Future Of Music

My friend George Howard recently wrote a great article for Berklee’s Music Business Journal.  In it he explains how music marketers can connect more closely with the fans that matter as they try and propel their band forward.  Here is an excerpt from the article and solid advice for any marketeer.  The complete text can be found here.

The Life Cycle Curve

In order to find your audience you must consider several details. The first is to accept the fact that you cannot market to the majority; you can’t afford it, and even if you could you would fail because of issues related to frequency of contact with these gatekeepers (i.e. radio/press).

Take the Mavens and Early Adopters and focus on these two groups. The Mavens, a term popularized by Malcolm Gladwell in his book The Tipping Point, applies to people who actively and aggressively seek out new things. They are the ones who are not only the most connected to the information channels, but are also most predisposed to discover new things, and new channels as well.

These mavens have a personality type that generates deep satisfaction from not only the seeking out and discovery of new material, but also the sharing of this material. The first class of people with whom they will share are so-called Early Adopters.

These Early Adopters are one standard deviation closer to the majority than the Mavens, and thus there are more of them. However, while they will adopt new things more quickly, they are not typically at ground zero of discovery. If the mavens are the bloggers, the Early Adopters are the readers of these blogs, and — to a degree — the re-bloggers. Again, these Early Adopters are a more populated class, and thus their influence is potentially greater than the Mavens.

There is crossover between the two groups. The area of focus is detailed below:

In every product category there are Mavens and Early Adopters. Whether you are dealing with music or any other product or service, you must find a way to bring your product to both groups.

Pyschographic Modeling

In an era of interconnectivity, demographics and geographics, while still important, are less important than the habits, trends, personality of a customer; i.e. their psychographic profile. Finding your audience requires you to understand profoundly the psychographic profile of your customers. What do they look like, where do they shop, what type of food do they like, etc.?

Determining these factors allows you to create a “model” customer. This is the person who, if you could get your music to her, would deeply embrace it. Also, given the fact that she is a Maven/Early Adopter, she will likely share what she has discovered with her network. Significantly, defining this Model Customer allows you to determine where this customer is likely to congregate, and thus where you must bring your music.

The Straddle: Offline and Online

We do not make profound connections with products, services or people online. Profound connections occur offline — in person. The genius of Facebook, and why it has eclipsed networks such as MySpace, is that it represents a Straddle of offline and online; we upload pictures and detailed stories of our offline activity so that our friends and family can be aware of these offline experiences. In this manner, you must understand that technology is simply an accelerator of your offline activity. By locating the Mavens/Early Adopters within your psychographic landscape, and taking your music to them — in person — you greatly increase the odds of these people developing an emotional attachment to your work.

Architecture of Participation

One of our most primal urges is to share information; this is why babies make the massive cognitive leap to learn language skills. Your job, once the initial offline experience has been established, is to create an architecture of participation; a method for frictionless sharing of information so that those Mavens/Early Adopters who have discovered you offline can begin to share their discovery with their network (i.e. online).

This requires a series of steps related to value exchange. Your first task is to establish four things:

1. Your own site
2. A Facebook Fan Page
3. A Twitter Account
4. An email newsletter

Your Site

On your site you must present a value proposition that begins with exchanging some type of content for an email address. Email is your currency; the more of it you have, the more likely you will be to convert what is essentially a non-scarce resource (i.e. your music) into something of tangible value. Do not be fooled into thinking you can get away using a third-party site as “your” site. While, undeniably, service providers such as Reverb Nation and Bandcamp provide value, you do not own these sites, and fundamentally your participation does more to increase the value of these sites than increase your own value. This is not to say you cannot extract value from these third-party sites; however, this requires using them like Facebook, Twitter, and others, to drive potential customers to your own proprietary site.

Facebook

Your FB fan page, similarly, must also represent a value proposition. The value here relates to engagement. FB allows for easy engagement via its makeup. Consider contests, polls, short videos, or other ploys that will keep your fans not only engaged with you on FB, but will encourage them to direct those in their network to your FB fan page. Of course, you must use FB to direct customers to the value proposition that exists only on your site: a content-for-email exchange, and other site-specific offerings (chats with the artist, etc.).

Twitter

Twitter should be used to establish your voice and to direct people to your site. The establishment of the voice comes as much from your affiliations — who you link to, who you follow — as it does from your actual tweets. As above, use it to engage and to direct traffic to your site. Employ time-sensitive offers and offers only available to those who follow you on Twitter. The goal is to inter-connect these tools, and to leverage them to enhance the offline experience. In all mediums you must encourage and facilitate sharing. Your site must have a FB “Like” button and a share on Twitter so that whenever you post content, your constituents can share with their network.

Email Newsletters

The single best tool for conversion of fan to customer is email. While email is an increasingly ineffective tool for communication it still yields a higher return with respect to sales than any other tool.

Therefore it is imperative that you use your email newsletter wisely.

1. They must be short; highlight one and only one action. The total length should be less than 500 words.
2. They should be frequent; once a week on a regularly-scheduled basis.
3. They should have a call to action; tell the recipient what you want them to do: come to the site to get something, come to a show, etc.
4. They should be forwardable; ask your recipients to forward the email to someone they think will enjoy it.
5. They should have sharing functions embedded; allow people to Tweet, add to a FB status.
6. Make it easy for people to unsubscribe.

Don’t worry about overwhelming people with email blasts. If people are unsubscribing, they’re likely non-value adding “fans” any way. Instead, focus on presenting real, timely, share-able value to your current fans so that they have a tool to help you gain new ones.

Converting your Audience to Customers

It is an immutable law of business and nature that somewhere close to 80% of your activity (engagement, profit, etc.) will come from 20% of your constituents. This is referred to as the Pareto Principle or the 80/20 rule. This means that if you have 10,000 people on your email list something close to 2,000 of them will generate 80% of your total sales. The other 8,000 will be largely non-value adding.

The problem of course is that you won’t know which of the 10,000 are the true fans. Thus, you must continuously work to increase your overall amount of constituents. Rather than having 2,000 of 10,000 contributing, strive to have 20,000 of 100,000.  In order to sift through the layers of participation to find the most valuable customers, you must create a filter. Think in terms of a funnel. At the widest point of the funnel is the easiest level of engagement: a free song for an email address.

Summary: The Value of Psychographics

The key is to determine what you deeply care about; what your purpose is, what your values are. From there you can begin — via a psychographic analysis — to find fans that share these same values. At that point, your goal is to bring your music to them, and create the architecture for more participation. Straddle between an offline and an online engagement strategy, but use both.

Once you’ve aggregated these Mavens and Early adopters, you must begin converting them into both customers and evangelists. This is done by honoring the 80/20 rule and working to extract maximum value out of your loyal 20%. Always work to increase the overall pool of your fans.

By George Howard

George Howard was President of Rykodisc, is an original founder of Tunecore and  Assistant Professor and Executive in Residence in the College of Business Administration at Loyola University.

You want a relationship with your fans? Why not  go to their houses and play.  No way to get to know people better than invading their homes and doing your thing right in the middle of their living rooms.  Right?

The future is all about breaking new ground and combining that with solid business models that you can predict and work with.  Here is a guest post from Fran Snyder on house concerts and what they should be a part of your future.

I encourage all of you to build on this model and create new experiences and interactions that create value and exchange between artists and their fans that cannot be digitized.

I would be very interested in your comments on this piece.

The Future of Music is Uncertain.

What we can confidently say, however, is that artists will benefit from increasing access to information, and systems/websites will develop to make that information useful, if not vital.

To find success with these new resources, I see two major limitations that artists must overcome. First, and almost instantly dismissed by todays artists, is the need to focus on fundamentals – namely, the ability to play and write great songs. The tsunami of social media and music advice is a relentless force pushing musicians away from their instruments. Before the recording, radio and tour budgets get out of hand, let’s go back to the woodshed – the one with no internet, the one that provides the solitude needed for a true artist to discover and develop their gifts. There is no substitute for great art.

