Michael, how long would you let a start-up you fund loose money before you cut the chord (dropped them from the label) or stepped in (told the “artist” how to make their art)? Labels may be really bloated and antiquated, but there is still a massive delta between the quality of product that comes from Sony and EMI and the product coming from some one with ProTools in their basement. Government grants for the arts are not the worst idea I have ever heard (while the industry figures itself out).

Even using the omni-present Radiohead example, the web 2.0 poster-child how music “should work” (i.e. be totally free and make money on other things), you can see how musicians are getting killed (financially and artistically).

This is how things would go down for Radiohead if they were a new band today:
1. The Bends is released (1992).
2. Creep (the single) and the record make no money on the shelf.
3. The band is too poor to tour properly for The Bends.
4. Their label gives little support (monetarily or artistically) for O.K. Computer and there for the record is totally marginalized.
4. O.K. Computer doesn’t come out to massive fanfair or critical acclaim.
5. Radiohead goes back to their day jobs…some as bankers, some as school teachers, some as musicians that scrape by on tips and cheap beer.

I am not pro-label. I am staunchly anti-label, but we pretend like labels haven’t released all of the music we love. We talk like anyone can make a platinum record in their basement. Does anyone know why we haven’t seen an “artist” get HUGE off a release recorded in their basement? Because you can’t do it!!! Producers and million dollar recording studios make a massive impact on the quality of the product. We are moving away from less product, more quality and towards way more product (and content producers producers), and far lower quality.

Post #119 is the embodiment of a misinformed opinion based on the idea that “musicians want fame and fortune”. They want to make money doing what they enjoy and what they are good at…no different than that developer that is in at 7am and stays until 11pm each night. That MFer loves programming, and he makes a nice living doing it.

No probably about it. Currency became a possibility in the Bronze Age - millennia after the Stone Age cave paintings were drawn. I doubt art even got you a kiss back in those days, but that didn’t stop them being drawn.

I am in full agreement with the notion that people make art because they can. That said, I’m not enthusiastic about trying to tell a struggling artist that, particularly as there’s bound to be a painful period of adjustment before the new model replaces the old.

Marcus: I agree with much of what you said in principle. However, if this whole “digital music” business has taught us anything, it’s that you cannot rely on tradition to dictate the future. That’s what fucked the record industry to begin with.

Right now, there is a HUGE flood of content thanks to things like mp3s and Pro Tools. More people are producing music than ever before and more people are listening to music than ever before. How can we possibly expect to tip everyone that’s putting “good” music out there? How can we even expect to -hear- everyone that’s putting good music out there?

As for all art not being deserving of protection, well, tell that to the guy who wrote a crappy piece of music that was later illegally sampled and turned into a multi-million dollar song, hehe.

Art does not deserve reward. GOOD art deserved appreciation, and if that involves rewarding the artist for it, it should be subject to the viewer/listener of said art what they feel is fair compensation.

There are people that stiff waitresses, it’s not illegal. They just didn’t like the service they got; it is precisely the same model.

Art is a tippers business. That is traditionally what art was. People were commissioned for artistic endeavors based off of renown or talent.

All art is not deserving of protection. Copyright was created to supplement rewards for a limited time in order to prompt artists to create while also rewarding them for creation. Copyright, in it’s current iteration, is a direct slap in the face of those who conceived of it (Including Jefferson).

In perpetuity is a bad model of ownership for intellectual things. Remember that you cannot hold music in your hand, as it is as ephemeral as the thoughts running through your head bearing no more substance than merely what value you, personally, place on it.

Once competition introduced, no need in special taxes or any other subsidy - market will do everything, and yes fat cats stripped away

record companies no longer add any value to an artist. distribution is free and promotion can be self managed. even record label brands don’t add value. i don’t buy a cd because its got warner’s logo on it. if u take the label out of the picture, artists make more than enough money.

