A VC: Rick Rubin And The Future Of The Music Business
ridani
· 2 years ago
The record labels need a new business model, that's clear. But I doubt Rick Rubin is going to help Columbia figure it out. He's got a great track record as a producer, that's not in doubt. But I think this quote sums it up: "One of his conditions for taking the job at Sony, which owns Columbia, was that he wouldn't be required to have a desk or a phone in any of the corporate outposts." Given the radical changes taking place in the industry, I'm not sure how he plans to navigate those waters without even stepping foot in the office. And if Columbia Records just figured out that kids aren't listening to they radio, they're stealing music, listening to it on an iPod, and finding out about music through word of mouth, that's pretty scary. It may have been news earlier in the decade, but those consumer habits have been pretty well documented for a while now.
carribeiro
· 2 years ago
Ask one more question to your group of students, and you'll find one universal thing:
People absolutely hate subscriptions.
We subscribe to something only if it's scarce, and if we need it for a limited period of time. That's why people rent a home - they don't know how long they will live somewhere. That's why people rent cars - you're travelling, you need a car for a short period of time. That's why we subscribe to newspapers - because they have a limited lifespan, and we only subscribe to a newspaper while it's important to us; as soon as we don't need it anymore, we just cancel the subscription.
In all other instances of what's called "subscription", what happens is that the industry fixes an amount to be paid monthly. Banks for example, they want to charge you a maintenance tax or something like this. And guess what? People hate paying for it.
For most people, music is not time-limited. If we like it enough we will buy it so we can own it, to listen anytime we want. A subscription model will never work, unless it's the only option around. Even then people will dislike it and keep looking for options.
fredwilson
· 2 years ago
that's why there needs to be a free ad supported option. the other idea i like is including p2p downloads as a license to all subscribers.
sb
· 2 years ago
What about cable tv?
Craig Plunkett
· 2 years ago
I knew you would be writing about this article as soon as I saw it. The additional thing missing is that people want to keep the music they've already paid to listen to after the subscription is over, which is another point of resistance from the record companies. And allowing storage is going to be a key component of their survival, iTunes has moved folks to a digital model without breaking the bought it/keep it paradigm.
fewquid
· 2 years ago
Rubin has certainly made enough money for the industry to be a respected voice. But then music recording is the poster child for the fingers-in-ears-I-Can't-Hear-You business model... We'll see how it plays out...
Preston
· 2 years ago
But the reality is, people are tired of being tied to subscription services. They're everywhere: hi-speed internet, utilities, car payments, rent/mortgage, insurance, cell phone contracts, web hosting, etc. Find a way to put me on a residual payment plan and I'll find a way to not need it.
Robert Seidman
· 2 years ago
I'm not sure $19.95/mo is the right model for anyone born after 1980. It would be the right model for me personally, if Rhapsody's database was any good, but I find it lacking. I would pay $19.95/mo. for what was available via the original Napster (everything, and every version of it ever!). But I can't track down "The Blues Project" Live from Central Park (1973) in digital format, not on Rhapsody, or anywhere else.
P.S. The Gotham Gal would be aghast -- the Ads by Adpinion ad running for Amazon to the right as I post this is "I Can't Stand Still ---- Don Henley". Just think if you could edit the ads on your blog, with just a minor change it could become the truth for your blog "I Still Can't Stand Don Henley" ;-)
Charlie Crystle
· 2 years ago
Fred,
The change in the record industry has been needed for years and has nothing to do with technology. Tech helps, definitely; infinite distribution helps, home recording helps (my studio can produce just about as good as any thats' not analog).
But one of the casualties is sound quality. People are accepting MP3 as good enough, and missing the sweetness of analog recordings. By the time a well-recorded 24-track 2" tape album is mized to a reel to reel, then converted to 24-bits for mastering, then converted to down to 16-bit CD quality, a lot of the sound has been lost.
Then convert to MP3 and you have AM radio. Ok, better than AM, but the loss of quality is incredible. It's why record companies hire engineers with good ears to do the conversions and touch them up before releasing them.
Try this sometime: rip Led Zepplin II from a CD to a WAV file. Then do the same and convert it to MP3. Listen to them both. The difference is stunning.
Then put the needle down on the vinyl. Then set it to repeat, cancel all your appointments, and get back into what music really sounds like.
charlie - you are certainly right about vinyl. i've been listening to vinyl at my house in long island and i love doing that. jackson normally makes this comment but i am sure he'll be happy to have someone new join in the chorus about the lost sound quality in the music business.
Jim Kerr
· 2 years ago
Charlie,
Audio quality has always been very low on the priority level of consumers when you talk about what they desire. This is why Sirius Satellite quickly abandoned its original name of "CD Radio" and its limit of high quality 100 channels. They found out very quickly that most people would quickly abandon quality in exchange for more choices and better content.