The second limitation is a tired and unproductive definition of success. Artistic success is a muddy thing… not the shiny superstar image we all secretly (or overtly) harbor from decades of media brainwashing. You can be important, you can be happy, you can be filled with meaning from your work as a recording and touring artist. Rich and famous is much harder to accomplish, and many stars will tell you it’s not nearly as satisfying as it looks. Dig into your work. What about it makes you most happy?

I’m convinced that becoming a superstar is harder than it ever has been. I’m also convinced that for artists who focus on a different goal, there is a rising tide of new opportunities, and more chances to succeed than ever before. Let’s start with touring.

Small is the new big, and why house concerts could save touring artists.

House Concerts – Mozart was onto something.

Mozart was well known for performing “parlor concerts,” in the homes of rich patrons who would delight in the opportunity to show off their acquaintance with him. Things have changed, however, and you no longer need to be rich to have access to some of the finest talent available. Furthermore, many of these artists are genuinely interested in their fans, and enjoy an opportunity to connect in a way that rarely happens in traditional venues.

Breaking New Markets = Breaking the Bank

Most acts, regardless of talent, are lucky to draw 30-40 people when they play in a new area. The resources needed to get beyond those numbers are getting more expensive and less effective all the time. Publicity and radio promotion can cost many hundreds if not thousands of dollars per week, and these methods employ people to beg, bribe, or cajole overwhelmed media personnel (writers, DJs, music programmers) who can rarely make the returns worthwhile. Ask any act how many “butts in seats” result from a nice article in the paper. Few, if any. Likewise, airplay doesn’t yield much unless it is sustained. Posters and flyers? Don’t get me started.

It’s been universally accepted for years that touring is so important, that artists should be willing to do it at a financial loss. Furthermore, it’s often suggested that you play anywhere and everywhere, because you never know where a new fan (including one with some power to help in a significant way) will turn up. And if you return consistently, you’ll build an audience.

I say it’s nonsense.

Of course, if you are an artist on the road, not every gig is likely to be a part of your grand strategic plan. But it is wrong to start with the premise that you should play in rooms where people don’t pay attention, and where the financial prospects are gloomy at best. That mentality is a disservice not only to your music, but to professional artists everywhere.

Shame on us. For decades we’ve been teaching audiences that it’s perfectly O.K. to sit 5 feet away from a performer, and carry on conversations at the top of their lungs. Who started this? Has anyone built a lasting audience this way?

Play Rooms You Can Fill – Play Rooms Where You Can Connect.

Without a fat budget and a dedicated team of smart supporters, I believe the best way to build an audience is to play rooms
you can fill, and
that allow you to really connect in a personal or powerful way with the audience.

But where are the rooms you can sell out with 40 seats? Specifically, where are the ones that don’t have an espresso machine screaming during your ballads?

Shrinkage!

The potential audience for live music in traditional venues continues to shrink and fragment. People have more choices than ever for entertainment, and many of those choices increasingly keep them at home. Rentable and on-demand movies, xBox 360 and Wii, and the increasing variety and breadth of sports events and programming provide serious competition to the concert business.

In addition, despite the good they’ve done to society, stricter DUI laws have reduced the number of people who go out to listen to music, and smoking bans force “would-be listeners” out of the room during the show. We now have 200 capacity clubs who routinely have 50 people show up, and a majority of the audience spends half the night outside.
So venues have to diversify to stay in business.

Pool tables, televisions, electronic trivia – anything to bring in more bodies, sell more drinks, and stay in business. They have to do this, regardless of how it affects (distracts) from the core vision of the enterprise – putting on live music shows. Artists (who seemingly have no better option) gladly walk in, set up, and waste their evening playing for ungrateful, inattentive patrons, and force their true fans to watch a show while drunks are screaming about the latest touchdown.

And everyone accepts it. That’s life.

Wanted: Hundreds of Geniuses

The fact is, it takes a genius to run a music venue that can turn a profit (consistently) by presenting shows with audiences of less than 50 people. The economies of scale mean that running a club that is 50% smaller than before might only trim your overhead by 20%, all else being equal. The ones that do succeed often split the club (restaurant/venue) physically – by creating a separate room for the music. Eddie’s Attic, in Decatur Georgia is a good example of this, but has had its share of tough economic times.

The fact is, as audiences continue to fragment and dwindle, many clubs will go out of business unless they downsize or change what they are doing. Especially if they are not doing it well. Artists have long accepted second jobs or being broke as a way of life – some club owners have as well. This is not new, but is it necessary?

In the absence of geniuses, how can we have profitable concerts with an audience of 30-40 people? One way is to create an event that is so special that one person (the venue) is willing to let the other (the act) keep all the money. Who would do such a thing? A house concert host.

What is a House Concert?

It’s an invitation-only concert in someone’s home, presented by a host who does not profit from the event. Although there are many exceptions and variations from these guidelines, house concerts are usually…

• held indoors and on weekends
• attended by 20-50 people
• paid for by a $10-20 donation per guest (for the performer)
• known to include light snacks, beverages or a pot-luck dinner
• attended by the host’s friends, neighbors, co-workers, and maybe a few fans of the artist
• attended by a 25-60 age group
• performed by solo, duos and small groups
• performed with little to no amplification
• very intimate – the audiences sit close and are attentive
• performed as two, 40-minute sets with a 20 minute break
• stronger for artist’s merchandise sales than traditional venues
• booked without a financial guarantee (sometimes a modest guarantee to cover expenses)
• known to house and feed the artist for the night

The Growth of House Concerts

All over the world (but mostly in North America) music fans are discovering that putting on a house concert is a lot of fun, inexpensive, and a great way to entertain friends and acquaintances. They also get a kick out of having personal time with the artists, and knowing that they are playing a very important role in their careers. And thousands of these events happen every year.

Due to space considerations, these house concerts are more likely to help singer-songwriter acts and small ensembles, but the variety of genres and spaces available continues to grow. Jazz combos, instrumental acts, or any act that can comfortably fit in a living room might really enjoy performing in these intimate spaces.

Until we have enough geniuses to develop a commercial infrastructure for small, profitable concerts, house concerts will have to fill the void. In the meantime, small clubs owners, since they often lack the purchasing power to get A-List performers, should connect with these non-profit promoters to take advantage of block-booking opportunities and “double buys.” Even when they are in fairly close proximity, there is usually a very small overlap between house concert and club audiences. House concerts often draw people who don’t like late nights and driving downtown.

Are house concerts the perfect pill?

So far you would think so. But a house concert host can have just as much trouble building an audience. Some hosts have a natural ability to gather crowds (through personality, standing in the community,etc.) but some really have to work at promoting their events. Booking a “stiff” act or two can seriously damage your reputation as a host, and start a downward trend of the audience you’ve worked so hard to build. House concerts are subject to all the same “acts of God” and “acts of Playoffs” that traditional venues deal with.

The upside, however, is that even a modest turnout (15-20 people) can be very satisfying, profitable, and not leave the artist scrambling for a hotel at the end of the night. Many house concert hosts provide food and a guest room for the night – two of the biggest expenses of being on the road.

Rebuilding Our “Infrastructure”

House concerts are filling a key missing ingredient in the live music infrastructure. They provide the venue for artists who cannot draw the numbers necessary for a traditional “for profit” live music venue. This provides opportunities for niche artists, such as
great talents who are not famous* yet, or not famous anymore
great talents who aren’t chasing fame or major commercial success
world class performers who’s fame and market share are limited by the genre (i.e. folk) they inhabit
developing talent

* substitute “well-known” if you prefer.

In the absence of house concerts, these acts play in bars and coffeehouses, serving no particular purpose. They don’t make a living wage, and neither does the venue. They don’t fully express their art, because a distracted audience simply cannot participate fully in the show. These “concerts” are often another missed opportunity to do something smaller and more rewarding.

Never before in our history has there been so much talent available, yet so much of that talent is “stuck.” There are not enough venues where small successes are possible – places that are the necessary stepping stones for an artist building a regional or national fanbase.

Necessity is the mother of invention, and the development of new house concerts, by enthusiastic and savvy fans, is necessary – always has been. Just ask Mozart.

Fran Snyder is a touring singer-songwriter, and founder of Concerts In Your Home

Thanks Fran!

