Ownership, access, enjoyment

June 10, 2011

Ownership, access, enjoyment

(image by Flickr user habeebee)

Apple's iCloud announcement earlier this week is the newest (and definitely biggest) "cloudy" announcement about music. This follows the launch of new platforms and services by Amazon and Google, along with other platforms that are already available; Pandora, Slacker, Rhapsody, Rdio, MP3tunes, Spotify, etc... I would add Youtube to that list, the biggest (and free-est) of those platforms..

So basically this means that we are increasingly going to listen to music by streaming it on our devices, rather than by popping a CD in a player, or by clicking a specific file in iTunes or on our iPods. This is major, because it means that you don't necessarily need to own a song now in order to listen to it whenever and wherever you want. You just need to have access to it, through your favorite provider.

So what does it mean for the artist?

People aren't buying CDs anymore, it's hard enough to convince some of them to buy our digital albums, and now they won't even have to do that.

That's right... with exceptions... but yeah, that's mostly right.

So, what now?

I often say that, in the music economy, there are three main, basic opportunities for monetization: ownership, access and enjoyment.
(I'm over-simplifying. MusicBizGuy has a good list here. But fundamentally, they are all in some way about ownership, access, or enjoyment

Ownership

This the the foundation that our multi-billion music industry of the last 25 years has been built on. Simple; you heard a song on the radio (or MTV or whatever). You liked the song. You wanted to hear it again. You had to own it for that to happen. Get to the store, take $16.99 out of your pocket and buy the CD (along with 13 other songs you didn't really care for... but that's a whole other story...). Or, fire up iTunes, click, 99¢, enjoy.

In order to enjoy that music, you had to own it.

Access

Well, now technology has made music tracks easy to store and transport (thousands of tracks in your pocket) and easy to transmit (click "play" on a Youtube video and it plays instantly, like magic, even on a phone. Magic.). New models are appearing where the music fan will now pay for access, directly, or through viewing ads, in an all-you-can-eat fashion. Anyone use Pandora already ? Or Netflix for TV and movies ? Well, there you go. The licensing and tech issues that have prevented music from getting "netflixed" earlier are disappearing fast, and we can expect music streaming to go prime time really soon.

Sadly, we can't expect the monetization of access to be significant for the vast majority of artists. See this otherwise very pretty chart. Self explanatory. As an author and/or as a performer, do not expect to ever earn significant revenue from your fans streaming your tracks on their favorite subscription service. Make sure you're registered with SoundExchange and you might see some dollars trickle in once in a while. But nothing to quit the day job, I'm afraid.

Enjoyment

This one is interesting. I believe the smart people in music understand that the future lies into optimizing and finding ways to monetize the enjoyment of music. What do I mean by "enjoyment" ? I'm still working on that, but I generally, it means that you're not just monetizing the music (the content). It means that you are monetizing a context, in which the content is being enjoyed. The easiest example of that is live music. A concert is content (the songs that are getting performed), that is getting enjoyed by fans in a specific context (in a venue, with friends and fellow fans, on a specific night, with a drink in hand, etc.). There is scarcity attached to the fact that this context is limited, in time - tonight only! - , in seating capacity, etc., and that perceived scarcity means that some fans that care about the content and its creators will attach value to the context, and be willing to pay to get in.

I'll argue that the same enjoyment effect happens when a fan stops by the merch table, or by your online store, to buy a t-shirt or a poster. There, they are actually buying an artifact, a souvenir and a branded testimonial of the enjoyment they get from your music.

Monetize enjoyment

OK, so, live gigs and merch. I get it. What else ?

That's the question. And the future of the music economy lies in finding lots of good answers to that question.

I think our challenge is to create a series of new and easy monetizable contexts. This will be the topic of many blog posts to come.

A specific area of interest that we've been studying (Chris and I, with other Zooglers and with many friends and collaborators) is the fan-artist relationship. It seems to me that in the last few years we have seen a profound change in how fans and artists relate. We'll have an amazing interview up here soon with Nancy Baym, on that exact topic.