Anthony Kuhn
· 2 years ago
Fred:
Thanks for the insightful piece on what's wrong with big music these days. Apple and iTunes are riding the wave of profits into the future, while the old skool music industry hardly has a pulse and is trying to sue its way to life. Rick is quite a character, but often times, change comes easiest from outside forces, not inside an armored culture of status quo. I took the time to read the NY Times story and see a glimmer of hope in Rubin's efforts. I cross-posted on your piece to http://blog.innovators-network.org The Innovators Network is a non-profit dedicated to bringing technology to startups, small businesses, non-profits, venture capitalists and intellectual property experts. Please visit us and help grown our community!
Best wishes for continued success,
Anthony Kuhn Innovators Network
Nathan Bowers
· 2 years ago
The only subscription I don't mind is Netflix because it has pretty much everything, the website is useful, and not having to drive back and forth to Blockbuster rocks. Plus, who needs to own a DVD unless you watch it every week?
Music wants to be owned. You want to be able to listen to it forever on any device, at any time. You want to be able to create your own mixes to play at parties. You want to be able to make a mix CD, or even send a friend some MP3s so they can get into a new band you love. Some of these uses are "piracy", but so what? Home taping not only didn't kill the music industry, it stoked interest in music for a generation of teenagers.
Today, all music stores and services (including iTunes) suck because they have catalog gaps and bizarre rules about what can and can't be sold as singles. This is not iTunes' fault. It's the fault of impenetrable music industry deals, but it still sucks for consumers.
The major record labels absolutely refuse to learn or change. Look at the latest Smashing Pumpkins album Zeitgeist. Different retailers like iTunes and Target got CDs with different bonus tracks. If you wanted the full album, including the TITLE TRACK, you'd have to go to 4 different stores. How can a crummy model like that compete with piracy?
John
· 2 years ago
Carribeiro is spot on: subscriptions are only good for temporal things. We form deep attachments to music, and it makes us possessive. I have a beat up vinyl copy of Astral Weeks that I bought at Westport Records in 1984, which has been unlistenable since I left it in car on a summer day 10 years ago. I can't bring myself to throw it away. Even mp3s are like that -- I haven't listened to NMH's "In the Aeroplane" for a while, but I like knowing I can, even if Napster folds again. The idea of Sony being able to turn off the spigot unnerves me.
It's a great article nevertheless, and kudos to Rubin for recognizing that central to any industry revival will be making music that people actually want to hear. They're not going to market their way out of it.
Jim Kerr
· 2 years ago
It's not that simple John. Much of this depends on execution. If you can have your subscription and take the songs with you on your music player, arrange them in playlists that last for the ages and you can trade with friends, and in general treat the Rhapsody database as your own personal library--then I dont' think people would really mind. Note that you can do all those things right now, but not as well as you could. But it will happen.
John
· 2 years ago
The right solutions has to be simple. The fundamental issue is, if I stop paying my subscription, does my music go away? If the answer is "yes", then I'd be unlikely to use a subscription service, no matter how well implemented. I don't think I'm alone.
As Fred points out above, subscription services already exist. And iTunes dwarfs them. People have already voted with their credit cards.
rob
· 2 years ago
Fred - I was a bit surprised that you didn't at least comment on the "myspace is over and "facebook" may not be far behind of the article....I thought of you as soon as I read it.
r.
david hyman
· 2 years ago
it may be quit sometime before there's ubiquitous broadband that takes subscription to the car and the portable (where buttloads of people listen to music) and that will hold it back. i do believe that ubiquitous connectivity will take subscription models to the masses.
that being said, i'm doubltful folks without jobs (kids) will pay for music. college students won't even pay for cabletv. shame they left out ad supported from the article!
phoneranger
· 2 years ago
Rubin makes the claim that the new subscription model will 10X the music industry. I doubt it. Add up the revenues from Napster, Rhapsody and even iTunes and you get a fraction of what BigMusic still gets from CD sales today. Would one of you digital download/subscription service fanboys please run some numbers to show how the music industry grows larger in five years than it is today? If music is indeed "free" then this business is worthless.
bsiscovick
· 2 years ago
You're right, given current business models, giving away music for free would make the labels business worthless. The point is their models needs to evolve.
It's simple, really. Revenue per song initially decreases as the labels give music away for free. Counteracting this, the massive increase in quantity of music listening more than makes up for the initial decrease in marginal revenue. Consider how cheap the marginal cost per song stream is with digital distribution - the labels should be sprinting to give away the songs and instead focus squarely on increasing music listening. With music available on-demand and for free, quantity of music listening will increase dramatically which, in turn, will a) drive higher premiums for ad-support music streaming (similar to the CPM model for image ads, the music streaming equivalent will be a cost of an ad per XX number of streams), and, b) grow the pie for ancillary (non-cd) revenue streams such as concerts, paraphernalia, etc.as more bands become popular through ubiquitous availability of music.
