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Free Is Just Another Word For Nothing Left To Lose
March 13, 2009
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"Artists make the vast majority of their money on touring and merchandise, not CDs. In turn, it is increasingly logical to believe that artists want to have their music reach the widest possible audience at the lowest possible price ... meaning FREE."
-- Pali media and entertainment analyst Richard Greenfield, November 2007"But free is not quite as simple -- or as stupid -- as it sounds. Just because products are free doesn't mean that someone, somewhere, isn't making huge gobs of money. Google is the prime example of this. The monetary benefits of craigslist are enormous as well, but they're distributed among its tens of thousands of users rather than funneled straight to Craig Newmark Inc. To follow the money, you have to shift from a basic view of a market as a matching of two parties -- buyers and sellers -- to a broader sense of an ecosystem with many parties, only some of which exchange cash." -- WIRED magazine's editor-in-chief, Chris Anderson, From the article 'Why $0.00 Is The Future Of Business', February 2008.
I used the above quotes from Greenfield and Chris Anderson in two separate commentaries a little over a year ago.
Chris Anderson, who coined the phrase "The Long Tail" when he authored a book with the same name, described in that book the online niche strategy and success of certain businesses (amazon.com, etc.) and talked about how distribution and inventory costs of those business allowed them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items.
Anderson's new book, "Free," is scheduled to be released by Hyperion Press this year, and in that book Anderson will talk further about how strategic alliances will possibly change the consumer market dramatically by offering goods and services for free. Well, sort of. If you read the above quote you get the picture.
From my commentary, "A FREE FUTURE," (February 2008) I wrote:
"There is no such thing as having too many customers, and no business is safe from shifting trends and changes in the marketplace today as consumers have more choices than ever where to spend their disposable income ... The most beneficial type of partnering companies can engage in is partnering with other companies that can provide compelling benefits for their customers. If used properly, the partnerships can be used to gain customers, protect them from predation by competitors, and protect profit margins. Of course, opening the doors to create such alliances means "thinking outside of the box" more than ever ... But the rewards can be extraordinary ... Strategic partnerships are fueling the growth of the world's most successful companies as the demand to deliver new products at lower prices increases. Such alliances also allow companies to enter new markets and expose products they otherwise wouldn't do on their own.
I could probably go on and on here about the potential explosion the industry will see when such alliances are established. There's no reason why labels can't start mapping out a brighter future now to bring music to an even bigger audience than ever before."
This week, in an article titled "Big Music Will Surrender, But Not Until At Least 2011 (see the link below to the story in my heading 'Big Music Biding Its Time'), Michael Arrington (the author of the article) writes "The labels fully understand that recorded music, streamed or downloaded, is going to be free in the future (we've argued this relentlessly. CD sales continue to decline by 20% per year, and the only thing that'll stop that trend is when those sales reach zero. Nothing will replace those revenues ... They also understand that recorded music will largely be little more than marketing collateral, meaning that the Internet services being sued today for copyright infringement will be embraced in the future as ways to get the word out on hot new music."
Arrington bases his prediction on a "surprisingly candid lunch conversation last week with a big music label executive."
Of course, we have no idea who that executive might be, but if he told Arrington the truth, then he definitely let the proverbial cat out of the bag. And if he did so, then I'm sure there is a price on his head. I imagine there are a whole lot of other industry executives who read or heard about this article this week and said, "He said what? He gave away our secret? What the f***?!"
Whatever the case may be, once again that four-letter word, free, is rearing its head. Though some might refer to that as rearing its "ugly head," a whole lot of others, myself included, say that ain't so. Visionary men with visionary alliances can navigate the rough waters that will lead them to some new models to generate revenues, once such alliances become a necessity and not an alternative. (And then, of course, as Don Henley sings, "The lawyers clean up all the details")
One thing such a model would do is really put the pressure on the RIAA. Other than gold and platinum sales certifications, the association would really have to focus its attention of truly serving the industry that supports it, instead of worrying about getting ISPs (Internet Service Providers) to cooperate in their war against illegal file-sharing and downloading. (And even though we are almost a decade into the new millennium, the RIAA still doesn't understand that they lost that war a long time ago, and that all these efforts are meaningless)
Before you go thing "free" actually means "free," think long and hard. There's gold in them there hills! Digging it out will cost some money, but once it's mined, the profits generated will be significant for artists and labels. More for the artists, possibly, since they create the music. But the labels can generate significant revenues as well if they create the kinds of ancillary revenue streams necessary.
One thing is certain. Free is the most loved word by consumers.
Perception is reality.
And Now This...
