The Beginning of the End of the Recording Industry
A couple PodcastMN podcasters have received “you’d better stop playing our music” notices from the major record labels. Coincidentally, the podcasters were about to wrap up their programs anyway, the letter just made it an easier decision.
P.W Fenton’s Rest In Peace installment of DigitalFlotsam.org proclaims the death of the major label recording industry citing these cease and desist letters as the first nail in the coffin.
This means podcasters will no longer do the marketing and promoting of major label-distributed music. It also means that if an artist wants to build a fan base a quickly as possible, they should avoid the record labels and just send mp3s to their favorite podcasters and start a podcast themselves. Independently. What Doc Searls calls the demand side supplying itself.
It’s been working for the Gentle Readers, Brad Sucks, Jonathan Coulton, the Lascivious Biddies, and Cruxbox – and it’s barely been a year.
There are more than 100,000 podcasts – and more each day – it’s nice of the major labels to hand the entire market over to independent musicians. That decision is admission of their irrelevance in this new our media world.
Now it gets interesting.
28 Comments
I’m still waiting for the musicians to mutiny en masse. It’s been a long time coming. The fact that they haven’t mutinied yet has emboldened the RIAA it seems.
I agree with Darrel. The skillset required in defining REAL business strategies as part of the so-called independent music revolution are very few and far between–clearly evidenced in discussions and thinking from the beloved SXSW camp. I don’t think it will come from from a huge community of artists themselves. It will evolve a few key creative and business-savvy individuals who are able to capitalize on the notion of community-built business modeling and licensing that actually points toward profitability in real dollars and cents.
Mark, I think between RSS, Garage Band, and CDBaby, all the tools exist for individual musicians and artists to be their own “record label”. From what I’ve read, artists don’t necessarily make out well under existing contracts – with the cheap, simple tools I mentioned above, they can retain control of their work and make a few extra bucks.
I’m not referring to the tool set. And I’m not suggesting that artists have to be signed to a major distribution network, or work with the status-quo of overreaching agreements. I’m talking about someone/some group of people who actually come up with a business model of distribution and licensing that actually turns heads, or at least turn the artist from hobbyist who makes a ‘few extra bucks’ to a sustainable vocation. Apple has taken the reapplication concept and done well (A & R people are still part of the mix; I don’t have info as to whether iTunes is a truly profitable venture on paper yet…), but not sure the artists themselves have discovered the Big Idea. Yet. Maybe there’s not enough room in the market. I still remain optimistic, however.
I see distribution handled by RSS, promotion via word of mouth (or word of podcast) and licensing handled through Creative Commons. Rather than having a single group or entity performing these functions as today, I envision a million smaller parties handling it.
Technology can provide great delivery mechanisms. CC works well as a viral marketing tool and for users who have non-commercial use needs, backed by good intentions. However, I am still stymied on how any of this helps an independent artist actually earn a viable living that pays the mortgage. Where’s the model for profit, or at a minimum, revenue? How do independent artists carve away market share from the Big Meanies? Creative Commons licensing has great aspirations for good-minded people. However, there’s no structure to enforce a world gone wrong..when people actually engage in infringement. If indie artists are strapped for cash and rely on alternative distribution channels and methods to get their work exposed, they certainly can’t afford to enforce the infringement of their work, under CC or any other licensing mechanism. That’s why organizations like ASCAP and BMI can help leverage the rights of individual artists and help provide a revenue (possibly profit) stream for doing business.
Thanks for a good discussion…
I don’t think the bar needs to be ‘paying the mortgage’ at this point. From what I’ve heard, even the Big Meanies’ contracts are hit and miss on this anyway.
The win: independent artists retain control of their work and distribute it under their terms – as marketing for live shows and other merchandise.
Sure, artists that want to ‘make it big’ will have to sign with Sony. There’s a million artists that have day jobs – and happy with their day jobs. These simple, grassroots tools make it easy for them to get their work out into the world w/o needing to make a commitment with a Big Meanie.
