Rights, distribution and radio.\u00c2\u00a0 Those are the three cards the major labels and their controlled publishing companies held.\u00c2\u00a0 And until Napster, those cards always triumphed.<\/p>\n
You needed exhibition to sell.\u00c2\u00a0 And that’s where the labels’ relationship with radio was so important.\u00c2\u00a0 Independent labels could not get their songs played.\u00c2\u00a0 Still cannot get their songs played, despite the Spitzer agreements.<\/p>\n
It was not easy to get records in retail establishments.\u00c2\u00a0 But even if you managed to accomplish this, it was almost impossible to get paid if you didn’t have a steady flow of desirable product. That’s how retail worked.\u00c2\u00a0 Stores paid you when they needed new product.\u00c2\u00a0 If you had no new product to deliver, you didn’t get paid.\u00c2\u00a0 And it’s hard to run a business with no cash flow.<\/p>\n
And then we get to the rights.\u00c2\u00a0 This is what tripped up Napster.\u00c2\u00a0 He who owns the product gets to say how it’s sold.\u00c2\u00a0 You just can’t take someone else’s wares and give them away for free.\u00c2\u00a0 You can’t take them and sell them either, the rights holders have veto power.<\/p>\n
So, innovation has been locked out.<\/p>\n
I just read a fascinating story in the "New Yorker".\u00c2\u00a0 Entitled "The Instigator", subtitled "A crusader’s plan to remake failing schools."<\/p>\n
Speaking of failing schools.\u00c2\u00a0 I’m stunned how many times I make an argument and my readers can’t comprehend it.\u00c2\u00a0 They’ve never been taught the power of analysis.\u00c2\u00a0 You’ve got right and wrong, black and white.\u00c2\u00a0 Subtlety?\u00c2\u00a0 Wrestling with the facts to your own conclusion?\u00c2\u00a0 Frequently their teachers couldn’t even exercise this.\u00c2\u00a0 And now, everybody gets a college education, but they take business courses, they’ve got no understanding of the arts and reason, and our society is poorer for it.\u00c2\u00a0 But the poor are another matter entirely.\u00c2\u00a0 They often go to schools where the teachers literally don’t teach.\u00c2\u00a0 And the students end up dropping out, and that ends up as all of our country’s problem.\u00c2\u00a0 Because even if you pull yourself up by the bootstraps and buy a BMW, where are you going to park it?\u00c2\u00a0 Where can you leave it where some poor citizen doesn’t break in and steal the airbag, to sell for cents on the dollar so he can buy drugs, feeding his habit that he employs to cope with the futility of life.<\/p>\n
We don’t live in India.\u00c2\u00a0 Not even China.\u00c2\u00a0 We’re not a country rampant with strivers, willing to work long hours to get ahead.\u00c2\u00a0 Rather, you don’t need an education because you’re going to be an athlete, or a rapper.\u00c2\u00a0 Sure, some kids go on to get computer science degrees and change the world…<\/p>\n
But they haven’t changed the music business.\u00c2\u00a0 Because of the triumvirate of rights, distribution and radio.<\/p>\n
This guy Steve Barr.\u00c2\u00a0 He’s been taking over schools in Los Angeles, one by one with his charter organization Green Dot.\u00c2\u00a0 High schools.\u00c2\u00a0 When it’s supposedly too late to have an effect.\u00c2\u00a0 But his Green Dot schools now send eighty percent of their students to college, whereas in L.A. we’ve got a forty-seven percent dropout rate.\u00c2\u00a0 Standardized test scores are twenty percent higher than L.A. Unified’s.\u00c2\u00a0 How did this happen?<\/p>\n
The power of one.<\/p>\n
Steve Barr is fifty, met his wife at Burning Man, married her three weeks later…\u00c2\u00a0 He’s not conciliatory, he threatens to create rival schools if the district doesn’t play ball.\u00c2\u00a0 He’s got a deal with the teachers union, but it’s not the standardized contract, and he makes all of the teachers in Green Dot schools reapply in the transition.\u00c2\u00a0 Where is the Steve Barr in the music world?\u00c2\u00a0 Where is the single individual who’s going to change the landscape, for the benefit of listeners?<\/p>\n
