Online Music Holdouts give in to iTunes
Came across an interesting alert on BW this morning:
http://www.businessweek.com/ap/tech/D8JJJU7O0.htm?campaign_id=alerts
Discusses a couple of issues... and a likely debating point. That of customer beneficial single track downloands vs. album download as desired by artist (artistic integrity). Are the artists being short-changed with bad royalty deals in the internet age?
Arjun (the music guy) and Kingslee (the Web-oriented Consumer) - please drop in with your thoughts.
Everyone else welcome. Tanmoy - You too.
http://www.businessweek.com/ap/tech/D8JJJU7O0.htm?campaign_id=alerts
Discusses a couple of issues... and a likely debating point. That of customer beneficial single track downloands vs. album download as desired by artist (artistic integrity). Are the artists being short-changed with bad royalty deals in the internet age?
Arjun (the music guy) and Kingslee (the Web-oriented Consumer) - please drop in with your thoughts.
Everyone else welcome. Tanmoy - You too.
posted by Arun Nair at
10:28 AM
4 Comments:
Artists have always been short changed with bad royalty deals.
If all you are getting is less than a dime per song downloaded or less than 10% of the what the consumer is paying. The only ones making real money are Apple and the record companies.(More importantly the record companies are taking a large cut for contributing zilch to the online sales/distribution system)
I'm sure they'd make a lot more with just a honour system for payments and people paying for a CD Quality download from a p2p network.(p2p drastically reduces the cost for putting up content for download, something which Apple currently charges $0.50 for a lossy version for could be close to nothing for a CD Quality song.)
I wouldn't buy a song/video from iTunes unless it's CD/DVD quality.
Online distribution is the future(it is already here), but it'll be in the form of CD/DVD/HD quality content, and not the kind of low quality over-priced content that one buys at iTunes.
There are sites that already offer music on an honour system.
In the future, as CD sales keep plummeting, and more people source their content from cyberspace, artists will find it more lucrative to go without the current day labels and maybe some kind of online collaborative effort. The record companies' days are numbered, unless they realise that their current insistence on DRM for music downloads is only profitable to the DRM providers (Apple/MSFT are the biggest players in that field right now)
[Some other points below which I almost made on another post of yours which didn't make it earlier thanks to BESCOM]
The whole argument that online sales/downloads affect CD sales is wrong. If people really want inferior quality music, they'd have stuck to buying audio cassettes instead of CDs.(MP3s/AAC are actually worse than audio cassette quality, with the only advantage that they don't degrade over time)
Music sales are down mainly because the stuff that they are putting out on the market is crap.(Compare artists/songs that were on the charts 10 years ago to today)
The movie industry has realised that ticket sales are down because their content is bad. The music industry still goes around blaming online downloads for it's woes.
100 years ago the only thing you could do at home for entertainment was read a book.
60+ years ago, home entertainment choices were probably books and music(radio/vinyl)
40+ years ago it was books music(radio/vinyl) and tv.
20-30 years ago, your choices were books/tv(cable?) /music(radio/vinyl/tapes/CDs)/movies(VHS)
For the last 10+ years, you also have 100+ channel cable TV and gaming(Consoles/PCs) and the Internet to add to the mix.
People still have the same 24hours a day and are probably working more hours per day than they did back in the 50s or even 70s.
When you throw in your out of home entertainment options of pubs/discos/cinema/malls etc... the amount of time people have for music they own as compared to any point in the past is much much lower.
And there are a lot more artists being signed/distributed by the major labels today than there were in the 60s/70s.
They have a much larger supply, while the market is shrinking and they expect to be selling more records.
BTW here's a study on CD sales vs online download of music from HBS ...
While I don't know about the numbers, I find their conclusions absolutely believable.
artists have not been short changed...
