IFTF's Future Now

Last.fm: Free the Music

Last.fm has announced that they will offer full-length tracks and albums for users to play through their site. For now, each track can be played three times before a notice pops up describing the subscription service to come. This noteworthy for several reasons: first, the major labels have all made deals with Last.fm to allow this; second, Last.fm will accept submissions from independent artists and will pay the artists directly. This creates yet another avenue for up-and-coming artists to make money off of their music without having to sign to a major label.

From the blog post:

We already have licenses with the various royalty collection societies, but now unsigned artists can put their music on Last.fm and be paid directly for every song played. This helps to level the playing-field—now you can make music, upload it to Last.fm and earn money for each play. If you make music, you can sign up to participate for free.

We’re not printing money to pay for this—but the business model is simple enough: we are paying artists and labels a share of advertising revenue from the website.

Today we’re redesigning the music economy. There are already millions of tracks available, and we’re adding more every day. We will continue to work hard to bring this to everyone in the world.

From AFP:

"We're building a platform to help redesign the music economy, enabling artists and labels to earn revenue according to how people listen, rather than how they buy," said Last.fm co-founder, Felix Miller.

"For the first time, anyone can upload tracks and get paid when those tracks are played. It's a whole different model."

It looks like there is some confusion about what this means for current subscribers. This is a different service so it will be interesting to see how the pricing works out for unlimited monthly access. Furthermore, will there be support for devices? How will the access to the major label music be any different than Yahoo! Music Service or Rhapsody? Will it play directly through the website or a proprietary player like the other two services (Last.fm radio already has its own player)?

Journey finds new singer on YouTube

While some bands are lucky enough to have a reality show based on the search for their new lead singer (e.g., Rock Star: INXS), others have to do it the old-fashioned way: a painful series of auditions. But when those fail, what is a band to do? In the case of ballad superstars Journey, they found their answer in the world of new media—YouTube, to be specific.

From the mouth of guitarist Niel Schon (via Stereogum, via Blabbermouth):

I was frustrated about not having a singer, so I went on YouTube for a couple of days and just sat on it for hours. I was starting to think I was never going to find anybody. But then I found THE ZOO and I watched a bunch of different video clips that they had posted. After watching the videos over and over again, I had to walk away from the computer and let what I heard sink in because it sounded too good to be true. I thought, 'he can't be that good.' But he is that good, he's the real deal and so tremendously talented.

Good news for Journey fans who haven't had the chance to hear "Don't Stop Believin'" and "Faithfully" live yet.  Even better news for all of those rock star wannabes who flood YouTube and MySpace with videos and audio clips of their performances in hopes of being "discovered" by a Web-savvy A&R exec or a surviving superband in search of a new lead singer. 

The Name-Your-Price Album Experiment, Part IV: Survey Says...

According to an AP article in today's San Francisco Chronicle, a comScore, Inc. survey shows that the majority of people who downloaded Radiohead's In Rainbows paid $0 for it.

Some 62 percent of the people who downloaded "In Rainbows" in a four-week period last month opted not to pay the British alt-rockers a cent. But the remaining 38 percent voluntarily paid an average of $6, according to the study by comScore Inc. [...]

The results of the study were drawn from data gathered from a few hundred people who are part of comScore's database of 2 million computer users worldwide. The firm, which has permission to monitor the computer users' online behavior, did not provide a margin of error for the study's results.

comScore's curious failure to explain their methodology aside, does this mean that people are inherently cheap or that a whole bunch of people think it's okay to take music for free, especially if a band allows fans to do so?  Is there a larger commentary on the value of musical recordings here?

Why MySpace Music Matters

Before joining the Institute, I did some work with a small publication called MacTribe. One of the pieces I wrote for the site/magazine was about MySpace Music and its effect on the music industry. That article has recently been posted on MacTribe in two parts and I wanted to post the first part of the article here (most of it is after the jump—click on "Continue reading 'Why MySpace Music Matters'" to get to it). Part 2 of the article can be read here.

The Rise of the Virtual Demo: How MySpace Connects Artists, Labels, and Fans

Teenagers adore it. Young adults use it to pass the time at lame desk jobs and track down people from their past. Predators use it to zero in on potential victims. Parents fear it more than any parent feared the Beatles and Elvis's gyrating hips combined, and other people just think it's a stupid waste of time and energy. So what could possibly make MySpace useful beyond worldwide Internet distraction?

Music, that's what.