Five nights as musical guests on 'The Late Show With David Letterman', and it seemed like U2 were everywhere last week doing everything possible to promote the release of their new album 'No Line On The Horizon.' According to Entertainment Weekly, "The appearances did little to goose Letterman's ratings, perhaps indicating lukewarm interest in the album."
All of that, and yes, the album did debut at #1 on the Billboard Top 200 Album Chart. But with sales of only 480,000 units, it's a long way from when their last album, "How To Dismantle An Atomic Bomb,"sold 840,000 the first week.
Okay, it's five years later and things are different. The economy sucks, and the retail music landscape has changed as more people have shifted their buying habits to online stores. But considering U2 is one of the world's biggest supergroups, those first week sales numbers have to be disappointing.
Maybe the pre-release online talk about the album was right and the music wasn't as good as previous U2 efforts. Maybe U2 is now (like The Rolling Stones and others) just a huge concert draw regardless of their album releases. Maybe the older demographic U2 fans haven't responded yet to the album and will do so in the weeks to come.
Whatever the reason(s) for the first week sales totals (and I'd love to hear from any of you on your thoughts about this), U2 has little to worry about. Their upcoming tour will gross gazillions in ticket sales and merchandising.
And these days, let's face it. That's where the real money is.
Online Music Services Cannibalize Offline Sales
From BusinessWeekThe music industry has a new Internet problem, writes BusinessWeek's Douglas MacMillan. Whereas online piracy was once the chief concern for the big record labels, now online music services like Imeem, Last.fm and MySpace Music are eating away at sales revenues. The irony about these services is that the major record labels are partners, receiving a cut of their fees and advertising revenues.
Ad-supported online music services were supposed to serve as a legal alternative to online piracy, while providing incremental revenue for the labels as consumers discovered new music. The reality, MacMillan says, is that these services have ended up as a substitute to buying digital music for many online users, rather than as a catalyst for more purchases. The cut the music labels receive from these services is far less than they get from digital and offline sales.
Meanwhile, overall music sales continue to slide. Last year, total industry sales were about $10 billion, down from $14 billion in 2000, according to the Recording Industry Association of America. Even though digital sales growth through services like iTunes remains strong, it's not enough to cover the cost of falling CD sales. According to a recent report by Forrester Research, overall spending on music is slated to shrink 4% through 2013.
Read more about it by clicking here.
Big Music Biding Its Time
TechCrunchIt's easy to look at Big Music these days and think, "These guys haven't got a clue," with their endless piracy lawsuits and "mafia-style collection rackets from venture-backed music start-ups." Music will obviously be free in the future, so aren't the record labels simply delaying the inevitable?
As it turns out, that's exactly what they're doing, says TechCrunch's Michael Arrington, and they're fully aware that music will be free in the future, too. At least, that's what one major industry executive tells him -- that it's all part of a master plan. The exec says the labels fully understand that recorded music, whether streamed or downloaded, will be free in the future, amounting to "little more than marketing collateral" in the sense that the Internet services being sued today for copyright infringement will soon be embraced as a means of getting the word out about new music. Indeed, the tables will soon turn for these services, as the labels will soon pay them instead of the other way around.
Arrington argues that by 2011 or 2013, the labels will reorganize their business models around peer-to-peer file sharing services and music sharing sites. "No longer will the labels be tied to revenue limited to sales of master recordings," he says. "By then most or all artists will be under 360 music contracts that give the labels a cut of virtually every revenue stream artists can tap into -- fan sites, concerts, merchandise, endorsement deals, and everything else." However, until that day comes, lawsuits and rev-share/equity deals with music sites will continue to make sense for the labels.
Read more about it by clicking here.
Making Music With iPhones?
Critics will say the Spice Girls and Go-Go's never made music. Certainly, those bands never made music with iPhones. A funny, creative YouTube video is starting to go viral. The clip, viewed more than 147,000 times, showcases an all-female band from Great Britain, called The Mentalists, re-creating "Kids" by MGMT with only their iPhones and iPod Touches.
Kim-Leigh Pontin, the band's singer, told CNET News on Friday that she came up with the idea while she and her band mates were messing around with theirApple handhelds. They acquired all of the instrument-simulation software from the iPhone App Store. (From cnet.com)
Read more about it by clicking here.
Teen-created Muziic Likely To Bother YouTube
A 15-year-old has created a free-music service by harnessing YouTube's vast
library of music videos.
Muziic, created by teen developer David Nelson, has built an iTunes-like interface on top of YouTube. The service enables users to stream YouTube's music to their PCs without fiddling with videos. Users can build playlists and organize songs in a way similar to iTunes.
Read more about it by clicking here.
