meta-roj

i’m obviously still on the back end of the loop when it comes to the ongoing music business discussion, so in an attempt to catch up and keep myself a bit relevant, i’ve opted to skip the “essay-length” response once again (and i apologize to all those who were so looking forward to my dense, improperly capitalized prose 🙂 ).

first, i want to thank john beezer of weedshare for dropping in and saying hello. i’m glad he appreciated my back-of-the-envelope analysis of weedshare, and he did take a few steps toward answering the concerns i suggested participants in the system might have (both listeners and musicians). that’s a very welcome thing, i’m glad this little blog in the dark corner of the net helped shed some light on the adventures happening over there.

next, i want to assure you that i intend to make some comments on irate and magnatune and mercora and last.fm and several other things – but i do want to devote a bit of time to them, and it’s been a bit hectic here lately.

if you’re following the music business discussion among the blogs, i’d point you to this bit by kevin laws over at due diligence, and this and this over at the big picture. barry’s talking about irate, kevin’s talking about some of the reasons online distribution hasn’t happened yet. both are worthy of a visit. i’ll respond someday 🙂

the new york times has a recent piece [registration], on the history of the prices of various audio formats.

and one last thought, borrowed from an old article in slate:

In erecting bulwarks around their domains, the major music businesses have left no entrance for the serendipity that kept the pop industry lively (and profitable) for decades

the bbc has a piece that quotes an EMI spokesperson saying, “The Beatles have chosen not to put their music online.”

of course, the beatles back catalog is already online, but this is a spokesperson talking about “legit” (as in paying for) download sites. i’m also given to understand that green day, beyonce and creed (to name a few more) are not available online.

those of you following my closely probably already know this, but it’s probably worth repeating on this subject. my work on solving the problem of the business of music largely ignores the back catalog. there are a few reasons for this, and this is one of them.

anyway, i don’t want to fault the beatles for this decision (or whomever it was that made the decision) – it’s perfectly legitimate. one of the principles i strongly believe in is that the artist should be able to say “no” and do what they think is in their own [long term] best interest. of course, that opens up the whole issue of getting artists to think in the “long term” but that’s a discussion for another day.

a legal read on this might be that there’s an ongoing dispute between apple (the beatles label) and apple (the computer company) about itunes. anything that could bias that case would be a Very Bad Thing for apple (the beatles).

in any case, since it is the beatles, it was worth mentioning.

kevin laws did, as expected, provide a very lucid description of the trouble with walmart over at due dilligence.

some time ago, i hinted at some of these points, saying that “the battle of pennies between vivendi and walmart will squeeze every last penny out of the existing business model.”

kevin’s material gives a good functional description of just how that squeeze works.

one thing i missed in my post was the strength of the “push back” from the record retailers. i mentioned it when i heard about it, but ultimately, the retail channel was apparently strong enough (still) to result in the collapse of the price-reduction plans at vivendi-universal. so much for my crystal ball 🙂

the independent music specialty retailers have been folding under the weight of large chains for some time now, and with that, the power of negotiation is consoldated. 1000 indie stores probably couldn’t get organized enough to push back and avoid the price cuts, but with only a few large chains, all it takes is a few phonecalls to say “we won’t take this.”

the real damage, on both a social and musical level, is that the traditional filters we used to find [good] new talent aren’t sustainable anymore. the brilliant musigeek at the local indie cd store – the one who knew every act on the 40-foot-long jazz shelf – he’s wasting that knowledge asking you if you’d like to supersize those fries or buy a refrigerator. the buyers at the retail level and the a&r people at the labels live under one-screwup-and-you’re out conditions. oh, and just to mention it – the djs at the local radio station are under the thumb of a centralized program director with a not-entirely-hidden agenda.

there aren’t many people left in the society that are paid to know music and find good, new talent. there are still people who are paid to push hits (top down), but the discovery-and-filtering process that can only happen with time (listenting to music is not time-compressible) and experience (lots and lots of listening) is suffering. sure, these people still exist, and they may even be on the net posting opinions for free – but if they’re holding down a non-music job to keep themselves fed, that’s an inefficient use of their time (at least as far as the music business is concerned)… these are extreme specialists.