Honestly, I’m less concerned about enforcement in a world gone wrong and more about encouraging positive behavior ahead of time.
That’s a big part of the problem: artists set the bar too low. And there are many artists and writers that don’t want to be merely hobbyists. It’s a longer, tougher road as an indie artist (some are indeed making a living, but mostly through relentless touring and merchandising). I believe someone will figure out a paradigm where they don’t have to sign with a major label and STILL make a viable living, through arms-length distribution and licensing. Why not hope for and aspire to this? That’s the revolt that I think Darrel is referring to. CC licensing addresses neither the revenue question nor the infringement problem. Another mechanism is needed…
Mark:
I think that’s exactly how they carve away at the market share of the big meanies. Unless your demographic is suburban teenagers, I don’t know if the big media approach is really the best way to handle it.
How many musicians make a living to pay the martgage with the current RIAA set up? Seems to me that only a small percentage benefit from the RIAA model, while the rest are left touring small clubs trying to get the word out.
I’m at the point where I no longer buy CDs. At all. I do buy music online, though. And I’m becoming increasingly frustrated when I do hear a new song (via a podcast or The Current or TV) and they don’t have any product for sale via download. I know I’m in the extreme minority right now, but I think that may slowly change.
Also, check into eMusic.com. I think it’s an interesting distribution model. You pay $x a month for x number of downloads. It basically FORCES the subscriber to listen to new music, which I thought was a nice way to approach the whole ‘getting the word’ out issue.
“Sure, artists that want to ‘make it big’ will have to sign with Sony. ”
Seeing how sony is presently getting sued for distributing Audio CDs that put a virus on your PC, and flailing in panic with the success of the iPod, I’m not sure if Sony is the best bet for ‘making it big’ at the moment. ;o)
“CC licensing addresses neither the revenue question nor the infringement problem. Another mechanism is needed…”
I don’t know. I’m someone that used to download all my music via Napster. Why? It was the only easy option at the tie. I can still do that, but now there are extremely easy ways to get my music legally, and I’d much rather do that, as I do want to support artists.
Now, the 17 year old kid may not go for that. I remember being 17 and we’d all make copies of our CDs on tape and I think that’s always the way it’s going to be.
I think what CC type licensing does is reward the honest consumer that wants to actually create a relationship with the artist to support their future endeavors.
So, between something like CC and Sony, I think at least a percentage of folks would by much more likely to pay for CC product than Sony. Sony is just an ‘evil corporation’ and so there is less of a push to be honest with them as a company.
Basically, all seem to agree here — and I agree too.
I do think Mark has a point: how does a musician pay a mortgage in the new model (except for a few lucky ones)? And Garrick has a fine point as well: how do musicians pays a mortgage in the old model (except for a few lucky ones)?
And this brings up the ugly fact that many of us musicians (independent and otherwise) are loathe to face up to: realistically, we’re not going to make a living from our music under any model we can now see.
So how might that change?
In the world of the future, instead of a few musicians with huge audiences, I see a world of many musicians with small to medium-sized audiences. Are those medium-sized audiences big enough to make a workable living for even 5% of musicians? Is there enough demand for music to go around?
Another line of attack on the question: The new world of home studios + internet distribution is probably only shifting dollars spent on music from one route to another. Are there enough dollars out there being spent on music to really make being a musician a viable profession for many people?
Darrel, So, we’ve got this much settled: You’re viewing it from the consumer’s perspective, Garrick is viewing it from the artist-as-hobbyist perspective, and I’m viewing from the artist/writer-who-wants-to-make-a-living perspective.
Not sure what mutiny you were referring to in your original post, but I still agree with it: a Big Idea for distribution/licensing that pays authors of the work while still meeting consumers’ needs/wants/desires, through the network effect suggested by Garrick. You guys want to help me build the model? Seriously.