I encourage everyone to build on this model and create new experiences and interactions that create value and exchange between artists and their fans that cannot be digitized.

Over the past year I interviewed many successful people from all walks of the music business.  They talk about what is working for them, their artists and writers and how to get ahead in the music business today.

These are music producers, label A&R executives, music publishers, video gamers, music supervisors, entrepreneurs, entertainment attorneys, artist managers, music distributors, marketing executives, and music educators from Electronic Arts, Topspin, CD Baby, Nettwerk, Primary Wave, Newbury Comics, Berklee College of Music and NBC/Universal and many more. Learn from Ian Rogers, Ariel Hyatt, Terry McBride, Jill Sobule, Phil Ramone, Kelly Cha, Mike Dreese, Derek Sivers and others.  Enjoy.

See more at Music Power Network

Decades before indie labels and DIY were the norm, and years before women had any real access in the industry, Cris Williamson was busy changing the face of popular music. Cris’s stellar vocals and compelling persona are regarded as legendary for good reason. Despite being like a well-kept secret, and dwelling almost completely in the independent music world, she nonetheless had an impact worldwide. Her now-legendary classic album, The Changer and the Changed, is one of the best-selling independent records of all time. For nearly 30 years, Cris has toured incessantly, selling out Carnegie Hall numerous times and headlining folk festivals around the country.

Here is an excerpt of her interview on MPN where she talks about the importance of gaining a foothold and going direct.

MPN is an online service for music business people and music and artist managers creating the future of the industry. MPN provides online musi…c business lessons, exclusive video interviews and advice, career and business planning tools and thousands of specially selected resources designed to help you achieve success in this ever changing industry. MPN gives you the tools, expertise and guidance to help you get organized and take your music career to the next level. Learn from industry experts, set your goals and realize your vision.

To see the full interview, click here.

Here are some ideas that you can use as a musician, band or artist from Music Power Network from artists Kelly Cha, Jill Sobule and J the S. There are a lot more videos like this on the site.

MPN is my latest project and an online service for independent musicians and bands. MPN provides online music business lessons, exclusive video interviews and advice, career and business planning tools and thousands of specially selected resources designed to help you achieve success as a self-sustaining artist in an ever changing industry. MPN gives you the tools, expertise and guidance to help you get organized and take your music career to the next level. Learn from industry experts, set your goals and realize your vision.

Learn more at Music Power Network.

Get Busy Committee

My friend Ian Rogers, CEO of Topspin has started to co-manage the band “Get Busy Committee“.  He has begun to blog about ALL the activities that an artist manager needs to drive their band to success.  It is a fascinating read and a real world education on how to take a band to market in the new music business.  This is going to be really fun to watch as Ian lays out step by step what he is doing to break this band and “get busy” in the marketplace.

To bring a band to market in today’s indie music market is a hell of a lot of work.  You need to be an entrepreneur and you need to build a team of people to help you market, package, promote, distribute, brainstorm, license, and develop a successful artist.  Ian is taking the indie artist management route described at Music Power Network.

Here are some excerpts from his blog.  Required reading for the indie artist and manager today:

The first thing we did was define success: as I mentioned earlier, the goal is to get this music to as many people as possible, connect directly with the ones who like it, build products those people want to own, and turn a profit. Sure it would be great to make enough money that Get Busy Committee could be their primary income, but we definitely aren’t starting with the “if we don’t get a song on a radio this is a failure” mentality. We are starting at zero. The goal is to grow every single week and not lose money.

We started by putting together a release plan. I opened a Google Doc and started dropping ideas and info into it, and encouraged others to do the same. We needed a team, so we started assembling the roster of people, services, and tools which would help us get this record out the door:

Building a Team

Press Relations and Marketing
Creative Direction
Web site design and development
Digital distribution
Physical Distribution
Non-traditional physical manufacturing
Performing rights organizations
Legal

While getting the album to iTunes is the main thrust for a lot of artists, it’s only part of the story (and a very small part so far) for us. We’ve been preparing for this release for months, started selling the album in six different package two weeks ago, are selling the album for $1 on MySpace all weekend, and much more.

Web Site

The object was to make the site:

Home base. The top SEO result for “Get Busy Committee” and anything else related to the band.

Vibrant. It should update with the latest information about Get Busy Committee with very little effort, from a variety of sources. Furthermore, we weren’t going to spend time or money building any of these tools from scratch. We integrated WordPress and Twitter to make sure it was easy to update with long or short-form updates (respectively) easily.

A fan acquisition tool. The site should be sticky like fly-paper. If you visit the site you should have an incentive to leave behind your email address, follow GBC on Twitter, become a fan on Facebook, a friend on MySpace, friend on Flickr, subscriber on YouTube, or subscribe via RSS. We may only get one chance to make a connection with you. We don’t want you to bounce in and bounce out without granting us permission to reach out to you later with an update.

A tool for fans to create other fans. Every page of the site is instrumented with simple ways to share on Facebook and Twitter, and feedback for having done so either in the form of a counter or free music for having done so. We want it to not only be easy to spread the word but for you to be recognized for having done so.

A place to convert at whatever level of fan you happen to be. Never heard of Get Busy Committee? No problem, you can stream the record or download a few songs for free. Super fan? How about the T-Shirt/USB Flash Drive combo for $55? Somewhere in between? No worries. We have something for you.

Useful. If you’re a college radio DJ who needs a clean version to play on your show or a beatmeister who wants an acapella to remix that should be easy to find. If you’re a blogger writing about the band there should be, even if it’s not linked from the front page. Anything you email to people regularly should be on the site and easily linked to.

Read much, much more about marketing, pricing, making connections, creating awareness and all the things a smart artist manager needs to know.  Brilliant!

Thanks Ian.

Ian Rogers and his team at Topspin are on in.  Listen to what he has to say in this brief interview from Wired and think how it can apply to your situation.

The more you know, the better decisions you can make and the further you can go.  Simple as that. Topspin is generating data, as are Nimbit, Reverbnation and others.

Patronage of the arts is a time honored practice that is still alive and well in the music business.  Many examples of fan financing from Ellis Paul, to Jill Sobule and many others have been reported and detailed recently in this blog and others.  Now a group of musicians from California have put together a very interesting program to raise money for commissioning projects that I hope catches on.  We need more thinking like this in the music industry today.  Effective and creative methods of connecting music fans to artists, writers, composers and producers will help propel the next generation of music making.

Symphony of a Million

“Symphony of a Million” is a 6-month campaign, a commissioning project that brings together composers, performers, and the general public.

The goal is to sell 1 million notes. Purchased notes will be used in not just one single million note work, but rather many new works. Composers will work with performers and compose pieces of varying lengths. The first work to be written will be a 1000 note work for solo marimba composed by Music Academy Online founder, Dave Schwartz, and written for percussionist Nobue Matsuoka. The second work will be a 4000 note composition for saxophone and harp and it will be composed by Anthony Lanman who will be working with saxophonist Dr. Noah Getz and harpist Jacqueline Pollauf who perform together as the duo Pictures on Silence.

* Buy a note for $1

* Each note becomes part of a piece of music composed by award winning composers. Throughout the process we will be commissioning composers to write new works of varying lengths using the notes that you purchase.

* A special “Symphony of a Million” concert, sponsored by Music Academy Online and featuring world-class ensembles, will premier all of the works created using the notes you buy. The concert will be held May 18, 2011, the 100th anniversary of the death of Gustav Mahler, the man who composed the “Symphony of a Thousand.”

* Buy as many notes as you wish. Dedicate the notes to someone special. Help to shape entire sections of new music with the notes you select! Your name (and theirs) will forever be part of the final scores.

* Encourage your friends and family to buy notes.

Find out more here.

My co-author and friend Gerd Leonhard was recently interviewed by Carter Smith of Rollo & Grady. Here is the interview:

R&G: How did you become interested in writing about the future of music?

