The following is a guest post from Martin Thornkvist, who both runs a Swedish indie record label, and works for Media Evolution -- an organization designed to help its various members learn about and embrace new media innovation opportunities. This is cross-posted from his blog at Media Evolution, and raises a really good point. Too often people talk about technology and content as if the two are at war with each other, rather than recognizing how it's a complementary relationship.
The first quarter 2011 Apple made a profit of $26.74 billion $6 billion. An impressive 17% of that is from their latest product, the iPad. Having followed Apple's reports for some years it struck me just how unimportant content distribution is for them. In economic terms at least.
It's obvious that Apple, and other tech companies, are using content to sell hardware. And damn, they are good at making us buy new products each and every year.
Hook and bait
It's obvious that the main objective of dealing with content for Apple, and tech companies in general, is to boost hardware sales. These days you can't hear a mobile executive talk without mentioning the importance of building an ecosystem for content to sell handsets.
The fisherman needs both a hook and bait to catch a fish. The fish is too smart to go for a hook without bait, like customers with tech products. And the bait without a hook is a fiesta for the fish rather than the fisherman, kind of like being a fish in a bay of pirates.
When looking at the media landscape we can see that everybody wants to be the hook. The hooks are owning the customer and the ecosystem in which they interact. That means they can control price, pace of releases and the right to set the rules of the game.
The media industries were used to being the hooks. That changed many years ago. Now, it's just about creating those alternative hooks of income streams yourself.
To many the question of being a hook or a bait is emotional. Everybody sees their work as the center of the media landscape and wants the rest to obey to their wills.
Stop making life hard for each other
Even though content distribution represents a small percentage of Apple's overall profit, they are making life hard for content producers by changing the rules of the game. Most recently they announced that for publishing companies to sell their subscriptions inside applications, they will take a 30% cut. It's still uncertain whether that counts for music apps like Spotify as well.
The content side is making it equally hard for tech companies that want to develop new media platforms. Music labels, film studios and book publishers can arguably be said to make it a nightmare to license their products. This is instead of acknowledging developers and engineers to be their best buddies to create new ways of providing content to customers, and eventually help them make money they badly need.
We need to understand that technology is nothing without content and content would be nothing without technology. Technology and content for sure has an interdependent relationship.
For a long time the content producers had the upper hand. Right now the technology providers act like they have it. But in the long run they both need to cooperate to keep prospering.
Here in Sweden, as record stores are closing, shops selling magazines are opening at about the same pace. Therefore, it's an interesting strategy for The Ark's upcoming release to be done as a magazine. In terms of physical distribution, it means that their music is available in 1,100 stores instead of just the 110 record stores that are left in Sweden. Also they'll be able to sell the product with 6% VAT instead of the usual 25% VAT, since magazines and books have that lower VAT in Sweden. That equals 19 Swedish kronors per sold copy in "discount" or markup.
To further understand the band's reasoning, I called The Ark's manager Jon Gray up:
Why did you release a magazine?
For many in the younger generation, music is something that's for free. The idea is to work with another form of packaging, to raise other values around the music. The genius is not the idea, but implementation. That we took this from start to finish.
We have not only created a product but also an extended network of resellers to sell it for us. For us it was about creating a new dealer network in addition to the traditional music trade. The 1,100 stores that sell this product are located everywhere including where people live.
What is the product you created?
When we released the Jesus Christ Superstar album (the singer Ola Salo had the title role in the Swedish production last year and did his own translation), we worked with Johannes Sjöberg at So Music, who previously have done some fantastically special editions release of, for example, Astrid Lindgren's life. When we planned the release of the new album, we asked Johannes if he could come up with an idea.
The result was a 100-page magazine with high-quality images, text and design. Sandberg & Timonen made the design and well known Swedish writers such as Andres Lokko, Jan Gradvall and Hanna Fahl have contributed with the text. Also, for Ola Salo as a lyricist, this format is a dream. Rather than get 4 separate texts stuffed together on a 12x12 cm cd booklet page, here each text has its own full page. It's almost a return to the LP format.
Do you think that others will copy your concept?
