Future Of Music

LOS ANGELES/NASHVILLE (Billboard) - It’s 9 p.m. at The Gig
in Hollywood and a crowd of L.A. hipsters is trickling in to
catch the evening’s act.

The bar itself is just one of several live music venues
scattered throughout the city that caters to emerging artists
hungry for a stage — however small — to hone their skills and
attract a following. Attendance tonight is sparse, maybe 30
patrons hang on the bar or linger on the beer-stained
dancefloor.

But the band on the dinner-table-sized stage plays to a
much larger audience. Practically unnoticed to all but the
performers are four domed, Vegas-style security cameras hanging
from different areas of the ceiling capturing their every move.
The Gig films all performances — three a night, seven nights a
week — and broadcasts them the next day from its Web site,
http://www.liveatthegig.com.

The Gig is riding a tide of revolution in the concert
business. The ongoing explosion of high-speed, broadband
Internet penetration in the United States has sparked a growing
need for quality, exclusive multimedia content. Live
performances fit this bill perfectly, and everyone from small
clubs to major media companies are getting hip to this fact.

The huge success of AOL’s delivery of the Live 8 concerts
last summer made it clear that both consumer demand and the
potential to offer compelling product exist. For Gig owner
Peter O’Fallon — a film and TV director — recording and
broadcasting shows is a way to not only marry his twin passions
of video and music, but also an attempt to develop new revenue
streams made possible by the Internet.

For the acts that pass through his doors, it’s free online
exposure that rivals any multicity tour, allowing them to post
links to their performances on MySpace or send to friends, fans
and promoters.

For the industry, it’s a rapidly growing business model
that is changing the dynamics among artist, label, venue and
digital music services.

The world’s largest promoters, AEG Live, Live Nation and
House of Blues, which Live Nation acquired just weeks ago, have
all bought into this concept, some more aggressively than
others. HOB was the pioneer with live webcasts from its clubs
dating back to 1995.

"We first focused on live digital delivery of shows because
nobody else was doing it," says Jim Cannella, national director
of corporate partnerships for HOB. "The whole world was
mesmerized by the infinite opportunity the Web represented,
there were widely accepted technology standards to put your
arms around and a market of hungry consumers which was doubling
in size every few months."

Today Live Nation, also the world’s largest venue operator
with its 40-plus amphitheaters, is making a "substantial
commitment" to wire 120 venues and festival sites throughout
North America and Europe with the ability to capture and
repurpose thousands of live concerts. Live Nation currently has
36 wired venues in the States and broadcasted more than 350
concerts from around the world last year.

And Live Nation has been creative in the outlets for these
concerts, including TV, mobile phone carriers, terrestrial and
satellite radio, online and other digital music distribution
avenues. "There’s no end to the uses once (the content is)
captured," says Bruce Eskowitz, president of global venues and
sponsorship for Live Nation. "It opens up tremendous
opportunities with 3G, SDTV, HDTV, live ringtones, etc. The
problem up to now has been the ability to capture it cost
effectively."

Eskowitz says his company’s current digital initiative is
about extending Live Nation’s relationship with its customers.
"An important new way to expand this relationship is through
the recording and distribution of the live concert," he says.

A CONCERT CASH COW?

Although neither the Gig nor Rehearsals.com has started
doing so, both companies plan to sell advertising on their
sites to recoup their investments.

"Ultimately, the idea is to monetize it," O’Fallon says.
"At the moment, there’s not a tremendous amount of money to be
made until there’s tens of thousands of people visiting the
site."

Live music is "definitely" a revenue producer for AOL,
according to Flannigan, with such heavyweights as Intel,
Nissan, Chevy, Lexus and Absolut onboard as advertisers.

"There is certainly a large collection of advertisers out
there who want to associate their brands with live
performance," he says. "Some of the biggest consumer-product
advertisers in the world are starting to feel like digital live
music is a fantastic showcase for their brand."

AOL has a ready-made "billboard" of sorts on each computer
screen where advertisers can reach consumers. Flannigan thinks
live webcasts could also be an "enormous" ancillary revenue
stream for artists, "especially artists like Pearl Jam or Bruce
Springsteen that are mixing up their shows every night," he
says. "There really are 10,000-15,000, even 20,000, people who
are interested in what’s happening at every single show, and if
you add that up it could result in some very meaningful money."

