As the old saying (kinda) goes, “If you love something, set it free. If there’s enough advertising revenue to sustain it, it’ll love you back.” Billboard.com, the originator of the music industry behemoth which is the Hot 100 and Billboard 200 charts, has got-with-the-program and is now offering free access to its complete archive of charts, reports PaidContent.org.
Billboard is betting that its chart archives, free streaming/paid download music from Lala.com and ticketing integration with Ticketmaster will be a big enough draw to keep advertising revenue high. Personally, I doubt it.
First: you’ve got to be global to succeed and Billboard has ignored its substantial global audience and brand by signing up partner services that are geographically restricted to the US domestic marketplace.
Second: to leverage the power and the brand of the Billboard Hot 100 and extend them across the broader interweb, we need to see those rich data archives addressable through an API. Billboard has to get more open and more free, or I predict it will soon drop off its own charts.
Prince’s interactive chart history on Billboard.com. Pretty, and you can link to it or embed it, but you can’t infer anything from it in Excel.
‘Doomed’ in music album covers rendered by Amaztype - check it out
In Canada, PWC forecasts that music downloads will exceed physical music sales by 2011. That’s no longer amazing, though it would have seemed so to the music industry five years ago. Now it’s just further confirmation of what we already knew - the music industry is undergoing change at of such magnitude and pace as to be almost indistinguishable from extinction.
It’s not so much the fact that it’s happening but the rate at which its occurring. In 2007, the Canadian download market was less than a quarter of the size of the physical sales market, yet in only four more years the minnow will overtake the whale due to the rapid rate of change - the decline in Canadian CD sales, for instance, was 11.9 per cent in 2006 and 19.8 per cent in 2007.
So far, all shocking stuff that no longer shocks. The unanswered question is: where will the CD market bottom-out? How many CDs can the industry still expect to sell in, say, 2020?
Remember, the music industry still supports a small but healthy market for vinyl records. It’s still possible to buy movies on VHS tape. Everything we’ve learned about new media in the past 30 years tells us that no medium becomes extinct; it just assumes a minor niche in a richer, more diverse marketplace of media.
Could CDs become the default medium for servicing developing markets such as Africa that don’t yet have the disposable income and mobile carrier penetration to support a mass market of mobile handset downloads? Could the physical music production component of the music industry cushion its fall by repositioning to focus on servicing developing markets? My guess is no; that either the disposable income won’t increase fast enough or the penetration of mobile carriers will make the window too narrow and short-lived.
Having done some work in mobile content and mobile social networks, I’ve seen for myself how quickly African consumers have leapt onboard and adopted mobile technologies. Even (and perhaps because of) in cities where there’s almost no terrestrial internet access and where mains electricity is available for only a few hours a day, mobile handsets have become the communication tool and social glue for not only resident communities but the broader diaspora created by the guest worker industry, refugee resettlement and overseas study programs.
Instead I’d expect developing nations to create a new class of music consumer; one who wants to mix western top 20 artists with a melange of local artists and music genres.
For the next decade or so handset storage on low-end phones will be limited to a few gigabytes so this consumer won’t be able to stay loyal to a small set of artists or brands. Instead they will delete/download/delete/download, choosing new content over keeping old content. You’d be wasting your time trying to build a multi-song or multi-album relationship with them.
Music and video content will be intermingled and video will be listened to as much as watched since content will be chosen from mobile portals that tend to blend the two together to increase the odds of a download from limited screen real estate.
Distant future? Hardly. Here’s a living, breathing example of the music consumer of the future, who I found on a train between Delhi and Chandrigarh last July, grooving along to bangra dance music on his mobile while his battery held out.
I’ve said it before, I’ll say it again: the music industry is changing so that recorded music is more about promoting your live performances and less about selling songs. That said, there’s still a little money to be made from selling songs.
We’re at a key milestone in Australia: the ARIA industry association has recognised its first #1 single without a physical product (no CD, no record, no tape, no DVD.)
Rihanna’s ‘Don’t stop the music’ was the third single her label has released in Australia and the first to make the #1 spot in the charts.
Crucially, it was released in download format only - no CD single was pressed.
That’s the future you’re listening to.
…yes, there’s some irony in this story photo being from a printed newspaper, but they still have a few decades of useful life, unlike CDs!
ARIA’s latest figures show a 47% decline in CD single sales year-on-year.
The only really shocking thing about that is that so many Australian consumers are still paying through the nose for the physical music product when the identical track is available online for about a third of the price.
Anyway, there’s nothing to wring your hands about (unless you own a CD pressing business) because sales of online digital single tracks increased by 64% in the same period, and at $8.38m in sales revenue is a little more than twice the value of physical single sales. Plenty healthy. Factor in the higher margins at almost every step in online versus physical production, distribution and delivery, and it’s a healthy business to be in, as long as you’re big enough to have a roster of successful artists and at the same time small enough to be able to keep up with the pace and true direction of change.
By “true direction” I mean where the industry is actually going, versus where some believe it can be steered. The former is entirely in the hands of the consumer, influenced by the content offerings available to them, how that content is priced and to what device it is delivered. The latter almost entirely the exclusive domain of large music labels and the industry bodies that serve them.