BTW, the other major point of the article is critical. The power of word of mouth is key to discovering new music. The rise of social recommendation/search applications together with unfettered availability will drive the evolution of the music business. My money says successful labels of the future embrace these new trends and develop new business models accordingly.
Great article! A lot of good points. I totally agree with your comments. I'm a big advocate of the new business model you mentioned in your article. The music industry giants are either going to have to get with the program & accept the new forms of music distribution, or they are going to be in sad-shape financially speaking. (The closing of Tower Records marked the end of an era, in more ways than one. ;-)) The companies that've figured it out how to cater to these new forms more quickly (emusic.com, iTunes, etc.), are obviously going to cash in the fastest. Although I'm older than the demographic interviewed in Big Red, I also get my music via iTunes, etc. I listen to my iPod in my car or when I'm mobile. I've got Roxio soundbridge at home, too. When I'm not listening to music that I've made into MP3s (yes, I actually BUY my CDs or MP3s, thank you very much! ;-)), I listen to music online, via places like last.fm, magnatunes, thedjlist, etc. People like me (i.e., citizens with a job, who are older than 18) are actually the prime customers for these services, because they actually have the expendable income to spend on large volume music purchases. ;-)
Tony Alva
· 2 years ago
You can wish and hope forever and a day that subscription music is the wave of the future, but it just ain't gonna happen. Music IS something people want to own, period. Serivces are cool as an extravegance, but I just finished putting together my listening room in my new house and spun vinyl and CD recordings I've OWNED for years all weekend and I didn't have to pay anybody anything.
Rock is dead, long live rock!
Jim Kerr
· 2 years ago
But Tony you're using a decidedly old school definition of "own." If you have complete and total access to a library of over 3 million tracks and you can organize it any way you want, and it will be with you as long as you like, then what is the difference between owning and subscribing?
It reminds me of that great Napster ad: Would your rather pay $600 and OWN 600 songs or pay $600 and have 5 years of 3 million+ songs, including all the great new songs released that you may want to hear but not buy?
fredwilson
· 2 years ago
i have stopped buying music and so have my kids since we got rhapsody on sonos. the only way i'd buy music anymore is on vinyl.
Michael St. Hilaire
· 2 years ago
To me there are a couple basic ways to listen to music:
1. Sometimes people just want to listen to a genre or a type of music, without having to think about should I buy this artist or that, or where they want to store all this music, or load it onto some portable, etc. they just want a radio station basically. I think this need will be served by some sort of subscription based service, or perhaps its free when you buy the device capable of picking up these stations. The stations would need to have limitless flexibility. Something like Pandora where it types the music based on a number of its listening properties so the station can best fit your current mood or what you want to listen to. This would also be a great 'discovery' engine for helping you find stuff you may not know about that fits your style. Getting the 'word of mouth' aspect could be tougher, but its certainly possible to factor that into the equasion.
2. As many of the posters said above, people love to own music. Those in this category want to be able to create their own playlists, download and own entire collections by a certain artist, live sets, bootlegs, remixes, etc. This is where the college students from the survey mostly fit i'm guessing and where a lot of the current generation of music lovers are. I think a subscription based model will only work if you are able to download whatever you want during that month of subscription.
Couple #1 with #2 and I think you have something extremely useful for all consumers.
jackson
· 2 years ago
So very sad.
If you all love music so much, how come the delivery sytems sound so shitty?
MP3, streaming media - far inferior sound quality.
We are moving backwards for the sake of convenience.
I call it lazy and greedy.
Jim Kerr
· 2 years ago
To be blunt, Jackon, it is because people simply don't care as much about sound quality as you do.
Ethan Bauley
· 2 years ago
Sigh.
Since the obligatory "people want to own" and "vinyl sounds best" comments are here, I'll do my part:
1. Ownership won't matter in [insert number between 3 and 10] years when you're never "off the grid" (that is, you have a near-ubiquitous wireless connection). You'll be able to listen to any track on-demand. Any decent music service in this world will enable you to download a copy for portability's sake. We are in a transition period now, technologically. It sucks. It's probably like being in a "adolescent" startup.
Side benefit: on-demand music is measurable.
2. Convenience drives adoption, not fidelity. Fidelity catches up later. When we're all surfing 100mbps FiOS, MP3 can take a back seat to something better.
Tony Alva
· 2 years ago
I hate to burst your bubble, but I've been working in wireless for most of my professional life and as much as I'd like to see an "always on the grid" world happen soon, or even in my lifetime for that matter, it just ain't gonna happen. The whole idea is hugely cost prohibitive in every sense of the word. Ubiquitous wireless grid? Who’s going to provide coverage for Valdosta, GA? It’s been decades and the cell companies can’t even deliver decent voice coverage, how do you see them or anybody else doing that with thirstier demand for bandwidth?