ultimately, the business of music doesn’t work without these filters. on the macro level, you need to be able to go from a half-million garage bands (and, by the way, has anyone ever quantified the number of garage bands out there? i just made this number up because i can’t find a good data point) to 165 charting superstars. from a business perspective, you need to be able to focus resources – today more than ever.

i had plans cancelled tonight, so…..

today we demonstrate power laws for the various power-law-seekers, and throw out some more data points about the top end of the music business into the ether.

to create these, we compile data from the full set of 52 weekly charts of the year 2002. each chart is inverted (score 40 for the #1 hit, score 1 for the #40 hit), and they are sorted and compiled by song and artist throughout the year. the chart positions for each song and artist are added together and plotted. this gives some measure of both time on the chart and rank on the chart (some will argue that a #1 hit isn’t just “one better” than a #2 hit, but that’s a different exercise and a different power law). it ends up looking like this (click for readable versions):

some points that may not be obvious…

there were 233 charting hits from 165 artists. there were 9 #1 hits from 8 artists.

it’s very possible to get “good chart juice” without getting a #1 hit. vanessa carlton scored 2nd place on the song juice chart, while only getting as high as the #5 position with “a thousand miles,” but it stayed in the top 10 for 15 weeks.

it also helps to keep new hits cycling through the charts – the “one hit wonder” syndrome caught kelly clarkson, and her #1 hit dropped off the charts after 13 weeks, leaving her with the 33rd ranked artist juice (and 32nd ranked song juice). no doubt, on the other hand, managed to get three tracks into the charts, “hella good” up to #13, “hey baby” up to #5, and “underneath it all” up to #3. no #1 hits there, but 53 track-weeks on the charts, which was good enough for 3rd ranked artist juice.

i don’t have the patience to figure out if 2002 was a “typical” year, but this is another demonstration of the high end. if you want to “crack the charts” you have to score among about 165 artists. the kelly clarkson (2002) and milli vanilli (1989) stories probably demonstrate that you can manufacture hits if you put enough cash under them. that said, kelly’s #1 juice in 2002 is the red dot on the far right of the group of #1 hits, and didn’t have the “hang time” on the charts to accumulate much “juice.” you can see that a lot of not-#1 tracks and artists outperformed kelly by this measure.

now, there’s a whole different set of questions about how efficiently various artists convert “chart juice” into “cash money.” i’m not going there tonight.

update: added the “song juice” stat for one-hit-wonder kelly clarkson.

(via boing boing – and i’m so glad to pick this one up).

scott andrew has decided to conduct a little experiment with human lab rats (that’s you).

not only has he put together a new diy release of his material (which is something musicians occasionally do), he’s made it an “enhanced” release. not just a cd, he’s added previously released material (like a whole second album) and new, unreleased material (like a whole bonus single) to the disc. so, he’s calling it “two and a half records in one” – it just happens to fit on one piece of polycarbonate – along with lyrics, coverart, notes and a photo gallery. and he’s priced this at $5.

but wait! there’s more! this is released under a creative commons license (tho i couldn’t determine which license it is…)

two-and-a-half records and some bonus material at a $5 price point – that’s not a bad deal by any stretch of the imagination, right?

so where’s the experiment? i’ll let scott explain:

The price is a sliding scale, with a $5 minimum. For the month of October, all amounts over $5 will be donated to the P2P Legal Defense Fund at downhillbattle.org, to help out families and individuals hit with RIAA lawsuits.

i don’t know if this is good for scott, or good for his audience. i don’t know if it’ll help him find an audience, or help him buy a big bag of rice to eat through the cold winter months, but he’s a creative person, and he’s decided to run with it.

good luck, scott.

i might be coming in on the tail of interest here, but since i do have some observations, and a blog, and a [small] audience of dedicated fans hanging on my every word when it comes to the music business (heh), i thought i should share a little weed. (hmm. that could be an interesting marketing angle. i’ll have to pursue that later as a bmoth)

some of you are already familiar, but i’d like to introduce the rest of you to weedshare, the music-business-start-up that “pays you to share music files.”

what is weedshare

with their simple 5-step plan, you too can make money sharing music files! i suggest you visit their site for their own version, but it goes something like this…

