Monday, April 7, 2008

Blast from Last Year

Here's an article from last year that's so classically luddite, it needs to be linked again.

Universal's CEO Once Called iPod Users Thieves. Now He's Giving Songs Away

The dinosaur CEO of UMG seems proud of the fact that he doesn't "get" technology. My favorite quotes from the interview:

Morris insists there wasn't a thing he or anyone else could have done differently. "There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me." Morris' almost willful cluelessness is telling. "He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."

It seems that as CEO, Morris' job was not to just watch the royalty checks roll in, but to be sure his company was positioned for changes in the market. The Internet was a huge change (obviously), but he seems willfully, proudly ignorant of how he could have structured his company to anticipate the disruption, and leverage the massive new distribution channel.


Digital music firms pay heavy price for labels' support

More evidence that elderly big label managers are looking for punitive advances to fund their retirement benefits rather than building a healthy digital distribution chain for their industry.

Here we have an unnamed label executive comparing the new business of online media to opening a bricks and mortar store on Madison Avenue. They continue to be clueless that the physical music sales are dying.

Delivering music online has significant costs, but none that you can visit as a customer. Spinning disks at data centers and CDNs, and developing compelling service software are significant investements. At 15% margins and multi-million dollar advances will fool some Dot Com Bubble 2.0 investors for a while, but once the money runs out, the labels are no further along.

The labels should be enabling in new distribution solutions, not punishing them.

Friday, April 4, 2008

Label hires techie

The geeks were right; music labels bow to technology

...EMI Group hired Douglas Merrill, the former Google Chief of Information, to run the label's digital unit.

There's nothing that says that the labels must be part of the finished equation... but the record companies are going to have to morph into smaller entities that represent fewer acts but oversee their total output: music, video, concerts, and merchandise.

Fred Wilson on the New Streaming

Something Important Is On The Horizon In The Music Business

In an always-on connected world, nobody will need downloads. I'll reorganize what I think is Fred's most important message to content owners and distributors, and service providers.

For content owners and distributors:

We need someone to create an easy to search streamable library of all the recorded music in the world. We need to be able to grab a track and embed it on our blog. We need to be able to see how many people played it... This all has to be licensed and legal and it has to result in money flowing to the artists.

For service providers (this goes to my thesis that it's the services who will enable the crowd to determine what acts get discovered and what music becomes popular, rather than relying on big promotion):

We need others to be able to crawl these user pages with the embedded music and create algorithms based on who posted it, how often it was played, and how often it was reblogged and linked to. The services that do all of that need to be able to play the music that flows out of these social algorithms in the same way.

Music from the Ashes

The music industry as we know it (big labels, big promotion) will die before it is reborn. Get ready for the Darwinian survival of the fittest bands.

Promotion will become organic, enabled by social media services. Music recommendation will return to a person-to-person, word-of-mouth high quality -- but on a global scale. The services that enable this promotion will be the new hit-breakers.

A&R departments are superfluous. This is not to say that A&R development is not needed. Artists may need managers who understand promotion, producers who undertand development, but they will be free-lance, not amalgamated into huge labels.