Getty Images, Lew Robertson
Maybe this is the easiest way to make sure your cash goes straight to the person who made it.
Getty Images, Lew Robertson
Last week, Eliot Van Buskirk, columnist and blogger at Wired, and Jay Sweet, Paste magazine's editor at large, got together in a chat room (so '90s!) to talk about paying for music now. After a technological stumble involving the revelation of exactly two embarrassing AIM names, they proceeded to drop bombs on the majors (they are the only industry I can think of that openly scorns, disrespects and tries to fleece their audience at every turn; in many ways, artists would be better off getting a straight loan from a bank), dispense friendly financial advice to musicians (smart bands have great management; great managers have even better accountants) and argue that a true and loyal fan is far better for a band than any kind of deal (I once flew 12,000 miles round-trip on my own dime to see The Fall).
Get all the dirt, let us know what you think of the conversation and, please, pose more questions to Jay and Eliot, after the jump.
Frannie Kelley (NPR Music): As you know, we are spending the next two weeks thinking and talking about how music — the industry, people's everyday experience of it, and the art — has changed over the past 10 years. Maybe the most obvious change has been to how we think about the price of music, if we even think about paying at all. So, aside from the fact that you're both sent a fair amount of music for your jobs, do you ever pay for music anymore?
Eliot Van Buskirk (EVB): Paying for music has become a rarity for me, as it has for lots of other people. I spend a lot of time near a computer, and can hear pretty much whatever I want on-demand. That said, I pay for live shows, vinyl, equipment and even the occasional download. For instance, I just bought the re-mastered Abbey Road from BlueBeat.com, which appears to be selling it without permission. So like most people, my answer is "yes and no." I'm certainly not in the habit of buying, but it does happen. For instance, I paid $300 or something for Beatles Rock Band, which to me, qualifies as a music purchase.
Jay Sweet (JS): Yes, in rare circumstances, but when I do it's because I am a part of the artists "loyal" community or tribe. For example, I wanted to hear Phish playing its "musical costume" from this Halloween. For the band's second of three sets they played the Rolling Stones' Exile on Main St. straight through. I couldn't wait to grab it on a P2P seeded tape trading site and I wanted it to be a FLAC or lossless file so I bought it straight from the band — $12 for three FULL sets of music. Over 3.5 hours worth. As I said it's a rarity but I think this example demonstrates the need for artists to cultivate loyal customers who want it NOW!
EVB: I also like to buy novelty items associated with a band. One of my favorite musical objects is an old-school music box that plays Mogwai's "Tracy." I also think AC/DC's box set that's a functional one-watt amplifier was a great idea, and it costs $200.
FK: You spend less cash though, right?
JS: I have spent a total of $42 "buying" music in 2009.
EVB: Overall, I definitely spend less cash buying music, aside from the occasional massive purchase, like Beatles Rock Band. It's possible that the best price for music is "free or really, really expensive."
JS: But I also receive over 75 CD's a month free.
EVB: I cannot stop the CDs from coming. I'm not writing about music anymore, just the business and technology around it, and still the deluge of discs continues.
FK: Right, so why are labels still making CDs at all?
JS: It goes to show the massive inefficiencies of the label industry.
EVB: Partially, it's because they bought out their distributors in the '80s. They literally own trucks.
JS: Exactly. And also because they need to have some payable against the bands, and they own the manufacturing, the distribution, the marketing etc.
EVB: And people still buy CDs — they constitute about half of recorded music sales. But by leaning on this old model, they're hanging on to the past to spite their future. I chalk this up to executives wanting things to stay the same as when they were coming up, and not caring about what happens after that.
FK: Does the money the average consumer spends on extras (like exclusive tracks) and novelty items, like the AC/DC amp, ever make it to the musicians?
JS: Yes and no.
JS: It depends on which labels and what items.
EVB: From what I've heard, lots of the weird, new money sources never get to the artist. For instance, Warner owns part of imeem. If imeem gets sold, will that money go to artists? Yeah, right.
JS: When bands do these 360 deals their signing bonus is usually the only cash they see for a good long while.
JS: Most of those deals are based on the net.
EVB: As for the novelty stuff, that does go to artists, from what I understand, which is a good sign. But when a label owns equity in a web startup, there's just no way that's going to filter through. Artists still have to audit their labels at great expense when they think something dodgy is going on, and I doubt their contracts cover stuff like equity in a startup.