Record companies have no choice but to threaten any and all unauthorized distribution of music. It’s their bread and butter. And, unfortunately/fortunately, distribution revenue the bread and butter of the musicians, any way you slice it.
I am more skeptical about CC because I’ve been trained to look at the worst case scenario and build off of that (people will infringe the work/how do you enforce that activity). CC paints a great picture if everyone behaves. the theory breaks down if they don’t, and it merely legitimizes aspects of fair use under copyright law that already exist to some extent.
Mark,
This model exists (at least from my perspective) it originally inspired the post.
Mark: I don’t know what the answer to my questions above is … but I am certain it involves making use of the internet’s potential for free distribution. If you’re afraid of letting your music run wild in the world without your permission, I don’t think the internet can help you much.
I’m not one of these “copyright is bad / information wants to be free” people — copyright is still very important, particularly for maintaining attribution and preventing plagiarism. This is not about whether copyright is good or bad. It’s about how we choose to use it.
Models that seek to create demand for an information product and then control its distribution are fighting the laws of information physics. I’m not sure your “Big Idea” exists as you picture it. You can’t force distribution through a pay model and simultaneously preserve the network effect.
Any workable approach is going to have to rely on 80% of people being honest, and simply succeed in spite of the 20% who aren’t. Under CC, you’re not any better off with that 20% — but you aren’t any worse off either!
And that’s what Garrick is talking about.
My earlier question still stands: how much money is out there to be made? Is it enough?
Apologies I missed Paul’s points before posting my last message, at it seems out of sequence in the discussion as I view it now.
Yes, the bigger question is whether the market exists. I believe if the work is good, the audience will come. Not sure of the macroeconomics for suvival, though. A good artist will find his/her audience if s/he looks hard enough. And there’s a lot of people who are willing to spend money via online music distribution (Darrel). I think it’s more about how to tap into existing markets than how to create new ones. And, to continually beat that horse, a better distribution and compulsory licensing system might help facilitate that.
Now, to turn the discussion back,
You and Garrick are correct about the notion that even blatant infringment is still “good” exposure for the undiscovered. And it would be great if everyone would license their work under CC. As any artist should understand, however, once you give it away (especially in a digital world) you can’t really take it back under ANY licensing scheme. The mechanics for retaining value are just different under other schemes than CC.
Mark,
What does a better distribution system look like to you?
“You’re viewing it from the consumer’s perspective”
Yes.
As for the mutiny, I was referring to Artists getting out of their RIAA contracts and distributing music directly with the online distributors. Basically getting rid of the 800 lb gorilla middleman.
“Record companies have no choice but to threaten any and all unauthorized distribution of music.”
I disagree with that. The RIAA could have embraced the internet, high volume/low cost distribution, and started trusting some of their customers. (the eMusic.com model) They’re too far gone for that, though. It’s hard to find consumers with any sympathy for the RIAA these days.
Mark, you may want to read into what Chuck D has been doing. He’d taking an extreme POV opposite the RIAA model, but it’s an interesting one.
Garrick/Darrel/Paul
First, thanks for the discussion. This is great and something a lot of us are passionate about and have put a lot of thought to, although I’ll admit I haven’t done all the research I should.
To try and answer Garrick’s question: I think the technological mechanisms for distribution over the internet are fantastic. Podcasting, downloading, filesharing, you name it. The mechanism breaks down when it comes to licensing. The compulsory licensing scheme used through organizations like ASCAP or BMI–the licensing clearing house–seems to be a better model for actualy retaining the value of creative work. It allows compensation back to the artists, based on exposure, and provides a method for the organization to enforce against infringement on behalf of the artists. It also allows those people who want to use others’ creative works but cannot contact the publisher directly to pay a fee to get access to music they want to use, in a commercial sense. I’m not saying the ASCAP/BMI models are perfect. They are limited. But when an artist uses Creative Commons licensing, they aren’t given any legal mechanism for the control of their work. CC works fantastic for educators, artistic collaborators who want to create derivative works, and for the unkown artist who wants exposure. But fair use exceptions to federal copyright law already provide some room for adaptation and use of copyrighted work without permission. I do think CC clears that up a little, by expressly creating a community of artists and collaborators/users who want to share their work. Yes, they’re will always be infringers. But licensing (and enforcement thereof) is what drives THE value for any creative work (An exception exists for software because collaboration is the primary inherent value of the open source approach…) Maybe I’m behind the times a little, but the inherent nature of artistic creative work isn’t just about collaboration or attribution. It’s also about driving value, hopefully revenue, and finally profit.