Subscription music is for casual listening, but the commentor above is right, nobody wants or needs another pain in the ass $12.99 payment to make. You all keep trying to come up with technical solutions and answers for how the industry is going turn itself around and what you don’t realize is that you’re the reason it died to begin with. Don’t give me the labels are all evil bit either. Technology is NOT always the answer, and in some cases (i.e. providing the means to steal music as easy as wiping ones ass) it’s quite the opposite. Me and many others remember how perfectly happy we were going to record stores and actually paying for a record/CD. I wasn’t weren’t mumbling to myself about how put out I was and neither was anybody else so don’t even trip.
Fools all of you. Once you’ve burned all your energy beating this dead horse with tech solutions, perhaps you’ll realize that it has ALWAYS been about making great ALBUMS, bodies of work that stand the test of time. Perhaps if it’s not too late by then maybe things will begin to recover.
Jim Kerr
· 2 years ago
Tony,
What you say is true for real music fans, but for a vast vast majority of consumers, it's always been about great SONGS, not albums. The record industry had research as far back as the seventies that showed consumers were not happy about buying albums when they simply wanted that one great song they heard on the radio.
Ethan Bauley
· 2 years ago
"...as much as I'd like to see an 'always on the grid' world happen soon, or even in my lifetime for that matter, it just ain't gonna happen. The whole idea is hugely cost prohibitive in every sense of the word."
Am I missing something here? What about 3G? What about the entire country of Japan? What about this:
Are you saying there's no way that in the next 20 YEARS a wireless device will be able to reliably sustain a 128kbps connection in Valdosta, GA?
If so, that's REALLY dark.
Z@elbows
· 2 years ago
My favorite part of the article is when he called the iPod dead technology, which it really is as we look at it today.
Give me a handheld unit, that links me into a massive amount of content, music, video, text, anything... , that I can download on the fly, and I will be happy. And a $20/month fee would be a lot easier to swallow than the $1.99 per track over air price we pay now. As far as ownership goes, it doesn't matter, as long as I can get anything I want when and where I want. That is even better than ownership.
So allow me to say Viva la subscription.
Jim Kerr
· 2 years ago
The problem with the record industry business model has nothing to do with how people discover new music, it is that the record industry model was built on two disappearing things: 1) Albums and 2) technology upgrades. This is obviously a simplification, but it cuts to the heart of the matter.
1) The record industry made its money via selling multiple songs in expensive album format to consumers who, in a vast majority of cases, just wanted to hear individual songs. In very real terms, the record industry, *even today*, cannot survive without the album model and its mark-up. With digital distribution, this unrealistic mark-up went away. I don't *have* to buy the full K.T. Tunstall album if I only like "Suddenly I See." And the price difference is dramatic: $16 versus 99 cents or less.
2) From the 78 to the LP to cassettes to eight tracks to the CD--the record industry could always count on a huge surge in catalog sales every few years as consumers upgraded their stereo equipment and had to buy new versions of their favorite albums. With music now equipment-neutral in digital format, this surge in catalog sales has been lost. Heck, users simply rip their own CDs now, so there wasn't even a real sales improvement with the transition to digital.
In the end, I think you are absolutely right, and companies like ours and Jupiter Research have been saying this for some time: The music industry will evolve to the subscription model. It simply has to.
riozen
· 2 years ago
I assume a lot of these comments, as interesting and informed as they are, come from folks who haven't made their living in the music business. Or, if they were in the biz, they were on the selling side of the desk not the creative. The old top-down paradigm imploded for several reasons.
1 - Control ( the most identifiable characteristic of the old business model) led to strangulation of the creative possibilities. In the early days - when recording companies and distributors were run by old fashioned salesmen or admen (Madmen is essential viewing on this era) - executives didn't care a twit about the content or steak just the sizzle or sale. Mitch Miller, while the head of Columbia, let John Hammond sign Bob Dylan, who you can be sure that he did not like. Most of these guys who ran the business until the late 80's worked the same way. They signed, promoted and sold music they despised or ignored. As long as the kids liked it they sold it. They were salesmen. This accounts for the tsunami of good music from 1955 to 1985 not technology or new formats. Then, a new crop of executives entered the scene - lawyers, accountants and anyone who had played in a band in high school but failed as an adult music maker even in a local scene. These people quickly became the arbiters of taste and suffocated the creative impulse. At it's farcical height in the 90's, the A&R people had more tattoos and hair variations than any of the bands.
2 - Theft - from the days of Morris Levy to the PLA generals in China - has been most effectively practiced as an inside game. In the 90's - after the payola and copyright extortion of the preceding decades - the new lawyers at the helm of the biz concocted the "controlled composition clause" whereby the companies only had to pay artists, writers and producers 75% of the statutory royalty rate. It was bad enough that the rate was the only non-negotiable maximum wage in America but to add insult to injury the boss strong-armed 25% of it from the creative community - legally. This has been followed by the obscenity of suing the customers for the industry's failure to monetize P2P. Can you imagine another industry suing the customers? So, the current crop of desk jockeys first killed off the creatives and now the consumers.