Gerd: I was involved in various online ventures during the Internet years, in the late 90s. I was trying to reinvent the music industry, so from 1998 through 2001 I ran a company called licensemusic.com. It was a real dotcom venture. Because of the work I had done, I saw what was going on. While I was recuperating from the dotcom craziness, I figured that since I had looked at it so deeply that I might as well write about it. I wrote “The Future of Music” from 2003 to 2004, and it was published in 2005. Ever since then I’ve written and blogged about the future of music, the media business and the content business in general.

R&G: In the book, you focus on the concept of music being like water. Can you describe that?

Gerd: I had a co-writer, Dave Kusek, who you might know. He teaches at Berklee College in Boston. The concept of Music Like Water wasn’t entirely ours. David Bowie once said in an interview with The New York Times that music would become like water, flowing freely. That stuck with us and we built this whole theme around it, saying that digital music needs to be as available as water. In other words, there has to be a licensed pipeline, just like licensed connections for water or electricity. Everybody pays for electricity and water, but nobody feels it’s a big effort to do so. Of course, people are up-sold with Evian, Pellegrino, or filling the swimming pool. It is very much the same logic. You have a license to use. You’re all in. Then you do an up-sell towards other variations. The principle fits pretty well with the idea of content distribution on digital networks. It’s a blanket deal – a big deal rather than a unit sale.

R&G: Is that similar to the labels backing Choruss? [Note: Choruss is a proposed plan that would build a small music-royalty fee into university tuition payments, allowing students to legally access and share music.]

Gerd: Yes, totally. A friend of mine, Jim Griffin, is doing that. Jim and I have talked about this for the last ten years, pretty much since Napster came to light. It’s a very similar idea, even though they’re thinking of this as more of a “covenant not to sue.” I don’t think that is taking it far enough. One has to be realistic. I think that the major labels are reluctant to give up control of the ecosystem in a flat out strike, so they will probably take a bit longer to get used to this.

R&G: If I understand this correctly, it’s a university tuition tax?

Gerd: It’s not so much a tax as a way for universities to say, “Whatever people do here, we can legalize it.” It’s fighting against the criminalization of sharing, which is great. And for the students it’s not a tangible expense. It’s wrapped into their tuition. It’s like 911 calling on your phone bill; nobody is going to complain about it. Then, I think a completely new ecosystem could pop up that would essentially be part of the way to access and up-sell to people. I would be against any such tax, levy, or any of those things, but if it can be made to feel like it’s free, which is what it is, I think that is an ideal solution that gets the ball rolling.

R&G: Once a digital network customer pays a fee, how are funds distributed to the artists?

Gerd: It’s very much like traditional radio. Every action on a digital network is monitored. Whether it should be is a different question, and, of course, there are privacy issues. But whatever action people are doing on the network, it’s captured in some anonymous way and then the revenues are paid pro rata. When you click on a song and share or download it, whatever network you’re on can say, “Okay, this was downloaded. This was streamed.” Artists are paid out strictly by popularity. So if your band is busy doing lots of gigs, you’re very popular and you get 100,000 people following you on Twitter, they will click on the song, download it, and you get more money. It’s just like radio.

R&G: Can the labels regain the trust of “people formerly known as consumers?”

Gerd: They may not be able to, and this is the Number One problem. I think it’s a very tough road. The only chance they have – and that goes for everyone, not just the majors, but also the indies – is to drastically open up, put their cards on the table and start doing business like everybody else. This means being transparent, sharing, putting deals on the table and making them public. They need to create real value rather than pretend to do so.

R&G: You’ve previously mentioned that music blogs are the new record labels.

Gerd: Yes. Music blogs have enormous power because people trust the blogs not to pitch them stuff that they’ve been paid to pitch. If they can keep it up, they will be the next BBC. When you look at mechanisms like Twitter or Facebook or FriendFeed, these people become the default recommenders for us. They are the ones who say, “You should pay attention to this band, to this artist.” That’s what radio used to do.

R&G: Serving as filters.

Gerd: Yeah. You have to keep in mind that the biggest problem we are having is not that music isn’t available, because even though it’s not legal it is available. The biggest problem is that once the legal issues are solved, everything will become available. Our problem will be that we have to pick, and nobody has time to pick through 62 million songs. That’s the total universe of currently published music, and it’s going to increase. We don’t really need to solve the distribution problem. We have to solve the attention problem. That’s what Amazon does for books.

R&G: You’ve talked about how the record industry should adopt Twitter. Can you elaborate?

Gerd: Twitter is a mechanism of micro communication, like RSS feeds. Therefore, it becomes something that is completely owned by the people who are doing it, rather than by the people who are making or receiving it. It’s a completely viable mechanism that is cost-neutral, at least to us. It becomes a very powerful mechanism for peer response and viral connections. That is the principle of what music is all about. It’s word of mouth, connecting, forwarding and sharing. A musical version of Twitter would be a goldmine. It already exists to some degree in blip.fm, but the music industry should use that mechanism to broadcast directly to fans. They’re starting to do that, but the problem is that many music companies perceive their primary mission as gatekeeper for the artists rather than getting the music out. That is a big problem today, when you’re in an economy where everybody wants a snack before buying a sandwich.

R&G: What other technologies do you think are necessary for the do-it-yourself artists and managers of the new music world?

Gerd: Widgets and syndication have made YouTube the world’s leader in video. 60% of videos are not played on YouTube.com but on blogs and other people’s sites. Music has completely overlooked that very powerful tool. That is this whole idea of syndication – getting people to transmit music to each other and then reaping the attention on the other end.

R&G: Many of the kids who grew up with Napster are now in college. They’ve never owned a physical CD and only know how to click and download music. They think music is supposed to be free.

Gerd: Yeah, and it can be free in the sense that it’s not as painful as paying per action. The question is not so much about the payment or the fact that people may not be willing to pay right away. It’s about controlling the marketplace. Who gets to listen to what, where, when and how much money do I get? We have to get back on the same page we were on a hundred years ago. We’re all on the same boat. Everyone wants an audience. Until we have that, we have nothing.

R&G: When do you foresee the end of the CD?

Gerd: I think we have another 18 months maximum for CDs to become a Step Two rather than a Step One. They have a 25% decline for 2008 pretty much around the world. How much steeper can they drop? In 18 months, the CD isn’t going to be the cherished moneymaker anymore. And this year people in the music business are going to be forced to say, “Okay, what is the next model? Do we have to loosen up to actually participate in this, or are we standing in our own way?”

R&G: Are you saying they need to recognize any revenue stream they can generate from their content? Sell CDs, subscriptions, etc.?

Gerd: The flat rate is the next CD. Its simple mathematics. If you charge or indirectly earn one dollar from each user of a network, that dollar can be ad-supported. It can be supported by bundling, so the user won’t feel it, so to speak. If you look at the total number of people who are active on digital networks, which is somewhere in the neighborhood of 3 ½ billion people, they’re not all going to pay a dollar because they’re in different countries. But the money that comes in from such a flat rate is humongous.

R&G: You are currently working on a new book, “End of Control.” When is it coming out?

Gerd: I’m working on it right now, and it’s kind of a painful process because it’s always changing. The first couple of chapters have already been published at endofcontrol.com, and people can download those. It’s a free book, so I’m working on various ways to make that more powerful. The control issue is key. It used to mean that if you had more control you would make more money, especially in the music business. You control distribution, radio stations, marketing, everything. Now all that is completely falling apart. Artists are going direct. Radio becomes useless to some degree. It’s all on the web now. People are doing their own thing. Control is a thing of the past. The question is, “What is the next business model?” That’s what I’m working on.

R&G: Who are the current music business visionaries?

Gerd: This is one of the most unfortunate things. There aren’t very many. I always say we need an Obama of the music business, or at least a Steve Jobs, even though Steve is kind of egomaniacal, but brilliant. I see a couple of people, like Terry McBride from Network Records in Canada. I firmly believe, however, that the biggest innovation will come from people who are not in the music business.

R&G: Is this the year we will see considerable change within the music industry?

Gerd: I thought it was going to be 2008, so I’m quite disappointed. I think we’ll see new things emerge in 2009 that will be completely disruptive, like the iPhone and mobile applications of music, new kinds of broadcasting, people sharing stuff through mobile networks and high-speed, broadband, wireless Internet. I think 2009 will be a key year because the current economic crisis will make it worse. People will stop buying content the old-fashioned way.