"This asset that we create, this hi-def, Dolby 5.1 sound,
piece of live concert footage, is something that (the artists)
own," Grodsky says. "It’s a copyright we don’t take ownership
of, nor a master we get control of, so it’s something they can
use for live DVD, live audio CD, exclusive product for retail,
bonus content on the Web, really the things they can do with it
are endless. So you’re creating a high-quality asset for them
to leverage down the line."

Lastly there is a revenue possibility through a
revenue-share on the backside, Grodsky says. "The business
model is pretty standard as it relates to the revenue that an
artist shares in from the distribution of the exhibition of the
content," he adds. "But the ability for them to create
additional revenues through their own exploitation of the
master after the fact is unprecedented."

From Reuters/Billboard - Read More Here

For
years, old recordings have piled up in the archives at Verve Records,
including beloved jazz tracks that had no market big enough to justify
pressing new discs. But thanks to the Internet, music lovers are
rediscovering iconic titles like Ella Fitzgerald’s "Sunshine of Your
Love" and Quincy Jones’s "Body Heat" — rekindling enough popular
demand to prompt Verve to reissue them through a project called Verve
Vault.

"The demand for music has never been as big as it is
today. We get all kinds of questions from customers worldwide, looking
for a track name or an album, or asking, ‘Why haven’t you put that out
yet?’ " said Jon Vanhala, vice president of new media and strategic
marketing at Verve. So far, about 2,700 albums have been brought back
through the Vault, with more than 5,000 scheduled to follow.

Because
the Internet has changed how people discover and share music, the rules
of marketing it and the hierarchy of who determines what’s hot have
also changed. As radio-music listenership declines, the industry finds
itself spending more time courting a broader field of tastemakers who,
through Web sites, are popularizing songs that never get radio play.
The primary tool in this transition is the playlist — a sequence of
tracks posted on blogs or shared on music purchase sites such as iTunes.

"I
listen to way more music than I ever have in my life," said Robert
Burke, a North Carolina quality assurance manager by day who spends
nearly all of his free time searching through new music online, then
compiling tracks in playlists with various themes, like rock songs that
include a tuba, Top 20 bands from the 1980s with mullets, artists who
sample riffs from Miles Davis, and so on.

"I kind of started it
because I’ve always collected music, and I’ve become pretty obsessed
with it since then," said Burke, whose blog on Yahoo Radish,
Playlistradish.com, has published thousands of his playlists for the
consumption of others.

With legions of new bands popping up
online every day, fans need guidance just to keep up, said Oliver Wang,
founder of Soul Sides, another high-traffic music blog.

In the
online world, friends’ recommendations or an endorsement from bloggers
such as Wang and Burke, as well as podcasts such as "The Nashville
Nobody Knows" and "Accident Hash," can yield significant marketplace
results.

A duo called Gnarls Barkley, for example, found a huge
following online. The band’s songs, including "Crazy," were well
established online before getting radio play. Its songs have been
listened to on the band’s MySpace social-networking site more than 6
million times. Transatlantic online exchanges made the British band
Arctic Monkeys famous in the United States before any album came out
here.

"Word of mouth benefits [independent labels] in particular,
and we’re only starting to see the benefits," said Kevin Arnold,
founder and chief executive of the Independent Online Distribution
Alliance, which disseminates music from 2,500 labels to digital music
services.

To court the online tastemakers, the alliance last fall
launched Promonet — a system that maintains a master playlist of new
releases for reviewers, Arnold said.

Digital music services
themselves have become engines of recommendation. Music stores such as
iTunes, EMusic, and Yahoo Music give users the ability to check out
others’ playlists, so people with similar tastes can find each other
and discover new music. Additionally, services such as Rhapsody,
Napster, Livefm, Pandora, AOL and Yahoo all have Internet-radio options
with algorithms that register a person’s taste and, based on the
listeners preference, stream in similar, new music.

"I’ve found a
few bands that way," including one called the Magic Numbers, said Alex
Kilfoyle, 23, a Washington electrical engineer.

"When I started
college, I was listening to rock and classic rock, and that’s it," said
Kilfoyle, who swaps music recommendations with old college friends
through instant messaging, online chats and checking out each others’
playlists on iTunes. A program called Hamachi also allows them to
listen to music saved on each others’ computers. Because of his
friends, he said, his musical taste has evolved to "eclectic — a lot
of everything."

