Why The Labels Will Fall

Saturday night, Ashley and I were wandering home along Castro Street in Mountain View, when I heard the strains of a bluegrass jam in full swing. We took a quick detour over to the Dana Street Roasting Cafe to see what was going on.

The place was, in a word, packed. Every chair filled, every patron’s eyes and ears glued to the band of the evening, Houston Jones, as Glenn “Houston” Pomianek ripped through a babbling bluegrass solo. We grabbed a coffee and stuck around for a half dozen songs and then toddled home to watch Saturday Night Live.

And that’s when Ashlee Simpson proved, once and for all, why the mainstream music labels are wholly unsuitable to be the stewards of culture.

Ashlee, as you may or may not know, is the younger sister of Jessica Simpson. She’s been following in the trend of other equally untalented starlets expanding their empires into the world of music. She (or at least the genetic pool that gave rise to her) can’t spell, I hear you saying, but surely she can play an instrument? Of course not, says I! Fair enough, you think, I guess she’s a vocalist.

Or so you would hope. Unfortunately, you’d be wrong.

In her first performance of the evening, Ashlee demonstrated that the task of lip-synching her performance stretched the limits of her meager abilities. And it only got worse, as the lip-synch track for the second song was for the wrong song, forcing her rush off-camera. Of course, the all-seeing eye of the Internet caught it all on video.

There are millions of independent bands out there like Houston Jones, stocked with real musicians, with real talent, and original material that they actually wrote. Previously, these bands were unable to reach an audience without the help of a label. But that’s changing. I expect that over the next ten years, the label grips will weaken, driven in part by dissatisfaction with the quality of product available, but also by the shear amount of much better (however the listener chooses to define “better”) material available from independent musicians.

The question now is one of discovery. Chris Anderson’s Long Tail article made a good point of demonstrating the value that lives outside the mainstream – all we need now is a way for people to easily find the stuff. Amazon.com recommendations can only do so much, as Amazon.com is ultimately limited by what it can carry. Bloggers will probably carry some of the weight, though I’d feel a little more confident in this turning the tide if there were some way to reward bloggers for directing traffic to artist’s sites, especially when such redirection resulted in a sale. With that kind of assistance, hopefully the money currently imprisoned in mainstream acts would get smeared across a much larger number of people. Nobody should be making millions for crap music; but any artist with talent and even a modest following should be able to make a living.

Of course, rewarding those who recommend products via their blog comes with its own set of issues.

Future Sound of Music

My discussions with Phil Johnson (of the local band Roadside Attraction) at the recent Entrepreneur Meetup were quite thought-provoking. Here’s a guy from a typical band trying to figure out how to “make it” – it sounds like every guy you knew in high school with a band, a three chord masterpiece, and immaculate hair. Except for the fact that Phil is part of a new breed of über-savvy independent artists. When people ask him if his band is trying to get signed by a label, he can only laugh and respond, “Why would we? We can do it all ourselves now!”

We can do it all ourselves? Damn straight – this guy gets what many in the record industry are fumbling to comprehend.

Welcome to the new reality for musicians (or any artist for that matter): any moderately talented garage band can fire up GarageBand and record high-quality audio both at home and on the road, capture photo and live video footage, and release it all via their web site. And they don’t even have to pay for the bandwidth if they use tools like BitTorrent. Anyone with a web browser and half-decent bandwidth can skarf it all down by the gigabyte, as much as they can find, and often as cheap as they can find it. Which brings us back to the dilemma facing the aforementioned recording industry: how does a band make any money?

As my buddy Kevin Burton pointed out, the challenges facing the music industry in its battle with file-sharing networks and darknets are quite similar to those the software industry has been dealing with for a long time: lots of people are stealing precious intellectual property that has negligible marginal cost of production. But, as Kevin points out, aren’t we forgetting the benefits of software piracy? Think of all the economic activity driven by software piracy – didn’t that more than offset the losses incurred by the industry? In particular, I recall one particular urban legend about Photoshop that makes me think this may not be so far-fetched.

A couple years back, there was a rumour that Adobe was leaking its software to pirate sites – or doing very little to prevent it at the very least. I don’t believe it was ever shown to be true, but it’s plausible enough from a business perspective to warrant consideration. The story goes something like this:

  1. Adobe wants to become the dominant player in the industry, so it leaks copies to pirate sites.
  2. Pirate sites distribute the software.
  3. Amateur web designer trying to build their first web sites start using whatever software they can find – and they easily find Photoshop.
  4. Fast forward a few years, those same web designers are now working at dot-coms building web sites – what software do they choose? That’s right, they choose Photoshop. Why? They already knew how to use it and heck, they weren’t footing the $800 for a copy of the software!

Once started, this system formed a nice feedback loop that effectively locked out competitors. Overpriced commercial software drives amateurs to piracy, software that is made easily accessible to those who know where to look. These amateurs get free software, become experts on the software, get locked into the software, and finally businesses hire the (now-expert) amateurs and foot the bill for the software. Can you say “business model”?

How does this apply to music? Well, first consider artists like Elton John – artists who own their whole back catalog (or, conversely, ask The Beatles, who don’t). These guys make lots of money every time they release a new album because fans buy not only the new album, but also two or three albums from the artist’s back catalog. The rights to the back catalog become a value multiplier. Will this model extend into the digital realm?

In a world where the marginal value of an individual song asymptotically approaches zero, albums in their current form cease to exist, and competition for audiences undergoes explosive growth, musicians will have to put aside the idea of making the money off individual songs and albums. Will an artist’s back catalog have value? Sure, but not the way it does right now. No one’s going to get rich selling albums; they’re going to get rich selling experiences. For what is music, but a mental shortcut to all the memories we associate with a particular song?

I predict that the value represented by a band’s back catalog will be indirectly captured in the prices of the only remaining asset of the artist that has any scarcity and hence any value (see the diamond-water paradox): their time. And ours. Think the Rolling Stones‘ ticket prices are exorbitant? Just wait. The winners in this game will be those artists that can that build and sustain an audience over the long term and craft experiences that form a deeper bond between the band and the listener that goes beyond the elements that can be captured in bits and bytes.

Of course, that does beg the question: how does a band keep themselves in mascara and spandex long enough to build this kind of value? This model requires long-term dedication to a band, the kind of dedication the music industry current model is incapable of providing – which, I would argue, is a good thing. The current pump-n-dump model of finding a pretty girl, teaching her to dance, writing songs for her, and hyping the hell out of her is directly responsible for the current deluge of craptacularly bad music. A “slow cook” approach is just the remedy we need – only those acts who actually have the musical talent, the dedication to their craft, and ability to forge lasting relationships with their audiences will be able to survive in this new environment.