Read more great interviews here at Rollo & Grady

My co-author and friend Gerd Leonhard was recently interviewed by Carter Smith of Rollo & Grady. Here is the interview:

R&G: How did you become interested in writing about the future of music?

Gerd: I was involved in various online ventures during the Internet years, in the late 90s. I was trying to reinvent the music industry, so from 1998 through 2001 I ran a company called licensemusic.com. It was a real dotcom venture. Because of the work I had done, I saw what was going on. While I was recuperating from the dotcom craziness, I figured that since I had looked at it so deeply that I might as well write about it. I wrote “The Future of Music” from 2003 to 2004, and it was published in 2005. Ever since then I’ve written and blogged about the future of music, the media business and the content business in general.

R&G: In the book, you focus on the concept of music being like water. Can you describe that?

Gerd: I had a co-writer, Dave Kusek, who you might know. He teaches at Berklee College in Boston. The concept of Music Like Water wasn’t entirely ours. David Bowie once said in an interview with The New York Times that music would become like water, flowing freely. That stuck with us and we built this whole theme around it, saying that digital music needs to be as available as water. In other words, there has to be a licensed pipeline, just like licensed connections for water or electricity. Everybody pays for electricity and water, but nobody feels it’s a big effort to do so. Of course, people are up-sold with Evian, Pellegrino, or filling the swimming pool. It is very much the same logic. You have a license to use. You’re all in. Then you do an up-sell towards other variations. The principle fits pretty well with the idea of content distribution on digital networks. It’s a blanket deal – a big deal rather than a unit sale.

R&G: Is that similar to the labels backing Choruss? [Note: Choruss is a proposed plan that would build a small music-royalty fee into university tuition payments, allowing students to legally access and share music.]

Gerd: Yes, totally. A friend of mine, Jim Griffin, is doing that. Jim and I have talked about this for the last ten years, pretty much since Napster came to light. It’s a very similar idea, even though they’re thinking of this as more of a “covenant not to sue.” I don’t think that is taking it far enough. One has to be realistic. I think that the major labels are reluctant to give up control of the ecosystem in a flat out strike, so they will probably take a bit longer to get used to this.

R&G: If I understand this correctly, it’s a university tuition tax?

Gerd: It’s not so much a tax as a way for universities to say, “Whatever people do here, we can legalize it.” It’s fighting against the criminalization of sharing, which is great. And for the students it’s not a tangible expense. It’s wrapped into their tuition. It’s like 911 calling on your phone bill; nobody is going to complain about it. Then, I think a completely new ecosystem could pop up that would essentially be part of the way to access and up-sell to people. I would be against any such tax, levy, or any of those things, but if it can be made to feel like it’s free, which is what it is, I think that is an ideal solution that gets the ball rolling.

R&G: Once a digital network customer pays a fee, how are funds distributed to the artists?

Gerd: It’s very much like traditional radio. Every action on a digital network is monitored. Whether it should be is a different question, and, of course, there are privacy issues. But whatever action people are doing on the network, it’s captured in some anonymous way and then the revenues are paid pro rata. When you click on a song and share or download it, whatever network you’re on can say, “Okay, this was downloaded. This was streamed.” Artists are paid out strictly by popularity. So if your band is busy doing lots of gigs, you’re very popular and you get 100,000 people following you on Twitter, they will click on the song, download it, and you get more money. It’s just like radio.

R&G: Can the labels regain the trust of “people formerly known as consumers?”

Gerd: They may not be able to, and this is the Number One problem. I think it’s a very tough road. The only chance they have – and that goes for everyone, not just the majors, but also the indies – is to drastically open up, put their cards on the table and start doing business like everybody else. This means being transparent, sharing, putting deals on the table and making them public. They need to create real value rather than pretend to do so.

R&G: You’ve previously mentioned that music blogs are the new record labels.

Gerd: Yes. Music blogs have enormous power because people trust the blogs not to pitch them stuff that they’ve been paid to pitch. If they can keep it up, they will be the next BBC. When you look at mechanisms like Twitter or Facebook or FriendFeed, these people become the default recommenders for us. They are the ones who say, “You should pay attention to this band, to this artist.” That’s what radio used to do.

R&G: Serving as filters.

Gerd: Yeah. You have to keep in mind that the biggest problem we are having is not that music isn’t available, because even though it’s not legal it is available. The biggest problem is that once the legal issues are solved, everything will become available. Our problem will be that we have to pick, and nobody has time to pick through 62 million songs. That’s the total universe of currently published music, and it’s going to increase. We don’t really need to solve the distribution problem. We have to solve the attention problem. That’s what Amazon does for books.

R&G: You’ve talked about how the record industry should adopt Twitter. Can you elaborate?

Gerd: Twitter is a mechanism of micro communication, like RSS feeds. Therefore, it becomes something that is completely owned by the people who are doing it, rather than by the people who are making or receiving it. It’s a completely viable mechanism that is cost-neutral, at least to us. It becomes a very powerful mechanism for peer response and viral connections. That is the principle of what music is all about. It’s word of mouth, connecting, forwarding and sharing. A musical version of Twitter would be a goldmine. It already exists to some degree in blip.fm, but the music industry should use that mechanism to broadcast directly to fans. They’re starting to do that, but the problem is that many music companies perceive their primary mission as gatekeeper for the artists rather than getting the music out. That is a big problem today, when you’re in an economy where everybody wants a snack before buying a sandwich.

R&G: What other technologies do you think are necessary for the do-it-yourself artists and managers of the new music world?

Gerd: Widgets and syndication have made YouTube the world’s leader in video. 60% of videos are not played on YouTube.com but on blogs and other people’s sites. Music has completely overlooked that very powerful tool. That is this whole idea of syndication – getting people to transmit music to each other and then reaping the attention on the other end.

R&G: Many of the kids who grew up with Napster are now in college. They’ve never owned a physical CD and only know how to click and download music. They think music is supposed to be free.

Gerd: Yeah, and it can be free in the sense that it’s not as painful as paying per action. The question is not so much about the payment or the fact that people may not be willing to pay right away. It’s about controlling the marketplace. Who gets to listen to what, where, when and how much money do I get? We have to get back on the same page we were on a hundred years ago. We’re all on the same boat. Everyone wants an audience. Until we have that, we have nothing.

R&G: When do you foresee the end of the CD?

Gerd: I think we have another 18 months maximum for CDs to become a Step Two rather than a Step One. They have a 25% decline for 2008 pretty much around the world. How much steeper can they drop? In 18 months, the CD isn’t going to be the cherished moneymaker anymore. And this year people in the music business are going to be forced to say, “Okay, what is the next model? Do we have to loosen up to actually participate in this, or are we standing in our own way?”

R&G: Are you saying they need to recognize any revenue stream they can generate from their content? Sell CDs, subscriptions, etc.?

Gerd: The flat rate is the next CD. Its simple mathematics. If you charge or indirectly earn one dollar from each user of a network, that dollar can be ad-supported. It can be supported by bundling, so the user won’t feel it, so to speak. If you look at the total number of people who are active on digital networks, which is somewhere in the neighborhood of 3 ½ billion people, they’re not all going to pay a dollar because they’re in different countries. But the money that comes in from such a flat rate is humongous.

R&G: You are currently working on a new book, “End of Control.” When is it coming out?

Gerd: I’m working on it right now, and it’s kind of a painful process because it’s always changing. The first couple of chapters have already been published at endofcontrol.com, and people can download those. It’s a free book, so I’m working on various ways to make that more powerful. The control issue is key. It used to mean that if you had more control you would make more money, especially in the music business. You control distribution, radio stations, marketing, everything. Now all that is completely falling apart. Artists are going direct. Radio becomes useless to some degree. It’s all on the web now. People are doing their own thing. Control is a thing of the past. The question is, “What is the next business model?” That’s what I’m working on.

R&G: Who are the current music business visionaries?