Apple Announces $79 iPod That Plays 1,000 Songs
It looks like it's the size of a small battery, and it speaks for itself. With the press of a button, VoiceOver tells you what song is playing and who's performing it.2 It tells you the names of your playlists, too. With 4GB of storage, the latest iPod shuffle can now hold up to 1,000 songs
Read more about it by clicking here.
MySpace CEO: I'd Rather Be Profitable Than As Big As Facebook
BusinessWeekThings have looked better for MySpace, the one-time king of social networking. Having lost its crown to Facebook, MySpace's user growth is now flattening out, key executives are leaving to start new companies, and ad revenue for 2008 is expected to come in well below the company's stated goal of $1 billion. Amidst the turmoil, BusinessWeek interviews MySpace CEO Chris DeWolfe, who is also rumored to be on his way out.
Nevertheless, DeWolfe "is in full spin mode" for the interview, says BusinessWeek's Robert Hof. He starts by touting MySpace Music, the six-month-old joint music venture with the major record labels that will soon allow its 18.1 million music customers to start purchasing concert tickets and band merchandise. MySpace is also planning to beef up its other media offerings, like games and sales of virtual merchandise. "Too bad you're not here a month from now," DeWolfe says.
One of the reasons MySpace's user growth has slowed down recently is that DeWolfe and company have been mostly focused on making more money rather than attracting new users. One wonders whether that's a smart strategy, given Facebook's phenomenal international growth. "I don't know Facebook's profitability," DeWolfe says. "But if I could have 300 million people using MySpace or be profitable, I would take profitability." Meanwhile, MySpace may soon be left out in the cold by partner Google, whose search revenues represented as much as 40% of MySpace's total haul last year.
Read more about it by clicking here.
MySpace Music, Six Months Later
CNetCNet checks in with MySpace Music, the joint venture from MySpace and the big four record labels, which is now more than five months old. In an interview, President Courtney Holt summarizes the first five months thusly: "Our traffic is huge. Our usage is very high. People are doing a lot of different things with music on our platform." For example, more than 100 million playlists have been created so far, and it was only a matter of days before the service recorded its billionth stream.
MySpace Music is still evolving, however. Recently, the site has improved its search features, tweaked its music player and added an activity feed to artists' pages. There are also "album pages" that give users a destination for purchasing albums, but also serve as proxy profile pages for artists that haven't created their own MySpace pages.
As CNet's Caroline McCarthy points out, MySpace got its start as an independent music hub before turning into the world's largest social networking site after News Corp. acquired it in 2005. However, midway through last year, the social networking giant was usurped by Facebook as the Web's No. 1. Since then, McCarthy says, "we've seen a lot of signs that MySpace has changed its strategy to reflect a return to its music and media roots." MySpace Music is the biggest movement in that direction. In the future, McCarthy says we can expect more tools and features for MySpace Music, in addition to more music videos, more music-centric video programming, and more merchandising and ticket sales.
Read more about it by clicking here.
iTUNES 8.1
Apple released an update to its iTunes music management software on Wednesday, adding a host of enhancements as well as support for a new line of iPod Shuffles it released earlier in the day. In addition to some security fixes, iTunes 8.1 adds new features to Genius--a feature that lets you put songs together in your library that somehow "go great together" --and support for CD imports to iTunes Plus.
JACKO STILL BOFFO AT CONCERT BOX OFFICE
Last week Michael Jackson announced a 10-night stand at London's O2 Arena at a press conference in London. Those 10 concert dates have now become 50 concert dates because all the tickets allotted during yesterday's presale, roughly 360,000 of them, sold out in one day. Jackson added another 20 shows to his original 10 dates, and as it now stands, the 2009 concerts will end on September 29th, and then he will return to the O2 arena on January 7th, 2010 for at least 15 more shows, bringing the total to 50. ( Source: MichaelJacksonlive.com )
RUNAWAYS FLICK CASTS FANNING
Variety reports that actress Dakota Fanning has been cast in the role of singer Cherie Currie in the upcoming Runaways biopic.
WINO ASSAULT CHARGES
Amy Winehouse was charged with assault last week stemming from an incident that took place last September. She posted bail and is due back in court on March 17th. Because of the charge, Winehouse has canceled her April 18th Coachella performance because the assault charge prevents her from attaining a work visa.
COOLIO TO THE COOLER
"Gangsta's Paradise" rapper Coolio was busted late last week at LAX Airport on suspicion of possession of drugs. Airport security found Coolio in possession of crack cocaine before he boarded his Southwest Airlines flight on Friday, March 6th. And the arrest will only enhance his resume.
