Re: Lowery

I’m not gonna fill your inbox with the protestations and ministrations of the minions. Everyone seems to have an opinion on this week’s meme and I know most are not interested in the thoughts of anybody but themselves. And I maintain all this bloviating is not moving the needle, which was my original point.  But I’m going to direct you to this post by Jay Frank, because it contains some interesting statistics. I don’t agree with everything Jay says, but the underlying point is we live in a crowded marketplace that is overwhelming the consumer and to a great degree when you think piracy is holding you back, the real issue is demand…there’s just not enough of it. That’s not to say major artists are not affected by piracy, but despite Lowery counseling Emily White, to a great degree this is not an emotional issue, facts are important. I’ve excerpted a couple of Jay’s points, but I believe it behooves you to read his entire post:

"I just don’t think they’re stealing the music of the majority of artists bitching about thievery’s impact on their business. The statistics don’t bear it out."

"…is the fact that there are too many artists competing for shrinking dollars, largely due to the shift from albums to singles. Despite the economic number that David Lowery quoted of the number of professional musicians falling by 25%, if you took "album releases" as an indicator, it seems like the number of pros has increased. In a decade, we’ve gone from about 30,000 albums being released to over 77,000 last year. And that’s just albums going thru legit channels. The problem, as noted by Chris Muratore of Nielsen on the previously noted New Music Seminar panel, is that 94% of those releases sold less than 1,000 units. Indicators that I have examined showed those low sales aren’t because of people stealing them. They come from too many releases causing most people to not even realize they are out."

IS STEALING MUSIC REALLY THE PROBLEM?

And while you’re at it, you should also look at Jay’s most recent post, about music industry trends. Most importantly, the point that "Albums Earn Less Songs Earn More" – "Adele "Rolling In The Deep" sold over 11 million units in 2011, the most of any single song in the Soundscan era" and "Singles Take Longer To Break" – "Carly Rae Jepsen – Released September ’11, Peak June ’12", "Gotye – Released July ’11, Peak May ’12", "Fun. – Released September ’11, Peak March ’12", "One Direction – Released August ’11, Peak April ’12", "Foster The People – Released February ’10, Peak August ’11".

BREAKTHROUGH TRENDS IN THE MUSIC INDUSTRY

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From: Joe Taylor
Subject: RE: The Senate Judiciary Hearing

small point but Merlin own a piece of Spotify and Cooking Vinyl are in Merlin

Joe Taylor
Record of the Day

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From: Scott Sommer
Subject: the power of howard stern…

Smashing Pumpkins released a new album. According to the interview with Billy Corgan, he let Howard pick any song off the record to play in full. Howard chose "Violet Rays." Billy said that was not the single and was surprised Howard picked it because it was more "out there" than many other songs.

Here is in image of the popular track ratings from the album:

(Click this link: http://bit.ly/LAcbMb and then click "View in iTunes" to the right of "Oceania – iTunes LP", which is at the top of the list.)

Be afraid, be very afraid. Especially when Lucian Grainge makes Edgar Bronfman, Jr. look like a paragon of openness and reasonableness.

If you were watching this hearing, and you knew nothing about the law, were just deciding whether the Universal/EMI merger should go through on fairness, you’d say NO WAY!

Lucian Grainge was so evasive and duplicitous you’d be afraid to go to dinner with him for fear he’d steal your watch. It was so obvious that both the panel and the chairman/senator had to remark upon it, that he didn’t answer a single damn question.

Roger Faxon was eloquent. But it was hard to figure out exactly whose side he was on. What I mean by that is isn’t he up for a job at Warner? And isn’t this sale from Citi to Universal guaranteed? And he said if the merger goes through he’s gonna lose his job, but admitted with a send-off paycheck, ain’t that the American way.

At least Irving Azoff was honest. He said that Warner was blocking this merger because they didn’t want to overpay for EMI, but they still wanted to own it. Truth is always refreshing. Irving was the only one who really talked about the new music business. Still, the concept that recorded music income is going to drop off a cliff and be nonexistent in the future is just plain wrong. The majors may not control the music of all of his acts, but they can determine on which terms they engage with the public in the marketplace.

Martin Mills made you want to sign to his company. He wasn’t sleazy, he was direct, and forceful.

As for Gigi Sohn… She didn’t look the part, but she was the musicians’ friend.

And the inquisitors were quite informed. Star of the panel was Al Franken, who even corrected Azoff, putting in the record that Universal was not first on Spotify, but third, after EMI and Sony. Franken had done his homework. He cornered Grainge. But like the weasel Lucian is, he refused to respond to the inquiry, again and again and again. Hell, Grainge wouldn’t even answer Kohl’s question as to why he bought EMI. Can you imagine that, someone spending $1.9 billion and not being able to articulate why?

This hearing is meaningless.

But the proposed merger is not.

Just today I got this e-mail:

"I need you to withhold publication of my name because I still rely on UMG for some licenses. However, I can personally vouch for the validity of Pakman’s statement to the WSJ. David Ring and his jr lawyer, Aaron Harrison, pulled the same kind of shit on me when I had to cut new licenses for _______ to save the company from extinction. Word for word.

