On the Gripping Hand

You may remember I mentioned the Copyright thread on Public Address System (PAS to its habitués). It got to 37 pages which we thought was quite a lot. There’s another one, starting from a review of Lawrence Lessig’s lecture in Auckland last year by Matthew Poole, which is now at 81 pages and 1600+ postings, and it’s gone into the issues for the music industry at some length (warning: abandon hope all ye who enter here, as much of it goes round in circles – just pick through and find the nuggets)

Yesterday, Rob Stowell posted a link to a series of posts on Hypebot about free music, from inside the industry. I recommend reading them for some insight and to form your own opinion before reading on, because I’m about to dissect them. ;-)

I wrote on PAS:

Some of those people are clinging to a false hope. I think Kevin Kelly (surprise) and the guy from INgroove have it sussed, but most of the rest are still talking about “maintaining exclusivity” and using free as a promo.

I’ll stick with Reznor’s view from the clip I posted the other day – as soon as it gets published, someone will rip it and put it online for free. It is not possible to stop that technically. If your business model doesn’t take account of that, you don’t have a viable business model.

And it doesn’t matter whether it’s music, art, literature or photographs; if it can be delivered digitally, someone is going to give it away, whether you want them to or not.

Now that you know that, formulate a business plan that takes it into account. That is the only sustainable way to make money in this environment

Rob came back and quoted Glenn Peoples’ billboard.biz column that headlined this little angst-fest, saying:

There’s a little more in this than “industry people” wanting to (further) feather their nests. It comes back to robbery’s original feelings of misgiving: “free” sounds great, but it’ll have down-stream effects we may not like so much. Personally, I have a very low tolerance for advertising wrapped round my culture.

Which is interesting because that lets out television, radio, newspapers, movies and much of the Internet, including Public Address itself, which all have advertising support for revenue. But I digress. I started to respond on PAS but the post was getting long and convoluted, so I thought I’d put it here instead. Herewith is my analysis of the Hypebot series.

Glenn Peoples doesn’t take a stand in this debate. He’s reporting on the Hypebot series. But his report is pessimistic, to me:

In theory, a company should set price equal to marginal cost. Digital goods on the Internet, though, are not akin to razorblades. In reality, not all digital music can be priced at zero. The information comes with real costs. Even if it feels free (Nokia’s Comes With Music) it’s not free.

Peoples also quotes David Zaslov:

“We don’t want to lose marketshare, but at the same time, we don’t want to encourage free content. Free didn’t work for newspapers. Free didn’t work for the magazines. And it doesn’t work for the broadcast companies. We have to see how it develops. But ultimately, we all have to follow the behavior of the consumer.”

That’s the general flavour I get from the series, apart from the ones outlined below; we don’t want it but we’ll have to give in to part of it, begrudgingly.

Kyle Bylin is actually inarticulate – I’m not really sure which way he’s going.

Virgil Dickerson is positive, but I tried his sampler and a) didn’t warm to the music (personal taste) but b) thought even less of the technological presentation. I think he “gets” free, but he’s struggling to do more than teasers, despite what he says.

Greg Scholl is very begrudging and only sees the teaser aspect:

As for the second type of free music – giving away tracks to sell tracks – we very much believe in the use of free music downloads as a promotional tool, and encourage our clients to give a song away

Really misses the point, for me. He still sees the revenue as driven by the individual song, but the idea that each copy is monetizable (and therefore each download is “stolen” revenue) is what is standing in his way. Maybe he needs some it zen marketing – you’ve got to let go before you can receive.

Bruce Warila is actively hostile:

Now that music is unbundled and selling for copper (pennies), it’s time to fight a new battle. If sharers rob us (rightsholders) of our right to digital exclusivity, which is our right to exclusively launch, release or to maintain an exclusive digital presence, then we are the fools for not insisting otherwise

And let’s remember, he’s an “investor [and] currently acting as their strategy and technology officer” for this Music Xray outfit (still in beta), so he’s not speaking as a songwriter or musician when he’s talking about rightsholders. He goes on:

Your strategy now should be to prepare for the day when a brand offers to buy your exclusivity. Since your songs are your advertisements, your calling card and your audio pheromones, perhaps consider being a bit more mysterious about everything else in your life. Hold back the baby pictures, the studio session videos and the near death experience stories until the exclusive offer shows up in your inbox. After all, if your free music offers don’t get you marketplace traction, the other stuff is just a pile of (fill in the blank).”

