Getting The Music Business Over The 'But We Must Sell Music' Hump

from the it's-not-all-there-is dept

On Monday, I attended and participated in the always excellent twice yearly event, the SF Music Tech Summit. As always, it was a fun time, full of interesting people. While smaller than some of the big music events, pound for pound, I tend to end up in a very high percentage of fascinating chats with people at SF Music Tech. The panel I was on was the first in the morning, and was officially called "meet the press," even though at least two of the five panelists (myself included) don't consider ourselves press. I didn't mean to stir up much controversy (never do), but I apparently got a few vocal folks in the audience riled up on a few points. The one that got some attention on Twitter, was the claim that live music was growing. A few folks started screaming and no one then let me back that up, but the numbers don't lie. A lot of people came up to me afterwards with stories of success by focusing on live music, and I even heard from some folks who are involved in organizing live shows who say that the "complaints" about live shows tend to come from those who focus only on a subset of live venues that have struggled lately -- but that the overall live market is thriving (as the numbers show).

However, there was a second point that I later tried to make that again I never had a chance to follow through on, and wanted to do so here. People were asking about what business models are working for musicians, and I started listing out some examples, and a loud gentleman in the front row yelled out that the business model that had to be at the center was selling music. I responded with what I thought was an important question: "Why?" and again people started yelling. Of course, no one answered the question, and then the panel shifted gears to another topic.

But, the reaction from the crowd on that question cemented for me one of the biggest reasons why some in the industry have struggled to grasp new business models. As I discussed in my NARM presentation a few months ago, selling music is just not a good business model, but it doesn't mean there aren't good, very profitable, music business models. It's just that selling music isn't a very good one. Instead, you need to learn to use the music (which still needs to be good, and is still the central reason why these other business models work) to sell something else -- something scarce, which can't easily be copied. That can be attention, access, time, creative ability, cool physical products, whatever. All of those things are made more valuable the more popular the music is, and you can build all sorts of powerful and immensely profitable businesses once you recognize that.

But if you still think that selling the music or making money directly from the music has to be at the "center" of any music business model, you're shutting yourself off to the largest opportunities out there. But, the thing is, music has always been a product that makes something else more valuable. While there was some disagreement on the panel from someone about how record stores were profitable in the 70s, that's a case where the music was making the vinyl (and later, plastic) more valuable. Today, it makes iPods more valuable. As the big box retailers know, it acts as a loss leader to bring people in to buy higher margin goods. Music is great at selling other, higher margin things. If you ignore that in the music business model, you're missing the big opportunity.

This isn't to downplay the importance of music, or say that the quality of music doesn't matter. It absolutely does. But the music is not the scarcity, and you don't make money off of selling something that's abundant. You use the abundance to figure out what other scarce goods it makes more valuable and you sell those. So, people can complain and shout all they want, but it doesn't change the basic fact that until you recognize that selling music directly just isn't a very good business model, you're limiting your market tremendously.


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    Jon Renaut (profile), Dec 8th, 2009 @ 3:41pm

    Sounds like a broken panel

    As soon as something got interesting, they switched to a new topic? Maybe you need to rethink the model for your panels.

     

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      Mike Masnick (profile), Dec 8th, 2009 @ 3:51pm

      Re: Sounds like a broken panel

      As soon as something got interesting, they switched to a new topic? Maybe you need to rethink the model for your panels.

      Not my panel. I was just a participant on the panel. And it was tough because it was a five person panel with a moderator -- so you had six people who had to have time to speak for a one hour panel, and we wanted audience questions. So, given the setup, hard to focus too much on any particular topic.

       

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        Jon Renaut (profile), Dec 8th, 2009 @ 3:57pm

        Re: Re: Sounds like a broken panel

        Yeah, not blaming you. It sounds like every other moderated panel discussion I've ever seen. The moderator has to get through the talking points even if the current one isn't finished.

        Good thing you have your own "panel" where you can finish the conversation.

         

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    Hulser (profile), Dec 8th, 2009 @ 4:52pm

    Rare --> Infinite

    Maybe part of getting over the 'But We Must Sell Music' hump is helping people understand the idea that a rare/non-infinite service (making music) can generate a non-rare/infinite product (digital copies of music). That physical or mental work can't be represented in some physical form, even if it's paper or a plastic disk, just seems counterintuitive. It just seems to be that one of the biggest barriers to understanding this issue is explaining the apparent contradiction that at the very moment a song gets copied to a digital file, it in effect switches from a rare good an infinite one.