1) download weed files – that’s their new mostly-windows media-format files
2) you get to play the file three times, then it nags you to buy it
3) download and install their software to unlock the 3-play limit
4) pay for tracks out of a stored-value account
5) and drag other people into the system

weedshare brings together elements of drm and mlm. others (see comments) have noted that this smells a bit like mediagora. kevin, i think, would not appreciate that comparison. i’ll try not to speak too much for kevin, since he’s much more eloquent than i, particularly on his subject, but mediagora is based on a set of principles that includes supporting derivative works and that drm schemes destroy value. both of these principles are violated by weedshare, so for the record, weedshare is not mediagora.

now you know what it is (and what it’s not). it’s available today, so let’s look at how it might work. remember, of course, i’m not working with, inside, or even hacking weedshare, so i’m speculating… and a lot of this applies generally, but weedshare is live, so i happen to be picking on them.

three questions

barry ritholz asks three important questions about weedshare, and that’s as good a place to start as any…

Windows Media Player?
weedshare is based on drm – you have the right to listen three times, then you have to purchase. open formats are completely out of the running because of the drm requirement, and the drm requirement is “hard coded” into the model. weedshare without the “3 free plays” and “3 tiers of incentives” isn’t weedshare anymore.

so, yes. it makes sense (to me) that they picked windows media player as a starting platform – the system has roots deep into drm and control (it is, after all, a microsoft creation). the weedshare model depends on drm, and if you have to bet your farm on someone’s drm, you can’t go too wrong betting on microsoft’s.

Hack-arounds. Can the Weed/WMP DRM system be broken?
yes. of course it can be broken. these days you run the risk of violating all kinds of [united states] laws by doing so, but it’s an algorithm, it can be reimplemented.

RIAA: Will the goons be able to distinguish between the sharers of these products? Will I be inviting a lawsuit from the Music Police if I share weed products?
of course, you wouldn’t be inviting an legitimate lawsuit, but the riaa has already missed at least once. if a network of weed-sharing crops up and really “spreads like a weed” then this threatens the riaa’s ability to identify the evildoers. the riaa is committed to their plan, so while this is entirely legitimate by design, it does threaten the riaa on several levels. even if they don’t sue listeners for sharing weeds, it’s not outside the realm of possibility that they could take other steps (sue artists? sue weedshare? push legislation?) to shut down this (and any other) system that encourages legal file sharing.

more questions

managing an incentive system
weedshare maintains an “incentive system” (kickback, payola, whatever…) for distributing the tracks, and any such system is, necessarily, based on tracking listeners and tracking files. this opens up two cans of worms.

the first can is what i’ve come to call the “identity problem.” simply stated, weedshare has to create and manage one (or more) identities for every artist and every listener. moreover, because it’s got the incentive program, it has to track (at least three) layers of distribution among those individuals. compromise an identity in the weedshare system, and your music might vanish. or the cash in your account might vanish. or you might suddenly find yourself with a hard disk full of crap and a big charge on your [paypal] account. this isn’t a technology problem as much as it’s a management problem. (and if you weedshare people wander into my part of cyberspace, that much is a freebie…)

the second can might be called the “evil empire problem.” (and don’t we all wish we had this problem…) this one, also simply stated is, do you trust weedshare? even well-respected, highly technical, amazing companies that go out of their way to be “not evil” can run into this one. as an artist participating in weedshare, do you trust them to keep your records for you? as a listener, do you trust them with your identity (see previous can of worms)?

is it worth hacking?
for the artist, you risk committing to aluminum-foil cylinders. your worst case scenario is that weedshare folds, leaves their technology locked up in a vault somewhere and protected by barbed wire, software patents and well-intentioned acts of congress, and microsoft releases a new version of media player that breaks the system. sure, it’s technically possible to play a cylinder, even today, but it’s usually not worth the trouble. if your entire body of work is locked into a format that becomes obsolete while it’s still so obscure that nobody hacks it, then your body of work vanishes.

the artists, of course, should be smart enough to avoid this worst-case scenario (by, for example, keeping a non-drm-locked master – artists, there’s your freebie), but that leaves the listeners on the short end of the obsolescence stick – if i amass a huge collection of weeds, then are they any good with the next version of media player? will the keys that unlock this vast collection of audio still work in the next version? on my next computer? when will i get shut down, and how do i migrate out of this system with my thousands-of-weeds collection? (generally, the answer is that you don’t. once the format is unsupported, it’s gone).