3 - Ignorance of technology combined with the hubris of control and legal theft left the "industry" sipping champagne while the boat sank. I was once told by an executive that the industry had billions of dollars and would always find a way to come between the music makers and the music lovers. This was 1994 when I told him that the new Internet would allow music makers to link up directly with music lovers - thus eliminating the middle man - the industry. I wonder if he's still laughing. Technology - as defined by the Internet - is useful if you play by it's architecture and not your narrow self-interest.
Music is a strange commodity. It cannot be held, or seen or tasted but the experience of it impacts all sentient beings in one way or another. It is invisible and an essential of life - like the air that we breath. Like water it will always seek it's path to us.
Facilitation is the new byword of the horizontal paradigm proffered by the Internet. The new music community online doing business will evolve from outside of the industry and inside the creative community. Whatever makes the use of music, purchase of music and experience of music easier to acquire and more satisfying for both the music maker and music lover will prevail. The new music biz will be huge and widely dispersed. I wish Rick Rubin and all of us well.
You make the "death of the 'record man'" argument, and while we could argue that there are no more Walter Yetnikoffs, Ahmut Erteguns, or Clive Davises, your argument that these guys simply were accountants and lawyers who didn't care about the music is significantly wide of the mark (even though many of them were lawyers).
In the end, the record company executives always did want hit records, and creative artistry, more often than not, is made to take a backseat. This was true in the fifties, sixties, seventies, and today. To argue that creative control and a desire to be "arbiters of taste" has overtaken the music industry is simply untrue. They still just want hit records.
Suing regular consumers is, indeed, stupid, but you don't make a compelling argument that Chuck Berry being screwed on his publishing hurt the record industry in some kind of same way that suing consumers today does. There has always been theft in the music industry. Perhaps the biggest difference is that today the theft is coming from an empowered consumer, rather than back alley agreements with people over cleans, cut outs, and chart positions. But I would say that ultimately theft has little to do with the woes of the music industry today.
Your final point is correct. The music industry's profit model was based on making the money through its distribution outlet, not the label. This is why a label like SBK could be bought in the nineties at a price that made no sense in terms of the company's actual sales. However, its market share was enough that the parent distribution company would make the profit on the distribution. As with so many businesses in the digital era, pegging your future hopes on control of distribution was a major error. We see that in companies as diverse as Encyclopedia Britannica and Blockbuster.
I appreciate a lot of the interesting arguments about fidelity, screwing the customer, and lack of creative vision, but the simple truth is that the record industry is failing because its underlying business models throughout its history--Album-based margins converted to profit through solely owned distribution channels--were a double whammy of inefficiency in the digital age.
riozen
· 2 years ago
Jim,
Excellent comments. However, I didn't say that the hitmen were accountants and lawyers. I did well working for the last of the old guys from 85 to 95 but it was obvious to all of us that the crop from 95 on (the accountants, lawyers and former high school guitarists) were not going to sustain the biz on the business side. I don't think they could have sustained any business let alone grow it. Suing the customers was the sure sign.
Gip Heffman
· 2 years ago
I find it interesting that so many feel the old way of doing business is going to return and thrive. Not going to happen. The Internet HAS changed everything. The artists are out front and finally in control. It's not going to be dominated by a few over the many, but by the many directly with the artists themselves.
Forget domination by the big boys, even Amazon, iTunes and the like. Soon artists will be interacting directly with the customers for a better experience for everyone. The key will be their ability to drive customers to them. Being discovered will be paramount. That IS what people really want to find, something new, something that enhances the wonder and thrill of a great new song and artist, not being sold some middle of the road schlock.
Jim Kerr
· 2 years ago
Gip,
This is a very insightful comment. At no time in history has the artist been as empowered as they are today. I have heard arguments that labels would simply evolve into marketing departments for artists and managers. While I think this is a bit of an extreme statement, it has a kernel of truth to it.
jackson
· 2 years ago
There's only one definition of 'own'. If you pay a bill every month, you don't 'own'.
ppearlman
· 2 years ago
the sub model will take off when aapl launches it and they will do that when they have the hardware launch in place to exploit all those who rush to subscribe...
All Comments
And if Columbia Records just figured out that kids aren't listening to they radio, they're stealing music, listening to it on an iPod, and finding out about music through word of mouth, that's pretty scary. It may have been news earlier in the decade, but those consumer habits have been pretty well documented for a while now.
People absolutely hate subscriptions.
We subscribe to something only if it's scarce, and if we need it for a limited period of time. That's why people rent a home - they don't know how long they will live somewhere. That's why people rent cars - you're travelling, you need a car for a short period of time. That's why we subscribe to newspapers - because they have a limited lifespan, and we only subscribe to a newspaper while it's important to us; as soon as we don't need it anymore, we just cancel the subscription.