JS: So the labels create exorbitant costs.
JS: In many ways artists would be better off getting a straight loan from a bank.
FK: If that's the case, and this is kind of a philosophical/ethical question, but do you think people SHOULD pay for what they COULD get for free?
EVB: I actually think the whole matter of "should" is sort of irrelevant. Online tip jars and voluntarily paying for stuff might work to an extent, but in the end, people are only going to pay for stuff that has value — whether it's convenience, the chance to hear something first, or the chance to get official extras. If the free offering is identical to the paid offering, most people are going to choose free.
JS: I think fans will always pay for something music-related from their favorite artist as long as there is some perceived value to whatever is being sold.
JS: Customization is KEY in today's music paradigm.
JS: Sell the fan something "special."
FK: What's the best way, as a consumer, to monetarily support a musician or band you would like to continue making music?
EVB: Consumers who want to support bands should buy what they can, but should also get the word out about to the band through their friends. Many of us have hundreds or thousands of Facebook friends at this point — posting a link to a free stream can help a band out.
FK: How do you sell to someone who's not yet a fan?
JS: That's when you give away free music.
JS: You hook on free passive selling.
JS: And then if they bite and if you treat them right, you will have a buyer for the life of you career.
JS: It's the same with free samples at the grocery store.
FK: Have you seen that play out all the way for anyone yet?
EVB: The Fall and The Grateful Dead (and their descendants). True fans of those bands will do anything to see them or hear their new stuff. I once flew 12,000 miles round-trip on my own dime to see The Fall.
JS: Tons of artists! The Grateful Dead and of course Phish who were allowing tape trading before the advent of CD's
EVB: Traits those bands have in common: a fiercely anti-commercial stance and a massive output of music over several decades.
FK: Anybody this decade?
JS: Of course, newer artists like The Avett Brothers, Joe Pug, Ben Kweller, G. Love
JS: The list is HUGE
JS: Almost every artist that plays the summer festivals circuit (sans some obvious headliners) gives away free tracks to people who visit their sites
JS: You see something live and if you love it you want the "postcard," i.e. the T-shirt, the new album, a live recording as a memento of the experience.
EVB: People are really loyal to Dan Deacon. It's like a religion to people, or it was the last time I saw him. And for him, it's all about the live show.
EVB: On the other hand, I think the blogs and general cultural tone these days lend themselves to a cyclical sort of thing, where it's hard for bands to have lasting fans because those fans are constantly encouraged to ditch them in favor of the latest new thing.
FK: Could those artists make money if they didn't tour?
JS: As for making money without touring, i think it is VERY difficult. Which to me is a blessing. It means you actually have to have talent and drive to make any cash. It helps separate the wheat from the Auto-Tune.
EVB: Touring is still *the* moneymaker, right, Jay? Along those lines, I've been talking to YouTube, Billboard, and Sony about their plans to distribute "live" music online and in movie theaters, which I think is a great idea. "Live" cannot be downloaded, and its value is lower when it shows up on bit torrent the next day. The smarter people involved in this are working on adding interactive features, to give the "live" version even more advantages over the bit torrented version.
JS: Bands like Umphree's Magee and The Disco Bisquits already do just that.
EVB: For example: You're watching a live show on your computer, and the band issues a challenge to make the best beat out of the following four elements by their encore. Their people sift through submissions in time to include an audience-created beat during the encore of the actual show.
JS: There are a few bands who have simulcast their big live shows to movie theaters so you can have somewhat of the live experience with amazing sound.
EVB: Yeah, I think that's a really positive direction: expanding "live" using somewhat canned technology. It combines the two big trends (digital distribution and the live experience).
JS: A lot of bands are taking their setlists directly from group chat rooms
JS: The walls between artist and fan are crumbling.
JS: This scares the middle men, i.e. labels.
FK: Have prices for tickets (at huge and tiny venues) gone up this decade? Do we get more bang for our buck?
JS: I think the middle ground is less bang for our buck.
JS: I think there are certain BRAND artists who can charge $$$$$$$ and small bands who still try and make it affordable.
JS: Just like America, the middle class ticket is disappearing.
EVB: Too true. For instance, the whole webcasting of live music thing could be greatly simplified by a big database containing all the rights-holders and what split they get, their contact info, etc. There are a lot of rights to clear to do live music online, especially with the publishers. But if that database existed, suddenly all these label and publishing people wouldn't have to spend all day on the phone talking to each other to hammer out one-off deals.