Before the dawn of the Internet age, when everybody suddenly fancied themselves an expert in web site design, musicians looking to promote their work had to do so through analog means: demo tapes, flyers, performances at artist showcases, etc. And just because they got a gig or found an A&R exec who’d bite doesn’t mean they’d have the one thing that can keep a musician’s career going for a long time: fans.

The digital revolution made it easy to upload tracks to a server and put them on the Internet, where everybody has access to them. But band web pages required at least rudimentary HTML skills, and not everyone broke down and bought a copy of HTML for Dummies. Now, anybody with a few tracks, a computer, and an Internet connection can create a self-promotion music page thanks to the controversial juggernaut of a social networking site, MySpace.

Future of iTunes

Last week, Universal Music announced that it plans to join forces with other major labels to create an online music store—BMG is already in. Universal decided in July that they would not renew their contract with iTunes and will instead offer music to iTunes basically as they please, allowing them to pull the music when they feel like it. Additionally, thanks to a publicized spat between NBC and iTunes over pricing and piracy control, NBC will not renew its contract with iTunes either.   

In light of these developments, Ivan Askwith at Slate ponders the future of iTunes. Can the iTunes Store survive without the content from major labels and networks? Askwith envisions three different scenarios:
"Apple backs down," "The networks back down," and "No one backs down."

In the no one backs down scenario—in my opinion, the most likely—Apple has the ability to become an alternative to a major label by working directly with artists. It's lucrative: bypass the label and market your music through the most successful online music store to date.

Askwith writes:

Through iTunes, Apple could embrace the growing number of musicians looking to escape the confines of the major labels, a roster that includes Radiohead, Trent Reznor, and Madonna. It's doubtful that most artists would agree to release their work exclusively through Apple, but it's not hard to imagine an artist giving Apple an exclusive advance distribution window in exchange for placement in an iPod commercial, a tour sponsorship, and a higher share of revenues than the labels and networks are willing to offer. And while it's outside of its current business model, Apple could even invest in saving fan-favorite television shows from cancellation: Imagine iTunes as the exclusive distributor for Arrested Development, Firefly, or Veronica Mars.

Historical agreements between Beatles' label Apple Corps. and Apple Inc. hindered Jobs and company's ability to get into the music business. But earlier this year the companies agreed to end the long-running trademark dispute. (Despite a variety of teasers, from Jobs demonstrating the iPhone's music capabilities with Sergeant Pepper's Lonely Hearts Club Band in his 2007 Macworld Keynote to the use of "The Beat Goes On" for a special September event, we're still waiting for the Beatles catalog to hit iTunes.)

Because of their willingness to jump into the legitimate digital music world while label execs were still trying to figure out how to use Soulseek, Apple really has an advantage. And a withdrawal of major labels means that Jobs can finally come through on his promise to release DRM-free music if the labels would allow. It's also worth nothing that the price of DRM-free music from EMI and other willing indie label participants in iTunes Plus has now dropped to 99 cents a song. How much of this has to do with Amazon's MP3 service—which I found to be amazing when I downloaded the entire Nick Drake catalog two weeks ago—will be left to speculation.

The Name-Your-Price Album Experiment, Part III: Warm Fuzzies

Eduardo Porter of the New York Times talks about the Radiohead experiment from an economist's standpoint.

Some economists suspect that what is going on is that people get a kick from the act of giving the band money for the album rather than taking it for free. It could take many forms, like pleasure at being able to bypass the record labels, which many see as only slightly worse than the military-industrial complex. It could come from the notion that the $8 helps keep Radiohead in business. Or it could make fans feel that they are helping create a new art form — or a new economy. People who study philanthropy call it the “warm glow” that comes from doing something that we, and others, believe to be good.

For the record, despite paying $0 for the Radiohead album, I am a good tipper.

Porter also believes that Radiohead's success may be good news for the industry IF they're willing to explore a new business model:

It is also potentially comforting news for the recording business. The industry has been struggling to find a business plan that will work in an online market in which — despite billions invested in antipiracy measures — fans can pretty much get their music for free if they want to.

Today, music lovers are left but two options: pay list price for an album, or perform what a fan might call a free download and a record company would call theft. Radiohead’s experiment suggests a third way out: let fans pay what they want and give them lots of touchy-feely reasons to want to give as much money as they can.

But will they be willing to explore? Maybe Radiohead's success is finally the kick the major labels need to embrace new media technologies and try something a little different than their tired formulas.