this isn’t a new lesson, because we’ve learned this from software. it’s generally more important to musicians than programmers, because musicians are [often] creating art and trying to leave a legacy. here’s the lesson. try to run a program that was once distributed on 5.25″ floppies that has drm (then known as copy protection) and that checks to see if you have an original disk. what? no 5.25″ drive? i have one. i’ll sell it to you (cheap!). your motherboard doesn’t know what to do with a 5.25″ drive if you have one? no worries. i have an old pc here and i can get the data off that floppy for you. uh oh. unless someone hacked that drm scheme, you’re out of luck. well, you can sit there and stare at the original floppy all day long, and technically, it’s still yours.

as an artist, your real risk might be that nobody cares enough about your work (after three plays) to hack it. if weedshare takes off, then the body of weeds will grow in value to the point that it gets hacked. if weedshare doesn’t take off, then anyone who adopted early will be stuck holding the bag (of weeds).

the upside

now that i’ve spent a lot of time shooting holes in weedshare, it’s time for me to put on my supportive hat and say a few positive things.

first, and very, very important, the system is up. it’s available today, you can download tracks, and they’re even running a top-10 chart on their homepage.

you can get involved, you can find music, you can get your music into the system, it works for video too (which i think should be emphasized a bit more). weedshare has taken a decidedly generalist approach, which could be good or bad, but the generalist includes video. and musicians do make video.

the concept has at least a little traction, with weed fanatic keeping track of the new sites and performer magazine running a piece.

another the fundamental upside is that the weedshare model is artist-focused and could work as a mlm distribution mechanism, if they can keep the “superdistributors” in the hierarchy happy and filtering for the rest of us.

today, i was inspired to put together a little chart to help further define the “top of the power curve” in the business of music. note that this is “just one chart” – but it’s the pop singles chart for the united states, and purports to represent sales and airplay.

(click for larger version)

i think this largely speaks for itself, but i do want to spell out a few points…

a total of 8 performers hit #1 on this chart during 2002

one of them (nelly) had two different (and back-to-back) #1 singles.

one of them (kelly clarkson) had a song debut at #1.

no real point to make with this, but the data was available, so i thought i’d give everyone some common reference points….

i’m a couple days behind, and have a lot to say on these subjects, but i don’t have the time for my traditional-length rant, so this will be just a couple quick hits today, despite the rich body of new material that i have to riff on….

the music business discussion has expanded significantly, with a response from a new player, and a few updates at due diligence that touch on another subject i seem to address here a lot lately (language problems). tim has brought in another kevin (kelly), who has a year-old view of the future of music, and shares an interesting email conversation with the rest of us.

the quick points i’d like to make on all this new material:

i still think musicians are monopolies and so i disagree with barry ritholtz. they may be incredibly weak monopolies, but art is not fungible, if only because it’s a completely personal valuation. even the best elvis impersonators are not elvis.

on the other hand, barry concludes his comments with an observation that i do agree with: “They certainly arent prepared for a 500 bands selling 20,000 copies each, yet thats where the music itself wants to go . . .”

music, as a business, is substitutable. again, the value is in the hands of the audience – a stones concert ticket is worth $700, and an open-mic-night at a local coffee shop may be worth a $4 coffee – but the real issue here is not the value-in-dollars but the value-in-attention. if a movie feels like a better way for me to spend two hours, i can’t be listening to the new britney album at the same time (unless, of course, britney’s gotten her tracks into the movie…)

this means the business of music cannot be studied in isolation – it does have to be viewed in the context of the broader industry of entertainment, but again there are degrees and nuances that defy ready analysis. do captive audiences count? does elevator music or music in the dentists’ chair count? does background count, or does it have to be an active listener? if a song is in a soundtrack, or a singer becomes an actor, what’s the appropriate “attention split”? did you go see the movie for a great story, enimem’s acting ability, or because you’re an eminem fan and have every album? we’ll never be able to quantify all these pieces.

and now for a couple pushes in new directions:

one thing that i haven’t seen discussed at all in these pieces (so far) is that the “pop star” has more than an economic/business-model function. there is an important social aspect to the big hits and big stars, because they give us a common touchstone in culture (even if you hate them, they are pervasive enough that you know them). i don’t think they’re going to just “go away” and be replaced with hundreds of “mini-stars.”