JS: Again, I'm fortunate enough to not pay very often to see music. However, the complaints I hear from people waiting in line has more to do with the ticketing surcharges and parking fees than actual ticket prices.
JS: Some bands are actually doing direct mail order and online sales for non Live Nation venues.
EVB: Back to music pricing for a second, I think it's priced way, way, way too high. I think 5 or 10 cents would be about right. At that point, the pay-per-download model would make a lot more sense. It's preposterous that an invisible file that's free to duplicate should cost the same as a CD, cassette or record.
JS: I completely agree
JS: And in the UK there are studies that show that the money is coming back into play because of variable pricing.
EVB: Lala is doing something interesting by pricing songs at 10 cents apiece . . . they're only web-streamed songs, but as more stuff becomes connected (phones, home stereos), that 10 cents price becomes more real.
JS: But again touring is where the real cash is.
EVB: It's an artificial market, with the price set by the supplier. What the consumer is willing to pay — the other half of the supply-and-demand equation — has fallen out of the equation.
JS: Very very true.
JS: And that's why they are dying.
FK: Is that only true in the US?
JS: It's worse outside the US in many places.
JS: Countries like the UK and Germany are just starting their "fight" against P2P file sharing.
JS: They are about 3 years behind the realization that the old way ain't gonna work. Instead of embracing and trying to surf the coming wave they are still building levees.
EVB: The good thing about those countries is that they're better about licensing certain streaming services. That's why Last.fm's on-demand service and Spotify are there, but not here. However, you're right about P2P — they're going down the same road that dead-ended here.
JS: They were smart enough on the streaming.
JS: That's where we are behind.
EVB: The RIAA claims that file sharing is down because of their lawsuits, but I don't think they have acted as a deterrent at all — the odds are just too low of getting caught. Instead, the carrot — sites like Hulu, YouTube, imeem, MySpace, Lala — have drawn users away from P2P by offering the same content in a more convenient way.
JS: It's a streaming future.
EVB: Yes. I believe downloading music for free will eventually be seen as a waste of time and disk space.
JS: Music fans who can just grab it elsewhere are losing interest in P2P. The RIAA had very little to do with it.
EVB: And as fraught as the whole "bundling with service providers" thing is (will I have to subscribe to multiple ISPs if I want both ESPN and Spotify?), bundling is a promising option for getting people to pay.
FK: So the majors will survive?
JS: Wow, good question.
JS: It depends if they stay on the same course.
JS: IMO the board of directors who now actually run these companies should fire everyone who is still left over from the mid 90's and before.
JS: Seriously they need to get rid of the people clutching their stock options. The old way is gone.
JS: People like Terry McBride at Nettwerk are at least trying to widen their eyes.
JS: They have been trying some very interesting ways to sell artists' wares.
EVB: As for the majors' survival, as things stand now, they're heavily reliant on their back catalogs. One option is for them to become licensing entities that keep monetizing those same old songs, because when it comes to new music, their tried-and-true system of investing in artists and then hyping them through controlled marketing channels is starting to fail (except in the tween market, which is, of course, not to be underestimated).
EVB: Most artists clearly need help from someone, but that someone is less likely to be a major label. They seem unlikely to slim down, and the margins are getting slimmer.
JS: The tween market works exactly as EVB put it because all mediums are 100% controlled by the suits.
JS: There is little to no creative/artistic freedom. The minute one of these tweener bands f—-s up (meaning they want to "expand" as an artist) they will be back in the malls and then on to the streets.
JS: There is really very little artists development still happening at major labels.
FK: Do tweens buy music or is it their parents?
JS: Both. Tweens are a big player in the "canned" goods market.
EVB: We've seen a few methods that allow kids to buy stuff without credit cards, but my instinct is that it's the parents, mostly. Hanna Montana tickets are the new cabbage patch dolls — if you don't manage to buy one, your kid is pissed.
JS: Yes on buying tickets to live events but tweeners buy their own tracks a lot of times.
JS: I know a lot of tweeners who have an itunes account with a set limit per month.
EVB: Right . . . and for the parents, that functions in an "I am teaching my kid the right way to live" sort of way. Would the kids spend that money if it was their allowance, transferable to other goods? I doubt it.