ROCK'ROLL FANTASY GRABS TYLER
Aerosmith's Steven Tyler will headline this year's Hollywood session of Rock 'N' Roll Fantasy Camp, teaming up with Duff McKagan, Todd Rundgren, Yes' Alan White and many more musicians to offer fans a chance to rock out with their idols. The Hollywood session runs from April 29th to May 3rd.
CHICAGO & E,W&F
Earth, Wind & Fire and Chicago will tour together again starting June 5th. The two previously did a joint tour in 2004-2005.
POLICE PHISH FOR DRUGS
According to an AP report, police in Hampton, VA confiscated almost $1.2 million in illegal drugs and more than $68,000 in cash from concertgoers at Phish's three-night celebration of the band's return to the stage after a nearly five-year absence. (And I wonder how many of those fans were once Grateful Dead fans)
DON'T KNOW WHO MIGHT BE WAITING FOR THIS, BUT
Devo have announced plans to release a new album later this year. It will be the band's first album in 19 years.
WELL, U2 DID IT, WHY SHOULDN'T HE?
Following U2's week long appearances on David Letterman, Prince has announced he will perform on the Tonight Show with Jay Leno three nights in a row, March 25th-27th. On March 29th he releases of two new albums, "LOtUSFLOW3R" and "MPLSoUND." (Both CDs, along with a third by new artist Bria Valente, will be available as a three-disc set exclusively through Target for a price of $11.98 ... the same price point the Eagles had on their multi-platinum 'Long Road Out Of Eden' 2-CD set at Wal-Mart) Prince will also perform a fourth night on May 28th, in celebration of the end of Leno's run as host of the show.
RADIOHEAD BUSY
Radiohead are reportedly planning a summer tour and hitting the studio. "We are working on new material. We'll be doing some more recording. It's business as usual," guitarist Ed O' Brien told the BBC . "We've sort of finished the bulk of In Rainbows touring. We will be doing alittle bit of touring in the summer, watch this space!"
NEXT GRAMMY DATE
The date is January 31st for the 52nd Annual Grammys return to Los Angeles' Staples Center. Since the event will take place earlier than normal, the eligibility year has been shortened one month from October 1st, 2008 to August 31st, 2009.
MORE CAPITOL VINYL
Capitol will continue their "From the Capitol Vaults" vinyl series with 11 more classic albums being re-released on June 16th. Among the highlights are the Beach Boys' "Surf's Up" and "Sunflower," Plastic Ono Band's "Live Peace in Toronto 1969," a trio of early Red Hot Chili Peppers albums, Roxy Music's "Country Life" and "Stranded" and the Specials' self-titled.
Quotes of the week
"He has the most amazing solo face. Literally, his tongue takes over."
-- Justin Timberlake, before giving his impression of John Mayer singing, on the premiere of 'Late Night with Jimmy Fallon'. And it was hysterical. Check it out on YouTube!"Me and my girls used to watch 'Dancing with the Stars' and they would say, 'You need to be on that show.'"
-- Lil' Kim, on being encouraged by her fellow inmates while she served 10 months in jail for perjury, to The Insider. Yeah, it was either that show or 'Prison Break'"I'm scared of jellyfish, dentists, knees, fungus, corn, ships, thunder and Michelle Obama."
-- Rainn Wilson of 'The Office', admitting to being Afraid ... very afraid, to PEOPLE at Cosmopolitan magazine's Fun Fearless Male Awards."We'll multiply! That's what's gotta happen."
-- Nick Cannon, responding to Us Weekly on whether he and Mariah Carey will have kids.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
This Headline from their 'Onion Magazine' cover...
How Did This Guy Man Come Up With So Many Rhymes?
See what man they are talking about here:
THE RADIO INTERVIEW on 'THE AMERICAN PERSPECTIVE' - From newsblaze.com
"Steve Meyer is on the front line of global music sales and distribution which he expects will soar to pocket-bursting levels. What's more, he shares his insight and ingenuity with us. Steve gives us both historical perspective and futuristic vision as he chats with Judy about the love of his work, trends of the business and his personal points of view about success, happiness and blending life with the lust for life. Steve joins Judy and helps us discover the thrill of having it all with a sense of balance and purpose. "
You can listen to an interview I did with Judy Piazza of 'The American Perspective' by clicking here: (It runs about 15 minutes)
http://www.thesop.org/index.php?id=10306.
The Blogs
Check out a great blog by Jerry Del Colliano, the Director Executive Programs, Clinical Professor Music Industry & Recording Arts, at the Thornton School of Music,University of Southern California, by clicking here: http://www.insidemusicmedia.blogspot.com.
Website
Check out attorney Ray Beckerman's website at: http://recordingindustryvspeople.blogspot.com where he prints news about the RIAA's ongoing activities
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)