It’s not Irving Azoff.\u00c2\u00a0 Sure, he wants to deliver rights to the artists via the Ticketmaster\/Live Nation merger, but now, in light of the Obama administration’s recent antitrust pronouncements, I doubt that merger goes through.\u00c2\u00a0 And even if it does, Irving’s so tied up with Doug and Jimmy and the rest of the usual suspects that he can’t lead a revolution.<\/p>\n
But he did start one.\u00c2\u00a0 With the Eagles and Wal-Mart.\u00c2\u00a0 Suddenly, the big acts are no longer signing with the major labels.\u00c2\u00a0 It’s not financially prudent.\u00c2\u00a0 Which brings us to distribution.<\/p>\n
Physical sales are dying.\u00c2\u00a0 Getting paid online is no problem.\u00c2\u00a0 The biggest problem is attention!\u00c2\u00a0 How is anyone going to know you’re releasing music, never mind hear it?<\/p>\n
Music radio means less than ever before.\u00c2\u00a0 Not only because of the endless commercials, but the alternatives.\u00c2\u00a0 Net radio, streaming on demand, iPods…why be subjected to unappealing tight playlists if you have options?<\/p>\n
Rights.\u00c2\u00a0 This goes back to Mr. Azoff.\u00c2\u00a0 If suddenly the artists control the rights, it’s a whole new ball game.<\/p>\n
But Irving deals with the old acts, the superstars.\u00c2\u00a0 How about the wannabes?<\/p>\n
The lawyers make those 360 deals because they want to get paid.\u00c2\u00a0 As do those acts who put down their John Hancocks.\u00c2\u00a0 Handlers convince them it’s the way to go, or they’re so desperate for cash, they see no alternative.<\/p>\n
But there is an alternative.\u00c2\u00a0 Especially when 360 deals forfeit so much for so little.\u00c2\u00a0 Check SoundScan, no one’s going diamond, almost no one is going platinum.\u00c2\u00a0 How much can the label advance?<\/p>\n
Still, innovators in the music sphere have been hamstrung by those rights the labels and the publishers still hold.\u00c2\u00a0 How many stillborn online music services have we had?\u00c2\u00a0 Playing by the established industry’s rules is a license to go out of business.\u00c2\u00a0 Just ask iMeem (which supposedly has found new financing, but they’re losing money streaming music.)<\/p>\n
For the past few years, the innovators have thrown up their hands.\u00c2\u00a0 If you want to be in charge of your own destiny, you create an iPhone app, you don’t try to solve the problem of music distribution.<\/p>\n
But this is going to change.<\/p>\n
New acts see value in giving away their music.\u00c2\u00a0 And if you control it, you’ve got the right.\u00c2\u00a0 How long until there’s enough unfettered new music, tunes the creators control as opposed to the fat cats, that someone from the outside can roll up these rights and create a viable alternative to the established game?<\/p>\n
It’s just a matter of when.\u00c2\u00a0 The old guard just wants to keep the old system in place.\u00c2\u00a0 Kind of like the French three strikes law.\u00c2\u00a0 What kind of garbage is that?\u00c2\u00a0 Rearguard and unenforceable.\u00c2\u00a0 Do they really think it’s going to increase revenues significantly?\u00c2\u00a0 No, legal alternatives are necessary.\u00c2\u00a0 But they’re impossible to establish when the old guard has so much power.<\/p>\n
But we’ve established that the old guard is losing its power!<\/p>\n
We’re not talking artists here, we’re talking businessmen.\u00c2\u00a0 Great artists are almost always shitty businessmen.\u00c2\u00a0 But great artists recognize great businessmen, which is why when David Geffen started his eponymous label, John Lennon, Donna Summer and Elton John immediately signed to the company, even though Geffen had been out of the business for years.\u00c2\u00a0 It’s why and how Irving controls all those acts today.<\/p>\n
But Geffen’s essentially retired.\u00c2\u00a0 And Irving is not about the new wave, but the old.<\/p>\n