In all other instances of what's called "subscription", what happens is that the industry fixes an amount to be paid monthly. Banks for example, they want to charge you a maintenance tax or something like this. And guess what? People hate paying for it.
For most people, music is not time-limited. If we like it enough we will buy it so we can own it, to listen anytime we want. A subscription model will never work, unless it's the only option around. Even then people will dislike it and keep looking for options.
P.S. The Gotham Gal would be aghast -- the Ads by Adpinion ad running for Amazon to the right as I post this is "I Can't Stand Still ---- Don Henley". Just think if you could edit the ads on your blog, with just a minor change it could become the truth for your blog "I Still Can't Stand Don Henley" ;-)
The change in the record industry has been needed for years and has nothing to do with technology. Tech helps, definitely; infinite distribution helps, home recording helps (my studio can produce just about as good as any thats' not analog).
But one of the casualties is sound quality. People are accepting MP3 as good enough, and missing the sweetness of analog recordings. By the time a well-recorded 24-track 2" tape album is mized to a reel to reel, then converted to 24-bits for mastering, then converted to down to 16-bit CD quality, a lot of the sound has been lost.
Then convert to MP3 and you have AM radio. Ok, better than AM, but the loss of quality is incredible. It's why record companies hire engineers with good ears to do the conversions and touch them up before releasing them.
Try this sometime: rip Led Zepplin II from a CD to a WAV file. Then do the same and convert it to MP3. Listen to them both. The difference is stunning.
Then put the needle down on the vinyl. Then set it to repeat, cancel all your appointments, and get back into what music really sounds like.
Sigh.
Charlie
http://www.missionresearch.com/salesworks
Audio quality has always been very low on the priority level of consumers when you talk about what they desire. This is why Sirius Satellite quickly abandoned its original name of "CD Radio" and its limit of high quality 100 channels. They found out very quickly that most people would quickly abandon quality in exchange for more choices and better content.
Thanks for the insightful piece on what's wrong with big music these days. Apple and iTunes are riding the wave of profits into the future, while the old skool music industry hardly has a pulse and is trying to sue its way to life. Rick is quite a character, but often times, change comes easiest from outside forces, not inside an armored culture of status quo. I took the time to read the NY Times story and see a glimmer of hope in Rubin's efforts. I cross-posted on your piece to http://blog.innovators-network.org
The Innovators Network is a non-profit dedicated to bringing technology to startups, small businesses, non-profits, venture capitalists and intellectual property experts. Please visit us and help grown our community!
Best wishes for continued success,
Anthony Kuhn
Innovators Network
Music wants to be owned. You want to be able to listen to it forever on any device, at any time. You want to be able to create your own mixes to play at parties. You want to be able to make a mix CD, or even send a friend some MP3s so they can get into a new band you love. Some of these uses are "piracy", but so what? Home taping not only didn't kill the music industry, it stoked interest in music for a generation of teenagers.
Today, all music stores and services (including iTunes) suck because they have catalog gaps and bizarre rules about what can and can't be sold as singles. This is not iTunes' fault. It's the fault of impenetrable music industry deals, but it still sucks for consumers.
The major record labels absolutely refuse to learn or change. Look at the latest Smashing Pumpkins album Zeitgeist. Different retailers like iTunes and Target got CDs with different bonus tracks. If you wanted the full album, including the TITLE TRACK, you'd have to go to 4 different stores. How can a crummy model like that compete with piracy?
It's a great article nevertheless, and kudos to Rubin for recognizing that central to any industry revival will be making music that people actually want to hear. They're not going to market their way out of it.
As Fred points out above, subscription services already exist. And iTunes dwarfs them. People have already voted with their credit cards.
r.
that being said, i'm doubltful folks without jobs (kids) will pay for music. college students won't even pay for cabletv. shame they left out ad supported from the article!
It's simple, really. Revenue per song initially decreases as the labels give music away for free. Counteracting this, the massive increase in quantity of music listening more than makes up for the initial decrease in marginal revenue. Consider how cheap the marginal cost per song stream is with digital distribution - the labels should be sprinting to give away the songs and instead focus squarely on increasing music listening. With music available on-demand and for free, quantity of music listening will increase dramatically which, in turn, will a) drive higher premiums for ad-support music streaming (similar to the CPM model for image ads, the music streaming equivalent will be a cost of an ad per XX number of streams), and, b) grow the pie for ancillary (non-cd) revenue streams such as concerts, paraphernalia, etc.as more bands become popular through ubiquitous availability of music.
BTW, the other major point of the article is critical. The power of word of mouth is key to discovering new music. The rise of social recommendation/search applications together with unfettered availability will drive the evolution of the music business. My money says successful labels of the future embrace these new trends and develop new business models accordingly.
(For a great article on the rise and implications of social search, see http://www.bschoolers.com/2007/08/14/where-is-s...)
Rock is dead, long live rock!
