The Internet creates new opportunities for the distribution of media and every new opportunity has associated challenges. Since returning to the status quo is no longer an option, the real challenge for IP holders is going to be the speed with which they can adapt to the changing realities.
I hold the music industry leadership totally responsible for the current crisis. The technology existed pre-Napster to protect IP, but the labels wanted no part of it and instead pursued a non-policy of denial. When the crisis became too huge to ignore, the genie was long out of the bottle and pro-active solutions could no longer be adopted easily. It is my impression that the ISP’s at that time would have been a lot more willing to adopt certain policies, perhaps even with some governmental pressure and participate in the solutions, rather than to increasingly distance themselves from it as they have. The Hatch Senate hearings could have been turned into creative problem solving, rather than a failed defence of the old ways. Despite their claims to the contrary, labels always viewed piracy as a profit margin reducer, not an industry killer. 8 tracks, cassettes, CDs, found ways of making huge profits with the new formats especially CDs, albeit while protesting loudly all along the way, but they never bothered to actually understand or fully embrace the new technologies with their risks and potential longer term rewards. Labels were always in the business of distributing scarcity, they were not prepared for a distribution model that is akin to selling individual snowflakes in a blizzard.
I do not think that peer to peer is the single cause of the problems faced by the music industry. One of the biggest problems is the fact that the music business is no longer in the long term business of music creation and distribution, but has moved over into the business of counting quarterly returns achieved from the sales of music units. A&R has been replaced by hype. While music is no longer the product, pop culture is and short term success is achieved at the expense of long term gains. In today’s climate, artists like U2 and Stevie Wonder would not have survived their first album and bands like Pink Floyd who achieved huge success after a few records would have been dropped before Dark Side Of the Moon. Trent Reznor was sued by the RIAA for creating promotions for his upcoming albums and eventually Nine Inch Nails was dropped for doing something the label should have embraced all along. Many of the artists that are or have been signed in the last decade, have little to no shelf life and there is no ongoing interest in their catalogue, whereas The Doors or The Beatles still enjoy sales. It is interesting to note that the new “all you can eat” models for the consumption of digital music will in fact destroy the only real source of revenue the labels had, which was their evergreen catalogues.
It is naive to think that a process with no transparency will ever benefit those it is intended to serve and it is the wrong direction for this discussion to be going. The industry needs to re-invent itself and get back to delivering quality and value to the consumer base, instead on focusing on how to exploit it to the last penny.
The industry has collapsed in some parts of itself and gone through radical changes in corporate objectives across the board. I am not certain what the industry is anymore. The empty promise of 360 deals, the collusion between media outlets and the majors, the price of getting music on the radio, the idea that labels actually know what the public will like and acting like taste police are all equally dangerous to the healthy production of music and lethal when it comes to preserving diversity in any meaningful way. Only by revisiting the entire model and changing the focus from short term gains to long term profitability and ROI can this industry re-invent itself. I am not sure it wants to however. The present leadership has made too much money and seems to have no wish to learn new tricks, while those that know the new tricks are either not in the business or are in fear for their jobs. Doing nothing is still safer for a music executive than sticking their neck out and being wrong or opposing senior management. Fear and ego dominate, not love of music or even smart business sense.
Music is ubiquitous to the consumer, so the industry must embrace this “big picture.” The live component is perhaps the most valuable of all from a monetization aspect with licensing becoming one of the most powerful promotional tools. Recorded music may sadly become a marginal ancillary revenue stream. Let us not forget that movie theatres make the bulk of their money from concessions, not ticket prices, but no one is complaining.
We need to think about music as an art form, not a commercial unit similar to an iPod or a refrigerator. If we can make that leap, then I have good news. The new business models exist out there. There are some very smart people who still care about the music and the business of music and who can balance artistic integrity with profitability. Bringing these models to light however will not be easy in what is still a monopolistic and non-transparent industry that remains unwilling to change. We should not be so naive as to think that independents have a shot at changing anything quickly, especially when, even as I write this, media conglomerates are getting bigger and will cast larger shadows, not smaller ones. The first big player that is willing to examine a new business model and incubate it will probably win the race. That is where the hope truly lies. Mind you, a big player need not be a label though it might be best if it were; it could be a Microsoft or any international company with influence. Look at what Apple has done.
As we come to grips with the greed of Wall Street bringing the US economy to its knees, we might fail to see the same climate in the music business operating merrily along. Our very culture is at stake here. While most of the attention has focused on pop, other genres, including classical music, have also been decimated in recent years and the leadership there has been even slower to react.
Meanwhile, computers and recording software have made it simple for anyone to record music, allowing anyone to release a record and some 75,000 of them were in 2008, with most of them being lousy and selling fewer than 50 copies. This testament to delusional narcissism shows how far the bar defining the word “musician” has dropped, but then look at the role models and what passes for stars today. The resulting background noise is hard to rise above even for those few with talent and access to radio is restricted despite Internet and satellite options. The international radio conglomerates with their programming have eliminated the individual taste making ability of the local DJs, offering instead, a very limited, predictable and safe menu, not unlike McDonalds, of music. The industry is mostly selling focus group approved pop culture set to music, not musicians.
We must ask ourselves is that really all we want or need? What kind of legacy are we going to leave behind? We try to prevent species from going into extinction, at some point we’d better focus on our artists who are slowly giving up or having to get day gigs. Without enough of them to continually raise the bar on innovation and quality, it will settle down to the flashiest but lowest common denominator. That prospect makes me very sad.
Jean Renard is president of TRM Inc a management and consulting company based in Los Angeles and Stockholm, that specializes in brand and artist management and development. TRM’s clients come from the music, acting, fashion, Internet and nonprofit sectors. In addition to his management work Mr. Renard is presently business affairs director of startup Superfan.com and devotes approximately half of his time to the pro bono work of helping charities involved in humanitarian and cultural endeavors to better position themselves to cope with the alarming scarcity of funding in the face of ever growing need.