SIMPLE CONCLUSION –> MUSIC IS VERY ALIVE, RECORD COMPANIES ARE DEAD!

1. It offers absolutely NO benefit to the artists or the songwriters. This is an advocacy tax for the RIAA (the labels to stay alive)

2. Like all tax plans (gov’t or not) the $5 surcharge will eventually NOT be ‘enough’ and the tax will rise.

3. There will most certainly be others in various industries who believe they too need a surcharge.

4. I don’t download, and shouldn’t be penalized.

5. Yes, I pretend to work in the Industry - both music and tech.”

Now I’ll add this:

Crystal Williams - “Record Labels are the VCs of the music industry. They take chances, they invest in bands, they advise them and promote them and help them succeed. ”

http://nashvillehype.com/cd-sales-off-20-again/

Last year Columbia, the big powerhouse Label in Nashville spent probably $500,000 to record and market a female artist whose only claim to anything was she was a secretary for one of the big-wigs (no, I’m not talking about Julie Roberts. Though the story is the the same, you’ll see the difference in one second!). This girl had a decent look, an alright voice, and an exorbinate expense account that allowed the best producers and people in town. Unlike Julie (who for the dollars spent hasn’t fared much better), this girl sold 1,000 copies of her “major label hundreds of thousands of dollars” release. 1,000 copies! - she, along with 5 more artist on the label were dropped (hey! ONE of them sold 5,000! woo hoo!)

1,000 cd’s sold is like paying $500 for each customer to buy that album. Customer Cost of Acquisition is a hot topic on the internet, but when applied to the Industry, it’s exorbinate in itself. The idea is to lower the cost.

Why didn’t she make it to the general public? Lack of dollars spent? Hardly.

From what we know, the girl was a secretary, and someone did hear her singing once.

There was no story. No life lessons learned. No reason to pay attention to what she had to say because no one knew a thing about her.

And don’t tell me WB Nashville doesn’t do the same - I know they do!

What could you do with a $500,000 budget? Could you record a great sounding album, shoot a video, hire a great publicist to promote you and still have about $450,000 left in the bank? Yeah, I thought so.

So where is all that money going? Recording cost alone are around $250,000 - many times much more. It’s been said the Dixie Chicks, prior to the last album, spent upwards of $600,000 just in recording cost!. I haven’t verified that, but it sounds about right, if not a little low.

Faith Hill has been said to have fully recorded over 40 songs for her latest album - at a cost of hundreds of thousands of dollars. Nothing wrong with that I assume, but whatever happened to picking the 10 to 12 songs you wanted to sing, and doing your album? Why record song after song after song? Market research?

Most producers in regular studios can do an album for around $25,000 and what you get is a product just as good if not better than what you hear all the time. Why is that?

For every artist like that I mentioned, where cost go through the roof and there’s no return, it just hurts everyone - consumers too! Because CD prices are just rediculously high anymore. Fair price is around $10-12, right now they’re pushing $18 for a new release. Sorry! That’s just too much.

—————————————–

Everyone knows the artist rarely if EVER see a dime of their album sales (thanks to dubious ‘re-coup cost’)! Everyone knows the money goes stright into the hands of the label (RIAA) who can then turn around and use that money to sue people and lobby congress to pass terrible legislation and to bully small internet radio providers to pay exorbinate fees and force them to close while regular radio pays nothing of the sort.

In other words: people aren’t rejecting the music, or the artist, they’re rejecting the RIAA.

——————————————

No one in their right mind wants to wait 5 months after a song first charts for it to rise to #1. That’s 20+ weeks and generally it’s 30+ weeks before another single ships - just out of control! Take Carrie Underwood for example. She is the American Idol 2005 and she’s still not released a new cd (at the time of this writing). I realise her album is still in the top 10 - and I’m sure to some they’re looking at that and her songs still on radio and saying “this album still has legs!” - but at 7,000 or 14,000 copies a week, VERY WEAK legs is all! They’re trading 300,000 sales a week on a new album for the 7,000 or so they’re barely getting! And they’re HAPPY about it! (same thing is happening now with Taylor Swift)

The long cycle is killing sales.

