kick ass. And by the way, I bought tickets to your show right after I downloaded The Slip.

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  • http://antisleep.com Scott Evans

    Sure, but… good. Rock stars rarely make worthwhile music; the music industry has as much to do with art, or music, as General Mills has to do with food; and there are still tons of great musicians making music worth seeking out, hearing, and seeing live. If those musicians have to support their art with a day job (I sure do), they’re not the first and that’s one less Steven Tyler. I think the only people lamenting the demise of the music industry are record labels and rock stars.

    I’ll also throw in that in the post-CD world, music fans *do* still want to support artists that they love. Vinyl — particularly in elaborate, collectible packaging — has seen a huge resurgence in the last few years, and IMO it’s because buying a record is like buying a poster or a shirt: it’s a nice artifact that represents good music and supports an artist (and for some people, it’s fun to listen to). With a CD, you rip it once and then you have to find somewhere to store it.

  • http://brooksjordan.name Brooks Jordan

    Marvelous post, Jim.

    >But, when you get the attention, then what?

    We need a Threadless-like solution of some kind to demonstrate that there is a new way to make money with music. I believe it will happen.

    I think tomorrow’s band won’t be just touring . . . their music will also be inserted into a variety of media points where money is being made. And they’ll do well. (Wilco comes to mind as V0.5 of that.)

    But for that to happen the new standards for marketing on the Web and producing film and TV have to be developed.

  • Rodney

    Rock Kills Stars.
    Stars Kill Rock.
    Kill Rock Stars.

    wwww.killrockstars.com

  • http://www.asourceofinspiration.com/ Armando Alves

    When you think about it, it’s just like theater companies and actors. They will have to do really good plays (records), and the actors can always have supplemental incomes like gigs on TV or doing commercials (merchandising, advertising).
    The music industry will have to get used to lower profits and get used to scarcity, just like the theater companies do.

  • http://blog.ivesdigital.com Phil Ives

    NIN is playing in AC soon, Just got the presale email.

  • http://www.tricornerhumor.com Michael

    As Scott pointed out, Vinyl is on the rise for the audiophiles. NIN, Metallica, Weezer, Andrew WK, have all released albums recently on Vinyl in addition to CD/Digital. NIN and Metallica even released limited edition box sets with all kinds of collectible goodies, different cuts of songs, and the like to accompany the album. I think the NIN one ran a few hundred dollars.

    It’s the little guy we should be worried about here, the true starving artists. They already have to work hard to get paid. Without the benefit of stardom to put people in the seats, how will they make it worth their while? And if they can’t become rock stars either? Sure, some of it is self satisfaction, but nobody says, “I want to be an artistically satisfied starving musician when I hit it big.”

  • http://xmlhacker.com/ M. David Peterson

    “The value that people might pay for in distribution now (higher bit rates, convenient discovery, etc.) will attract some dollars, but the music loving consumer in aggregate is never going to pay as much for music in the future as they did in the past.”

    You start your article talking about how great of show NIN puts on and then come to this conclusion? How? Trent Reznor made more in 24 hours (1.6 million) than he personally had *ever* made on a single album selling $5, $10, $20, $75, and $300 packages of an album the labels would have never released, doing so under a Creative Commons license, and you conclude that consumers are never going to pay more for music in the future than they did in the past? You couldn’t be more wrong.

    Consumers are willing to pay for content. They simply need to perceive that value exists in that content beyond what they can get for free in a digital download. Trent found the perfect balance of free, freedom, and financial success and the retail music industry will become stronger than it /ever/ has as a result. The artists just need to think outside the CD case.

  • Jim Stogdill

    Brooks, my original notes for this post included the question “where is the adsense for music’s long tail?” What I meant by that was that in other long tail content environments advertising provides at least some mechanism for monetization. It’s kind of hard to imagine ads in the middle of an mp3 file though. I agree with you, it’s currently missing and needed.

    Scott and Michael, I think the resurgence of high end vinyl sales is very cool. It might even make the artists some money but I don’t think it fundamentally changes the economics and relative the shift away from leverage.

    And Michael, don’t you think things are at least bit more optimistic for the emerging artist? I know for example that the combination of Pandora and digital distribution has my hard drive singing with acts that never would have broken thru before. They would have been selling CD’s from the trunk of their car; but they can at least attract attention more widely than the geo-limits of their touring now.