- i dont think labels are signing deals where digital royalty is lower- when you look at royalty as a %age of associated costs in the context of dealer or retail price. you'd be surprised to learn that margins to the label (after accounting for all costs incl royalties) are significantly lower vis a vis brick and mortar retail. in india for every 1 rupee transacted in the digital/ mobile world, the government earns a FLAT 15%. VAT on physical sales is 4%. other costs which are involved are of 'aggregators', and of csps- 'service provider'.and of course the telco itself. so at a dollar to dollar level, cents are less, but at a net receipt level, it matches.
if there are artists who are getting 'less' on digital vis a vis physical, i'd like them to meet my artists, and have a chat. I'll buy the drinks and food.
sure there will be labels that cheat artists, dont report royalties yada yada yada. that will always be the case. just like it is in every business- the movie business, the prostitution business, the drug business, the bond business, the paint business, the pharma business, the modelling business, and of course the vegetable business.
online distr is here...all of us know...as a music label in india its awesome news, because in the digital world, you dont generate returns and obsolecense of stock, a bugbear of the indian business, because ALL sales in india are on sale or return.
im not too sure if the labels role is completely over. even in the long tail, you need a filter/ editor whatever you may wanna call it. especially in the day and age of 200 TV channels, on demand audio and video, video games, comics, books etc etc.
i agree that most consumers are buying bad quality sound- even worse than an audio cassette. but the thing is they don't know and or don't care. sure people bought cds because they sounded better- but they also bought cds because of nifty conveniences like direct track search, longevity etc etc. if the cost of upgrading to the superior technology was a 30 kg cumbersome box that you couldnt take with you in the train, people may have to stuck to vinyl or cassettes. most people like the i pod coz of the 10000 songs in a pocket funda at a rational level and the badge value, sheer beauty of design and the social status/ belonging funda at an emotional level.
I dont subscribe to the 'today's music is not as good yesterdays' school of thought. though i may agree with you at an personal/ spontanepous or emotional level...(led zep trounces over anyone)i dont think thats correct and i dont think its fair. music like any cultural product is a product of the times/ the politics/ the drugs/ the fashion/ the economics and the other things that songwriters are inspired by.
You can argue that there will never be punk the quality of the clash or sex pistols ever again. but that could be because england may never see social or economic conditions such as the mid late 70s ever again too.
you yourself point out that over the years entertainment choices have grown by leaps and bounds- i dont think music aint good as it used to be...but what i WILL say is that the power and hence the probability of music ever again becoming the 'voice' of a generation (like the 60s), and having THAT kind of cultural impact (as immortalised by cameron crowe in almost famous)has diminished drastically, and disproportionately.
the ease of acquisition on the net has further contributed to its demise in this specific regard...there is just no fun or effort or excitement of going to the store, looking at the album cover for a few minutes, paying for it , and running home to read the liner notes or lyrics or pictures.
im very happy you raised the '50s to now point'. i've had the same thought, and have actually considered taking 2 years off and actually taking that up as a formal study/ thesis.
there are possibly a lot more artists being put out by labels becasue tastes in music are now more fragmented, and also there are a lot more labels, radio stns, online stns, etc. especially in the long tail world, where the niche is the norm, it would naturally follow that you have a lot more artists being signed. choice is good.
coming back to the article, i think the whole 'they must buy the album' funda is a bunch of bollocks. people will buy what they want to buy/ cosnume what they want to consume. i had brick in the wall pt 2 for 10 years before i had the album. similar to stairway and led zep 4. today i own almost every floyd album, and 8 led zep cds. give the customer what he wants. if you want him to buy the album, its your job to sell it- you could possibly incentivise him to buy albums by making it cheaper or what everyone is doing now, (as metallica has done) making rare/ bonus shit available only if you buy the full album.
secondly, dear artist/ band, if you want your songs to be heard only on those specific albums, dont do greatest hits, bets ofs and essential collections.
led zep, ac dc, and metallica never give their consent for compilations. however led zep has appeared on osts (dazed and confused), and has released gr hits albums. metallica and AC DC are the only ones who dont do either of the 3- no best ofs, no compiles and no osts. you shook me all night long was used in school of rock trailers etc, and was featured in the movie, but wasnt on the ost.
there. my 2 cents.
@bowen arrow
im not too sure if the labels role is completely over. even in the long tail, you need a filter/ editor whatever you may wanna call it.
I think that is the role which should end, this leads to the current situation where artists/bands are created, rather than just promoted.
Something like say Digg.com where people rate upcoming artists who put their own content up.. and based on their popularity record companies could sign them up for more mainstream distribution.
The labels are still the best bet for real world things like offline distribution or organising tours/concerts.
you dont generate returns and obsolecense of stock, a bugbear of the indian business, because ALL sales in india are on sale or return.
Wouldn't this also mean that there will be a lower volume of sales.. and more cribbing about how file-sharing is cutting into record sales/volumes?
