Tim Lee

No Economics

Via Chris Anderson, Bob Lefsetz provides a reality check to those who think that music distribution needs a “business model”:

I’m positively stunned at the blowback from business regulars about that chap giving his music away for free. Oldsters can’t understand the economics!

I’ll clue you in, THERE ARE NONE!

This is your worst nightmare. People who can follow their dream on sweat equity. Who with their computer and the money from their day job or mommy and daddy can compete with you. It’s like the North Vietnamese, all our military might couldn’t defeat individuals who would fight to the death. Same deal in Iraq.

It’s an eye-opener. That your model is IRRELEVANT!

YOU need to pay the mortgage. YOU need to go on vacation to the Caribbean. But the new musicians? They’re willing to sleep on the floor and eat ramen. Hell, they’re in their twenties, they’re not on the corporate track, they’ve got different ambitions!

This flummoxes the old wave. Especially after the eighties and nineties. You’re supposed to go through the usual filters. Get a lawyer and a manager and then shop your demo to labels, who get to not only decide whether to sign you, but what your music should sound like. But the music coming from said majors…it makes the new music-makers puke. So they’re doing it their own way. They care as much about the old system as snowboarders care about skiers. In other words, NOT AT ALL! They believe they’ve got a better system.

The long-term threat to the music industry is not pirates, but musicians themselves. Many of them would rather be famous than wealthy, and will give their music away if that’s what it takes to get it widely heard. As dirt-cheap, Internet based methods for getting music to fans continue to improve, labels will have less and less to offer such bands. And if enough bands choose to give their music away, it’s easy to imagine music fans will start to eschew any band that demands payment for their music.

As I’ve argued before, the ultimate result may wind up looking a lot like today today’s blogosphere: giving away your work will be the norm, a lucky few musicians will find ways to parlay their success into paying work, (through live performances, corporate sponsorships, custom composing or recording work) but the big winners will be consumers who will get a vast universe of content without paying a dime. The music industry may be devastated in the process, but more musicians will get what they really want: an audience for their music. That doesn’t sound too ominous to me.

April 10, 2007 | Comments |

Viewing 7 Comments

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    Music distribution might not need a business model, but music production could do with one.


    Once a musician has an audience, there may be some musicians that would be tempted by the audience offerring to commission further production.


    Of course, most musicians will prefer their creative energies to remain untainted by their fans' filthy lucre.

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    Bob's a little late to the party. I've been saying that for years. For a "new" artist who gets signed, they don't make any money off CD sales anyways. The Label makes al the money. Oh, they used to do some marketing & promotion, and tour support, but they charge all that shit back to you anyways. As a musician, if I give my music away for free, or just a nominal fee, I'm building an audience who will come out and see me live, which is the only way I make any money signed to a Label or Not. Why do I need a label to mediate between me an my audience....?
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    It seems that the musicians say things like steveconga above, or what CSS dii with giving a free blank CD away with their first release, so that you could record songs for a friend. Revenue model is clear for the musician: more gigs.

    Now, it's a very different story for the hangers-on, the marketing folks, they lawyers, and ultimately the big labels: they are just simply redundant.
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    I'm curious as to what this conversation portends for other creative content that has a definite non-zero cost of creation, and has no opportunity for revenue streams other than the playback of the content?

    Movies? Television shows? (which of course, the lines continue to blur there in genres).

    Advertising is the only way for producers of other media to recoup costs at this point - and giving away content otherwise isn't a "loss leader" for anything additional in that world...

    Very curious to see how this is going to play out in other creative mediums.
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    Jon,

    If I could predict the evolution of markets, I'd be getting rich on Wall Street, not writing a blog.

    With that said, giving content away doesn't mean you can't make money from it. I think television will probably be the least affected: they already give their content away and sell advertising. All they need to do is take a page from Google's playbook and figure out how to make their ads relevant and useful rather than annoying. I expanded on this idea here.

    As for movies, keep in mind that the home video market has only been around for about 20 years. In the worst-case scenario in which piracy completely destroys the market for paid home video (which I think is doubtful), Hollywood will simply find itself back in the position it was in in 1980: reliant on revenues from movie theaters and broadcast advertising. That will be painful in the short run, but they got along just fine for half a century on just theater revenues, and I see no reason to think that won't continue--especially since many of the costs of making and distributing films are falling at the same time.
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    I think that movies will do fine as will TV.

    One thing thugh, is that the falling producrion costs, and the amatuer involvement could even lead to new possibilities for indie concept-films, but with some of the special effects and bespoke music that was the exclusive domain of the big studios. I am hoping we'll see some really good sci-fi indie films, on some material that wouldn't be considered commercially viable right now. Think of some of Lem's books, for example.

    Also, this discussiion has neglected my favorite medium: Books. That's right, people do sometimes still read books. Although you can download many books, it seems that books are (and will be I predict) quite resistant to sales losses due to downloading--the physical copy just has too many advantages of the electronic, and I don't see that changing, anytime soon.

    Newspapers are being deeply affected, and the role of the newspaper is so great in American political history, and there still is a desire, I think, for a reasonably priced paper that I am going to go out on a limb and predict that we will see not-for-profit newspapers--funded by the bequests from the baby boomers. Kind of like the print version of PBS. That will happen about the same time as a major metro regions start to see their for profit papaers all go belly-up, and everyone will see the danger in this.
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    I think Bob has an important point, but makes the mistake of trying stretch it to apply to the entire industry.

    Personally, I think the music industry is poised for major overhaul as most here suggest. It is filled with layers upon layers of parasitic middlemen getting fat on the work of the actual creators.

    The Internet and the various new distribution technologies it enables, give artists an amazing ability to cut out the middlemen. Following the success in travel and trading industries, musicians are poised to grab more control over their futures than they had during the past 50 years.

    So, I suggest the real lesson might not be that "all recorded music should be given away," but that "artists must use technology to remove the middlemen and then choose their own model."

    As Bob suggests, hungry twenty-something artists that are just interested in making the music they love and couch surfing can and are giving away their recording for free...more power to them! They can follow that model toward ascetic stardom.

    However, Bob is too busy making his "you old people just don't understand" point, to the more complex reality.

    While there are a lot of single, hungy, and ideological twenty something artists out there, there are many more that aren't. There are a lot of great artists that have kids and mortgages and need a way to pay for them. It may not be through CD or download sales, but why should that option be precluded?

    If Jack White wants to stop touring and spend more time at home with his wife and kids, I want him to have a way to support them. If that means selling copies of the new Icky Thump then I'm all for it!

    In the end, Bob needs to recognize that most of those artists he's talking about will eventually grow up. They aren't Peter Pan. And if they have to choose between their art and supporting their families, drug habits, what-have-you, well...those are difficult choices I hope they aren't forced to make.

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