    I do think it will be harder to get “rock star rich” because of the death of leverage, but it seems to be me the tools for gaining an audience are getting better as marketing is no longer the domain of just the majors?

  • http://xmlhacker.com/ M. David Peterson

    @Michael: “It’s the little guy we should be worried about here, the true starving artists. They already have to work hard to get paid. Without the benefit of stardom to put people in the seats, how will they make it worth their while? And if they can’t become rock stars either? Sure, some of it is self satisfaction, but nobody says, “I want to be an artistically satisfied starving musician when I hit it big.””

    Interesting point. Stay tuned to http://amp.fm/

  • http://xmlhacker.com/ M. David Peterson

    @Jim Stodgill: “And Michael, don’t you think things are at least bit more optimistic for the emerging artist? I know for example that the combination of Pandora and digital distribution has my hard drive singing with acts that never would have broken thru before. They would have been selling CD’s from the trunk of their car; but they can at least attract attention more widely than the geo-limits of their touring now.”

    This I absolutely agree with, primarily because I have been building what I believe to be the right solution for the last couple of years. See my previous response to Michael for the link.

  • Jim Stogdill

    M. David, I probably am wrong, after all the future has a way of turning out differently than expected… but let me clarify what I meant.

    The comment you highlight was specifically in reference to packaged / distributed music. What I mean is that if music buyers once spent $X Billion on music, I’m contending that the changes in distribution will result in

    An artist’s income is something like Total = Linear Income (e.g. touring) + Leveraged Income (e.g. record sales, tee shirts, and what the hell, even sheet music)

    NIN was filling up 20K seat auditoriums before he started giving his music away and I think he’ll continue after. So, the first term in the equation is probably about a wash for him. I think the second term goes down as there will be only incremental monetization available on the leverage side (the cool vinyl with great packaging kinds of things).

  • Jim Stogdill

    Last bit of that paragraph got cut off for some reason..

    I’m contending that the changes in distribution will result in …. an overall reduction in aggregate dollars spent to less than X. If a file is free they might pay more for a higher bit rate version, but not incrementally as much more as they would have paid for the binary choice before.

  • http://xmlhacker.com/ M. David Peterson

    @Jim: “NIN was filling up 20K seat auditoriums before he started giving his music away and I think he’ll continue after. So, the first term in the equation is probably about a wash for him. I think the second term goes down as there will be only incremental monetization available on the leverage side (the cool vinyl with great packaging kinds of things).”

    This is true to a point, but he’s also seeing a surge of new interest in his music that he’s never before seen, adding 26 additional shows recently, adding towns like Missoula and Billings MT, places he would have never been able to justify the expense in previous years. > http://tour.nin.com/

    The thing that you need to keep in mind is that musicians have *ALWAYS* made their money on touring. For example, Lyle Lovett recently > http://www.reuters.com/article/entertainmentNews/idUSN1030835920080710 – admitted he has never made a single dime from the sales of his albums. He survives by playing shows. So the fact that Trent Reznor has proven that a model exists that can now generate revenue for musicians from the sales of music suggests that while we are currently in a lull, creativity on the part of the musicians (and labels if they would ever wake up and stop suing everyone over copyright issues) holds potential to cause a surge in sales never before seen.

  • http://xmlhacker.com/ M. David Peterson

    @Jim: “I’m contending that the changes in distribution will result in …. an overall reduction in aggregate dollars spent to less than X. If a file is free they might pay more for a higher bit rate version, but not incrementally as much more as they would have paid for the binary choice before.”

    Again, I completely disagree. This would be true if the CD itself remained as the primary merchandising focus. The key — as Trent has proved — is to realize that the CD is only one of /several/ products that people are willing to spend many on. It’s the perception of value that is driving this charge, so if a CD is losing its perceived value, then, like Trent, the artists need to introduce new ways of packaging the content, providing value-add items that you simply can not get in a digital download.

  • Anon

    How about music companies give up on this whole marketing beast that caused albums to cost ridiculously more for the consumer than they cost to make, and allow CDs, iTunes albums etc. to sell for, say $3 each? $1 a song is a convenient way to package and sell music but realistically, the average person isn’t going to buy more than 2-3 albums/month that way.