another important point that’s also missing is that most of this discussion has revolved around the “high end of the power curve” – and that’s a valuable place to start (if only because of the social implications – we can all talk about the stones). but it is just a few players, with pretty much the same model, and really doesn’t capture the breadth of “creative business models” that are already at play in this crazy business of music.

and finally, there’s the “non-music” markets that are worthy of discussion. it’s not just musicians-trying-to-be-actors, it’s merchandise, in the broadest sense. it’s branding and pitching and other revenue that comes not from the music, but from the social status that came through the music. is “music business” (at least at the top end) an end unto itself, or just a tool to leverage on your way to a new basketball shoe?

i do hope to get back to some of these points and write in some detail, but for now… back to the real world, and let the blogologue continue.

update: barry has commented that there are interesting models, but i was trying to point out that they (and this echoes one of tims earlier approaches) generally don’t apply to the top of the curve where we’ve been holding most of this discussion. i think it’ll be very difficult to convince the stones or britney to get into the magnatunes or weedshare models. important questions to bring up in this context are: can any of the new models create a new pop star? should they be able to? is there a fundamental incompatibility in these models? does that matter?

tim rightfully points out that he did address the non-monetary social issues of “star power” – just to refresh my own memory, and make it painfully obvious, here’s part of his comment: “This kind of high grossing big act isn’t going to go away. There’s always a top end of the power law curve. And there’s a social role for them: For the 15-25 year old segment that are the dominant buyers, they are objects of common attention that symbolize group membership, a sort of media plumage that’s part of the adolescent socialization process.” sorry about that – we’re playing the same tune on this one.

kevin laws is back with the guys at due diligence, and today’s installment goes into where the power is in the recorded music business.

Music companies aren’t monopolies; they’re just middlemen who take a cut for helping the real monopolists.

we’re converging on the same language, which is a bit reassuring for me.

i do have one minor comment, and it’s more important in the big picture than at the top end of the power curve: i think i should note that the “minor labels” generally make their money “selling up” their acts. what this means is that there’s a whole food chain of “music companies” taking their cut as you work through the system (unless, of course, you are a music-industry creation and start ahead of the pack). these “little cuts” that everyone (label, manager, lawyer, new manager, producer, new lawyer, agent, new label, etc, etc, etc) takes are, effectively, a “death of a thousand cuts” for most of the musicians that start down this path.

kevin promises a future installment on “RIAA Enemy #1” – if my guess is right (and i do hope it is), you might’ve seen a little hint about why we both picked on walmart.

in my work with the music industry, i generally ignore the back catalog. perhaps the main reason is that the laws and contracts are etched in stone already, and it’s impractical to “free them up” before demonstrating a viable alternative.

but, i do want to go on the record and say that the back catalog has value, and in the long term, it’s truly a goldmine. it’s just a goldmine i can’t touch for some time to come.

anyway, today i found an interesting article [some registration may be required] in the washington post.

The Rolling Stones cast a satanic glow over the U.S. music industry on Wednesday as a reissue of their 1968 opus “Sympathy for the Devil” opened at No. 1 on the singles sales charts

that a 1968 reissue opens at #1 on any chart is interesting enough, but it gets better.

It replaces a song that is almost as old, a remixed version of Elvis Presley’s “Rubberneckin’,” which was originally released in 1969

two 60’s-vintage reissues scoring #1 back-to-back on the singles charts? amazing.

and then there’s this thought. i recently talked about the stones and the business of being the stones. astute readers will note that in that previous post, i mentioned that the stones were their own record label since about 1970 (i don’t have an exact date), and will realize that a 1968 track isn’t on that label.

New York-based ABKCO is owned by Allen Klein, an accountant who managed the Stones at the end of the 1960s and owns the copyrights to their 1960s recordings.

i am not privy to the specific contract language, but i imagine the stones won’t see any royalties from the single. it’s not all bad for mick and the boys, though – the stones are on tour. having a #1 single can’t hurt. on the other hand, it would’ve been nice to have the single released toward the beginning of the tour, as opposed to right at the end. ah well. i guess that’s the music business.