The Death Of The Music Industry

This has been burning up my inbox all day.  It’s a viral sensation.

First thought is the music business is screwed.  Second thought is LOOK AT THAT GIANT CD MOUNTAIN!

I’m not privy to the original Bain report, I’d like to see the inflation rate factored in, for all I know this graph is a hoax, but it feels right.

In other words, the CD was the greatest invention in the history of recorded music.

And it was fueled by high prices, vinyl replacement and television, MTV built acts whose music the public wanted to own.

We’re never going back to high prices, that paradigm is dead.  At the advent of the CD era a VCR cost almost a grand and you fixed it if it broke, now VCRs don’t even exist and their replacement, the DVD player, which is almost extinct itself, goes for under a hundred bucks and if it breaks you throw it away.  We’re still dazzled by technology, but we expect it to be cheap soon, if not immediately.  Now it’s all about mass adoption out of the box, and then the price goes down to commodity level.  The odds of a new expensive music format coming down the pike are nil.  But we can learn from the computer and mobile phone industries, everyone needs to consume/pay for music, it’s just about making the proposition attractive and cheap enough.  In other words, we shouldn’t be talking about driving the price up, but down, to gain instant and mass acceptance.  As for MTV breaking acts…  Ratings were always horrific, but the cumulative audience and the channel’s monopoly in a limited music universe are not easy to replicate, but not impossible.  It’s about building a music exhibition/discovery site that features thrilling music.  At the advent of the eighties, the dawn of the MTV era, music was exciting, as it was at the dawn of the twenty first century, with Napster, everybody was talking about music, it was on the cover of "Newsweek", now everybody’s on Facebook and young kids want to grow up to be Mark Zuckerberg instead of Boy George or Simon Le Bon, because Zuckerberg does it his way, by inventing something new we didn’t know we wanted.  How long has it been since music has delivered this?

In other words, the CD era was an anomaly, not to be replicated, and to continue to try to prop up this paradigm is economic death.  Labels still make 74% of their revenue from CDs

CDs still 74% of sales in 2010. Long live the CD!

They just have to look at Kodak to see the fallacy in this game.  Everybody said digital photography was coming, and finally it did, killing the film business, killing Kodak.  But people are shooting more images than ever, we’re living in the midst of a photographic explosion, we’re living in the midst of a music explosion, just because there’s presently less money in the sale of recorded music than previously doesn’t mean there’s not a ton of money to be made in music.

Note: Subscription has to win, otherwise recorded music revenues go flat and never recover.  We’re moving to the cloud.  If people can listen to their MP3s anywhere there’s no incentive to buy a subscription.  That’s why we need free subscription before digital lockers take hold, to inure people to paying VERY LITTLE for ALL THE MUSIC.  We’ve got to get everybody paying for music, get the price extremely low, it can always go up, like cable, but if it doesn’t start out low, adoption rates will be limited.  I’m behind Spotify because it presently has the best functionality.  It’s not beholden to the browser, it’s its own app, and this is a good thing.  Because of P2P technology functionality is equivalent to ownership.  But unless it launches free, it’s dead on arrival and we go to digital lockers and economic death. Rhapsody and Napster proved long ago people don’t want to pay for subscriptions out of the box.  But don’t think this means people won’t rent music.  They rented movies then paid for them and are now renting them again.  The public is malleable!

RADIOHEAD

If it’s not about the first week sales, entering the chart at number one, you can announce only days before your album is available, not only surprising and elating fans, but cutting down on the dreaded leak syndrome.

Sure, the major label built Radiohead.  Then again, after "Creep", what did EMI do for them?  It’s not like the band got a lot of airplay.  They followed their own muse and made challenging music that appealed to their fans.  Radiohead knows it’s not about closing everybody, but just those who care.

Who do I hate?

RADIOHEAD FANS!

Because whenever the band does something they clog up my inbox, whenever we discuss music they froth at the mouth. But I know, unlike a street team, they’re not being paid, they’re doing it out of passion and belief, so I don’t really hate them, I envy them, that they’re so into something, so I will never ignore Radiohead, even though they’re not my act of choice.

MUMFORD & SONS

In the old days, we never would have known Mumford & Sons was the hit of Grammy night.  Because we wouldn’t have instant sales information and the album couldn’t have been successful because the limited physical inventory would have sold out in a flash in brick and mortar stores.

But now you can manufacture ad infinitum, online, iTunes was ready with all the inventory necessary.  Mumford & Sons is still number one on the iTunes chart.

The old wave constantly bemoans the new wave, says the Internet ruined music.  What the old wave hates is it’s lost control.  Which came in the form of distribution.  Radiohead could not go their own way.  And it would have been hard to seed retail with enough copies of Mumford & Sons to show a spike, to feed demand.

The future is not digital sales, it’s streaming.  And if the labels were smart, which they are not, they’d go with Spotify immediately, before Apple or Google allows customers to keep their purchases stored in the cloud, obviating a need for subscription services.  So these sales statistics, which are anemic by old wave standards, are not harbingers of the future.  But they do illustrate demand.  You cannot categorize what appeals to the public.  In this crazy world anything can hit.  With everything available, the public selects from the giant smorgasbord, messing with the system.

People want to be touched emotionally.  That’s what Mumford & Sons delivers best.  In other words, in an era where so much music is made by machines, people truly desire that which is made by humans.

When it’s all said and done, Mumford’s album could outsell Katy Perry’s, it’s close.  Sure, Katy sold more singles, but do singles build careers?

He owns two radio stations in Aspen.

And they only have two minutes of commercials an hour.

As they say on the broadcast, you’re only two minutes away from music.  If all terrestrial stations adopted this paradigm, could the terrestrial radio band have a resurgence, could it dominate?