    Music is driven by what’s new, always. You are going to listen to a song/album only so many times before wanting something different to hear. Right now free podcasts fill that need in my life. I would buy a lot more of the music I hear in podcasts if every album wasn’t ten bucks. *BUT* the reason I would buy them would be just as much to support the bands as to own the tracks. I guess I don’t feel rich enough to support all these artists at current album prices.

  • bowerbird

    the rolling stones? m.t.v. cribs?
    i see where you’re coming from:
    money, money, and lots of money.

    is that what you think a “rock star” is?

    no sir, it’s love. (and/or a lot of lust.)
    it’s sexuality and charisma and more,
    but _none_ of it has to do with riches.

    (we actually prefer it if our rock stars
    spend all of their money wastefully…)

    and if you think _love_ is going to leave
    the rock arena, you’re just plain wrong.

    you _are_ right when you say that there
    won’t be as much money as in the past,
    and it’ll be spread over more musicians.

    because the public was _overcharged_
    in the past, and by ridiculous amounts,
    while the labels cheated the powerless
    amd bid up the money for top-sellers.

    so no, there will be no more vast riches.
    (most especially not for the middlemen.)

    but a lot more musicians will be making
    _enough_ money to make a living off it.
    (as opposed to making a killing off it…)

    you simply underestimate the love, and you
    likewise underestimate the power of music,
    if you do not believe tomorrow’s musicians
    will be able to convert that love into money.

    because the fans just plain won’t be stupid.
    they’re aware that music requires musicians,
    and the best of it needs an insane creativity,
    and they’ll be willing to fund their musicians.

    so they will find a way. they will lead the way.

    (and the musicians will come to understand
    that the fans are their “boss”, rather than the
    record company, and that will improve music.)

    and the mechanism will _not_ be via _touring_,
    which seems to be the current thinking today…
    that’s just another business where middlemen
    have raised the prices to a ridiculous amount.
    so that pyramid scheme will soon collapse too.
    it’s already clear that tomorrow’s bands cannot
    fill the sheds at the rents currently being levied,
    so _something_ has to give. (read bob lefsetz.)

    but fans need the live experience just as much as
    the recordings, so they will find a way to get both.
    they will pay for both, and be happy to pay for ‘em.

    so no, we won’t have the filthy-rich “rock stars”,
    but we’ll still have well-loved charismatic singers,
    a la trent reznor, and — even better — we’ll also
    have lots of musicians creating lots more niches,
    and making themselves a living while doing so,
    especially now that the middlemen thieves who
    stole so much of the pie are out of the picture…

    because the fans will make it happen. just watch.

    -bowerbird

  • http://antisleep.com Scott Evans

    @Jim: “It might even make the artists some money but I don’t think it fundamentally changes the economics and relative the shift away from leverage.”

    Well, part of my point was — it’s fine by me if the economics shift away from music as a big business, and never shift back. There will still be great music, and plenty of ways to learn about it and see it performed.

    I feel similarly about musicians making money. It’s nice to recoup some money on the investment of pressing records, or studio time, or whatever; it’s nice to finance your tour. But nobody ever said that musicians have a right to a living, particularly based on the sales of recorded music. If that’s a weird blip in musical history, so be it.

    Here’s an interview with Steve Von Till of Neurosis, a Bay Area metal band that I would by all accounts consider a success. They’ve been around for 20 years; released 10 records and a handful of side-project/solo records; done numerous world tours; are broadly cited as influences; etc. http://www.lordsofmetal.nl/showinterview.php?id=1723

    I like this bit:
    Q: When did you stop touring and what was the strongest motive behind it?

    A: After touring in 1999 we decided that it was just compromising the music and our families too much. Like I said, we never made a living out of this band. So when you are gone two-hundred days as year and have to come back and get some kind of shitty job so you can pay the rent, it started to get old. We were in our thirties and we just felt it was enough. It slowly unfolded for us; this music is too important, we should only do it when we want to with who we want to and when we have balance in our lives. We can’t be fucking around backstages and truck stops anymore, we have to be responsible fathers so we decided to go home and get a job that we could maintain which would give us the freedom to still make music. And you know what? We made more music in the last seven years than we did in the seven before. The Neurosis records have come more often, there are lots of projects on the side, plus we are running our own label so it is more creative than ever.

