A VC - Latest Comments in Rick Rubin And The Future Of The Music Business

Re: Rick Rubin And The Future Of The Music Business

Bob — Thu, 12 Nov 2009 12:28:09 -0000

Thanks for posting!

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http://thefutureofthemusici...

Re: Rick Rubin And The Future Of The Music Business

Ethan Bauley — Fri, 07 Sep 2007 14:55:15 -0000

"...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:

http://www.readwriteweb.com...

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.

Re: Rick Rubin And The Future Of The Music Business

sb — Wed, 05 Sep 2007 10:20:37 -0000

What about cable tv?

Re: Rick Rubin And The Future Of The Music Business

John McGrath — Wed, 05 Sep 2007 09:55:11 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

riozen — Wed, 05 Sep 2007 09:44:17 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

ppearlman — Wed, 05 Sep 2007 09:12:47 -0000

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...

Re: Rick Rubin And The Future Of The Music Business

jackson — Wed, 05 Sep 2007 03:33:33 -0000

There's only one definition of 'own'. If you pay a bill every month, you don't 'own'.

Re: Rick Rubin And The Future Of The Music Business

bsiscovick — Wed, 05 Sep 2007 00:18:57 -0000

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.

(For a great article on the rise and implications of social search, see http://www.bschoolers.com/2...

Re: Rick Rubin And The Future Of The Music Business

fredwilson — Tue, 04 Sep 2007 21:56:20 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 18:04:38 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 18:01:23 -0000

Brad,

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.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 17:40:39 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Gip Heffman — Tue, 04 Sep 2007 15:48:23 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Tony Alva — Tue, 04 Sep 2007 15:24:00 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

riozen — Tue, 04 Sep 2007 15:11:23 -0000

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.

Brad Parker
www.muzlink.com

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 13:17:52 -0000

To be blunt, Jackon, it is because people simply don't care as much about sound quality as you do.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 13:16:39 -0000

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?

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 13:10:57 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 13:07:44 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Jim Kerr — Tue, 04 Sep 2007 12:59:20 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Z@elbows — Tue, 04 Sep 2007 12:22:41 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Ethan Bauley — Tue, 04 Sep 2007 12:12:48 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

jackson — Tue, 04 Sep 2007 12:11:06 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Michael St. Hilaire — Tue, 04 Sep 2007 10:48:54 -0000

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.

Re: Rick Rubin And The Future Of The Music Business

Tony Alva — Tue, 04 Sep 2007 09:58:11 -0000

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!