It reminds me of that great Napster ad: Would your rather pay $600 and OWN 600 songs or pay $600 and have 5 years of 3 million+ songs, including all the great new songs released that you may want to hear but not buy?
1. Sometimes people just want to listen to a genre or a type of music, without having to think about should I buy this artist or that, or where they want to store all this music, or load it onto some portable, etc. they just want a radio station basically. I think this need will be served by some sort of subscription based service, or perhaps its free when you buy the device capable of picking up these stations. The stations would need to have limitless flexibility. Something like Pandora where it types the music based on a number of its listening properties so the station can best fit your current mood or what you want to listen to. This would also be a great 'discovery' engine for helping you find stuff you may not know about that fits your style. Getting the 'word of mouth' aspect could be tougher, but its certainly possible to factor that into the equasion.
2. As many of the posters said above, people love to own music. Those in this category want to be able to create their own playlists, download and own entire collections by a certain artist, live sets, bootlegs, remixes, etc. This is where the college students from the survey mostly fit i'm guessing and where a lot of the current generation of music lovers are. I think a subscription based model will only work if you are able to download whatever you want during that month of subscription.
Couple #1 with #2 and I think you have something extremely useful for all consumers.
If you all love music so much, how come the delivery sytems sound so shitty?
MP3, streaming media - far inferior sound quality.
We are moving backwards for the sake of convenience.
I call it lazy and greedy.
Since the obligatory "people want to own" and "vinyl sounds best" comments are here, I'll do my part:
1. Ownership won't matter in [insert number between 3 and 10] years when you're never "off the grid" (that is, you have a near-ubiquitous wireless connection). You'll be able to listen to any track on-demand. Any decent music service in this world will enable you to download a copy for portability's sake. We are in a transition period now, technologically. It sucks. It's probably like being in a "adolescent" startup.
Side benefit: on-demand music is measurable.
2. Convenience drives adoption, not fidelity. Fidelity catches up later. When we're all surfing 100mbps FiOS, MP3 can take a back seat to something better.
Subscription music is for casual listening, but the commentor above is right, nobody wants or needs another pain in the ass $12.99 payment to make. You all keep trying to come up with technical solutions and answers for how the industry is going turn itself around and what you don’t realize is that you’re the reason it died to begin with. Don’t give me the labels are all evil bit either. Technology is NOT always the answer, and in some cases (i.e. providing the means to steal music as easy as wiping ones ass) it’s quite the opposite. Me and many others remember how perfectly happy we were going to record stores and actually paying for a record/CD. I wasn’t weren’t mumbling to myself about how put out I was and neither was anybody else so don’t even trip.
Fools all of you. Once you’ve burned all your energy beating this dead horse with tech solutions, perhaps you’ll realize that it has ALWAYS been about making great ALBUMS, bodies of work that stand the test of time. Perhaps if it’s not too late by then maybe things will begin to recover.
What you say is true for real music fans, but for a vast vast majority of consumers, it's always been about great SONGS, not albums. The record industry had research as far back as the seventies that showed consumers were not happy about buying albums when they simply wanted that one great song they heard on the radio.
Am I missing something here? What about 3G? What about the entire country of Japan? What about this:
http://www.readwriteweb.com/archives/asian_mobi...
?
Are you saying there's no way that in the next 20 YEARS a wireless device will be able to reliably sustain a 128kbps connection in Valdosta, GA?
If so, that's REALLY dark.
Give me a handheld unit, that links me into a massive amount of content, music, video, text, anything... , that I can download on the fly, and I will be happy. And a $20/month fee would be a lot easier to swallow than the $1.99 per track over air price we pay now. As far as ownership goes, it doesn't matter, as long as I can get anything I want when and where I want. That is even better than ownership.
So allow me to say Viva la subscription.
1) The record industry made its money via selling multiple songs in expensive album format to consumers who, in a vast majority of cases, just wanted to hear individual songs. In very real terms, the record industry, *even today*, cannot survive without the album model and its mark-up. With digital distribution, this unrealistic mark-up went away. I don't *have* to buy the full K.T. Tunstall album if I only like "Suddenly I See." And the price difference is dramatic: $16 versus 99 cents or less.
2) From the 78 to the LP to cassettes to eight tracks to the CD--the record industry could always count on a huge surge in catalog sales every few years as consumers upgraded their stereo equipment and had to buy new versions of their favorite albums. With music now equipment-neutral in digital format, this surge in catalog sales has been lost. Heck, users simply rip their own CDs now, so there wasn't even a real sales improvement with the transition to digital.
In the end, I think you are absolutely right, and companies like ours and Jupiter Research have been saying this for some time: The music industry will evolve to the subscription model. It simply has to.