    Great music happens when musicians really, really want to make it — regardless of money.

  • Kevin Shockey

    Great post Jim. I just couldn’t stop myself from agreeing with you more. You also make me wish that NIN would come to my neck of the world. Un-likely, but who knows.

  • http://kevincurry.tumblr.com Kevin Curry

    Selling soundboard quality recordings of live shows will increase

    (see also, http://nugs.net).

    $45 for a ticket to Widespread Panic + $12.95 for lossless FLAC

  • http://extendably.com Josh

    What never ever seems to come up is that if it was really, really easy to pay for something… people would. I’m thinking largely of the tweens and teens here… too young for credit cards, too unorganized for paypal…

    That’s the lucrative market right? If it was simple to pay, via a text msg perhaps then I’m sure people would.

  • http://nakatoo.blogspot.com/ العاب شمس الدين

    This is an excellent post , thank you , I’m grateful to you .

  • http://blog.ivesdigital.com Philip Ives

    As someone pointed out, the headlining bands are coming up with box sets and vinyl and collectors items. The Indy scene in Philadelphia has been doing this on the small scale for years, even before mp3s. Punk/ indy bands press up a 500 count run of vinyl and sell that at their shows.

    I think there’s a digital counterpart to this as well. Someone is going to make a nice player (Pandora?) where ads help monetize the content. The bands can AND DO use their own flash players on their sites and deliver ads there. The rise of video on the web and monetization strats there is just beginning too.

  • http://kevincurry.tumblr.com Kevin Curry

    It seems worth noting here that Apple seems to have cracked this nut, for the time being at least, by going back to the old model, i.e., tightly controlling the distribution system. Here’s I’m talking mostly about apps, not music. But both apply. @Josh – they’ve also made it easy to purchase by tying it to your phone bill. No more choosing between breaking out your credit card at every purchase and storing your credit card info with every seller out there (and you don’t have to register and take on a wholly new and different financial model with a PayPal). $30M in apps sold in the first month (at $0.99-$9.99 ea)?! http://www.webguild.org/2008/09/how-to-build-a-great-iphone-app.php

  • http://www.EatMyCube.com George from Cubehead

    Thanks for the write-up, Jim!

  • http://brooksjordan.name Brooks Jordan

    >Brooks, my original notes for this post included the question “where is the adsense for music’s long tail?” What I meant by that was that in other long tail content environments advertising provides at least some mechanism for monetization. It’s kind of hard to imagine ads in the middle of an mp3 file though. I agree with you, it’s currently missing and needed.

    Jim, yep, no doubt that some kind of adsense for music will be one revenue stream, but that’s not what I mean.

    What I’m saying is that as new models for brand advertising and entertainment emerge on the Web – and new standards for measuring and valuing how users interact with those environments – that music will be part of that mix and musicians will be paid for it.

    For example, you might see a 9-episode Web TV show that is made on the cheap that invites Cubehead to contribute two or three of its top singles for an initial payment and equity.

    If that show has modest success or goes Black Swan, then Cubehead shares in its success.

    Or BMW might release a rich media ad frame (a creative compression of one of its popular short films into 5 seconds) that Cubehead does the music for.

    BMW is smart enough to know that the purpose of these ad frames is to lead to the short films and the short films lead to the website. So does Cubehead.

    So the deal BMW and Cubehead works out is an appropriate payout at each level (ad frame, short film, website) with the big payoff as people visit (and interact with) the website.

    What I’m saying is that the same forces that are changing the music business are changing the whole media environment and that will create new opportunities for music to attract attention and be a significant revenue stream for musicians.

  • Jim Stogdill

    Wow, lots of great comments. I really appreciate all the insights. I just have a couple quick follow ups:

    @Scott Evans Sounds like we basically agree. I was in no way defending a musician’s entitlement to be a “rock star”, just trying to sort out the shift in the economics in my own head (and do it out loud). I’m sort of ambivalent either way but would love to see the long tail have more area under the curve so that emergent artists doesn’t have to starve as long – and can make a living doing it if they choose to.