The Name-Your-Price Album Experiment, Part II: Backlash

This MTV News article does a great job of summing up the recent buzz around Radiohead's name-your-price experiment: Radiohead Fans Feel Duped By In Rainbows' Poor Sound Quality, Possible Ulterior Motives

In short, the MP3 quality was only 160kbps, technically but usually imperceptibly better than iTunes' 128kbps AACs but not ripped-from-CD quality or even as good as Amazon's 256kpbs MP3s. Fans feel ripped off because the band's management has been very straightforward in their admission—arguably an admission of the obvious—that the MP3s were a way to sell more CDs. Many of those who paid for the album—an Internet survey of 3,000 fans found that the average price was £4, or $8 US—will now actually end up spending more in total for the music than they would have if they'd just waited for the CD to be released for purchase.

This does make me feel like those of us who paid $0 for the album did basically what we were supposed to do, much to the chagrin of the honest fans who felt they should pay for the music. But the original experiment has not changed. Shady marketing tactics or not, Radiohead still offered fans music that the band created at a price the fans determined—and many people were willing to pay.

The Name-Your-Price Album Experiment

As everyone has read by now, Radiohead is releasing their seventh album, In Rainbows, in two formats. One format is a superfan-friendly, $81 discbox, to ship in early December.  The second format is digital download. The notable thing, of course, is that you name your own price for the digital version. The band's contract with EMI ended after the release of their last album, Hail to the Thief, so until they link up with EMI again or another major, they're able to experiment with non-traditional distribution approaches. There will be no advance or promotional copies distributed to writers or other industry in-types—we all have to wait until October 10. Understandable, considering the disaster that ensued for label Beggars Banquet when Radiohead frontman Thom Yorke's 2006 solo album, The Eraser, leaked on the Internet. Radiohead is maintaining control.

This scheme begs the question: is it stealing if the band allows you to have it for nothing? I followed the links to pre-order checkout and entered the amount I am willing to pay for MP3s of their new album: $0. I thought there would be a catch, some point in the process that forced me to pay at least a penny, or perhaps a message calling me a cheapskate. But no, I even got a confirmation email that showed a price of $0 and informed me that I'll get another email when the album is ready for download. This may seem outrageous, but when you're a music writer, you get a steady flow of promos—things you may or may not like—that publicists and labels hope you'll review. I will most likely pay for my copy with an album review even though, quite frankly, every critic in the world can pan the album and Radiohead fans will still stand by it.

While many people pony up what they can to pay for the album, free is still an option, and this isn't the first time a band has made a digital album available for free. Wilco released Yankee Hotel Foxtrot for free online in 2001. And instead of suing fans when A Ghost is Born made its way around the P2P networks before the album's 2004 release, the band invited fans to donate money to Doctors Without Borders as compensation for their downloading. Frontman Jeff Tweedy estimates they raised about $15,000. In a May 2007 interview with Pitchfork, Tweedy said:

The whole experience with Yankee Hotel Foxtrot validated a lot of ideas we've had. It's not necessarily to make a piece of plastic we have to sell every two or three years. We would love to be able to think that we could do it even if we didn't have a record deal, which we proved to ourselves that we could. We liked the idea of people listening to our music. I guess the simplest way of saying it is that I don't think that artists should expend any energy keeping people from listening or seeing or hearing or reading their art. I think that's antithetical to the whole principle of being an artist.

The list goes on. Prince put out 3121 as a free download earlier this year. UK band The Charlatans will release their album for free download in 2008. Robin Davey of the Bastard Fairies—an LA-based band that released their album for free online and later achieved Internet celebrity thanks in part to Bill O'Reilly's outrage over one of their self-produced videos—told me in an interview that, "We believe in our music so much that we believe if they do like it they will want to go and discover everything else we have. Giving it away makes no big deal; it makes perfect sense."

The labels may be freaking out, but this is clearly a sign of a band using its music to promote itself (as if Radiohead really needs any more promotion). If the new Radiohead album blows me away, I'm more likely to write a positive review that will encourage more people to purchase the album, buy some In Rainbows merchandise, or gather my friends to go see them live—and tickets won't be cheap. Part of the reason Radiohead is able to pull this off and have people volunteer to pay money is that they've been around for a long time and have a very loyal, borderline zealous, fan base. It's a great experiment and the major label executives will undoubtedly gnaw on their nails as they wait to see the results. It's one thing when a relatively unknown band does this sort of thing as an attempt to build a fan base and get a major label contract. It's a whole new thing when an wildly popular band's contract with a major ends and they go on to self-release and pay-what-you-want album.