Evidence of a failure to keep up with the true direction of change: talk of prolonging the life of CD singles by including “ringles” - ringtone versions of the single - on the CD, along with software that will make it “easy” to transfer the ringtone version of the track to a mobile phone.
Please, don’t let’s pretend for a moment that this might have the slightest chance of widespread consumer adoption! Consider the “Sony rootkit” fiascos, and what might need to be installed on the consumer’s PC in order to deliver a ringle from CD drive to handset. Better find a way to provide technical support for Windows ‘98, 2000, XP, Vista, OS X and Linux installation issues for product that retails for $5. Don’t even start about what tiny percentage of mobile consumers ever successfully connect their handset to their PC, or want to do so for any reason.
Is it even possible to deliver a software application within the constraints of CD single data storage limits that might have a chance of being compatible with the diverse community of mobile handset operating systems, ringtone file types and carrier locks out there in the marketplace? I don’t like the word “impossible” - it always seems to get me in trouble - but let’s just say I’d be flabbergasted.
The only sensible way to deliver ringtones to mobile handsets is online, and for the majority of mobile consumers, the carrier - not the label, not the handset manufacturer - owns that pipe. No CD single “ringle” is going to influence that in the slightest. Labels: work with the carriers… or maybe acquire them. Carriers are to the future of music what radio broadcasters have been in the past, plus the entire retail supply chain. Getting out of that headlock they have on you is going to take more than a “ringle” or two.
Mike Arrington in Techcrunch has it absolutely right when he heralds the news that CD music sales were down a further 20% in 2006. It is good news, and inevitable. What’s that? Shocked to hear a record label looking forward to the decline of CD music sales? Well, the massive changes currently affecting the music industry are why Littoral Records exists. In any moment of dramatic change there is an opportunity for small, fast-moving businesses to gain a competitive advantage over the large, slow-moving dominant players. The bigger the changes, and the faster they occur, the rosier the future for Littoral Records, the artists it represents, and for you the music-buying public. Why? Let me spell it out for you:
You don’t consume music the way you used to. The industry is still configured to cater to the way we bought music 20 years ago: you saved up all your pocket money for a couple of weeks so that you could buy one, or at most, two new albums a month. Because your purchase volume was so low, the investment you made in the purchase decision was enormous. Your purchase decision research was 90% of the time you spent as a music consumer. Everything from lavish stadium shows to million-dollar music video to double-album-insert-art-pull-out-poster album production extravaganzas were all aimed at you in your purchase decision research phase, to influence you to buy one album over another.
If you still pay for the music you listen to (vs downloading it free via P2P or sharing burned CDs with friends) you don’t buy albums anymore because you can trial each track on an album and download only what you want, busting the album-sized products into EPs or single tracks. Smaller sized purchases and cheaper music online means that instead of 90% of your month spent researching and 10% spent purchasing, you spend 90% of your month making little nibble purchases, and almost none of your time researching.
Record labels can’t invest all that money trying to persuade you to buy one product anymore, because they can’t be sure when you’ll buy. You don’t make the same investment in researching your purchase, because if you don’t like what you’ve bought today, you can just buy something new tomorrow. So all the massive promotional and media infrastructure aimed at changing your album-buying decision is wasted.
The same internet technologies that changed the way you consume music have also changed the way music is produced and marketed. While its still possible to spend millions of dollars in a recording studio, that investment has no greater chance of breaking-even than a music which is created in a bedroom with a Mac and some midi software. Music’s marginal production costs are approaching zero.
Record labels used to be able to ‘gate’ the supply of new artists and music by forcing all aspiring artists through their production systems; systems that had evolved to extract the maximum profit for the label while minimising risk, leaving the artist saddled with the maximum risk and minimum share of profit. Now artists can exist entirely without a label, or do an end-run around the label production system - coming to meet the label only at the point at which their completed debut album has already sold a few thousand units, has been reviewed everywhere that matters, and has been played to a large and growing fan base online and offline worldwide.
A larger number of artists inevitably means much lower sales for each artist, as the music buying volume is shared more broadly. The old Top 10, Top 20, and Top 100 charts used to track the success of an artist will become meaningless because the market is changing from the Top 100 making 99% of the revenue to a market where 99% of the revenue is made by artists that don’t even appear on the chart.
The days of the music megastar are fading, and in a decade or so will be just a memory, replaced by ‘entertainment megastars’ of whom Paris Hilton is an early prototype. They will be wealthy from the proceeds of a variety of media, one of which will be music. These megastars will still be created by entertainment companies, but not record labels. Instead they will be owned by vertically-integrated media empires like News Corp.
For music artists, there will still a reasonable living to be made from music, but it will come from performance, not from the sale of recordings. For most of the history of popular music, this is how artists made a living, and its to this market we must now return. Because your recorded music will continue to decline in value until most of it is effectively free, it’s not something you can make a living from directly, but it remains the best tool for promoting your live performances and finding new audiences.