Gerd: This is one of the most unfortunate things. There aren’t very many. I always say we need an Obama of the music business, or at least a Steve Jobs, even though Steve is kind of egomaniacal, but brilliant. I see a couple of people, like Terry McBride from Network Records in Canada. I firmly believe, however, that the biggest innovation will come from people who are not in the music business.

R&G: Is this the year we will see considerable change within the music industry?

Gerd: I thought it was going to be 2008, so I’m quite disappointed. I think we’ll see new things emerge in 2009 that will be completely disruptive, like the iPhone and mobile applications of music, new kinds of broadcasting, people sharing stuff through mobile networks and high-speed, broadband, wireless Internet. I think 2009 will be a key year because the current economic crisis will make it worse. People will stop buying content the old-fashioned way.

Read more great interviews here at Rollo & Grady

I was recently interviewed by Carter Smith of Rollo & Grady on The Future of Music.

R&G: What was the reason behind writing “The Future of Music?”

Dave: Gerd [Leonhard; co-author] and I became friends at Berklee. He did a few projects with the music business department, which is how we got to know each other. We started talking and found that we had a lot of common ideas about what was happening in the music business. I ran Berklee Press, so I had a way to publish the book. We just started putting ideas down on paper. There wasn’t as much blog action then as there is today. It was probably 2002 or 2003 when we really started to write the book, so we figured, ‘Okay, we’ll publish it in book form.’ Our motivation was, ‘How can we help people understand what we think is going to happen?’ Both Gerd and I had done lots of panels and music shows – South by Southwest, all the digital music ones, Billboard and many gigs like that. We thought, ‘How can we pick some of these ideas and package them in a form that would be digestible and widely available to people at a reasonable price point?’ That was the genesis of it all. Honestly, it all happened so quickly that I kind of wish we could do it all over again. It was fun. It was a very condensed period of time. There were a lot of things that obviously were changing and happening, and there were a lot of things that weren’t so obvious. For example, I don’t think there was an iPod when we first wrote the book. That happened during the publishing and editing process. There was no iTunes music store, no MP3 blogs to speak of and no Amazon.com selling downloads. eMusic might have been there. It was all so early. Everything was happening so rapidly. We just tried to gather up as much as we could that was obvious and make some stabs as to what might happen.

R&G: Can you discuss the process of writing the book?

Dave: I learned a lot from Gerd during the process. I was more on the ground with the musicians. My whole career has been helping musicians and artists create their art, take their art to market and most recently teaching them about it. Gerd was more in the consulting end of things, talking to the likes of Nokia, Apple and Sony. I learned a lot about what was going on in the corporate world that I hadn’t been exposed to. I think we pushed each other because I would often argue that, ‘Man, we’ve got to talk to the artists and writers and managers, not to your consulting clients, because most of these people aren’t going to understand what the hell you’re talking about.’

R&G: “Music Like Water” the David Bowie quote meaning music becoming a utility. Do you still believe in that?

Dave: I think it’s inevitable. Music has always been free. It started off as a live performance. You’d go to a party, to a friend’s house, to a show, to the theatre or an event and music would be there. You’d be dancing and laughing and happy and singing. There was no idea of a business other than maybe the performers wanting to get paid. Throughout the technological phase of the last seventy or eighty years, there was always a free form of music, such as radio. The single most influential technological phenomenon in music was radio. It brought music to everybody, and it was free. Now we have gone through this pre-packaged, packaged phase of music, with vinyl, cassettes and CDs. That was a way for labels to control distribution and squeeze profits out of people wanting copies of the stuff they heard on radio. But once that leapt into the Internet, music became free again.

R&G: By free, do you mean file-sharing and uploading CDs onto your computer hard drives?

Dave: Both. People have been trading files for years. It started out on Usenet, which predated Napster. You remember Apple’s “Rip, Mix, Burn” campaign? It was really all about enabling the digitalization of music and unlocking it from the plastic that it was bound to. I don’t see it as a big deal that music is free again and in a higher quality format that is randomly accessible to the file-sharing networks or the services that we have now, some of which are “legitimate” and some aren’t. It’s not a very big deal to me. It just seems normal. The utility idea already exists on your TV. I have Comcast service here on the East Coast. We have Music Choice, which is essentially digital radio on your TV. There are 30 or 50 channels of music that are programmed and streamed to my house constantly that I pay for on my cable bill every month. I’ve been doing that for fifteen years. I have no choice about it. I just do it. It comes with HBO and the basic cable service. So there already is a music utility that millions of consumers in the U.S. have paid for many years. Why can’t that service just get a little bit better? If you add a random access mechanism where I can select what I listen to at a finer level than just picking the channel that Music Choice gives me, the service becomes better. I think it’s inevitable. I don’t understand what all the teeth gnashing is about. That’s a personal opinion.

R&G: What role will labels play in the future business models?

Dave: The major labels are going to be able to sign new artists, so they will have influence. But I think the indie labels and the no-labels that artists are forming – their personal labels – are going to be just as influential. If you get a super-hot band that decides they’re going to help pioneer a new format or a new distribution vehicle, and people love the band, they’re going to pick that up. They’re going to inherit that into their life. If enough new bands do that and connect with their fans, that will matter way more than what the four big record labels do. Eventually, they’re going to come around and say, ‘Oh man, we’ve got to get on this bandwagon,’ as opposed to doing it deliberately. You can see in the last four or five years, and particularly in the last two years, that labels are willing to abandon DRM, experiment and take a little bit more of a risk in how their music is put out there, which they absolutely, categorically refused to do four or five years ago. The rest of the music world is pulling them along. The fans and the new music are pulling the bigger labels into the future, as opposed to the big labels setting the pace. I think those days are over.

R&G: The majority of people I talk to feel that the next killer app is a filter that will enable users to find music they enjoy.

Dave: I think that’s certainly a critical element of whatever system of music delivery we evolve into. Findability, discovery are going to be critical features. I don’t know that there’s going to be a technological solution to that problem. Again, various forms of word-of-mouth have driven the popularity of all music through the years. So, to the extent that we can supercharge that word-of-mouth that’s happening in blogs like yours and services like Last.fm and Pandora that are kind of aggregating the opinions of others, uncovering and making those available, I think that’s going to be very important. But again, I don’t see how that’s any different than my telling friends in 1963 that I heard this cool band on the Ed Sullivan Show. It’s the same thing.

R&G: What do you think of blog aggregators such as The Hype Machine and Elbows?

Dave: I frequent The Hype Machine. Elbows, I’ve looked at a couple times. I think it’s a great thing. The more somebody can make it easier for people to find music they’re going to like, the more value that entity will gather. I don’t know that a computer-based search is going to be the ultimate winner. I tend to doubt it. I think it’s going to be more in the mobile space. It still blows my mind that people sit in front of their computers and listen to music on these absolutely shitty little speakers. They’re listening to crappy files in an uncomfortable chair. When I grew up, having a killer stereo was all that mattered, other than a car and a girlfriend. The stereo/audio business has completely gone away and been replaced by shitty ear-buds from Apple and MP3 files. It blows my mind that people tolerate that. I think it’s impacted the experience of listening to music, how you listen to it, how you enjoy it. So I’m not sure that a computer-based model is going to get enough traction to supplant other ways of acquiring, listening to and finding out about music. I think it needs to be easier, better sounding, portable and more integrated into your life. It needs to get outside of your bedroom or den.

R&G: I read on your blog that Douglas Merrill, President of EMI Digital, said he agreed with data that suggested file-sharing is good for the music industry. I found that interesting, but he also came from Google and didn’t have any experience in the music business. Do you see a trend in technology guys coming to the labels and figuring out how they can make this work; a technology guy versus the old-school music guy?

Dave: Not necessarily. I think the great labels of the past were run by music people who understood what the artists were all about and how to create great product, great songs and how to put great people together. I don’t think we can wave a wand and put a bunch of techies in the driver’s seat, and everything will suddenly be good. You need educated people that understand the technology, the music, the creative process, the marketing and the relationships with fans. As those skill sets get implanted in the people running the companies that matter – not just labels, but publishers, touring companies, marketing companies and distribution companies – then things will get better. I’m pretty confident of that, but I don’t see technology solving the music industry’s problem.