1 - Control ( the most identifiable characteristic of the old business model) led to strangulation of the creative possibilities. In the early days - when recording companies and distributors were run by old fashioned salesmen or admen (Madmen is essential viewing on this era) - executives didn't care a twit about the content or steak just the sizzle or sale. Mitch Miller, while the head of Columbia, let John Hammond sign Bob Dylan, who you can be sure that he did not like. Most of these guys who ran the business until the late 80's worked the same way. They signed, promoted and sold music they despised or ignored. As long as the kids liked it they sold it. They were salesmen. This accounts for the tsunami of good music from 1955 to 1985 not technology or new formats. Then, a new crop of executives entered the scene - lawyers, accountants and anyone who had played in a band in high school but failed as an adult music maker even in a local scene. These people quickly became the arbiters of taste and suffocated the creative impulse. At it's farcical height in the 90's, the A&R people had more tattoos and hair variations than any of the bands.
2 - Theft - from the days of Morris Levy to the PLA generals in China - has been most effectively practiced as an inside game. In the 90's - after the payola and copyright extortion of the preceding decades - the new lawyers at the helm of the biz concocted the "controlled composition clause" whereby the companies only had to pay artists, writers and producers 75% of the statutory royalty rate. It was bad enough that the rate was the only non-negotiable maximum wage in America but to add insult to injury the boss strong-armed 25% of it from the creative community - legally. This has been followed by the obscenity of suing the customers for the industry's failure to monetize P2P. Can you imagine another industry suing the customers? So, the current crop of desk jockeys first killed off the creatives and now the consumers.
3 - Ignorance of technology combined with the hubris of control and legal theft left the "industry" sipping champagne while the boat sank. I was once told by an executive that the industry had billions of dollars and would always find a way to come between the music makers and the music lovers. This was 1994 when I told him that the new Internet would allow music makers to link up directly with music lovers - thus eliminating the middle man - the industry. I wonder if he's still laughing. Technology - as defined by the Internet - is useful if you play by it's architecture and not your narrow self-interest.
Music is a strange commodity. It cannot be held, or seen or tasted but the experience of it impacts all sentient beings in one way or another. It is invisible and an essential of life - like the air that we breath. Like water it will always seek it's path to us.
Facilitation is the new byword of the horizontal paradigm proffered by the Internet. The new music community online doing business will evolve from outside of the industry and inside the creative community. Whatever makes the use of music, purchase of music and experience of music easier to acquire and more satisfying for both the music maker and music lover will prevail. The new music biz will be huge and widely dispersed. I wish Rick Rubin and all of us well.
Brad Parker
www.muzlink.com
You make the "death of the 'record man'" argument, and while we could argue that there are no more Walter Yetnikoffs, Ahmut Erteguns, or Clive Davises, your argument that these guys simply were accountants and lawyers who didn't care about the music is significantly wide of the mark (even though many of them were lawyers).
In the end, the record company executives always did want hit records, and creative artistry, more often than not, is made to take a backseat. This was true in the fifties, sixties, seventies, and today. To argue that creative control and a desire to be "arbiters of taste" has overtaken the music industry is simply untrue. They still just want hit records.
Suing regular consumers is, indeed, stupid, but you don't make a compelling argument that Chuck Berry being screwed on his publishing hurt the record industry in some kind of same way that suing consumers today does. There has always been theft in the music industry. Perhaps the biggest difference is that today the theft is coming from an empowered consumer, rather than back alley agreements with people over cleans, cut outs, and chart positions. But I would say that ultimately theft has little to do with the woes of the music industry today.
Your final point is correct. The music industry's profit model was based on making the money through its distribution outlet, not the label. This is why a label like SBK could be bought in the nineties at a price that made no sense in terms of the company's actual sales. However, its market share was enough that the parent distribution company would make the profit on the distribution. As with so many businesses in the digital era, pegging your future hopes on control of distribution was a major error. We see that in companies as diverse as Encyclopedia Britannica and Blockbuster.
I appreciate a lot of the interesting arguments about fidelity, screwing the customer, and lack of creative vision, but the simple truth is that the record industry is failing because its underlying business models throughout its history--Album-based margins converted to profit through solely owned distribution channels--were a double whammy of inefficiency in the digital age.
Excellent comments. However, I didn't say that the hitmen were accountants and lawyers. I did well working for the last of the old guys from 85 to 95 but it was obvious to all of us that the crop from 95 on (the accountants, lawyers and former high school guitarists) were not going to sustain the biz on the business side. I don't think they could have sustained any business let alone grow it. Suing the customers was the sure sign.
Forget domination by the big boys, even Amazon, iTunes and the like. Soon artists will be interacting directly with the customers for a better experience for everyone. The key will be their ability to drive customers to them. Being discovered will be paramount. That IS what people really want to find, something new, something that enhances the wonder and thrill of a great new song and artist, not being sold some middle of the road schlock.
This is a very insightful comment. At no time in history has the artist been as empowered as they are today. I have heard arguments that labels would simply evolve into marketing departments for artists and managers. While I think this is a bit of an extreme statement, it has a kernel of truth to it.
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http://thefutureofthemusicindustry.com