     

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      ChurchHatesTucker (profile), Dec 8th, 2009 @ 7:03pm

      Re: Rare --> Infinite

      "It just seems to be that one of the biggest barriers to understanding this issue is explaining the apparent contradiction that at the very moment a song gets copied to a digital file, it in effect switches from a rare good an infinite one."

      Yeah, it's the old hunter/gatherer model that we seem to be largely stuck with. If someone hasn't really looked into the issue, their mental models are based on scarce goods (which are all we had to deal with for eons.)

       

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    Reverend Dak (profile), Dec 8th, 2009 @ 5:06pm

    Is it possible, given your higher-than-usual-profile-especially-regarding-the-media-industry-business-model-criticisms, that there were industry shrills planted to disrupt you when you speak?

    Isn't "selling music" more than just a copy of the CD, or a concert ticket? I think it's great and important that an artist can "make a living" from their art, and I will always find it bothersome when an organization who's whole purpose is to "make a buck" is the one "defending" the old business models.

     

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    spaceman spiff, Dec 8th, 2009 @ 5:10pm

    Live music rocks!

    My wife and I host house concerts in our home several times (or more) each year. We can fit 35-40 people in our basement venue. We have hosted such artists as Sparky and Rhonda Rucker and Andy Statman. With an average of 25-30 people attending and with CD/DVD sales by the artist during the break, the artists leave with an average of $500 to $1000 USD for a 1 1/2 hour concert, not to mention dinner, and free room and board if they wish to stay at our house before heading off to their next gig. It's not a huge amount of $$, but given that most of these musicians do 3-5 shows per week, they make a decent living and seed the market with a demand for their music. FWIW, Statman, considered one of the finest bluegrass mandolin players in the world and klezmer clarinet master, was backed up by members of Special Consensus. He had two sold-out shows at our house in one evening. Since I play bluegrass mandolin, you can imagine what a thrill that was for me!

    Small, but intense audiences who appreciate these artists, are what makes a musician's live worthwhile. They get intimate feedback from their audience and the audience gets direct contact with the artists who enrich their lives. Yes, live music lives, and rocks!

     

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      Wendy (profile), Dec 19th, 2009 @ 5:41pm

      Re: Live music rocks!

      Hi to spaceman spiff - I would be remiss as a wife and agent if I didn't point you toward my husband as a potential artist for your series. He's a frequent house concert performer. If you do visit the site, check out videos of "Man of Straw, "Witchita Lineman" and "For Always" to give you a taste... Ok, sorry to barge in. Back to the discussion.

       

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    Suzanne Lainson (profile), Dec 8th, 2009 @ 7:12pm

    If you want to make music, make music. If you want to sell something else, sell something else.

    If you think of music as what you do for fun, and if you think of something else as what you do for income, then there is no problem. And with so many people wanting to create music, that is the reality anyway. Do music for self-expression, creativity, and community building and don't try to do a bunch of music-related stuff you may not enjoy. Accept music as a hobby. Treat it like skiing -- something you do and that you put time and money into, but not as a profession or source of income.

    Here's how to view the degrees of separation between music and income.

    No degree of separation: Sell your music.
    One degree of separation: Sell stuff related to your music.
    Two degrees of separation: Use your music to sell other people's stuff (e.g. have your music in commercials).
    Three degrees of separation: Write music to sell other people's stuff (e.g. write jingles and commissioned works).
    Four degrees of separation: Play music. Use that as a way to promote your real profession (e.g., the singing plumber).
    Five degrees of separation: Play music. Don't mix it with any money-earning activity. Keep your hobby and your income generating activities totally separate.

     

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    Anonymous Coward, Dec 8th, 2009 @ 8:00pm

    A few folks started screaming and no one then let me back that up, but the numbers don't lie.

    Mike, once again you are bootstrapping and not telling the whole story!

    First, the numbers are only for the UK, not the world. You cannot take a single market and blindly apply it to all other markets.

    Second, there is no indication as to the number of tickets sold during this time. The UK has suffered some dramatic ticket price increased in the last few years, with acts like Bon Jovi almost tripling ticket prices from their last visit, and a number of festivals cranking their ticket prices through the roof.

    Basically, while more live money is coming in, it isn't clear that any more fans are seeing live music, rather just that people are paying more for the same thing.