Read more great interviews here at Rollo & Grady

I was recently interviewed by Carter Smith of Rollo & Grady on The Future of Music.

R&G: What was the reason behind writing “The Future of Music?”

Dave: Gerd [Leonhard; co-author] and I became friends at Berklee. He did a few projects with the music business department, which is how we got to know each other. We started talking and found that we had a lot of common ideas about what was happening in the music business. I ran Berklee Press, so I had a way to publish the book. We just started putting ideas down on paper. There wasn’t as much blog action then as there is today. It was probably 2002 or 2003 when we really started to write the book, so we figured, ‘Okay, we’ll publish it in book form.’ Our motivation was, ‘How can we help people understand what we think is going to happen?’ Both Gerd and I had done lots of panels and music shows – South by Southwest, all the digital music ones, Billboard and many gigs like that. We thought, ‘How can we pick some of these ideas and package them in a form that would be digestible and widely available to people at a reasonable price point?’ That was the genesis of it all. Honestly, it all happened so quickly that I kind of wish we could do it all over again. It was fun. It was a very condensed period of time. There were a lot of things that obviously were changing and happening, and there were a lot of things that weren’t so obvious. For example, I don’t think there was an iPod when we first wrote the book. That happened during the publishing and editing process. There was no iTunes music store, no MP3 blogs to speak of and no Amazon.com selling downloads. eMusic might have been there. It was all so early. Everything was happening so rapidly. We just tried to gather up as much as we could that was obvious and make some stabs as to what might happen.

R&G: Can you discuss the process of writing the book?

Dave: I learned a lot from Gerd during the process. I was more on the ground with the musicians. My whole career has been helping musicians and artists create their art, take their art to market and most recently teaching them about it. Gerd was more in the consulting end of things, talking to the likes of Nokia, Apple and Sony. I learned a lot about what was going on in the corporate world that I hadn’t been exposed to. I think we pushed each other because I would often argue that, ‘Man, we’ve got to talk to the artists and writers and managers, not to your consulting clients, because most of these people aren’t going to understand what the hell you’re talking about.’

R&G: “Music Like Water” the David Bowie quote meaning music becoming a utility. Do you still believe in that?

Dave: I think it’s inevitable. Music has always been free. It started off as a live performance. You’d go to a party, to a friend’s house, to a show, to the theatre or an event and music would be there. You’d be dancing and laughing and happy and singing. There was no idea of a business other than maybe the performers wanting to get paid. Throughout the technological phase of the last seventy or eighty years, there was always a free form of music, such as radio. The single most influential technological phenomenon in music was radio. It brought music to everybody, and it was free. Now we have gone through this pre-packaged, packaged phase of music, with vinyl, cassettes and CDs. That was a way for labels to control distribution and squeeze profits out of people wanting copies of the stuff they heard on radio. But once that leapt into the Internet, music became free again.

R&G: By free, do you mean file-sharing and uploading CDs onto your computer hard drives?

Dave: Both. People have been trading files for years. It started out on Usenet, which predated Napster. You remember Apple’s “Rip, Mix, Burn” campaign? It was really all about enabling the digitalization of music and unlocking it from the plastic that it was bound to. I don’t see it as a big deal that music is free again and in a higher quality format that is randomly accessible to the file-sharing networks or the services that we have now, some of which are “legitimate” and some aren’t. It’s not a very big deal to me. It just seems normal. The utility idea already exists on your TV. I have Comcast service here on the East Coast. We have Music Choice, which is essentially digital radio on your TV. There are 30 or 50 channels of music that are programmed and streamed to my house constantly that I pay for on my cable bill every month. I’ve been doing that for fifteen years. I have no choice about it. I just do it. It comes with HBO and the basic cable service. So there already is a music utility that millions of consumers in the U.S. have paid for many years. Why can’t that service just get a little bit better? If you add a random access mechanism where I can select what I listen to at a finer level than just picking the channel that Music Choice gives me, the service becomes better. I think it’s inevitable. I don’t understand what all the teeth gnashing is about. That’s a personal opinion.

R&G: What role will labels play in the future business models?

Dave: The major labels are going to be able to sign new artists, so they will have influence. But I think the indie labels and the no-labels that artists are forming – their personal labels – are going to be just as influential. If you get a super-hot band that decides they’re going to help pioneer a new format or a new distribution vehicle, and people love the band, they’re going to pick that up. They’re going to inherit that into their life. If enough new bands do that and connect with their fans, that will matter way more than what the four big record labels do. Eventually, they’re going to come around and say, ‘Oh man, we’ve got to get on this bandwagon,’ as opposed to doing it deliberately. You can see in the last four or five years, and particularly in the last two years, that labels are willing to abandon DRM, experiment and take a little bit more of a risk in how their music is put out there, which they absolutely, categorically refused to do four or five years ago. The rest of the music world is pulling them along. The fans and the new music are pulling the bigger labels into the future, as opposed to the big labels setting the pace. I think those days are over.

R&G: The majority of people I talk to feel that the next killer app is a filter that will enable users to find music they enjoy.

Dave: I think that’s certainly a critical element of whatever system of music delivery we evolve into. Findability, discovery are going to be critical features. I don’t know that there’s going to be a technological solution to that problem. Again, various forms of word-of-mouth have driven the popularity of all music through the years. So, to the extent that we can supercharge that word-of-mouth that’s happening in blogs like yours and services like Last.fm and Pandora that are kind of aggregating the opinions of others, uncovering and making those available, I think that’s going to be very important. But again, I don’t see how that’s any different than my telling friends in 1963 that I heard this cool band on the Ed Sullivan Show. It’s the same thing.

R&G: What do you think of blog aggregators such as The Hype Machine and Elbows?

Dave: I frequent The Hype Machine. Elbows, I’ve looked at a couple times. I think it’s a great thing. The more somebody can make it easier for people to find music they’re going to like, the more value that entity will gather. I don’t know that a computer-based search is going to be the ultimate winner. I tend to doubt it. I think it’s going to be more in the mobile space. It still blows my mind that people sit in front of their computers and listen to music on these absolutely shitty little speakers. They’re listening to crappy files in an uncomfortable chair. When I grew up, having a killer stereo was all that mattered, other than a car and a girlfriend. The stereo/audio business has completely gone away and been replaced by shitty ear-buds from Apple and MP3 files. It blows my mind that people tolerate that. I think it’s impacted the experience of listening to music, how you listen to it, how you enjoy it. So I’m not sure that a computer-based model is going to get enough traction to supplant other ways of acquiring, listening to and finding out about music. I think it needs to be easier, better sounding, portable and more integrated into your life. It needs to get outside of your bedroom or den.

R&G: I read on your blog that Douglas Merrill, President of EMI Digital, said he agreed with data that suggested file-sharing is good for the music industry. I found that interesting, but he also came from Google and didn’t have any experience in the music business. Do you see a trend in technology guys coming to the labels and figuring out how they can make this work; a technology guy versus the old-school music guy?

Dave: Not necessarily. I think the great labels of the past were run by music people who understood what the artists were all about and how to create great product, great songs and how to put great people together. I don’t think we can wave a wand and put a bunch of techies in the driver’s seat, and everything will suddenly be good. You need educated people that understand the technology, the music, the creative process, the marketing and the relationships with fans. As those skill sets get implanted in the people running the companies that matter – not just labels, but publishers, touring companies, marketing companies and distribution companies – then things will get better. I’m pretty confident of that, but I don’t see technology solving the music industry’s problem.

Read more great interviews here at Rollo & Grady

Our book is available in various forms.

You can listen to the book on iTunes as a podcast for free. Go to the iTunes store and search “Future of Music” podcasts and subscribe.

You can buy the book on Amazon for $11.53 or less.

You can purchase the audiobook from Audible for $7.49.

Here are a few of the reviews.

