meta-roj

it seems i’m dancing with tim oren a lot these past several weeks, which is, i must say, interesting. tim’s latest, which is a lucid rationale and a bit of a mechanism to drive a stake at the heart of the music business bears some comment.

my “set of disclaimers” – i do have a vested interest in this material.

in deference to tim, who really embraced the pirate theme, and because i’ve been running the mencken slitting-throats line for seems like years now)…. with a hearty yo ho ho, i cast my eye upon the bounty of of Britney…

today i’m going to ignore the “recording revenue” completely, and leave it as an exercise to find recording artists that actually make a living on royalties from their recordings (happy hunting… 🙂 ).

to touch the issue of concerts and promotion. scarcity at the top end of these segments is very much tied to a couple bottlenecks in the market – ticketmaster and clear channel.

i’ve written a few things (1, 2) here about ticketmaster, and actually spent much, much time prior to my blogging days studying this creature. an off-the-cuff phrase i used often about ticketmaster – “the third most-hated monopoly in the united states” – after microsoft/the cable company/the phone company (#2 – depending on your background) and the federal government (#1). the story is an old one, and a complex one, and not worth reviewing in gory detail here, but two data-points of interest are that in 1994 (with the pearl jam incident), ticketmaster was adding $3-6 to the price of a ticket. today, it’s $10-15 (to be fair, the price of first-class postage has gone from 29 cents to 37 cents during the same period). point two: ticketmaster holds the keys to venues run by more than 8000 clients.

clear channel is the other bottleneck in the system – they own or have exclusive rights to 135 venues around the country. 135 doesn’t sound like much, but dig into their web a bit and you’ll find this: “In 2001 the Music Group generated approximately 70 percent of concert ticket revenue in the U.S., and produced more than 30 major music tours by such performers as U2, Madonna, Janet Jackson and *NSYNC.” pick a random clear channel “top 40” (that’s “today’s hit music”) station and look for a playlist and you find 29 or maybe even 36 songs. it’s a natural fit. you integrate promotion (radio) with production (concerts) and take a (growing) cut at both ends.

with the bloodshed in the recording side of things, the record labels are coming to the party:

EMI will not only release Williams’s next six CDs, it also gets a cut of his lucrative merchandising, publishing, and touring rights. In effect, it becomes a multi-interest entertainment business rather than a mere record label

i’ve tried to keep this short, but i think one other issue bears comment… for the past several months, i have been exploring the “low end of the power curve” – and it’s been an interesting and strange journey (with a nod to the dead). tim’s got a point here. this is the region of least resistance, and it does have some interesting qualities related to scale. (and i know how those kooky venture capitalists like that word! – usually in the phrase “that doesn’t scale”).

consider, for a moment, that guitar manufacturers give away a few guitars to the “top end of the power curve” as promotions to get their gear seen (and heard, presumably – more on that in a second!), then sell on the order of 1.5 million guitars to the low end every year. to a large extent, this is selling a dream, and it’s based squarely on a bountiful market model. bb king fan? lucille is a gibson – and you can have one too. can’t afford lucille? you can stay in the gibson family all the way down to several hundred dollars. perhaps the guitar of porn stars is more your style… honestly, i don’t know if jenna jameson plays a guitar, but we have photographic evidence that she can hold one. in any case, the guitar makers count on the dreams of the masses (this is one of the social functions tim mentions). every teenaged guitar-wiz wannabe, from blues to porn has to buy an axe. the dreams of musicians make a perpetual goldrush. there’s always a new set of ’49ers ready to pack up their ford econoline wagons, load an amp and an axe, and hit the road looking for gold (or fame, or women, or a drummer). many are going to find fools’ gold (in the form of a record deal advance with many zeroes on it).

an important lesson in any goldrush is that it’s very difficult to make money finding gold, but it’s relatively easy to make money selling shovels – and shovels are good at both ends of the power curve. some guitars even look like shovels.

so, with that, i return the volley to the rest of the net… with, it would seem, much more to come.