How come no one has thought of CD burning kiosks for obscure/slower moving artists at the major retail music outlets?(This could also result in identifying file sharers based on "watermarks"/signatures)
Also if the record companies did away with iTMS/DRM and sold their content to the customers directly they'll be able to offer the same content at a lower rate/ make more money off it or even both.
Real is offering unlimited songs for $9.99 per month or so, definitely seems like a better deal than buying 10 songs from iTunes or 1 album every month.
there is just no fun or effort or excitement of going to the store, looking at the album cover for a few minutes, paying for it , and running home to read the liner notes or lyrics or pictures.
My whole collection of CDs is in pristine condition. I can do almost that right on my desktop with zero effort with amaroK (even for a song I'm listening to on an online radio station!)
It's simply the best audio player around, try out their live-cd if you don't run linux.
The problem with the online music scene is none of the innovation has come from the "music industry". And so many years after napster, they are still trying to play catch up instead of taking the lead.
Even worse trying to stiffle innovation by getting govt. to enact laws(and succeeding at places like the tax on blank media) and crying fowl when the BBC puts up a collection of Beethoven Symphonies for download. And suing sites publishing lyrics/music-sheets.
The next big thing which the industry is missing the bus on is the P2P-TV(This is probably the single most exciting thing I've seen on the internet in the past 5 years). Over the next few years you are going to see the current set of video podcasts and other non-traditional folks moving to the next level and having their own online TV channels/live shows. While the current set of media companies are going to be haggling over territorial advertising rights and other old-world stuff like they did with online radio stations.
there will always be created bands- much like there will be 'created' anything- as long as music is a product which it ultimatley is, there will always be created bands- its up to the consumer to accept/ reject them for whatever reason. further, its not only the labels that create bands. most 'created bands' come out of the CAA/ management co kinda mould and the labels are the ones who merely invest/ partner in the musical aspect and more importantly the marketing of that music(not only physical distribution)aspect of it. Im sure there are already bands which are sd to mgmt cos who retail on the net- the collapse of the label will not lead to a decrease in created bands- you may see them going straight to downlaod or subscription services or maybe even straight to starbucks et al. However, what of the recording budget- songwriters, producers, music video makres, image consultants etc- Sure there have been bands that have made it without all that (Thank God for them), but for the music business to maintain its size and mass and impact somewhat, all bands cannot be the arctic monkeys etc of the world. even in rock and credible or 'real' music producers, studios etc cost a heck of a lot and the labels are performing this role of risk taking. lets face it- mutt lange, brain eno, daniel lanois, steve lillywhite, the neptunes, bruce fairbairn, all cost money.
Wouldn't this also mean that there will be a lower volume of sales.. and more cribbing about how file-sharing is cutting into record sales/volumes?
thats 2 seperate points- returns and obsolecnese refers to the physiacl world- labels are happier for the benefits of legit sales in the unphysical world. the point is moot in a digital world which is 100% piracy or file sharing.
How come no one has thought of CD burning kiosks for obscure/slower moving artists at the major retail music outlets?(This could also result in identifying file sharers based on "watermarks"/signatures)
Yes, this is happening soon- the retailers are the ones who also need to come forward with some kind of investements and marketing, which is where the roadblock lies.
Also if the record companies did away with iTMS/DRM and sold their content to the customers directly they'll be able to offer the same content at a lower rate/ make more money off it or even both.
Once again 2 points- DRM- is for protection- which is a relative term- direct sales- yes, do-able and in process- the next 5-7 years will see this settling.As tech costs go down, the benefits in infrastructure the current aggregrators etc have will come down too.
The problem with the online music scene is none of the innovation has come from the "music industry". And so many years after napster, they are still trying to play catch up instead of taking the lead.
Possible, and agreeable- but the music business wasnt the one that created its last saviour too...the CD.
One way to look at it is that the music business is ultimatley the content creation business and its focus was always the creation of content and hence the power in the label scene and the decisons that dictated the direction in which it went were centred there. the labels were always known by the ceos, and each ceo is/ was an a&r guy who discovered/ signed so and so superstar act....clive davis/ santana/ stein/ madonna, ramones, ertgun- ray charles, zepplin etc. couple that with big egos, jets and a general life of excess, its not a wonder that they didnt see the digital age coming.
a label exec and a fellow star wars buff (who shall remain nameless), once told me...
"tough to see the world around you is when your head is buried in your secretary's pussy."
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