Yes. Generally speaking, all other revenues for recorded music negligible. Recorded music is free, there is no other business model that has taken after where the CD left us. Whether it's digital downloads or Spotify. There is no money yet. If we become the best selling album in 2010 and the best-selling monthly magazine ever, as I believe we well, it's obvious to me that others will follow our example.
This text was originally posted in Swedish the media cluster organization Media Evolution's site.
With our CwF + RtB experiment in full swing, we've asked some of the participants involved to provide some guest posts, including their thoughts on the experiment itself. Martin Thörnkvist runs the Swedish Record label Songs I Wish I Had Written, who represents Moto Boy, one of the artists involved in our Techdirt Music Club. If you order both the Techdirt Music Club and the Techdirt Book Club before midnight PT, August 3rd, we'll throw in a free Techdirt hoodie, or a free lunch with Mike Masnick. We asked Martin to write about his experiences with the "new" music world and new music business models:
In 1999 I attended a Ron Sexsmith concert. As always, he did a great performance. He did an amazing cover of Leonard Cohen's "Hey That's No Way To Say Goodbye." The way he introduced made me even more exited: as he played the intro, Ron said, "this is a song I wish I had written." That's admiration of somebody else's art.
Some years before, I had tried to learn play the guitar. I remember one summer in particular I spent way too many hours trying to learn Yellow Submarine. Damn, was I bad. Instead of tearing my hair out while playing guitar, I decided to channel my love for music in another way: I started a web-based fanzine. This was four years before MySpace, and to make it possible for our readers to listen to the obscure indie pop acts (artists like Peter Bjorn and John, Jose Gonzales and Jens Lekman) we wrote about, we started a special webshop for music. Some years later, we got tired of the fanzine, but after some months I missed the webshop bit and started it up again. After a few months, I asked a new band called Eurosport if I could sell their CDs -- to which they let me know they didn't have any! Still, I loved their songs and asked them if they wanted me to print a cover and burn some CDRs, and they agreed. After receiving a threat of being sued, the band changed their name to Le Sport, and the first song they had ever written (and I ever released) turned out to be a summer hit in Sweden. I went with the flow and tried to learn how the music business work. Suddenly, I had a record label. Wihoo.
The name of the label was of course: Songs I Wish I Had Written. The statement I wrote then still pins it down quite well, I think:
"We see this label as a frame that puts pieces of art in the focal point. It's the art itself that is important; the frame exists as a context which further emphasizes the brilliance of the chosen creations."
Now, as you can imagine: a guy with no experience and no money had to rely on something other than the traditional ways of doing things. Luckily for me, some years before the label was founded, the internet had become popular -- with music fueling much of its progress.
"Hey, what a perfect match," I thought. My main goal is to spread the music I love, and here's the most powerful copying machine the world has ever seen at my desktop, free to use. The main reason for the instant success of Le Sport (apart from the great songs) was our way of using free music as a way to market the music. We were sure that the more listeners we got, the more buyers we would get.
I've never really felt any need to think about my role in relation to the artist I work with. I have always gone with the flow. But lately, after a variety of in-depth discussions on the future of the music business, I've started to think more of my specific role in all of this. I think there is a need for a discussion on the role of middlemen in the music industry. I think that's because, to me, it's crucial to make correct (or at least good) decisions on future possibilities and strategies.
In the work of positioning what you offer to your costumers, I think you get a good picture of what contemporary reality looks like. You learn from both the good and bad examples that others are executing in music industry (and other digital content industries). So how could I position myself, where it would be obvious which powerful tools can be used in an inventive way in order to be the best in the world to offer what I need to offer?
The two most important cornerstones I defined for my future work are:
to make the music I work with available in as many ways my customers want to listen to it and
help the artist I work with with creative ideas to engage with those listeners.
I would like to coin a new term for the type of modern music professional I see myself as being. I'm hereby dubbing myself as a CA - Creative Administrator.
To explain the admin bit: Most artists I know aren't even able to keep a calendar! That's ok, but they surely need help. And so do their fans, who all are wandering around in an all you can eat Mecca. Musicians need an admin and fans require reasons to buy. I need to be creative and always keep an eye (if you have been in the biz longer than me you'll probably need to keep two -- and it probably helps to talk to your kids every day to keep track of what they're doing) on the reality of what I can and should offer my customers, artists and fans: something they can't get elsewhere.