—————————————————-

http://nashvillehype.com/riaa-.....as-the-un/

From Don Dodge - http://web.archive.org/web/200....._cha.html: “The goal at Napster was to be the online distribution channel for the record labels, much like iTunes and the *new* Napster is today. There were several offers made to the labels that would have given them the vast majority of all of the revenue. The numbers were staggering. We had over 50 million users, many of whom were willing to pay $5 per month or $1 per download for digital music. That translates to about $250M a month or $3B per year. Even if Napster kept just 10% of the revenue that would be $300M per year against expenses of less than $10M. At the stock market multiples of the day that would have been a $15B IPO.”

Just so you get it, the labels and the RIAA in their wisdom, turned down close to $3 Billion (with a B) a year so they could make $0.

This isn’t a personal attack, please don’t take it like that - but also understand, there’s been a LOT of discussion about these very issues Kaplan is talking about — I didn’t want to subsidize ‘Piss Jesus’, but I did - and I wouldn’t want to subsidize Kenny G. , but under this stupid plan to make people pay a tax, I will…

There’s just too much to write on a comment so I’ll leave it at this — this tax is a bad idea. The people involved, given the benefit of the doubt, are good people - they just have a terrible idea.

I think those that make money from art may have something to be worried about. Those who are concerned about the future of artistic endeavor should not be worried.

I do believe that you really do care about changing the music industry for better and discussing “new models of pricing and distribution for digital” so I appreciate your points, even though I disagree with you on a few points:
—-

#1) Equating the stealing of physical goods to the stealing of digital goods is the classic mistake of the copyright culture (RIAA, Jack Valenti, Disney, etc.). See Larry Lessig on this point, all three books.

Stealing a physical good means one less available for the next person; this isn’t true for digital goods, per Jefferson’s comment/analogy that taking the light from one candle to light another candle gives me light without taking it away from the other.

Please, please don’t hinder the discussion with the false and misleading analogy linking physical goods to digital goods. It’s tired and only discredits your otherwise valid points.

Now I do agree with you that just because a digital good can be re-produced/copied perfectly at no cost, that doesn’t mean that we as society should throw out copyright; we do need to respect copyright (reformed copyright, not the draconian life+75 years BS we have now) and ensure that artists are compensated for their works.

As you correctly state: “Piracy may not equal stealing, but the “it should be free because I don’t want to pay for it” argument just doesn’t hold a lot of water, and that seems to be as far as most people get.”

Agreed– so let’s have an intelligent discussion on the original point of Mike’s post: how should a digital good be valued and how should we pay for a digital good?

I and other smart people (Lessig, Bob Lefsetz, Fred Wilson, Umair at Bubblegeneration.com) can move past this initial discussion hurdle so join us as well.

—–

#2) “Record Labels are the VCs of the music industry. They take chances, they invest in bands, they advise them and promote them and help them succeed…Investment is still necessary.”

Are the majors really investing in bands anymore, really? Can you say that with a straight face?

The majors invest with a short-term, mass-appeal, top 40 radio mindset. They don’t actually invest in developing truly “artistic” talent. As many people have suggested, could an group like Radiohead, that took many years to grow , develop, and become a commercial success, even get signed nowadays?

It’s not just me who thinks that the majors don’t really develop talent/artists.

Why has commercial radio gone down the toliet? Because the majors, through nasty tricks like payola schemes, force-fed crap music through Clear Channel-owned stations to appeal to the lowest common denominator.

True, other entrainment channels have proliferated in recent years but radio downfall started before that. People didn’t want to listen to the crap music that the majors were forcing over the airwaves and they turned off their radios.
—–

#3) “If we’re not willing to pay for physical cds…or for digital downloads…or a concert…then exactly why are people expected to keep making music?”

