VenChar

The future of music?

Interesting perspective on the future of the recording industry from a musician who's also a software engineer:

It’s my belief that music CDs will soon be given away free. The CD will become promotional material to advertise a band’s live shows and merchandise for sale. Space inside the CD cover could even be sold for advertising.

This will have several results: First, bands will reduce the cost of producing a CD by making use of the incredible capabilities of your average digital recording system to avoid the ridiculous hourly prices that professional recording studios charge. (Next week my band is doing this very thing.) Self-production will become the norm.

Second, CDs will become shorter, more focused and released more frequently. (‘See us on tour next month at these locations! Hear these four songs performed live!’)

Third, bands will perform live far more often and venues for live music will see a resurgence in popularity.

Interesting pipe dream of an end-run around the recording industry. I buy the fact that it is now technologically feasible to self-record and that this is even an economical alternative. But what about promotion and distribution - isn't that where the labels comes in? The vision that's being articulated is probably a feasible strategy for a small band to build grassroots support and popularity and even to fund itself on a modest scale, but to scale up from there and reach a mass audience you need the intermediation of a label of some sort. Tim Oren's had some thoughts around a music business model targeted at genre acts (acts that fall below the 100-200,000 unit sales line) that's worth reading in this regard.

Umair had an incisive analysis recently (see here and here) on why file-sharing is so pervasive and how the music industry needs to adapt. To quote:

For many people, digital music's more about risk than it is about music itself. Not legal risk - but transactional risk, the kind of risk you take when you buy a used car...consumers download music, as much to derive extra value from getting something for free, as they do because they want insurance against buying something they didn't want in the first place.

He proposes solutions for reforming the recording industry that insure the consumer against this risk. I find this musician's idea above intriguing partly because it addresses the risk issue in a fundamentally new way - view the CD as a way to mitigate/reduce risk on the part of the consumer and derive revenue through other means (live shows, merchandise).

The day the music died

OligopolyWatch writes that "The Big Five [AOL Time Warner, Vivendi Universal, BMG, EMI, and Sony] are one of those rare new oligopolies that are ripe for major disruption due to their inability to adapt to changing market dynamics, not because of music piracy. In this case, it's the dependence on blockbusters."

From an interesting Slate article by Mark Jenkins:

Meanwhile, younger fans lose interest quickly and often don't develop strong loyalties. They're less likely to investigate a breakthrough act's previous albums or buy its next one. The genres that appeal to under-25 music fans continue to sell, but individual performers fade quickly.

This is a huge problem for the big labels, who still base their marketing on long-term stars who release multimillion-copy blockbusters. One album that sells 10 million copies is more lucrative than 10 that sell 1 million, because once a CD takes off, the only fixed costs are manufacturing and shipping, which are trivial compared to production and marketing. And long-term careers make each album less of a risk, since the most loyal fans will buy everything an artist releases and profits are high on back catalogs that keep selling.

Yet maintaining superstars is hard and getting harder. They require large advances, high royalty rates, and massive production and marketing money. And they keep demanding such things even when their careers tank (notable recent examples: Michael Jackson and Mariah Carey). The risk that a contemporary superstar's latest album will bomb is high, since attempts to reach the widest possible audience can easily lead to banality and overexposure

People over 40 now constitute 44 percent of the CD market, up from 19.6 percent in 1992. However their tastes have become highly fragmented and they're had to reach through mass-marketing. The younger set have more homogeneous tastes but tend to have less loyalty, as a result of which b(r)ands marketed to this group (boy bands, etc.) tend to have short lifespans.

Of course, the recording industry has blamed the systematically-falling CD sales over the last couple of years on music piracy. The Slate article suggests that the reasons for the declining sales lie elesewhere. It draws an interesting historical parallel: the emergence of cassette tape technology in the late 70's. "In 1978, record sales began to fall, and the major labels blamed a larcenous new technology: cassette tapes... It turned out that home taping had not killed music. Instead, the central problem was the collapsing popularity of dance-pop—lively, sexy, but personality-free music whose appeal was broad but thin." The emergence of MTV in 1980 was the systemic shock that jolted the industry out of the doldrums by popularizing little-heard-of musicians to an Amercian audience and giving a "novelty-starved" population something to cheer about. The article goes on to suggest that Napster/Kazaa and the like are the shot in the arm that the industry needs right now.