My complete guess is that the RIAA is unwilling to depart from the current revenue model based on licensing to move to the low cost/high volume approach because the waters are just too black, murky, and stormy as of right now. No one knows what lies on the other side. The actuaries have crunched the numbers and it doesn’t look good. Plus, there’s probably a lot of conservative shareholders saying “DON’T YOU DARE!”
Please challenge me on this, but I’d be willing to bet that iTunes standing by itself as a revenue model is not profitable. I could be very wrong. And maybe the future holds a different outlook on this distribution mechanism in terms of profitability…like emusic or the group at InRadio with a recasting of something similar to mp3.com (what was that url again?).
Apologies for the long answer: some sort of community clearing house for licensing for ALL types of creative work, with some exceptions (software), that provides an avenue and option for enforcement against infringement, creative work, utilizing the distribution and viral marketing mechanisms enabled by the internet. It needs to accommodate business-minded artists and those who want to use that work and create their own derivative work, while utilizing a low-cost fee and royalty approach.
Maybe we’re talking about two different things: Distribution model (already exists) and broad-based licensing model (enforcement mechanism).
Does any of this make sense, or am I all wet?
I will read about what Chuck D has been doing…and get myself updated on the latest thinking. Thanks, M
If a clearing house is needed, I’d like it to be the individual artists – so they can maximize their compensation.
Yes! Yes! It would have to have critical mass to be able to fund the enforcement for unauthorized distribution, performance, public display, adaptation…much like ASCAP or BMI does now. Although some might view those organizations as Big Meanies. But not if it’s organized, marketed and driven by the artists themselves. Maybe the folks at creativecommons.org have this type of plan in the works…
Yeah, I think you are. Software is not so different: some software’s bread and butter is collaboration, but that doesn’t mean other people don’t want licensing revenue for their software.
Licensing is not THE value mechanism; it is A value mechanism. Look, for example, at public radio: MPR makes good money giving their content away for free and then asking for donations.
Licensing of individual copies is incompatible with viral distribution. If you want the net working for you, you’ve got to give it away, at least in some limited way.
Licensing is NOT incompatible with CC, however. If you use a non-commercial share-alike license, other artists are free to use your work and people are free to share it, but as soon as somebody wants your tune for an ad jingle or a feature film, CC does not apply and they still have to reach a licensing agreement.
I think you’re making two conceptual mistakes: first, presuming that all revenue from art must trace directly back to licensing; second, equating a CC license with releasing something in the public domain.
Paul,
Our motivations for why we engage in creative work are obviously different: we have different expectations of what we want to achieve.
In response:
“…but that doesn’t mean other people don’t want licensing revenue for their software….”
You’re right. And those people won’t use CC. They have no use for it. I should have qualified the distinction between software and open-source software.
On that note, has anyone ever tried to navigate an open-source licensing agreement for software that relies on other open-soure agreements which rely on yet other agreements? It requires a lot of faith in other people. And no one guarantees their code is truly open source. Ask any attorney specializing in software licensing, including Google’s Chief Licensing Counsel: careful review of code and licenses is imperative so they don’t stumble into liability.This same problem applies to other creative works: you’re putting your faith in the person extending you a CC license that they haven’t appropriated or copied work they haven’t used. To keep that relationship clean, they would need to extend you some sort of warranty–which is something the CC license doesn’t do. In fact, there’s a nice big all-caps disclaimer in it.