But despite the changes in how fans and artists communicate and engage with each other, when it comes to monetizing that relationship, we are still stuck in the old fan-as-a-consumer paradigm. "You're my fan? Well, good. Now please buy my music, buy my merch, buy my tickets". The good news here is that the innovation is in place, making that transaction more direct than ever, creating new packages for different levels of fans, and smart fan-funding pre-sale tools (see Kickstarter, and Pledge Music). The bad news is that by treating fans as consumers, we are limiting the artists' margins, and ignoring a potentially bigger potential.

I think we need to focus more on the fan-as-a-partner, fan-as-a-collaborator, fan-as-a-patron. Fan-as-a-friend. What does it change, as far as the music business is concerned ? How am I supposed to monetize a friend ? (first hint: you ask.).

We have plans to come up with a few tools to enable some of our ideas around this (... stay tuned for Backfed later this year) and we will definitely involve the Bandzoogle community, to test some assumptions, ask for advice and ask for feedback, etc.

But in the meantime, what we hope to demonstrate is that:

Music is more valuable than ever (but music needs contexts, where fans will value the content, and the creators).

This is perhaps the most exciting times, for both musicians and fans. The opportunity is there to define a new deal between the two, and to redefine the rules of our industry.

Artists and fans. That's it.
The rest of us (Bandzoogle included) are enablers, and we are peripheral to the main action. And we should only be compensated as such.

★ Posted by David on June 10, 2011 | 11 comments ★

Comments

Posted by Manoukian on June 10, 2011

David,
Great post. I'll be following your series of blogs on this topic closely. I'm interested to see how you guys will demonstrate that music is more valuable than ever and how a deal should be struck between artist and fan. I agree with these concepts and am curious to see how they'll be materialized. From what you've mentioned and from many other similar posts on ASCAP's newsletter and many other blogs, it seems that the live show will be a crucial determining factor. If so, then how does the songwriter and publisher play into this? From the looks of the chart that you linked in your blog, there won't be much left for them either....
Cheers,
Raffi

Posted by MrMindz on June 12, 2011

The music industry is changing with technology .
Its funny . But its also awesome to say this .
The power doesn't lie in the label no more .
But rather the fan and the artist . Now the
labels thats making the big bucks off an artist
no longer has that power . I think music is now
going in an stage of independence . And its new
Its fresh . And also its in its early stages .

So we gone have chaos and we gone have some new ideas
this is the age where the artist can have their
power back in their hands . The only other thing to say
is this . Use it wisely Or Abuse It wrongly !

Posted by amonthofsundays on June 12, 2011

David wrote:

People aren't buying CDs anymore, it's hard enough to convince some of them to buy our digital albums, and now they won't even have to do that.

We've been thru this before. Don't know where anyone is getting any proof, but the statement itself is ridiculous. CD's are here for quite a while longer whether you buy them or not. Not everyone walks around with a device attached to their waste or their ear, especially the babyboomers that are left. You'll have to wait another couple of decades until they have died off to make that kind of statement. And as far as Itunes and the digital media, well, that seems to be the quickest and easiest way to go for most, so one should not assume the future until there is a complete pysical change over like we saw from cassette to cd. Technology is growing in leaps and bounds but some things are just better left alone. Or, at least not rushed.

Posted by stoneman on June 12, 2011

amonthofsundays wrote:

David wrote:
People aren't buying CDs anymore, it's hard enough to convince some of them to buy our digital albums, and now they won't even have to do that.
We've been thru this before. Don't know where anyone is getting any proof, but the statement itself is ridiculous. CD's are here for quite a while longer whether you buy them or not. Not everyone walks around with a device attached to their waste or their ear, especially the babyboomers that are left. You'll have to waitanother couple of decades until they have died off to make that kind of statement. And as far as Itunes and the digital media, well, that seems to be the quickest and easieat way to go for most, so one should not assume the future until there is a complete pysical change over like we saw from cassette to cd. Technology is growing in leaps and bounds but some things are just better left alone. Or, at least not rushed.