Ian Rogers, 33, grew up in Goshen, Ind., where there was no record store.

"I
drove five hours to Chicago to see a punk rock band," he said. He’d
pore over reviews in Maximumrocknroll magazine, then have his mother
write checks so he could send off for albums without having listened to
them, said Rogers, who is now director of product marketing for Yahoo
Music.

The effort and cost involved in buying made him feel
almost obligated to like what he could get, he said. "You end up
consuming what’s marketed to you. With the Internet, you consume
exactly what you want."

To adjust to that shift, radio stations
are experimenting with "send us your playlist," or by-request music
shows, said Mike McGuire, an analyst with the research firm Gartner Inc.
"It greatly complicates how you promote acts and content," which is why
forward-thinking labels like Warner Music Group’s all-digital label
Cordless Recordings are spending more time and promotional money on
finding bloggers, he said.

While consumers say the diversity and
availability of more content is unequivocally good, some bemoan the
lost art and distinction of having the great, comprehensive record
collection.

In the past, a music aficionado had to invest time
and money sifting through racks in the hunt for, say, a little-known
ska band. Now, entire CD racks and vinyl-record collections can fit
into several gigabytes of computer memory — and people who never
invested their resources in acquiring music can simply rip off a
playlist, or type in a search to find that same, small-time ska band.
It’s yet another blow to brick-and-mortar record stores, which with the
rise of digital music have already lost CD sales.

"The fun of
collecting is gone," said Michael Crowley, who said he spent his
childhood hunting for bootlegged copies of obscure acts in hidden-away
record shops run by edgy people with nose rings. "They’re not that fun
if you can download them with a few mouse clicks," said Crowley, a
Washington journalist who wrote about the rock snob’s demise by digital
music for the New Republic.

Crowley admits that he now relies
more on music blogs and friends’ playlists to keep up with trends in
music, making him more of a follower than a leader in the online world.
Still, he said, the ability to copy music can’t stand in for taste.
"Taste is something you have to cultivate."

Richard Carlisle toes
a harder line. The self-described vinyl-record purist has sold records
for 30 years and owns Orpheus Records in Arlington. He’s never put an
iPod to his ears and spends no time on the Internet surfing for new
music. "I have a vested interest in people not using an iPod," he said.
"I guess you could call it a sour-grapes phenomenon."

But online
trends still affect his business; a customer recently came in asking
for an album from an indie-rock band he’d never heard of — Neutral
Milk Hotel — which had become popular online. Since then, he’s sold
roughly 30 of those albums.

From Yuki Noguchi
Washington Post

NPR / Marketplace

Listen to this story

Universal
Music wants to save the compact disc. The company said today it’s
unveiling new packaging to make CDs more attractive to consumers who’ve
been lured about by digital downloads. Lisa Napoli reports.

KAI RYSSDAL: We talk a lot on this show about digital
music and downloading. But the good ol’ compact disc still accounts for
90 percent of the music industry’s sales.

It’s getting a makeover from the world’s largest music company. In
Europe at the end of the summer, the Universal Music Group is going to
jazz up its packaging and raise the prices on the hot new releases. And
at the same time it’ll simplify packaging and cut the prices on older
offerings.

Marketplace’s Lisa Napoli says some feel that’s incredibly beside the point:

LISA NAPOLI: Dressing up the compact disc and
charging more money for it is kind of like the Emperor’s New Clothes.
So says Dave Kusek, co-author of the book, "Future of Music."

DAVE KUSEK: Packaging is not the issue.
It’s value and convenience is the issue. It’s part of a continued
denial that the music industry has a problem.

The problem isn’t that some people hate those flimsy CD jewel cases.
And the solution isn’t to make sturdier cases, or add extra tracks and
videos. Industry observer Bob Lefsetz says CDs are a dying format and
the industry just wants to maximize revenue.

BOB LEFSETZ: This is like, you now, a
complete sideshow. It’s irrelevent. It’s to what degree is it
Smith-Corona typewriters and one day you won’t be able to sell them.

Lefsetz says it all goes back to those peer-to-peer file-sharing sites where people get music for free.

