ETRE 2008 – day 3, part 2, The Future of Music

Tina Baker, Brown Rudnick
Peter Gabriel, Artist and visionary
Cornelius Claudio Kreusch, Founder & CEO, MusicJustMusic
Ian Henderson, VP, EMEA Digital Business Development, Sony Music Entertainment
Jamie Kantrowitz, SVP Entertainment,
David Maher-Roberts, Chief Executive Officer, The Filter

None of us likes things that look like monopolies. Not even if they are owned by Apple. The one burning urge of creatives – above and beyond the urge for remuneration – is self determination. The other huge driver is quality. Creatives have no tolerance for poor quality, and musicians are doubly less tolerant of bad quality audio.
So, those two creative drivers are colliding with the world of venture capital, copyright law and major distributors. And the resulting sparks, fire, friction and general mayhem is creating some genuinely exciting new music and some genuinely exciting new business models that are beginning to ensure that the artist does not starve to death before recording that vital third album.
I probably ought to say that I have been a really huge fan of Peter Gabriel’s work, (sorry, Trevor Horne, I still do). So I might be a bit biased, but I really think that Peter talks a great deal of sense about relaxing the control freaks and seeing what works.
Now that, I have to say, is a business model I can subscribe to.
The panel took a while to warm up. Should have been a bit easier as Tina is a real rock star of her legal world and is one of only three solicitors that I would do pro-bono commercial work for. (The other two know who they are: Vincent, Richard).
I immediately took to the panel – they had two bald guys, so that scores points with me quickly. I guess they helped to balance the huge hair on the other two panel members.
I’ve met and grasped what The.Filter does before, and think it is rather cool. I was surprised that Ian described Sony as very resource limited in terms of doing new things in digital, but not surprised that he loved mobile (probably because it is one place they can get paid cash for content easily). Jamie Kantrowicz really has a split function from major labels to the very end of the long tail of MySpace music. I recoil slightly from News Corp extending their claws into music as well, but Jamie is cool, so there is some hope that reason will prevail. She has 60m people using her music service, so, in many ways, is already a major label. Cornelius is one of those dangerous radicals who, with MusicJustMusic is probably going to do something great.
So heads up: the music industry has stopped losing volume, we are told (pun intended).  After a decade or so of volume slide, we were offered a 15% volume increase in 2007/8. I’ve written before that I did not believe the piracy arguments and feel that most of the grief suffered by music companies was simply down to making music people did not want or selling it in a form that lacks convenience. It was good to hear some good news about the music to digital transformation.
Most of my friends are already bored of my “pride of ownership” argument that says that boxes will survive as people simply like to horde physical objects. (An idea handed to me by Ian Turnbull a few years ago that has been proved by experience since then).  However, digital makes the process of discover of new music easier (the.Filter, Apple Genius bar), and the process of sharing and collaboration to enjoy music easier (WinAmp Orb, …). What is clear is that digital tech is also making the process of creation of music more collaborative and simpler. So why is it not all good news?
The elephant in the room is that the music labels dropped the ball on A&R and that was compounded by rabid copyright insanity forcing labels into protecting stuff that was rubbish in the first place. How are they going to get out of that? Well, I don’t think that an unquenchable spume of  tepid music created by talentless goons is going to solve it. The sad truth of the wisdom of crowds is that more than half the crowd has less than the mean level of talent. Which is fine for the business of making money, but not so good for the quality of music we all get to listen to.  IMHO what is clear is that technology has to quickly focus on three things:
1.    Creating better quality music (AI and tuition to help younger people with the process, better quality sound devices, critically simpler interfaces to music creation devices, better codecs, new ways to store music so it can be manipulated and edited better)
2.    Helping the market select, rate, promote and enjoy the music that is created.
3.    Enabling “pull” discovery of music from well informed, well connected, active communities. (though I suspect this first needs to develop an immune system to stop manipulation by the large media groups)
Only with those two in place are we likely to see music that people actually want to pay to own or enjoy.
Ian from Sony put forward three themes for 2009
1.    Selling a la carte in non copy protected formats
2.    Bundling music into other products (phones, devices)
3.    Free to enjoy ad-supported music websites
Not quite a Damascene conversion, but certainly a few steps down the road and some green shoots of hope for the artist to get some revenue. (I think he should have talked more about live music, which is where I think all the real talent is going right now, but then that is rather harder for Sony to control…)
Looping back to Peter Gabriel’s point that artists want control, we found some back up in the idea that of 5 million people who make music, only about 1% earn their entire lifestyle income from music.  The other 99% merely want to have a platform for expression and recognition. And digital media and the internet can provide that. That, for me, is a really great role for places like MySpace.
<plug filter on> Now, unable to resist a plug, I was thinking along one of Peter’s other comments that major labels will evolve into service companies that earn fees but do not own or control the copyrights (which will belong to the creators). The plug: it is great little digital tools like Moviestorm which will come along and enable the creator artists to create some really cool promotional and performance video. <plug filter off>
Small bands are like very small brands, in that they are “lost in the noise”, so need to create brand recognition and awareness straight away or they will not be heard.  Digital media provides ways for artists to get discovered, and ways they can directly connect to their potential and real audiences.
From the recoil to the shock caused by Napster, we are seeing the fight back of the major labels happening now. They are sticking to their old business models of demanding revenue for their back catalogue, which is no way to mount a modern fight back. They can’t really do much else. Seems like the only way to break music free is to reduce the life of copyright once it has been bought. (I’d personally let the creator own copyright for life, but make companies that buy those rights received only a shorter rights life. )
Some clear-headed thinking about the reality of living in a digital age came through. If you cannot change, adapt now and make sure you can evolve in future.
Some surprises: 30m people using “project playlist”? why? Is it all push (as it “I am cool, aren’t I, ‘cos this is my playlist”) or is there any real pull? (“ok, I’ll listen to it in that order”). Who uses it? No idea, and it goes over my head.
Some non surprises: Jamie liked Simon Cowell and Disney. Probably a good idea, as it is core demographic for MySpace.
The other factor that came through was there are still problems with decline in the revenue of recorded music from traditional channels. Digital is filling the volume gap, but not the revenue gap. That decline is also shared by radio (which is in its own digital revolution right now). The two do appear to be related. Anyone remember the hit parade?
Credit Crunch impact: music is not going to shed its optimism. There is a real future for music and it is digital. It just has not happened yet.