The Fight for the Future of Music

Posted by: Catherine Holahan on March 11, 2008

The Interactive portion of South by SouthWest was winding down March 11, giving way to the music festival for which the Austin, TX, conference is most well-known. But the debate over the Web’s proper role in the music business was just heating up.

Much of the fire March 11 emanated from a heated afternoon panel discussion in meeting room 10. The presentation was titled “Ad-Supported Music, A New Hope for the Industry?” But it may as well have been named the fight for the future of music. The panel and the audience spent much of the hour intensely lobbying for their preferred method of music distribution and criticizing other models.

The panelists included: Ted Mico, head of digital strategy at Interscope/Geffen/A&M records; Peter Rojas, founder of the recently launched music blog RCRD LBL, an ad-supported music blog which enables visitors to download free mp3s and then shares the ad revenues with artists; Steve Jang, Chief Marketing Officer at music sharing social network imeem, and Simon Wheeler, director of digital for Beggars Group Digital LTD.

On the panel, the most animated discussions were between Mico and Rojas. Mico spent much of the panel arguing in favor of all-you-can eat subscription services such as Rhapsody and, perhaps in the near future, a similar offering from Apple's iTunes. (Rojas said during the panel that "We all know Steve Jobs and Apple are working on this" referring to subscriptions). “It is clear that somebody at some point will crack the subscription nut,” said Mico. “I do think that there is an aspect to subscription that is interesting because it allows people to discover music without having to pay extra for it.”

Meanwhile, Rojas, best known as the founder of tech blog Engadget, spent most of his time advocating business models that don’t include “selling” music at all. Instead, he argued, music should be used to sell other things such as ads, and then artists can be compensated with a portion of those revenues. Mico, who is very much in favor of selling music, objected to the idea that music can’t be sold. Though he did agree that artists should additionally be compensated with shares of the things they help sell—most notably music players such as Apple’s iPod.

One of the most heated discussions came when Rojas argued that music blogs are “a huge force in music right now and in some ways more important than the labels because that is where bands are being broken.”

Mico responded: “Different people want different forms of access but the idea that this is a blog and this is radically different than anything else is bullshit.”

Even that comment, however, was mild compared to the comments from the audience. People asked pointed questions of Rojas about just how much artists were compensated, implying that his model would not allow artists to make a living, and called out Mico and the recording industry in general for everything from antiquated, unfair contracts to resisting digital avenues that would be beneficial for artists. “Subscription is one that the record companies are trying to chase after because it is a great way to have recurring money,” said one audience member. “But for the consumer, what is the value that they get out of that?”

Though the future of music seems to always generate passionate discussion, I was surprised so many people appeared to have already picked a favorite business model. It seems to me that the music industry—still reeling from declining album sales—needs to try as many new outlets as possible in order to ensure it doesn’t miss out on new revenue streams. That means trying out ad-supported models, widgets that play music but then sell concert tickets or merchandise in support of the artist, social networks, and whatever else people develop.

The music industry has only recently opened the door for new models by finally abandoning certain restrictive digital rights management tools. The door should probably stay wide open for a long while.

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Reader Comments

Rich

March 13, 2008 10:55 AM

Catherine, your last paragraph is absolutely correct.

Steve Purdham

March 13, 2008 12:12 PM

Great post Catherine,
I agree with lots of your analysis.
The lively debate is indicative of the excitement, dynamism and confusion in the industry at present. After a long stale mate, there’s a lot of momentum for change - we’re feeling that very much at We7, as an ad-supported music download model. I liked Ted Mico’s straightforward points about the differing forms of access people now demand, and also the great benefit of ‘free’ services of one sort or another, that they allow people to discover more new music.
The industry is at last opening its doors(and minds)and is trying out as many models as possible (we just signed an on demand ad-funded streaming deal with Sony BMG). I also share your surprise at people having favourite models – the future will not have a single silver bullet and will undoubtedly be music access from multiple sources for different people, rather than one dominant system.
Steve Purdham – CEO – www.we7.com

W.B. Ullrey

March 15, 2008 09:30 AM

So why can't we use the "AM Radio" model of music discovery and distribution? Broadcast (give away) shortened, narrow dynamic range, cuts and sell the you-know-what out of full-length, Hi-Fi, cuts and albums. I'm a perfect example of how it worked: I would hear something I liked on the radio, then, when I could afford it, I'd buy (spend $$$) the beautiful, full-length, album versions. It worked well.

JOE GOWER

March 18, 2008 03:46 AM

IT IS CLEAR THAT MOST OF THE THINKING IN THE NEW DIGITAL MUSIC AGE IS DONE BY OLD SCHOOL FOLKS...

FACTOID.
YOU CAN DOWNLOAD MUSIC FREE
THE INTERNET DID NOT EXIST TEN YEARS AGO WITH HIGH SPEED WIRELESS CONNECTIONS, MEGA HARD DRIVES AND MUCH MORE.

THE ONLY WAY AN ARTIST WILL SURVIVE TODAY IS TO DO CONCERTS AND MOST OF THEM KNOW THAT.

LETS FACE REALITY...THE MUSIC WORLD HAS CHANGED.

Catherine Holahan

March 18, 2008 03:45 PM

Hi Everyone,
This is the writer. Thanks for the comments. I just started blogging and I love the discussion.

I agree the music industry has certainly changed. CDs are not going to be around much longer and it's not clear that a la carte downloads will ever make up the revenue. In fact, it's becoming increasingly clear that they won't.
I think the labels realize this. Increasingly, they're trying to get a piece of artists' ticket and merchandise sales--clear recognition that much of artists' future revenue will come from live shows and t-shirts.

Do you guys think the labels will survive if the new model is more about selling other stuff with music--such as ads and merchandise--than about selling music?

Haris, Papoulidis

April 16, 2008 09:12 AM

My personal opinion is that Music labels(at least SonyBMG and Universal) will change their form and will be also the market leaders in any possible new business model. In addition, I believe that they can predict the future better than us. If we take an eye on history it is very possible that the next 5 years a new digital form of music will appear. Thus, the one who will control this will control the music market.

MUSIC EXECUTIVE

March 21, 2009 05:38 PM

TRUST ME WHEN I TELL YOU THAT MARKETING AND PROMOTION BUDGETS AT THE LABELS ARE SHRINKING BAD TO THE POINT THAT PROJECTS ARE FLOPPING BECAUSE OF LACK OF FUNDS TO PROMOTE. THESE OLD SCHOOL "DIGITAL GUYS" WILL FOLD AND GIVE UP PARTIAL CONTENT FOR MARKETING/ PROMOTIONAL NEEDS SOONER THAN YOU THINK. MAJORS ARE IN TROUBLE, THE IDIOTS ALREADY HANDED TOO MUCH POWER TO ITUNES CUZ THEY DON'T THINK REALISTICALLY

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