    Also, the combined sales of music and live music is flat from 2004 to 2008 combined, which means that there music industry in the UK isn't getting any more money than that is was before.

    Your bootstrapping is almost mind boggling at times, this is such an obvious attempt to take a small amount of data and turn it into some sort of massive fact.

     

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    Ethan Kaplan, Dec 8th, 2009 @ 9:57pm

    as I often say

    Music is not an atomic entity anymore. What is necessary is a holistic approach to the experience driven through and by music, which may or may not be the monetization of the music itself.

    Regardless, the concept of selling "music" as an....atomic entity... hasn't existed in perhaps forever.

    Wish I could have made it up there for SF Music Tech and represented, but had just run a marathon and been away from home for a week :)

     

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      Mike Masnick (profile), Dec 8th, 2009 @ 10:31pm

      Re: as I often say

      Music is not an atomic entity anymore. What is necessary is a holistic approach to the experience driven through and by music, which may or may not be the monetization of the music itself.

      Amen.


      Wish I could have made it up there for SF Music Tech and represented, but had just run a marathon and been away from home for a week :)


      Would have been great to have seen you there. Oddly, your major label colleagues were either missing or staying very well hidden. Surprised me since they usually at the event. I'm sure there were some major label folks there, but they were very much in the background this time around.

       

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        Anonymous Coward, Dec 9th, 2009 @ 5:54am

        Re: Re: as I often say

        Perhaps the major labels have already seen that this is a dead end in the music maze, and have moved on from it.

         

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    Anonymous Coward, Dec 8th, 2009 @ 10:49pm

    I love people named Mike

    who have to make my comments moderated. Yay!

     

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    Anonymous Coward, Dec 8th, 2009 @ 10:51pm

    Mike rhymes with Mooo Cow. Work with me, people.

    Moderated comments are the way of the future

     

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    UBER ANGER, Dec 8th, 2009 @ 11:03pm

    I had a musician sleep on my couch for 4 weeks straight!!

    There are many things wrong with the music business. For example, we may denounce with righteous indignation and dislike men who are so beguiled and demoralized by the charms of pleasure of the moment, so blinded by desire, that they cannot foresee the pain and trouble that are bound to ensue; and equal blame belongs to those who fail in their duty through weakness of will, which is the same as saying through shrinking from toil and pain. These cases are perfectly simple and easy to distinguish. In a free hour, when our power of choice is untrammelled and when nothing prevents our being able to do what we like best, every pleasure is to be welcomed and every pain avoided. But in certain circumstances and owing to the claims of duty or the obligations of business it will frequently occur that pleasures have to be repudiated and annoyances accepted. The wise man therefore always holds in these matters to this principle of selection: he rejects pleasures to secure other greater pleasures, or else he endures pains to avoid worse pains."

     

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      Anonymous Coward, Dec 8th, 2009 @ 11:10pm

      Re: I had a musician sleep on my couch for 4 weeks straight!!

      Dude, there's something totally wrong with that.

      I mean, must explain to you how all this mistaken idea of denouncing pleasure and praising pain was born and I will give you a complete account of the system, and expound the actual teachings of the great explorer of the truth, the master-builder of human happiness?

      Really now, No one rejects, dislikes, or avoids this pleasure itself, because it is pleasure, but because those who do not know how to pursue pleasure rationally encounter consequences that are extremely painful. Nor again is there anyone who loves or pursues or desires to obtain pain of itself, because it is pain, but because occasionally circumstances occur in which toil and pain can procure him some great pleasure.

      Get over yourself. They're wrong and so are you.

       

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    Mr RC (profile), Dec 9th, 2009 @ 2:24am

    heh...

    "Second, there is no indication as to the number of tickets sold during this time. The UK has suffered some dramatic ticket price increased in the last few years, with acts like Bon Jovi almost tripling ticket prices from their last visit, and a number of festivals cranking their ticket prices through the roof.

    Basically, while more live money is coming in, it isn't clear that any more fans are seeing live music, rather just that people are paying more for the same thing.

    Also, the combined sales of music and live music is flat from 2004 to 2008 combined, which means that there music industry in the UK isn't getting any more money than that is was before."

    Perhaps that's the problem right there.. if ticket prices weren't 3x higher... more people could/would have attended... (there is a recession going on) more people = more alternative sales (tshirts, cds, concert posters, signed stuff.. etc) = more money PLUS more fan loyalty... more fan loyalty = more exposure to potentially new fans (word of mouth, p2p, etc) = more money (music sales, scarce goods sales, higher concert attendance etc)..