I agree with that! I am a boomer and most of my friends still buy CD's. They want that physical entity they are use to having. Also, many of them shun the latest technology simply because it is a natural phenomenon for people to resist change. So, I believe the market for Cd's will continue even though as time goes on, the percentages of Cd purchases will surely continue to decline. The effects on artists will be geared not towards technology but who their audience is. The boomers are hooked on the physical entity and the youngsters continue to pursue the free options available. Diversity in product and distribution will be the key for many artists and labels. Also, I believe that technology will eventually catch up to the free market and overtake it with digital stop gaps. Much in the same way that TV (which was free when I was growing up) has now become a mostly pay to see medium. Currently, in this economic environment, the cost of a CD is way to high for the young consumer. As the costs of manufacturing and distribution begin to fall (as I believe they will have to) so shall the costs of CD's. That in turn will open the door for the young consumer to consider having a physical copy. One other thing of note is that the effects of constantly listening to music through an ear piece are now being studied due to a rash of reports of young people with hearing loss. No one knows what effect that will eventually have on music consumers and their buying trends. I believe that the solution will be parents forcing youngsters to go back to conventional listening methods. I have heard the doomsayers about the music industry for many years. They said the same things when the cassette came out. People did start recording their own music but the overall effect on the industry was small. When the Cd came out I heard it all over again. The music industry continued on. Now the internet is here and even though the effects of the internet cannot be ignored, it certainly does not spell doom to the physical market yet. Some people just want to have something that they own. They are use to that and are resistant to change.

Bandzoogle admin

Posted by David on June 12, 2011

Manoukian: Thanks. The point I bring is that I think we can grow the piece of the pie of the music economy that comes from the emotional connection and engagement that exists between fan and artist. Yes, usually that connection will happen between fan and performer (vs. songwriter or composer). But if the performer needs a songwriter to make that connection happen and sustain it, then the songwriter will be in good position to get his or her fair share. I also mostly ignored the publishing and licensing businesses in my post. I'm no expert, but I'm hoping there are ways to grow those "pies" as well, and that's good news for the songwriter.

MrMindz I agree with you. That said, smart and discerning labels will remain important, doing what they do best; curating and filtering content to find the quality artists and being experts at facilitating discovery by fans and engagement. But I think the "label" business will move from being the gatekeepers determining what artists would get exposed to fans (and what fans would get exposed to...), to being à la carte providers of value added services.

amonthofsundays and stoneman: "People aren't buying CDs anymore" ... "the statement itself is ridiculous"... well of course it is ridiculous. I know that people didn't stop buying CDs all of a sudden. I was exaggerating, to make my point that it's harder than ever to sell music. I know that CDs are still getting bought in large quantities every day. And yes, CDs are still popular with certain demographics, and in certain genres (jazz and folk, as I've seen, and others). But then... (borrowed from Digital Music News and the RIAA).
CD sales
And also (from Flickr user palmasco):

Tower Records

But I agree that for many fans, the physical object remains inportant. Heh, vinyl is up 455% (in the last 5 years). Please explain that one

Posted by aratunes on June 13, 2011

Why doesn't bandzoogle become a cloud?

Who needs apple in the middle (leaving 12% for the songwriter)?

Here's the deal - you buy a song and to listen to it your device sends a message through the internet to a server. It just makes sense for that message to go directly to the ARTIST'S server.

So, (Bandzoogle, I just want 1% of this ) Bandzoogle sets up its own cloud with all of us as a critical mass, we market it by everyone covering the "Hey you get off of my cloud" song in the first week of October, we name it "iArtist". We make sure that copyright is super important- sure copy protect the stream ( you don't see apple's code going out and being shared, do ya)

Then we all get rich and famous!!

Aratunes

ps visit my site to laugh or cry

Posted by amonthofsundays on June 13, 2011

....wouldn't have anything to do with all the crappy music that keeps being pumped out now would it?

Posted by staggstreetband on June 13, 2011

hi...I'm trying to add HTML to my site for a widget. The help area says to "go to HTML CODE FEATURE...i cant find it anywhere. Not on add features...I have add pages but not add features....any help?
Thanks
Les

Posted by amonthofsundays on June 13, 2011

staggstreetband wrote:

hi...I'm trying to add HTML to my site for a widget. The help area says to "go to HTML CODE FEATURE...i cant find it anywhere. Not on add features...I have add pages but not add features....any help?
Thanks
Les

Click the HELP tab above on your console and the staff will respond and help you. This isn't a help section.