FK: But they're all up on the internet. Don't they know how to rip streams yet?
JS: I could make a big generalized comment.
JS: Such as the metal/jam band/rock kids do, but the Jonas brothers crowd hhhmmmm not so much.
JS: It comes down to tech savvy and an older sibling to teach me how.
EVB: Anyone who buys a ringtone cannot rip streams, I would say. As a generalization.
FK: I guess what I'm saying is that the future consumer is used to paying for music now, because it's so much easier. So the man is safe.
EVB: The whole idea of permanently acquiring media could be growing outdated though . . . kids might not understand the point of ripping a stream. They figure they can always go back to the URL and listen.
JS: When streaming becomes the norm.
JS: All these kids will have personalized mixes/radio or whatever we want to call it available to them in the cloud.
EVB: Right, which it sort of is. As a wise man once said, if you want to see the best on-demand free music service in the world, go to YouTube and close your eyes.
JS: Were you that wise man?
EVB: (no, it was the ceo of a competing music company...)
JS: Sounds like something you would come up with.
EVB: Speaking of YouTube, there's a reason it can offer music legitimately that music-only (i.e. not video) sites cannot afford to: When people watch videos, their eyes are looking at the web page, and they can be advertised to with overlays, pre-rolls, and adwords. When they go to a free on-demand music service, their eyes spend most of their time elsewhere. As far as this streaming stuff goes, music services with a video component will have an easier time of it.
FK: Why is paying for or stealing music such an emotional issue for so many people? Where does the anger towards the major labels come from? Is it justified? Why is it that consumers feel like they have a right to own recordings?
JS: I think a lot of this emotionalism is media-generated.
JS: I think the average person is really just looking for ease of use and aggregation.
JS: People don't have their trusted DJ's anymore, so they want things/people who share similar tastes in music to point them in the right direction.
EVB: The anger towards the major labels is well-deserved. They are the only industry I can think of that openly scorns, disrespects and tries to fleece their audience at every turn.
EVB: People see this theft as tit for tat.
EVB: Not that "infringement" is "theft," but that's another issue.
JS: As for anger toward the labels, they robbed from the artists and the audience for so long that the backlash is more the deserved.
JS: If both the artist and the fan feel ripped off . . . that's a harbinger of doom if I ever saw one.
EVB: I spoke with an RIAA executive around the time of the original Napster lawsuit, and his tone was very much "these goddamn meddling kids" and not "how can we treat our consumers better so they don't backstab us?"
JS: The fans as the enemy is really a fight you can never win. Ever.
JS: Imagine any other industry where the brand sues its customer base on a regular basis.
JS: Pretty soon you go for a different brand.
EVB: Part of the problem, many maintain, is that the bean-counters with MBAs took control, as they have with just about everything else, and sought to wring every last cent out of music fans. File sharing is a pressure valve that is ensuring that that doesn't happen anymore. It gives the fan a way to push back against this thing that has been pushing against him/her as hard as it can. Why not push back?
JS: And the new crop of artists is rightly sided with fans and not the bean-counters.
JS: True fans = better long term revenue source than quick upfront money from a multinational corporation that doesn't know jack about music.
EVB: Labels have essentially become banks. Radiohead's genius with In Rainbows' was, in part, to use a bank instead of a label. Banks have better terms, assuming you're an established act like they are.
JS: Exactly what I said earlier.
JS: Bands would be better off taking out small loans than using a label.
JS: At least they would be in charge of their own accounting.
EVB: Good call.
FK: Do they then have to hire an accountant?
EVB: Yeah, the accounting at the labels has always been so, so murky. And it's prohibitively expensive to audit them.
JS: Smart bands have great management. Great managers have even better accountants.
EVB: Well put.
FK: Are either of you listening to music right now?
EVB: I was, but stopped for this. Let me turn something on.
FK: Are you streaming it Jay or on stereo?
JS: My CD player in the office is piling up serious dust.
FK: I still have "Pink Cadillac" stuck in my head.
EVB: I've been listening to a Spotify playlist consisting of all of Drowned In Sound's picks for best albums of 2009.
JS: I was actually listening to NPR's 50 Great Voices and just picked my 5.
FK: Do you guys want to mention/discuss anything else?
EVB: I just bought a $500 vinyl preamp, weirdly.
JS: See? Vinyl lives.
EVB: The chassis is made out of wood. I think it's a response to all the digitalness.