    Again... the industries problems are due to basic greed and outdated business models... this is why there's no growth.. not 'piracy' or infringement or whatever the hell it is you want to call it..

     

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      Anonymous Coward, Dec 9th, 2009 @ 5:14am

      Re: heh...

      Nope, sorry, you miss the point (and please, don't be shy to use the 'reply to this comment' button at the end of a post so you post ends up in the right place).

      if ticket prices weren't 3x higher... more people could/would have attended

      This is the incredibly stupid and greedy part of the whole "CwF" thing. Basically, because bands, management, and labels are no longer making as much money selling music recordings, they have to make the money up somewhere else. So they do live shows, and raise the price.

      In very simple supply / demand terms, they can raise the prices until the shows don't quite sell out. It's one of the very nasty downsides of the whole concept, that ticket prices will be as high as the market will bear, literally pricing many fans out of the game. So if you want to see Bon Jovi in London, be ready to fork out between $400 and $500 US for a ticket, because there are just enough idiots willing to part with the money to see the shows, so they prices are that high.

      In the end, there was no increase in consumer spending on music in the UK in more than 4 years, just a shift in what they are spending it on, and if the ticket price scenerio is right, less people saw live shows than before, but paid way more for the same thing. That is the problem of selling rarities, rarities are expensive and are priced to the pocketbooks of those willing to pay the most. It screws the average fan, but hey, you aren't useful if you aren't willing to spend.

       

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        Anonymous Coward, Dec 9th, 2009 @ 5:56am

        Re: Re: heh...

        Heck, there is potential that the high ticket prices are contributing to more piracy as well, as people are driven to have to get the music for free so they can save money to afford 1 concert a year.

        Unintended consequences?

         

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        chris (profile), Dec 9th, 2009 @ 7:40am

        Re: Re: heh...

        This is the incredibly stupid and greedy part of the whole "CwF" thing. Basically, because bands, management, and labels are no longer making as much money selling music recordings, they have to make the money up somewhere else. So they do live shows, and raise the price.

        and this is the incredibly stupid part of the whole "we refuse to recognize the change in the market" thing.

        you aren't guaranteed double digit growth, or even profits. you have to change with the market.

         

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    Mr RC (profile), Dec 9th, 2009 @ 2:38am

    Also...

    I'm currently in Slovenia (Central/Eastern Europe), and I've gotta say, live music is BOOMING here.. not just in this country.. but in most of Europe (I travel a lot for business and pleasure)..

    The licensing in most of the EU isn't as harsh/strict/costly as it is in the west (with a couple of exceptions, considering the UK is part of the EU, even though they like to pretend they aren't) .. live music is alive and doing well... not just small local groups.. but big names are constantly coming through.. and the ticket prices are reasonable (It cost me ���30 to see Iron Maiden a couple of years ago when they were here, saw Cradle of Filth for ���5, Type O Negative was ���20) and even with mainstream bands.. it's rare for a concert ticket to be above ���50 and those that are .. oddly enough... don't sell out (and often end up cancelling their concerts... *cough*Madonna*cough* ) ..

     

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    Mr RC (profile), Dec 9th, 2009 @ 2:39am

    errr

    those question mark thingies are meant to be Euro symbols... sorry... *makes a mental note to type it next time*

     

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    SteelWolf (profile), Dec 9th, 2009 @ 7:04am

    Music != Music Recordings

    I think part of the problem is that industry has been telling itself and its artists for years that selling recordings of music is "selling music." As you frequently say, the music simply made whatever physical medium it was on more valuable.

    Even as smart musicians find ways to use their music to make new scarce things valuable, there is still a market for "selling music," that is, selling the creation of new music. For example, a company might be willing to pay an artist to create a new song for a TV commercial, so it could debut with a never-before-heard soundtrack. From there, of course, copies of the song recording will spread far and wide, but the company has used the music to make their commercial stand out and the artist has gained exposure they can leverage to sell their own scarcities.

     

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    Wendy (profile), Dec 19th, 2009 @ 5:50pm

    a good brain nudge

    As someone married to a musician - we talk about this puzzle all the time - the seeming disconnect between interest and sales, fans and finances. You've given us something new to consider in terms of focusing on a scarcity and attaching the music to it. Hmmm.... Good thoughts. I appreciate your sharing your perspective.

     

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