And what people want most is exhilarating new music.\u00c2\u00a0 We love our oldies, we want to remember our summer camp girlfriend, but we don’t want to be married to her.<\/p>\n
So he who controls new music controls the world!\u00c2\u00a0 What if new music does not align with the usual suspects?\u00c2\u00a0 What if new music goes with the entrepreneur?\u00c2\u00a0 Who is more about protecting the artist and his career than making a quick buck?<\/p>\n
The old players don’t like this, they don’t want this.\u00c2\u00a0 But they’re losing their stranglehold.\u00c2\u00a0 We’ve got a ripening landscape wherein a revolutionary like Steve Barr can build a position and then cause the old guard to blink.\u00c2\u00a0 Break a bunch of new acts by delivering the tunes in an innovative way and how long is it until the old guard has to sign up on your terms?<\/p>\n
You’ve got no leverage if you control no rights, if you can’t break your act without terrestrial radio and physical distribution.\u00c2\u00a0 But if you can get the word out online, and control all revenue streams via a storefront you own, the old guard will come to you.<\/p>\n
And even if the old guard does not capitulate, it ends up being neutered.\u00c2\u00a0 Because of its diminishing control of hit music.<\/p>\n
I’m doubtful anybody in the established music business can lead the charge.\u00c2\u00a0 There’s too much history, too many alliances with the past.\u00c2\u00a0 As Malcolm Gladwell says in the same issue of the "New Yorker", David only beats Goliath if he puts in incredible effort and is willing to do what is "socially horrifying".\u00c2\u00a0 "Socially horrifying" means you challenge the rules, and break them.\u00c2\u00a0 Or as Gladwell states, "He couldn’t fight the establishment, because he WAS the establishment."\u00c2\u00a0 "The price that the outsider pays for being so heedless of custom is, of course, the disapproval of the insider."\u00c2\u00a0 Even Irving Azoff, with his reputation for questionable veracity, can’t fuck Jimmy Iovine.\u00c2\u00a0 He’s in business with him! You’re not going to break the rules if your wives are friends and you vacation together, play golf every weekend at the private club.<\/p>\n
So, it has to be an outsider who leads the charge.\u00c2\u00a0 Who has to be desirous of putting in the effort.\u00c2\u00a0 But after Napster and Grokster and KaZaA and the Pirate Bay, no one’s been willing to make the effort.\u00c2\u00a0 But what if you weren’t stealing?\u00c2\u00a0 What if you were setting up a better shop across the street?\u00c2\u00a0 More in tune with what the public desires?\u00c2\u00a0 Then, you’re on the road to success.\u00c2\u00a0 But not overnight.<\/p>\n
It takes time.\u00c2\u00a0 You can’t play by the old guard’s rules if you’re trying to break them.\u00c2\u00a0 You can’t be desirous of driving a Lamborghini based on the venture’s profits in the first year.\u00c2\u00a0 Which is why the charge won’t be led by people like Tim Westergren, or Michael Robertson, who aren’t about music, but money.\u00c2\u00a0 The lead will be taken by someone who’s been to a million shows, who’s got multiple hard drives of music, who first and foremost is a music lover!\u00c2\u00a0 That’s how Ahmet made it, that’s how all the legends made it.\u00c2\u00a0 But too many of those in power today have always worked for the man, they’ve never done it themselves, which is why they are vulnerable.<\/p>\n
Never underestimate the power of one.\u00c2\u00a0 The David who challenges convention with a ton of effort and succeeds.\u00c2\u00a0 There is no innovation in the mainstream music sphere.\u00c2\u00a0 It’s not wanted.\u00c2\u00a0 Risk is anathema.\u00c2\u00a0 But we’ve just about reached a tipping point.\u00c2\u00a0 Where someone unknown is going to amass rights and power and change the entire game.\u00c2\u00a0 Just you watch.<\/p>\n
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