Publishers Weekly
Two innovators in music technology take a fascinating look at the impact of the digital revolution on the music business and predict “a future in which music will be like water: ubiquitous and free-flowing.” Kusek and Leonhard foresee the disappearance of CDs and record stores as we know them in the next decade; consumers will have access to more products than ever, though, through a vast range of digital radio channels, person-to-person Internet file sharing and a host of subscription services. The authors are especially good at describing how the way current record companies operate – as both owners and distributors of music, with artists making less than executives – will also drastically change: individual CD sales, for example, will be replaced by “a very potent ‘liquid’ pricing system that incorporates subscriptions, bundles of various media types, multi-access deals, and added-value services.” While the authors often shift from analysts into cheerleaders for the über-wired future they predict – “Let’s replace inefficient content-protection schemes with effective means of sharing-control and superdistribution!” – their clearly written and groundbreaking book is the first major statement of what may be “the new digital reality” of the music business in the future.

5.0 out of 5 stars THE FUTURE OF MUSIC IS NOW
Gian Fiero (Hollywood, California)
This book is so brilliant that it makes the vast majority of music industry books that are being published seem irrelevant. It discusses in detail, the reasons why the future of the music industry is headed into the digital/mobile entertainment era. It also provides statistical information that professionals, marketers, entrepreneurs, and educators can use constructively. Both Dave and Gerd (the books co-author), have their fingers firmly planted on current music industry activities and trends. They also possess and display a clairvoyant eye toward the future that offers beneficial insight and foresight to those who may not be aware of what this whole digital (i.e. independent) revolution is about, and most importantly, what it will entail to prosper in it. The book is easy to read, easy to understand and simply brilliant. If you buy just one industry book this year, this should be THE one. Buy it now!

5.0 out of 5 stars Indispensible
Stephen Hill “Producer, Hearts of Space” (San Rafael, CA USA)
A stunningly candid source of concentrated, up to date insight about the music business and its turbulent transition into the digital era. This book tells it straight and will make the dinosaurs of the music industry very unhappy.

Like Martin Luther’s ‘95 Theses’ nailed to the door of Wittenberg Cathedral, Kusek and Leonard drive nail after nail into the sclerotic heart of the old-fashioned music business. Their rational vision of the future of music rests on the idea of unshackling music from the hardcopy product business in a yet-to-be-realized era of open content licensing, facilitating sharing and communication among users, and growing the business to its full potential.

It provides as clear a vision of the future of the music industry as you will find, from two writers with a rare combination: a solid grounding in the traditional practices of the music business, an up-to-the-minute knowledge of the new technologies that are changing it, and the ability to think through the consequences.

I’ve dreamed about a book like this, but thought it would be impossible in today’s hyperdynamic environment where every week seems to bring a breakthrough technology, device, or service. But by digging out the underlying trends and principles Kusek and Leonard get under the news and illuminate it. Along the way they provide a brilliantly concise history of the evolution of digital media.

I can’t think of any book more important for artists to get the full re-orientation they need to survive and prosper in the digital era. It’s no less critical for members of the music and broadcasting industries who need to consolidate their thinking into a coherent roadmap for the future. In a word: indispensible.

I recently interviewed Ian Rogers of Topspin Media for a new project I am working on the – “Future of Music Toolkit”. More to come on that later…

Ian brought me up to speed on the development of the Topspin platform for music promotion. They are creating very cool marketing software and services to help artists and their partners build businesses and brands. This is clearly part of the future. Here are some comments from Ian and a link to his presentation to The Recording Academy at the GRAMMY Northwest MusicTech Summit 2008.

“The lamenting we read in the press is not the story of the new music business. Continuing to talk about the health of the music industry on these terms is as if we’d all been crying about the dying cassette business in 1995. The difference is that when we moved from cassette to CD the winners were the same (big companies who owned access to cash, distribution, and marketing) and the definition of winning was the same (more units sold for these big companies).

Music consumption isn’t declining: iPod sales up 59% Y/Y (source: Apple), P2P filesharing volume up 35% Y/Y(source: NPD), audio streaming up 25% Y/Y (source: Accustream). And despite the endless discussions about the “pirates,” there isn’t an unwillingness to pay for music, either: 1.6B decisions to buy music in 2007, up from 1.3B in 2006 (source: Neilsen Soundscan), 40% Y/Y increase in worldwide digital music sales (source: IFPI), 8% Y/Y increase in North American concert revenue — an all-time high (source: Forbes.com), 40% paid an average of $5 in Radiohead’s pay-what-you-want model, Nine Inch Nails self-release generates $1.6M in first week sales, includes sell out of $300 box set in first 48 hours (source: NIN.com).

IMHO the only perspectives that matter, that of the artist and the fan. I see news about the health of the music industry as defined by the stock price of WMG or quarterly earnings of UMG, Sony, and EMI every day. What I don’t see, apart from a few articles on Radiohead and Nine Inch Nails, is an update on how the world is changing from the artist point of view. But I tell you, when I talk to managers and artists they feel it, they feel an ability to take their careers into their own hands, to redefine what success means for them, and that is the emergence of the new music business.

I say this with all respect to our friends in the existing music business. We all know smart people who are busting their asses trying to solve the Innovator’s Dilemma those companies are facing.

Again, there are only two players in the music business that matter at the end of the day: the artists and the fans. The rest of us either add value or get in the way. Don’t get me wrong, over the years labels have added a tremendous amount of value through financing, A&R, marketing, promotion, etc. I’m just saying that every player needs to either understand how it truly adds value or it needs to get out of the way, Topspin included. Our business does not operate on lock-in, ownership of copywritten work, or long-term contracts. We either add value today with a compelling service or we die. And I’m perfectly happy with that.”

See Ian Roger’s complete presentation here.

I recently interviewed Ian Rogers of Topspin Media for a new project I am working on the – “Future of Music Toolkit”. More to come on that later…

Ian brought me up to speed on the development of the Topspin platform for music promotion. They are creating very cool marketing software and services to help artists and their partners build businesses and brands. This is clearly part of the future. Here are some comments from Ian and a link to his presentation to The Recording Academy at the GRAMMY Northwest MusicTech Summit 2008.

“The lamenting we read in the press is not the story of the new music business. Continuing to talk about the health of the music industry on these terms is as if we’d all been crying about the dying cassette business in 1995. The difference is that when we moved from cassette to CD the winners were the same (big companies who owned access to cash, distribution, and marketing) and the definition of winning was the same (more units sold for these big companies).

Music consumption isn’t declining: iPod sales up 59% Y/Y (source: Apple), P2P filesharing volume up 35% Y/Y(source: NPD), audio streaming up 25% Y/Y (source: Accustream). And despite the endless discussions about the “pirates,” there isn’t an unwillingness to pay for music, either: 1.6B decisions to buy music in 2007, up from 1.3B in 2006 (source: Neilsen Soundscan), 40% Y/Y increase in worldwide digital music sales (source: IFPI), 8% Y/Y increase in North American concert revenue — an all-time high (source: Forbes.com), 40% paid an average of $5 in Radiohead’s pay-what-you-want model, Nine Inch Nails self-release generates $1.6M in first week sales, includes sell out of $300 box set in first 48 hours (source: NIN.com).

IMHO the only perspectives that matter, that of the artist and the fan. I see news about the health of the music industry as defined by the stock price of WMG or quarterly earnings of UMG, Sony, and EMI every day. What I don’t see, apart from a few articles on Radiohead and Nine Inch Nails, is an update on how the world is changing from the artist point of view. But I tell you, when I talk to managers and artists they feel it, they feel an ability to take their careers into their own hands, to redefine what success means for them, and that is the emergence of the new music business.

I say this with all respect to our friends in the existing music business. We all know smart people who are busting their asses trying to solve the Innovator’s Dilemma those companies are facing.

Again, there are only two players in the music business that matter at the end of the day: the artists and the fans. The rest of us either add value or get in the way. Don’t get me wrong, over the years labels have added a tremendous amount of value through financing, A&R, marketing, promotion, etc. I’m just saying that every player needs to either understand how it truly adds value or it needs to get out of the way, Topspin included. Our business does not operate on lock-in, ownership of copywritten work, or long-term contracts. We either add value today with a compelling service or we die. And I’m perfectly happy with that.”

See Ian Roger’s complete presentation here.