The problem is that the industry is already too concentrated. The only fair solution is to exchange extended copyright protection for mandatory statutory licensing of all known digital business models including downloads and on-demand services."

Meanwhile, you all know the name of the company this gentleman is speaking of.

You see these guys are assholes. Especially Lucian Grainge. They’re bullies who want to succeed not so much for their artists, but for themselves. It’s the American way.

As for the public.

SCREW YOU!

P.S. Bronfman made an excellent point, that the AT&T merger with T-Mobile was denied, even though the resulting entity would have equal or less market share than Universal/EMI.

P.P.S. Even indies need distribution. Did you see that Amanda Palmer made a deal with Cooking Vinyl today?

D.I.Y. Heroine Amanda Palmer Signs With Indie Label Cooking Vinyl

P.P.P.S. Cooking Vinyl does not own a piece of Spotify, MOG or Vevo. But Universal does. In other words, you can be independent but every time your music is streamed you’re enriching your competitor. It’s kind of like paying the Mafia to keep your restaurant open.

P.P.P.S. Irving screwed up. He talked about the major labels exercising "blocking rights"… Isn’t this what this hearing is all about, the concept of blocking unapproved entrants into the marketplace, whether they be music services or acts, requiring them to play by majors’ rules, if they allow them to play at all?

I think I’m switching sides. I think I’m against this merger.

On one hand I’ve been very influenced by Peter Paterno, who’s convinced me market forces always triumph, that the government does not need to get involved. Hell, look at Microsoft… It squandered its dominance all by itself. As for Live Nation and Ticketmaster… There are more ticketing companies than ever before, Live Nation missed the EDM boat… One can argue strongly that Universal should just swallow EMI whole and let it be it.

But there’s a problem. Especially in the U.S. You see in this country, copyrights are forever. Theoretically they expire, but whenever that’s close to happening some fat cat leans upon his congressperson and the term is extended. Yup, Mickey Mouse should be in the public domain, you should be able to paint his picture on pre-school walls and sell t-shirts with his visage… But Michael Eisner and Disney just couldn’t let that happen.

Even patents expire. Relatively quickly. That’s why the generic drug industry is burgeoning. But musical copyrights? They just go on and on, and he who controls them has power, he can gum up the works.

Imagine if there was no copyright in music. Napster would still exist. Then again, it might already have been eclipsed by streaming services. But Napster died. Because it needed permission. Something the rights holders just would not grant.

You see I’m less worried about the forty percent of the new music marketplace Universal would own with its acquisition of EMI than its catalog. New music market share comes and goes. The barrier to entry is not incredibly high. But they’re making no more Beatles records. If this merger goes through, Universal would own them and the hits of the Beach Boys, never mind the tracks it already controls. And if you want to go into any business requiring usage of copyrighted material, you’re gonna have go through them, Universal…your company will be dependent upon their whims.

Which is why for so many years we got no new developments in legal online music distribution. The rights holders just wouldn’t license. And they extracted ownership in Spotify in order to grant said license and as a result, we’ve got no idea how much they’re getting paid or what artists are entitled to. It’s a closed system. And it sucks.

Think about the Telecommunications Act of 1996, which enabled radio consolidation. It ruined music radio. There’s not a listener who would not agree. And by tightening radio playlists, it negatively impacted music at large, it was hard to sell it if you couldn’t hear it.

Of course now there’s the Internet.

But the Internet was nascent in 1996. And that was over fifteen years ago. Terrestrial radio is still the best way to expose music, to everyone but the major labels’ detriment.

The problem is, there’s a limited number of stations. Just like there’s a limited number of copyrights. He who owns the past unfortunately ends up controlling the future, for a very long time anyway.

Eventually so much of the classic rock era will be financially irrelevant. Just like you don’t need the music of the 1940’s to launch a service today. But that’s going to be a very long time from now…

But let’s say the merger doesn’t happen. What’s end game then?

I believe the major labels will lose their grip on new music production. Then again, he who controls distribution holds the trump card. But what I’m saying is what is end game if this merger is not allowed to go through? Are we gumming up the works by preventing inevitable consolidation? Does the company that buys EMI end up with an orphan entity down the road that is only worthwhile if merged with another?

That’s an interesting question.

But anyone who doubts the power of Universal, the big kahuna, already, should read the story of eMusic in today’s "Wall Street Journal". Unfortunately, it’s behind a paywall, so I’ll quote the relevant provision:

"In some cases, Universal has already used its market power to extract favorable terms from online music services. In early 2008, David Pakman, then the CEO of eMusic.com Inc, was negotiating to add major-label releases to his company’s catalog of independent music. David Ring, a senior digital executive at Universal Music, told him Universal’s massive catalog entitled it to more favorable terms.

‘He said, "We get more, because we’re Universal. That’s just the way we roll,"’ Mr. Pakman recalls. That stance, Mr. Pakman adds, applied to ‘every dimension of our contract: the rate you pay per unit sold; the promotion you agree to do.’ The companies reached an agreement 2? years later, after Mr. Pakman had left and eMusic raised its prices sharply.