Are you kidding me, did you really ask this question?

The answer is simple and Ethan Kaplan even gets it, sort of, although he didn’t mean to– people are going to keep making music because they love it, because they’re artists and they make music because they love it.

I’m all for paying artists and I believe in copyrights (but remember copyrights are “To promote the Progress of Science and useful Arts”) but artists, as Ethan so lovingly describes them, will make music because they want to, because they love to, regardless of whether they get paid or not. It’s not some hippie/communist statement either, that’s the reality of it now.

If you don’t love the music for the core, fundamental reason that it’s your passion, stop making music.

Because only the people who truly love making music will be any good anyways, and those are the artists that deserve to get signed to labels and developed (although I don’t believe the majors are truly developing artists anymore– that’s Lefsetz’s opinion too and he’s been in the industry and writing about if for over 20 years).

From Lefsetz– http://lefsetz.com/wordpress/i.....g-records/

“That’s one of the dirty little secrets of this business. Talent is only fifty percent. Desire and perseverance make up the rest of your success. But NONE of the foregoing are a guarantee.

So, you’re up shit ocean with a paddle so small you’re overwhelmed.

Welcome to the club. You’d better be doing it for a love of the music, because chances are that’s ALL you’ll have, your music and your enjoyment in playing it.

Maybe you’ll gain some traction, you’ll become a pro. But the odds are against you. You need that desire and perseverance and LUCK! And it’s harder to get lucky every day. Even if the radio station DID play your record, what would it MEAN, is anybody LISTENING?

We’ll get some clarity in the future. The gulf between amateur and pro will reemerge. But chances are, only a thin sliver of pros will be like the stars of yore. There will be Kanye, and then the guy who can fill theatres.

That’s the game you’re getting into.

So don’t lay out a plan for world domination. If you’re lucky, you can dominate your DOMICILE! Maybe if a friend goes to college in another state you can make headway there. But there are too many people and too few slots and no pot at the end of a rainbow.

Cry all you want, but this is fact. You’d better be doing it for the love of the music. And this is the key that may grant you success. Those old paradigms, how you look, how you’re marketed…the majors only have a few slots per year, and most of THEM don’t make it. The old game is dead. The new game is daunting.”
—–

#4) “But when was the last time you bought a bottle of water? I hear that’s available for free too. But we differentiate.”

Exactly– how has the music industry differentiated its product in the last 10-15 years?

Smaller CD packages, DRM, suing their own customers, ringles (oh yeah, ringles, the music industry’s saving grace)?

The answer is that the majors haven’t done much to create new value or differentiate their product– certainly nothing that their customers wanted. If you want innovation in the music industry, look outside the industry and look at the internet: last.fm, stereogum, pandora, Hype Machine, RCRD LBL.

Go read Umair at Bubblegneration.com for the most detailed, quantitative and analytical analysis on the root causes of the industry’s problems: http://www.bubblegeneration.co.....usicrisk1.

“But, partly because of massive buyer power (the influence the biggest retailers exert over the record labels), prices in the music business have long since failed to carry any pertinent information. Prices have become, if not fixed, as many suspect, certainly standardized. And this robs consumers of a vital means to gauge how much future value they derive and risk they take when purchasing different music goods. It also robs labels of the ability to really understand consumer preferences.”

—–

Sorry for the long comment but it needed to be said.

when radio was introduced in the 20ies the record industry blamed it for falling record sales. instead of trying to ban the use of recorded music on air, the license fees of ASCAP were introduced.