You won’t be aiming to live in a mansion and drive a Ferrari anymore, but it will be possible to own your own home and put your kids through school, as long as you adapt to these changes as quickly as possible and develop the ability to engage and entertain a live audience through performance.
In Australia and elsewhere, there’s a lack of live performance venues, but this can be solved in a variety of ways; artist collectives investing in venues, labels investing in venues, and savvy investors investing in venues when they see how live performance will be the next big growth area in the entertainment industry. For the last 30 years we’ve believed that popular music must be performed after 9pm, on only a few nights of the week, only on premises licensed to serve alcohol, and they should preferrably be hard to find, smoky and dirty - expect all that to change too.
Labels like Littoral which are small enough to adapt will start to focus on marketing the live performance of artists using recorded music and other means, such as managing the online presence of an artist, and the way we share profit with an artist will necessarily change too.
While nobody will be a megastar in the future of the music industry, many more artists will be able to make a good living from performing live, and more profit will be returned directly to the artist when the large record labels start to splinter and collapse - that’s the best news of all.
Fan-recorded excerpt of ‘Live In London’ by James Cooper and band, from the album launch event at Sydney’s Vanguard.
US indie music mag The Fader is one of a small number of specialist magazines starting to make PDFs of their magazines available via RSS feeds in iTunes.
Will it work? Well, there’s a couple of niggly issues to work out. For starters, limited merchandising space in the iTunes interface mean it’s not likely that magazines are going to be actively promoted in iTunes by Apple. Magazines will need to drive their own traffic, which means many magazines will be reluctant to experiment for fear of cannibalising their print subscribers (not that this will actually happen, but it’s a publisher’s worst, most scary nightmare.)
There’s also no navigation to magazines in the current version of iTunes. The PDFs of the mags actually live in the podcast directory as RSS feeds with PDF attachments. To the RSS feed reader element of iTunes, this makes perfect sense, but to Joe Consumer, compute it does not. Magazines would need their own spot in iTunes’ left hand side navigation for much repeat traffic to come back.
PDFs, of course, can only be viewed on your Mac or PC, not your iPod, which is where many consumers consume the content they download in iTunes. There’s a good chance many people will subscribe to a magazine feed, and then never come back to read issue two because it doesn’t appear in their iPod or in their regular playlists.
File size is a problem too. PDF is a great format for high-fidelity rendering and printing, but it’s lousy for data compression. I don’t actually know how big the PDF file is for the latest issue of The Fader, because the whole time I’ve been writing this, it’s been downloading on iTunes, and 10 minutes later, it’s still downloading. Do you get excited about downloading magazines overnight so that you can read them tomorrow? Latest-release movies maybe, but not magazines. Not unless they’re top shelf import mags that I’d otherwise have to wait a week or two for the airmail copy to arrive.
In summary, pushing magazines through iTunes is a great example of outside-the-box thinking, but it’s not going to change the magazine publishing industry or the iTunes business for some time yet.
iTunes Store’s recommendation engine does the darndest stuff. Browse amongst the less popular artists in almost any genre, and if the album you’re looking at hasn’t been purchased too many times, what do you get recommended? Bernard Fanning’s Tea & Sympathy.
Don’t get me wrong; it’s a great album, but the chances of it also being purchased by someone who bought Urge Overkill’s Saturation are very low.
Much more likely that there’s a merchandising filter built into the iTunes Store management tool that lets a manager flog an album in spaces where there’s nothing much else to recommend at this time, because there isn’t a sufficient purchase history to deliver an accurate recommendation for titles like Saturation.
Problems are twofold: (a) merchandising filters can be like a firehose - very, very on or very, very off - so you see one title over-merchandised on pages like this; and (b) they tend to create a closed feedback loop - enough people browse from Urge Overkill to Bernard Fanning to fool the recommendation algorithm into offering Tea & Sympathy as a recommendation rather than a merchandised product.
Fanning’s already sold more copies of Tea & Sympathy on iTunes Store Australia than there is tea in China, so the person managing the store should really give the server a good hard kick at this point - send it off to go merchandise something else.
Hooray! Apple’s iTunes Music Store (ITMS) is live for Australia! We can all buy music online for our iPods! But there are no Littoral Records releases there yet, unfortunately. Not sure why yet (the local iTunes people are no doubt extremely busy right now) but hopefully you won’t be waiting much longer. Stay tuned!
I came away from the three day Immedia AMBC 2005 conference recently thinking to myself, “perhaps the answer is to skip the whole manufacturing and retail distribution malarkey, and just focus on producing and marketing music in online-only deals with artists?”
My idea would be to try to encourage independent artists who are unlikely to break even on an indie release in Australia to just release their work online thru Littoral. They can skip the offline altogether, or sign the rights for offline over to another label - I’m cool with that.
I still have numbers to crunch, but my hunch is that it might be significantly more profitable, albeit on much smaller volumes. And you might have to kiss your ARIA Top 20 entry goodbye as a result (hahaha).
Anyway, it’s such a good idea that Warner Music has pinched it already - how do ya like that, fer cryin’ out loud?