A Universal spokesman called Mr. Pakman’s account of the conversation ‘complete fiction.’ In the same email, the spokesman wrote: ‘UMG has licensed more digital music services than any other music company.’"

Music-Merger Bid Plays Out

Who do you believe? Hell, Universal’s denial was not even complete. It sidestepped the issue… And we hear from the spokesman, not Mr. Ring himself?

Mm… My mind is not completely made up.

But I’m afraid, very afraid. Because he who controls the lion’s share of copyrights has undue influence on the future of music. Not only in distribution. This is not tech, where Palm is trumped by RIM, which is trumped by Apple and Android. all within a decade. Those rights Universal holds last, like I said, essentially forever.

We’re waiting for the older generation to die.

The most insightful thing I’ve heard this year emanated from the lips of Irving Azoff, he said Lucian Grainge thought his competition was Doug Morris.

Do you see what happened here?

Doug got eased out of Universal because he was too old. So he’s on this vendetta to prove Vivendi wrong. And Lucian needs to win against Doug, so he does insane things, like overpay for EMI. Hell, even Sony didn’t swallow EMI’s publishing division whole, it brought in outside investors to help carry the weight. Meanwhile, stuck with a pig in a poke, he now owns EMI’s recorded music division, he can’t return it to Citi, Lucian’s paying a fortune in legal fees in order to absorb said company as opposed to selling it.

Is this any way to run a business?

No.

Meanwhile, you’ve got other old farts married to radio, albums, all the relics of the seventies. It’s as if Steve Jobs came back from the dead and tried to convince everybody to use an Apple II, saying life was simpler back then, we were all on the same page, there was less competition, things were good.

But Steve Jobs is dead.

And some day the old farts running the music business will be too.

Last night I went to a dinner at Cecconi’s. You know, the hipster restaurant where Morton’s used to be. One Direction was eating in the corner, or so I was told, but we were ensconced in the private room, fourteen people, half from music, half from tech.

I was the oldest one there.

Most people my age don’t have the time. Somewhere in your fifties, it becomes all about lifestyle. Eating, playing golf, your kids have left the nest… Whereas those younger than that are hungry, they’re still on the way up.

These people were hungry.

And I’d like to tell you the music people were ignorant, backward, out of touch… But they were not. Actually, they were more in touch than the tech people, who seemingly only wanted to build something, flip it and get rich.

That’s the difference between music and tech. Music, when done right, is forever. I.e. the Beatles, the Stones, all the classic rock acts, not to mention Sinatra. Tech, no matter how well it’s done, is destined for the scrapheap. Whether it be UNIVAC or Palm. Its time in the sun is very brief. And the tech people want to use our music to make their money, not worrying about hurting that which should last forever.

And the people in the room felt music should last forever. Ironically, it’s the old farts who don’t feel this way. Because they need to get paid.

There can’t be long term thinking in the music business, because the old farts need to get paid. None of them own their companies. All of them have contracts, with bonus provisions, which they plan on getting, by hook or by crook. They don’t care about what’s good for the company, never mind the music, they only care about what’s good for themselves. That’s why there’s so little progress.

And the tech guys say give us your music, we’ll give you equity. One of these enterprises has to hit…

Huh?

And the label people say they can’t give them the music even if they wanted to. Because oftentimes the artists say no. And some of the biggest artists aren’t even about the money. It was remarked that Madonna is in a pissing match with Lady Gaga, she’s got to prove that she’s the progenitor, that she’s still bigger, money is almost irrelevant.

And the television agent said despite being a music fan, he wanted no part of the business. Because there was no business. Same as it is in movies.

That was fascinating. I always like to explore someone’s success. How did this TV agent like saying no?

That was no problem. Because when you say no in TV, there’s always another opportunity, there’s always another season, outlets that need more programming. Say no in movies and your career may be over.

And the lawyer in the room said her clients were all about giving away the music. And she represented household name acts. It was the labels who stood in the way.

And the end result was I see no movement.

But I foresee giant change within the decade.

Because the old farts are gonna die.

We’re no longer gonna debate the merit of CDs. Or radio. The target demo will have grown up without CDs and they’ve never experienced great radio, to the degree they’re even listening. And this generation will only be interested in hits. Why should there be an album? I just want the single.

Everything the old people take for granted, that’s in their DNA… The younger generation doesn’t believe in, they don’t even care about. And they’re here to replace us.

Castigating P2P is like trying to deny someone’s summer camp experience. Yes, Napster burgeoned in 2000. If you were computer-savvy then, let’s say you were nine, you’re now twenty one. All you know is P2P and files.

Meanwhile, I know a famous manager who still doesn’t use a computer, to this day!

We’re in an era of gridlock. And what the last decade has taught us is to follow the audience. They’re leading. While we’re bickering about rights and the way it ought to be, they’re utilizing the new platforms and programs to slice and dice and acquire just what they want to. We don’t need to teach them, we need to follow them. Better yet, get in front of them.

But the old farts keep yelling for them to come back. It’s kind of like herding cats. Impossible. But they keep trying.