And this all comes at a time when the first sued fan to take the RIAA to trial lost the battle. Jammie Thomas of Duluth, Minnesota, has been ordered to pay $220,000—$9,250 for 24 major-label songs. The artists include Journey and Green Day. Should be a fun appeal to watch.

Sue Me, Sue You, Sue Everybody!

In addition to attending the Bandwidth Conference, I moderated a panel there on Saturday afternoon called "Sue Me, Sue You, Sue Everybody!" The topic was, of course, about the impact of the RIAA's rampant lawsuits against music fans who download illegally and, in a few cases, innocent people who somehow get swept up in the lawsuit spree. The panel featured three great intellectual property experts: Eric Steuer (Creative Commons, Wired, and Meanest Man Contest), Jason Schultz (Electronic Frontier Foundation), and Larry Feldman (DMusic and Boycott RIAA).

The panel was videotaped at the request of Larry Feldman. Here's a five minute clip featuring Larry and Jason. Larry talks about Boycott RIAA and explains why Fair Use should be a last-resort defense. Jason talks about the way the marketplace is changing to include new and different infrastructures outside of the major label system, possible payment systems for digital music, and the pitfalls of  tying a business model too tightly to technology.

Enjoy!

Bandwidth Conference: Music + Technology

I attended the Bandwidth Conference in San Francisco last week where music industry people, from small label owners to PR types to technology developers, gathered to discuss the intersection of music and technology and its impact on the future of music and the industry.

One of the most interesting panels I watched was called "E-Merging Labels: The Shape of Things to Come." Moderated by Kimberly Chun of the SF Bay Guardian, the panel featured Ted Kartzman (RealNetworks), Tim Mitchell (IODA), Lydia Popvich (Quannum Projects), and Jeff Yasuda (Fuzz). The conversation revolved around new labels that are emerging in the digital music landscape and the kinds of marketing and promotions strategies they have to employ in order to survive and help artists succeed.

There are five main low-cost marketing strategies emerging that take advantage of technology; the efficacy of each depends on the desired outcome or the targeted audience. These strategies are:

1. Blogs: very quick word-of-mouth, rely on an audience that trusts the blogger's taste and recommendations.
2. Podcasting: the numbers are not as robust as people had hoped they would be, but it's still a low-cost distribution and promotional strategy.
3. Viral [music] Video: this has proven very successful, thanks to YouTube in particular.
4. Brute Force Guerrilla Marketing: the take-it-to-the-streets approach is hit-or-miss.
5. Widgets: perhaps the newest of the strategies, widgets are interesting but their ability to measure and track distribution is not quite there yet.

All of these strategies are invaluable to emerging labels because they cost little, are easy to use, and they provide very quick delivery. Instead of the classic label model, where 30% of the marketing budget goes to getting the music into large retail stores with the hopes of blockbuster sales, new labels are capitalizing on the speed of distribution with mobile phones and computers in order to use music as a promotional tool and cash in on merchandise and live music later. Labels often use free labor in the form of interns to push the music to the social networks and reach the "MySpace Generation." Commercial radio is an expensive gamble and the odds are not weighted in the favor of a new artist and is homogenous. Podcasting, webcasting, and Internet radio (if it can survive the new royalty rates) are the new radio.

Because so much of these marketing strategies depend on name recognition and word-of-mouth promotion, it's essential to create a brand for the band and the label. And due to the metrics applied to online music tools, labels are better able to judge what's working and what's not and adjust their strategy intelligently. They can also do leveled targeting for different audiences. For instance, if a band's core following reads the blogs, a label can push tracks to the blogs first and then decide who should be the next ring of targeted marketing and use the tool that they respond to best next.

From a business standpoint, labels of the future may adopt collapsed copyright, where the artist owns the copyright and publishing rights and the label or management works out distribution, performances, and other revenue streams, sharing revenue with the band. Within this system it's much easier for a song to be distributed as a ringtone or used for a film because the artist has final say on where it goes, not a bureaucratic publishing house or major label.

Lydia Popovich believes that "music culture is changing" and that the ease with which anyone can make, produce, and distribute music is "changing the way people appreciate music." In such a free-for-all landscape, a relationship with your audience and a strong brand for a band are essential for distinguishing quality from noise, figuratively speaking. While the major label system may remain for some time, it's clear that another model is emerging that will compete with and, potentially, break down the major label chokehold on music.