“…MPR makes good money giving their content away for free and then asking for donations.â€
MPR is a nonprofit organization. As a musican/writer in a commercial sense, I don’t want to ask people for donations when they listen to my music. I want to create a revenue stream. I can choose CC for my own marketing purposes, but I still need a mechanism to collect royalties when presented with a bona fide commercial opportunity. I would suspect that most artists would approach it the same way with their work, unless they don’t believe in capitalism.
“Licensing of individual copies is incompatible with viral distribution.â€
Again, you are correct in today’s paradigm. Therein lies the crux of the problem. I view the viral nature of the internet as a means of marketing, while embracing it to limited extent. I don’t want to give everything away. And I don’t want to rely the single revenue stream of performing my own songs and collecting money at the door for that or tangible merchandise. As a pure songwriter, the only means of revenue I really have is (1) the outright sale of song to artist/publisher (2) negotiating points on the sales contract for the CDs of the artist’s sound recordings or (3) get a royalty for their distribution.
“…as soon as somebody wants your tune for an ad jingle or a feature film, CC does not apply and they still have to reach a licensing agreement.â€
Yes. So the value in CC has carried you that far. Which is good! So, other than viral marketing and distribution, what can CC offer to the artist? That’s where I think it falls short. ASCAP /BMI handle a lot of your licensing woes. Like an insurance company, they’ll enforce your copyrights on your behalf, and send you the royalty checks when your music is used in the stream of commerce by a third party.
“I think you’re making two conceptual mistakes: first, presuming that all revenue from art must trace directly back to licensing; second, equating a CC license with releasing something in the public domain.â€
Not all revenue from art must trace back to licensing. Apologies for not making that clear. I just think that in today’s world, licensing plays a huge part for music. There’s other methods of creating revenue: outright sale,/assignment, merchandising, live performance, asking for donations. However, I can only perform so many gigs and sell so many rock and roll t-shirts on my own.
I’m not equating CC with work in the public domain. But, entering into a CC-type of agreement certainly introduces a different type of risk for you as an artist. And in my practical nature, I take a more pessimistic view than Garrick. Hope for good behavior! Expect infringement. Evaluate your risk.
“I don’t want to ask people for donations when they listen to my music. I want to create a revenue stream.”
Isn’t that splitting hairs a bit? Revenue is revenue. ;o)
TWiT just interviewed Simon Steadman. They had to major label contracts and got burned on both, and then decided to just give away all 150 of their tracks online and reap the subsequent publicity via podcasting. Will it pay off? I guess that’s the answer we’re waiting for…
“Hope for good behavior! Expect infringement. Evaluate your risk.”
one also needs to consider the type of infringement. A kid giving a copy of your MP3 to another kid = that’s infringment, but does that actually hurt your bottom line? Do you benefit MORE from the viral marketing aspect? Honda using the song to sell cars = another infrignment, and something you should certainly be compensated for.
Artists under contracts today do not make money from their music. They make it from touring, selling tshirts, hats, etc. Why do you think those concert tshirts are so expensive.
The simple fact is that the model is changing because the tools and access to distribution are evolving. The RIAA doesn’t like this because as the 800# gorilla they can’t change quickly. As with most large bodies of people they are not nimble. All of this is a huge threat. When threats occur, people and companies and institutes react. They are battening down the hatches in hopes that they won’t have to deal. Throw the laywers at our customers. That’s a great model.
In our consumer, capitolistic society it’s really about good marketing. So the artists that tap into this will win. This opens up all kinds of new ‘middlemen’ to come into the space. Imagine if you just paid someone to market for you and you did the rest yourself. The marketeers wouldn’t own your work. You would. Artists deserve to have say over where their music goes and when. I’ve seen many artists succeeding in this model without the recording industry. There might be fewer superstars, but that just leaves more opportunity for the Fugazi’s of the world to be out there making music and a living.
It’s all in flux right now so it’s pretty hard to say what will and what will not work.
