Mayhem & Chaos Blog

Music industry watch

Reading between the lines in the Madonna deal

Yesterday it was announced that Madonna is leaving Warner Music Group and signing on with Live Nation, a concert promoter.

What?

That's right -- Live Nation is a concert promoter and not a label. While there is plenty of speculation about the finances behind the deal and wether its good for Warner and bad for Live Nation, the deal sends one strong message: The concert is the future of the music industry.

Music fans are less likely to spend money on music these days and the ways of getting the music for free are numerous. But, seeing a concert is a big ticket event these days. Ticket prices are skyrocketing as artists are trying to make up for losses in music sales.

But, I see problems with this approach as well. I personally won't shell out in excess of $100 for a massive concert where I get searched and can't bring in my own water. Attendees get gouged at every step and turn in these concerts and fans are increasingly staying away from these concerts.

So, the new music industry is going to have to reinvent the concert experience if they want it to be a serious part of their income. I'm curious to see how this will turn out.

Music industry watch

The demise of the music industry is rapidly accelerating

I've been waiting for ten years for this time in history to come and now things are moving soo fast its hard to keep track of it all. DRM is gasping its last breaths, artists like Radiohead release their own albums without the help of labels, Prince releases his album in a newspaper, Trent Reznor and Madonna dump their labels and you will soon be able to buy all music in DRM-free mp3. Awesome!

Seriously, this is where the music industry should've been 10 years ago when mp3 first appeared on the scene. But what did they do? Nothing at first. Then came Napster to prove that there was demand and the labels balked and sued Napster. Never did they open their own store to meet the market demand.

What happened in light of this? People figured out the tools to rip their own CDs. The learned what it meant to enjoy music in the digital age, even though many rips were crap and early mp3s sounded pretty awful. The metadata was a total mess, but with a little effort you could be in control of your own music collection. In other words, they lost the consumer. Forever.

The music industry missed the opportunity to sell the old catalog once again. People have been willing to buy CDs, even though they bought the same cassette tape years earlier and the labels failed to capitalize on that. Instead, the balked and started suing their customers.

In the meantime the value of recorded music drops to near zero as BitTorrent makes the experience to pirate better than the experience of going to the store to buy the media. (This is especially true with movies today where you do not have to sit through endless trailers that you can't skip. BitTorrent the movie and you get no heavy handed trailers and only the movies you wanted. For free.)

By focusing on their insipid desire to self-destruct, they neglect the artist. Artists have been ripped off for years and when the consumers/fans bail on the labels, the artist are stuck holding the bag. So, what's the logical conclusion? The artists revolt and dump their contracts as soon as they can.

The blindness of the label caused them to lose the consumer and the artist. Gone. If you have neither, you have no business left. Expect massive lay-offs or total collapse at the labels in the next few years.

Finally -- I've been waiting for 10 years.

The new music industry is here. CD Baby, IODA, iTunes, Amazon already provide lots of means for artists to get their music out to fans. After being bitter about the utter lack of progress for so many years, I'm enjoying sitting back and watching this whole scene unfold. Finally.

DRM

The nails in the coffin for DRM keep stacking up

The Zune store is supposedly going to see DRM free MP3s. Cory says:

Microsoft has just announced that it will sell more than a million DRM-free tracks in the Zune store. In other news, Satan just sent out for a snow-shovel.

This gives me hope that the high tech music industry will finally have a chance to flourish, now that DRM free mp3s allow for interoperability between music sellers.

Music industry watch

RIAA fails basic business case analysis

The RIAA trial proceedings in Virgin v. Thomas started yesterday and we're already getting all sorts of interesting information from this trial. This if the first case of the RIAA's "Sue the World" program to go to trial, and as its usually the case with trials all sorts of dirty laundry gets aired. Jennifer Pariser, (her last name is a slang term for a condom in Germany, quite fitting I think!) the council for Sony BMG says:

She then made perhaps the most startling comment of the day. Saying that the record labels have spent "millions" on the lawsuits, she then said that "we've lost money on this program."

I've suspected that this program wouldn't make them money ever since it started and its nice to get that confirmed now. What's even more amazing is this:

"We haven't stopped to calculate the amount of damages we've suffered due to downloading, but that's not what's at issue here," replied Pariser, who was reminded by Judge Michael Davis to answer the questions actually asked by Toder, not hypotheticals.

Toder then pressed the Sony executive on the question of how many people actually downloaded music from the defendant. "We don't know," she replied. "I can't identify any other entities aside from what SafeNet reported, but I know that many others did... that's the way the system works."

Wow! This program is costing them money, creating tons of ill will, yet they have no means to quantify that its working at all! When you conduct business in this manner there is only one way to go: Out of business. Anyone with an ounce of business intelligence would do a rough ROI analysis and immediately figure out that its amazingly stupid to have started this program in the first place. Of course they say that "Lawsuits are punitive, not business " -- I'd hate to tell you this, but if you're losing money, its business!

Of course this information comes from the same source that tells us that CD Ripping is stealing. You can't possibly go out of business one moment too soon!