LEFSETZ: More tracks are traded P-to-P in
a month than are sold in a year on physical formats. For every track
that is sold at the iTunes music store, there’s in excess of 10 that
are traded.

In other words, to make money from music will take more thinking outside the box.  Not just revamping the box.

In Los Angeles, I’m Lisa Napoli for Marketplace.

After years of digital disruption, the music industry is still divided on the best strategy to move forward with.

So far, recorded music distribution has commanded most of the attention during this disruptive phase, at least in major press circles. Sales of CDs, the rise of online formats, the challenges presented by P2P networks - these are all immediate concerns and issues felt most acutely by labels. Quieter aspects of the business include the live concert industry, brand sponsorships, merchandising, and publishing royalties, areas that labels rarely reap direct revenues from. And wedged in-between are mobile formats, led by the explosive ringtone phenomenon, which now benefits both labels and publishers alike.

The distinctions are important, and so are the widely-divergent opinions on where this business is going. In one camp, there is a strong belief that disruptive technologies like P2P file-sharing can be controlled and contained, that music fans can be retrained, while formats like paid downloads and even CDs can power a long-term revenue stream. Others point to massive shifts in the way consumers are discovering, receiving, and ultimately listening to music, and question any attempt to fundamentally alter P2P networks as they exist today. One suggested solution is a licensed P2P architecture, not with filtering or controlled selection, but through broad-based methods like ISP monthly surcharges. Still, another group disavows any attempt to harness P2P at all, and instead focuses on a far broader revenue outlook for artists - an approach that could include free file-sharing for promotional effect, and paid concert revenues from core listeners, for example.

In between, endless variations exist. But a key question is whether the skies can be tamed on digital distribution. Continued efforts by the RIAA reflect a belief that they can indeed be reclaimed. "A vibrant, online marketplace is taking root," said RIAA chairman Mitch Bainwol and MPAA chief Dan Glickman in a recent Wall Street Journal opinion, while noting that "file-sharing networks like iMesh and BitTorrent are showing that the technology can be used legally." The pair also pointed to surging paid download levels, and ongoing legal action against illegal services.

The piece has a more-than-healthy bit of spin, and the opinion was timed with the one-year anniversary of MGM v. Grokster. Certainly, some positive developments are happening for the industry since that decision, particularly in the paid download realm. But that game is still early, and a-la-carte purchases still present a dangerous change in bundling practices - despite jumps in total revenue. Meanwhile, most music fans are still grabbing files en masse from applications like eDonkey and LimeWire, and earlier claims that file-sharing volumes are being "contained" are thinly supported. Elsewhere, attempts to offer a filtered, paid file-sharing platform have been either non-existent or unsuccessful. Companies like Mashboxx have yet to see the light of day, SnoCap never emerged as a legitimate P2P backend power-player, iMesh has made little noise after its inception, and a recent deal with BitTorrent was largely superficial. Meanwhile, according to figures from BigChampagne, there are more than ten  million active file-sharers online at any given moment, a figure that continues to increase - albeit at a slower rate over the past year.

So when do things change? The question for the RIAA is whether the current state-of-the-industry reflects a deeper, structural shift that is inconsistent with the philosophy of the trade group. Alternative approaches have been kicked around for years, including more diversified label business models, ISP-based blanket licensing of P2P networks, and DRM-free, cheaper paid downloads. Certainly, the weeds on those approaches are complicated, and their success is less-than-guaranteed. But the current report card for major labels is mixed at best, and sales of pre-recorded CDs are continuing to drop.

Meanwhile, the RIAA seems doggedly attached to its strategy, despite serious questions about its success possibilities. Ultimately, consumers will offer a final verdict, part of an increasing power-shift across numerous industries. If that is the case, then why is the RIAA pushing so hard with "we’re winning" opinions like the one found in the Wall Street Journal? Does a well-executed PR campaign have any effect on the underlying market? Perhaps the perception of a recovering major label could boost stocks like WMG, but will it make consumers buy more CDs, or purchase more tracks on iTunes? The answer is no, especially since the most engaged music listeners - teenagers - are mostly disengaged from mainstream media outlets. And in an increasingly fragmented media landscape, the market is likely to change on its own, regardless of what major press outlets - and anyone else besides consumers - have to say about it.

From Paul Resnikoff at Digital Music News