We all hate terrestrial radio.  Because of the COMMERCIALS!

And Pandora is programmed by a computer.  Which is why it always gets it so wrong.  When it comes to music, when it comes to taste, we need a human being.

Satellite’s got human beings, but you pay for it.  And it’s hard to convince people to do so.  It’s just not an instant close.  Because satellite doesn’t know who its audience is.  The way you succeed today is to turn your customers into evangelists.  And satellite hasn’t had that ability since the merger.  It used to be a club of renegades, now it’s where the terrestrial talkers go to die.

Except for Howard Stern.

But there are always exceptions.

But maybe in the future we won’t be spoon-fed.  Maybe we’ll choose all our own music.

But maybe we won’t.

Jeff used a great word today, EXHAUSTION!  When you come home after a hard day at work do you really want to dig in and pick what you want to listen to, or do you want someone to do it for you?  Sure, a muso is dying to curate his own playlist, then again, how do you discover anything new?

At two minutes an hour, if he sells out, Jeff’s stations make money.  He’s not quite there yet, he’s still got unsold inventory.  Because the price is high.  But advertisers are seeing the light.  If you support a station that puts the listener first, it burnishes YOUR image.

Terrestrial radio is no different from the rest of America.  It’s all about short term profits.  It killed the major labels, it’s anathema to developing something with credibility, with longevity.  We need to believe.  And belief takes time.  If you’re taking the easy way out, we don’t want to go along for the ride.

Look at Apple.  They break every rule.  The products are unique, what you didn’t even know you wanted, and they’re anything but cheap.  Could radio succeed at this game?  Giving people what they should hear, not what they want to hear?  In other words, if you throw research out the window and trust your gut do you actually GROW your audience?  There’s a business in me-too, but the true riches are in being unique.

We had a great hang today at Le Pain Quotidien.  I follow Jeff on Twitter, he responded to what I wrote about Troy Carter and when I wrote back he told me we should get together.

And what did we do when we connected this afternoon?  We talked about MUSIC!

It’s hard to talk about most Top Forty music today.  What’s there to  say?  Ke$ha brushes her teeth with Jack Daniel’s?  That’s the big story online.  Or do we want to read an expose on Diane Warren or Dr. Luke?  Interesting, but what we like most is artists, with a point of view, doing it their way.  How do we foster this?

The economic crash in the music business is weeding out a lot of those looking to get rich quick.  Used to be you played music because you were inspired by the blues, now you’re inspired by "American Idol" and the cash.  If you put fame and riches first, you end up with today’s popular music, tripe.

Not that there’s not good music out there.  What if someone programmed the best of the best?

Do we really need narrow niches?  What if we had personalities listeners could believe in?  Who were beholden not to the boss, but the fan.  Who kept their jobs not only because they didn’t air tune-outs, but because they had something to say, because they had a point of view.  Ryan Seacrest is today’s most popular deejay…  What does he stand for again?  Questionable sexuality?  A willingness not to offend?  A desire to be ubiquitous?

The stations of yore survived on the personalities.  WNEW FM was carried by Scott Muni, never mind Alison Steele and Zacherle.

If you build it, they will come.

But you’ve got to build it with them in mind.

That’s what’s wrong with Pandora.  They say it’s about listeners, but it’s really about getting rich.

Not that radio stations should lose money.  But if they see themselves as a service, a life force, they’ve got a chance to survive.

Terrestrial could kill satellite and Pandora overnight if they turned down the commercials and opened up the playlists, if they became Apple instead of Microsoft, if they appealed to those who cared and learned to care instead of being a commodity.

We can’t bring the public back to what once was.

But we can corral them to where we want them to be in the future.

But only if we put them first.

From: A Little Birdie

Sales stats, these include sales until 3amEST. I’ll keep you updated as sales come in throughout the week as well.

Mumford & Sons
"Sigh No More" – 31,189 +156%
"Little Lion Man" – 42,664 +88%
"The Cave" – 37,899 +114%

iTunes Stats
#1 Album on the store
"LLM" and "The Cave" #1 and #2 Alternative Tracks
"LLM" #13 track overall
"The Cave" #15 track overall

Just checked.  Mumford’s album is STILL number one on iTunes.

What does this tell us?

Quality triumphs over spectacle.

And that Top Forty beats is a business, but not the only one.

Real music has returned.  Played on acoustic instruments.  You can argue about the songs, the genre, but you can’t complain about the dancing or the singing to tape or all the stuff music fans have been complaining about for DECADES!

This is the revolution.

We’re in it.

Forget about genres.  Just be good.  Follow your muse.  We’re waiting for you.

Meanwhile, the big winner of the night, Arcade Fire, is only number 3 on iTunes.  Winning isn’t everything, especially on the Grammys.

From many:

http://whoisarcadefire.tumblr.com/

I figured this was a fake.  Anything too good to be true on the Internet usually is.  But I checked Rosie O’Donnell’s twitter stream and she said it.

This is all good publicity for Arcade Fire, but know that the Grammy show is now bigger than the acts.  And that you can enjoy the winning, but the days of Bonnie Raitt becoming a national hero in wake of her victory are done.

Arcade Fire does not make mainstream music.  The mainstream will not embrace them.

That’s not a problem.  I’m just saying their win is a private moment amongst fans.  A good one, but despite winning on a mainstream telecast, it does not make them mainstream.

Mumford eclipsed Arcade Fire on the show.  Because they realized on TV it’s all about being simple and intimate.  You go broad, with explosions and spectacle, live.  But not on TV.

Meanwhile, Mumford & Sons’ album is $9.99 and Arcade Fire’s is $7.99.  When you’re hot, price is irrelevant.