I’ve been called out. Though, I’m not here to “defend” anyone, I’m just genuinely interested. This whole issue - new models of pricing and distribution for digital (or information) goods has been on my mind on a cultural and academic view for six years now. It started with looking at the issues the software industry was dealing with re: piracy and pricing, and then a few years ago, I realized that music was really facing a lot of the same concerns. I joined the music industry 2 months ago to get a closer look. (and because I am a shameless Drupal fangirl and we’re pushing boundaries with that all the time)

Regarding adapting a versioning approach to music… I think most artists would cry foul at that. Why should there have to be a “deluxe” version of a song in order to sell it? I would think most would prefer to produce a song that fits with their vision.

Things ARE changing within the music industry - Look at how The Raconteurs just released their latest album - no lead time - no advance copies - direct to consumer digital downloads.

@browse Bravo! I didn’t think anyone would call out that point, but it’s a totally fair one. Unfortunately, that accounting doesn’t take care of the fixed costs, even if the marginal costs are zero. Piracy may not equal stealing, but the “it should be free because I don’t want to pay for it” argument just doesn’t hold a lot of water, and that seems to be as far as most people get.

@pt Perhaps my tone with that “Please name..” statement didn’t come through as intended.
I said: “Please present examples of recent artists who have become popular without a label, being featured in an ad or soundtrack, or being on tv. Investment is still necessary.”

You said: “This comment shows in a nutshell why the current record label industry deserves to die. In her world, independent artists who are successful by getting on TV or soundtracks(based on the quality of their work) somehow don’t count.”

That’s not what I meant at all. I wasn’t pitting labels vs TV or Soundtracks. Artist discovery and development, whether it’s from a label, a tv show, a car commercial, or a movie soundtrack is still an investment. I was asking in genuine curiosity for examples of artists who are doing well without any of those channels.

and finally I introduce you to: P2P commercial software where all music can be found for a monthly fee (I’ve been waiting for that one for a while now. willing to pay 50 dollars a month just to find music and share music on a platform of my choosing. I would love to et some 50’s hits (as well as some unknown hits I like) and get some 90’s rap all in one place. I know it will be a while before this happens, but I can imagine.

who else here thinks that the music industry will end and be replaced by a sector of the technology industry? Places like MySpace will become the next music company or Apple? I do.

I don’t mind paying for music. I just want you guys (majors) out of the equation. Your time is up. An album costs about a $1 to manufacture… including marketing, recording, etc. Digital distribution is many times cheaper. The music tax BS from a few weeks ago tells me you guys are not even starting to grow up.

I used to work for Sony Music. You Nathan may be a good guy, and there are good people working for even the majors. But the policy and the attitude is what you have to work and live with. Buying music used to be great. Doing business with you guys sucks and it sucks *Big Time*.

My biggest pet peeve with the content industry is the equation of stealing and piracy. Stealing removes a copy from the marketplace; whereas, piracy does not. If you steal a pack of gum, you are wronging both the store you stole from and the customer who would have bought it. If you pirated the pack of gum, from the market point of view, it’s like you were never there.

The reason people are willing to pirate what they won’t pay for is they see it as a good for themselves and a neutral-to-good for everyone else. If they like the music, they support the band through concerts, future CD sales, hype to friends, etc.. If not, they are just bits on a hard disk. No one was harmed in the sampling of those bits.

Of course there are always those kids who pirate because they are cheapskates who would be otherwise willing to buy music but instead opt for a free alternative. Those are the people whose actions need to change. But, trying to brainwash them that piracy = stealing is not the way to do it.

Songwriters don’t go on tour. They don’t sign marketing or branding deals with Revlon or Pepsi. For the most part, they get paid a penny here and a penny there for each CD manufactured or each radio spin (or, more and more, each mp3 paid for). If people steal all their music and stop listening to the radio, how do songwriters get paid?

Why is the system set up this way? Because copyright law deems it so. The thing is, much of music copyright law is based out of the early 1900’s. It needs to be updated. How? That’s clearly a difficult issue. But there is a big difference between the “music industry” and the “recording industry.” And I think it’s important to keep in mind that there are multiple parties that are involved in this issue, not just the over-paid recording stars and the bloated major record labels.