    @Josh I agree that frictionless payment would have some impact, but I don’t think it would fundamentally change the economics (I could be wrong). Plus, it raises the specter of big screens at the concert that say “if you like this song, text xyz to buy it now!”

    @Kevin Curry I actually think Apple makes my point in a way. iTunes is Red Hat and and Sony is name your big proprietary software vendor. It’s a “pull the rug out” business model and even if Apple is successful in the long run (not convinced) they will draw less total revenue than the industry they replaced. Also, they seem on track to share maybe even less of it with the artist than the industry they are replacing (and worst, the old industry that isn’t even adding distribution value any more is still getting their rake off the top, side, and bottom).

    @Brooks Jordan Thanks for the clarification and interesting to ponder. Makes me think of Citizen Cope’s music in Pontiac commercials very early when he was still playing small venues. However, I’m not sure it’s the whole solution given the attitudes of many artists about mixing art with Madison Ave. In photography there is this “my personal work” / “their commercial work” bifurcation and I know it plays out differently in music but I wonder if the sentiment won’t at some level prevent this from being a universal solution for monetization.

  • http://brooksjordan.name Brooks Jordan

    >However, I’m not sure it’s the whole solution given the attitudes of many artists about mixing art with Madison Ave.

    I agree, at the moment it’s looked down upon . . . and so was advertising until Google took another look at it. And now it’s sexy.

    But not just because of Google.

    It’s because advertising by the nature of what it has to be to attract attention is going to flip into something else (I believe) both more creative and economically balanced for artists, advertisers, and publishers.

  • Jim Stogdill

    @Brooks Great point. I think an interesting question will be whether the artists creative input can survive the flip you see coming. If they can, I think it will work.

    I agree that artists look down on advertising, but that wasn’t completely what I was alluding to in that personal work / commercial work divide. I was thinking about the fact that commercial work comes with a “creative director” and it’s not the artist. The artist, musicians included, typically ends up as a participant in someone else’s creative vision rather than the driver of their own. Then, maybe music has always been more of a blurred artistic / commercial activity. After all, they call them concerts and charge for them (rather than calling them openings and serving cheap wine and cheese).

  • http://antisleep.com Scott Evans

    @Jim – yep, sorry, I got a little ranty there but in fact we do agree. :) Of course you made the point in the OP that rock stars as we know them are disappearing, and it didn’t sound like a lament. I must have keyed off of your title too much. Heh. I too am curious to see what emerges, both as an observer, a listener/consumer, and an ever-flailing musician/recordist.

    (But you know, I wonder how many sub-major-label artists made a living — and what kind of living it was — off of record sales even 10-15 years ago. Polvo, Shiner, Lori Carson, whoever. I often suspect that the “making a living as a rock musician” thing is a bit of a myth.)

  • http://joshuamauldin.com/ Josh

    That’s a great article. I really agree that this industry in its current form is a “dead man walking,” and I am very excited to see what the future brings for it.

    I feel like part of their strategy will be pushing toward a model similar to that of cable TV—pay a monthly fee and get all their music. But I hope there will be more innovation than that. More cool things for us, more tools for the artists to use for promotion.

  • Jim Stogdill

    I ran across this this morning and thought it was a nice take: http://www.scenesc.com/2008/09/08/the-new-music-industry/

  • http://brooksjordan.name Brooks Jordan

    Today I got an email from NIN because I’m a member of their website at nin.com offering me the chance to buy two tickets before the public for their show in Portland, OR.

    That’s value. It’s not that it hasn’t been done before, but it’s the way NIN and other bands go about doing it in an environment that fans own.

  • Jim Stogdill

    Just noticed that David Byrne is only selling his new album Everything that Happens Will Happen Today from their web site, and only as an entire album.

    There are a bunch of choices though including physical CD, high bit rate mp3′s, collector packages, and FLAC / lossless formats.

  • http://www.illect.com Josh from Illect Recordings

    Hey Jim, nice article. One of my partners in our record label sent me the link. This is something we’ve been trying to creatively come to grips with.

    I’ve been on both sides…

    Working for a corporate record label (Head A&R and General Manager)

    Now working a day job so I can basically do music for the love of it (I’m a 1/3 partner in an indie hip-hop label).