Actually, there are a lot of artist/songwriters who don’t tour and sell t-shirts today who do make money under contracts…contracts to publishers and via the compulsory licensing model administered through performing rights organizations (ASCAP/BMI/SESAC).
Incorrect. Many people (JBoss, Hibernate, MySQL for example) give out their software away free and open source, and then make money selling documentation, support, and consulting.
Irrelevant. Non-profit status has to do with what happens to revenue, not whether there is revenue: MPR reinvests it entirely into the company, and they are therefore a nonprofit. They make quite a bit of money giving their content away for free; it is what they do with that ample money that makes them a nonprofit.
You want a model that pays your mortgage? MPR is paying the mortgages of several hundred people by — did I mention this? — giving their content away for free.
You mean other than doing the two things that form the bulk of current record company’s expenses (and most of their reason for existing) essentially for *free*, what can it do? Uh, not much.
That’s good advice — regardless of whether CC is involved. Any realistic approach is going to have to be pragmatic about the realities of technology and culture. I argue that CC is one possible avenue.
My statements are getting taken out of context here, so, for clarification:
Open source developers generate their revenue from sources other than licensing. Licensing plays a very little role in direct revenue-generation for these people. My comments were limited to Paul’s statement “…but that doesn’t mean other people don’t want licensing revenue for their software….†Yes, that’s right. They [proprietary developers]do want licensing revenue from their software. My response doesn’t say that open-source developers don’t have revenue. Rather, they don’t get revenue from licensing. The people that have no use for CC are proprietary developers–right or wrong, their model for business centers on licensing. Period.
The whole MPR example is actually irrelevant to this discussion, and misses the point entirely. MPR is not solely committed to employing hundreds of artists/writers to promote their own work and collect revenue and profits for them so they can pay their mortgages; I don’t qualify as a non-profit organization, because I want to profit from my songwriting. Again, I don’t want to ask for donations for my music. I want to generate profit in a commercial sense. Good or bad, right or wrong: licensing, among other methods, is a legal mechanism for doing that.
BUT today, no automatic, direct or efficient sync between mass creative rights management and current distribution mechanisms exist. This is the model for business I was referring to originally.
CC may play a partial role in a mixed bag of creative strategies for the musician in the future. I’m just saying that licensing exists primarily to generate revenue for all types of industries, and I don’t see it disappearing any time soon. It will remain a big part of the mixed bag.
With all due respect, I think you’re missing the point of the MPR comparison. It is not an analogy. It is an example of a non-licensing-based revenue model that is actually working. And it is relevent.
Actually, it is. That is exactly what MPR does. Read their mission statement if you don’t believe me. Those “artists” they employ are reporters, DJs, authors, voice actors, etc. And MPR is, in fact, soley devoted to employing them and collecting revenue so that they can pay their mortgages … and so that their work can keep reaching as many people as possible.
If MPR were also devoted to giving shareholders a return on their investment, then they would be a for-profit corporation. It is actually the fact that they are soley devoted to employing people to produce and distribute content that makes them a nonprofit.
I think you may be confused about what “nonprofit” means. It does not mean that the company does not make money, or that it does not pay money to its employees. It is a technical distinction that has to do with what happens to corporate profits — which does not include the profits of individual employees.
MPR is an example of exactly what you’re talking about, if you have eyes to see it.
Those two statements have nothing to do with each other: that’s my point. You want to generate profit? Asking for donations is one legit way of doing that. Licensing is another. You don’t want to ask for donations? Fine. Don’t. You’re free to reject certain potential revenue streams out of hand, though I’m not entirely sure why.
You’d be interested in the Snocap project. I have doubts about whether it will work, but they’re thinking what you’re thinking.
Agreed to that. My points are just (1) not all revenue necessarily comes from licensing, and licensing may not even be the primary source of revenue for some; and (2) CC and licensing are not necessarily mutually exclusive.
Mark — Here’s the link for Snocap.