That’s just sad, to me. It’s all about commodities. His brand new thing is going to crash and burn because it’s based on an old model – he’s just wrapping it in new paper.

Chris Vinson is sort of positive:

Once you have a fan, it’s a lot easier to ‘upsell’ them on other forms of same music — a $0.99 acoustic version, a CD, a live show, etc. But without that easy first step, there is a big chasm to cross. I think the key is to have a overall strategy, and include ‘free’ as that easy first step.

But this is still missing the point. He’s treating the teaser as a loss leader. It’ll work, up to a point, but compare it with Radiohead giving away the whole damn album. And still being the top seller.

Bruce Iglaur is still in the old mode as well:

At this point, no model for monetizing music (for example, advertising-based free streaming or downloading) other than traditional royalties has proven to fairly pay artists, songwriters or their patrons/financiers (the labels). So, a free track or stream with label and publisher approval? Sure. Distribution of music without label and publisher approval? Nope.

It can’t be stopped, but he continues to cling to a belief that it should be.

Jim Mahoney is even more doom’n'gloom:

Know that if you waive performance or other royalties in exchange for “promotional value” you may be putting the final nail in your coffin (at worst) or allowing others to profit on your music (by building their own business models and taking your audiences and selling advertising or subscriptions) while you make nothing tangible in return (at least).

Completely missing the concept that you might be making money anyway though others may be able to “profit on your music”. He’s fixed on the sales model and anything that interferes with that is wrong.

I’d agree that Kevin Arnold is kinda positive, but wary. He’s still on the promotional kick, though:

Just like the handouts at Costco, tasting at a winery, or swag bags at conventions and parties, labels and artists have long given away music in the form of samplers and promo CDs, free performances, and outlets like radio and MTV. In the digital world this act has value in ways that we’re still learning and consistently surprise us. Who would have thought that the free giveaway of Nine Inch Nails’ last record would end up with it being the top selling album at AmazonMP3 last year?

He’s aware but still not there in understanding. ” Who would have thought that the free giveaway [...] would end up with it being the top selling album [...]?” – that’s the key right there.

Think outside that box, as Reznor and co did, and do. It’s not just promo, it’s a new way of doing business that’s as old as the bible: “Cast your bread upon the waters”(Ecclesiastes 11.1) or “Give, and it will be given to you” (Luke 6:38). That’s not to say I’m turning to a deity to look after copyright – not at all – but the concept is not unlike Karma – what goes around, comes around.

Bruce Houghton‘s little poem is almost right – “free music only has value if it sparks action” except it’s still tying the music to the purchase and so, for me, misses the ultimate point.

I’d have to say that, while I think I agree with Robb McDaniels, he’s a little incoherent. What I get out of his piece is that he understands that value is a malleable concept, and subject to perception. Maybe

Jeff Price gets it:

Free giveaway of music was, and still is, an important part of any marketing and promotion campaign. The change that has occurred is a music fan can now get any song they want for free, not just the ones being authorized. [...] I disagree strongly with the statement that the industry is not profitable – it is. In just one month, bands and digital only labels are generating tens of thousands of dollars,recouping their costs more quickly and making a healthy profit on top. Revenue is being generated from MUSIC SALES in unprecedented amounts allowing labels and artists to have real careers and earn significant annual income.

As does Susan Ferris:

Having a song that is available to the masses for free has proved profitable for us. We have been able to give a taste with out spoiling the dinner. Ultimately the fans have been truly appreciative and in return purchased the whole CD

Watch for Tunecore and Long Live Crime Records to move ahead in the future – understanding is everything in a knowledge economy.

Actually, I’m more hopeful than not, having read those pieces. The ones who get it will be the luminaries of the next decade of music. And the ones who don’t, won’t be around.