    The bummer is that music piracy really does hurt and it seems to hurt the little guy more. The little guy doesn’t have the vast retail channels or even enough revenue stream opportunities.

    It hurts to see some of our own records being downloaded 100,000+ times and then struggling to sell the 1,200 or so CDs to simply “break even” on recording costs, marketing, mailing out promo copies and so on. The art is good… it’s in demand… it’s priced right…

    Things certainly have changed when it comes to how (primarily younger folks) people value music. I’ve had conversations with kids who have downloaded albums on any of the spots that have it free of charge… the excuses are the same. If only it could be our choice if our stuff was freely available. We’d certainly do it in some cases but not on everything.

    It’s like… why bother? We’re not trying to become millionaires. We don’t have the benefit of having already made piles of cash. Pretty frustrating. We’re creative guys so I think we’ll be okay. It’s amazing at how quickly things changed.

    The silver lining is that we love what we do. Just wish it were easier and that our music was consumed in more honorable fashion. We’re also pleased to know that we are fair and honest when it comes to dealing with our artists that we partner with. We don’t “lord” over them. We make decisions together. We don’t do things the industry way. After being in that environment for several years, it was obvious that it was broken and the old dinosaur wasn’t adapting quickly enough.

    Thanks again for the article!

    Josh
    Illect Recordings
    http://www.illect.com

  • Jim Stogdill

    Hey Josh, thanks for the thoughtful comment.

    In the post I intentionally avoided the legal/moral aspects of all this; mostly to avoid the more heated commentary to focus on the likely structural impact. I think Reznor’s paraphrased point of view of “I don’t like it but it’s the new reality” makes sense. However, I agree with you that the implications are not theoretical.

    You’re comment about 100,000 downloads only resulting in 1200 cd sales seems to fly in the face of the attention leads to sales argument. However, it probably supports my argument that the artists themselves are better able to find an audience for their live shows; not that that will help their label. I think you guys are going to have look for other models along the lines of Brook’s comments to monetize that attention.

    We seem to have arrived at a kind of behavioral logic that can be over simplified as “Big record companies are stupid therefore they don’t deserve the rule of law.” At this nexus of behavioral justification and enabling technology, the stupid get punished but differently than they might have if there products were atoms instead of bits.

    Previous generations have seen too-dumb-to-adapt industries go away too, but they didn’t raid the warehouses of the buggy whip and wash board manufacturers to steal their stock as an added kick in the ass.

    On the flip side, the way large content / copyright owners use their concentration of influence to push for laws that are obviously self-serving (long copyright extensions for example) does little to create an environment of trust and respect for rule of law.

  • http://cera.us Chris Cera

    Rockstars aren’t dead, they just need new investors.

    I wrote a related piece on my blog:
    http://cera.us/2008/10/31/rockstars-arent-dead-they-just-need-new-investors/

  • Pete Smith

    If there were fewer overpaid rock stars and Major label execs and more independent artists making a decent living the world would surely be a better place and good music would thrive as a result.

    We are an independent record label and publishing company not a big bad corporation out to sue people for file sharing, we WANT them to spread our music around.

    Songs from our catalog have been played by hundreds of radio stations and podcasters worldwide and it didn’t cost them a penny, in return we got exposure and promotion…..sounds like a good deal to me, that’s why many of our tracks have been released under a creative commons license and are free to download. So what if you lose out on lost sales, you gain more in the long term by increasing your fan base (If you can survive that long)

  • Pete Smith

    If there were fewer overpaid rock stars and Major label execs and more independent artists making a decent living the world would surely be a better place and good music would thrive as a result.

    We are an independent record label and publishing company not a big bad corporation out to sue people for file sharing, we WANT them to spread our music around.

    Songs from our catalog have been played by hundreds of radio stations and podcasters worldwide and it didn’t cost them a penny, in return we got exposure and promotion…..sounds like a good deal to me, that’s why many of our tracks have been released under a creative commons license and are free to download. So what if you lose out on lost sales, you gain more in the long term by increasing your fan base (If you can survive that long)

    http://www.antiqcool.co.uk

  • Skindo1

    Man, that article was boring and written with much taste, wit or comic relief. jeez