I recently did a presentation for the Business Innovation Factory on music. When they post the video I will provide a link. In the meantime, here is the presentation:
This is a story about the past, present and future of music.
There is a lot of discussion these days about free music and the decline of the power and influence of the major record labels. However, I would argue that music has always been free in one form or another, throughout history and that the relationship between the artists and their fans – the artists and their patrons is what really matters.
Record labels are a relatively recent phenomenon in the history of music. Perhaps they have seen their useful life as a component of the music business, perhaps not. They have been helpful in injecting capital into the marketplace and promoting artists on a scale never before seen. They have provided a vehicle for artists to go to market that was quite effective in its day.
But music at it’s core is entertainment and a form of creative expression that transcends language and cultural barriers and always will. If we focus on music as a cultural phenomenon, perhaps we can find some answers to the questions about the future.
The Artists
The music business essentially began with the live performance of music at the symphony, opera or chamber ensembles for wealthy patrons of the arts. People experienced music directly with the artists in the room with them.
Music is a social art form, and artists were driven by their passion to make music and connect with people who would enjoy it. It’s a lot of fun to make music, but the greatest joy comes from delivering it to other people who appreciate what you have created.
For many artists, making music is all they know how to do.
But like many aspects of modern life, music has been profoundly impacted by changes in society and by the rise of technology – indeed music has been driven by technology.
Radio
The music industry began back in the early 1900’s with the invention of amplification and radio. With radio people could listen to and enjoy music together in the comfort of their homes. It transformed time and space and made it possible for huge numbers of people to enjoy music that they might never have heard otherwise. Huddled together were our grandparents and parents, listening to music over the airwaves – together, enjoying it all.
And the greatest part about it – IT WAS FREE.
VINYL
In the 1950’s Vinyl LPs were introduced into the marketplace and along with radio – crystalized an industry. Vinyl records changed the very nature of how music was enjoyed. Recordings fixed a musical performance in time and stamped it onto a piece of plastic. They made it possible to shift both time and space for people, so we could now enjoy music anytime and anywhere.
They also fundamentally changed the way music was delivered – no longer was a piece of music played live, with different players and interpretations every night making the music more dynamic. Instead, the songs were played exactly the same – over and over again – turning music into a product instead of an experience.
This was a profound shift in the way people experienced music.
Elvis
Television was the next technology to impact the music scene in the mid 1950’s. In 1956 Elvis appeared on the Dorsey Bros “Stage Show” and became an nationwide sensation. This was the beginning of music marketing to the masses.
The Beatles
In 1964, a new band called the Beatles appeared on the “Ed Sullivan” show – and from then on, the music business would never be the same. Like many kids my age, when I saw the Beatles on TV – I knew that I wanted to be a Rock Star.
The Music Industry
Business structures were formed and expanded to address the booming opportunities in the music industry.
Record Labels – brought recorded music to market and became the engine that drove the entire music industry.
Publishing Companies – found ways to exploit the “song” through licensing.
Radio Stations were finally forced by congress to pay a Performance royalty to the publishers for playing the songs over the airwaves –
The songwriters got paid, but not the labels. The legislature argued that radio airplay was in effect massive free promotion for the record.
Music started to become a very big business for the companies involved. Music was marketed to young people and the growth was fueled by new artists and new songs.
Technology continued to march on.
The Audio Cassette made music more portable. The Sony Walkman became the best selling consumer electronics products of its time.
Synthesizers changed the way music was produced, adding a lot of new sounds to the palette. At the same time synthesizers put a lot of traditional orchestral instrument players out of work.
And then the Personal Computer raged into the marketplace.
I can tell you that Apple had its eyes on the music industry from the very start because I was there. They were actually forced to stay out of the music business for a while, by the Beatles record label “Apple Records” – over a conflict with the name “Apple”. This was a healthy foreshadowing of things to come.
Compact Disc
In 1982 Sony and Phillips introduced the Compact Disc. The CD was the first digital format to hit the marketplace. CDs were intended to deliver pure digital sound quality. CDs were originally marketed as “Perfect Sound Forever”. The labels wanted the public to go out and repurchase their vinyl music collections all over again on CDs and make billions more dollars in the process. It worked. Sales soared for over a decade.
However the record companies failed to realize that they had digitized their entire catalog and put perfect digital copies into the hands of the public – at $18.95 a disc. Before long the computer companies were offering devices that could copy CDs in seconds. This failure to understand technology would come back to haunt the labels in a big way.
MIDI
In the early 80’s I got involved in a project with Dave Smith and others to encode music in a compact digital form. The idea was to make music easier to store and edit, and network instruments together. We worked with a bunch of different companies including Sequential Circuits, Yamaha, Roland, Korg, Casio and Passport Designs to create something called MIDI – the Musical Instrument Digital Interface. We created an open and free standard that anyone could use – royalty free.
As a result of MIDI many new music companies were formed, thrived and exploded in the 1980’s. There was a profound transformation in the way music was produced, mixed and distributed – and millions of people got involved in recording and creating music at a very high level. MIDI was a revolution in music making.
Ironically, MIDI is in every cell phone you have – and the reason we have ring tones.
World Wide Web
Here is something that I want you to think about for a minute.
The World Wide Web came to market in 1990 – just 18 years ago. The web made it possible for anyone to create a home page for whatever they wanted to say or market. If you are under 25 years old in the US, it is hard to imagine life without a digital network. And this just happens to be the target age group of the record companies.
In 1998, MP3 files were developed to send music over a telephone line. MP3s made it possible to compress the digital music files on a CD into a small file that could be easily copied. The Internet made it possible to transmit these files around the world in seconds.
Technology made taking music even easier that making music.
Napster and the iPod
It was the combination of the Internet and the MP3 file that sparked a young college student named Shawn Fanning to invent the first Napster software that allowed people to trade and share song files. Almost overnight, kids around the world were tapping into Napster and trading songs and discovering new music using the Net. A huge community formed.
This was followed shortly by the invention of the MP3 player and the iPod in 2001 by Apple – which would soon dwarf the sales of the Sony Walkman and become a multi-billion dollar business.
Trading files online became an instant success and the MP3 became the new format for music delivery – mandated by the consumer.
Something very different began to happen to the music industry. The power began to shift from the record companies to the tech companies and the music fans.
Record Companies – Orgy of Success
The record labels enjoyed an orgy of success with the CD.
But they really missed the ball in identifying their customers. They thought their customers were Wal-Mart and Target and other record retailers. Instead, their customers were people like you and me who actually buy music.
When the labels realized people were trading MP3 files online, actual customers interested in music – they decided to sue them. This was not and is not a great business strategy, to sue your own customers. What were they thinking? Or maybe they weren’t thinking at all.
Future of Music Book
In 2004, I wrote a book on The Future of Music with my friend Gerd Leonhard. Unfortunately a lot of what we predicted to occur has become true. Sales of recorded music have fallen some 50% already from their peak in 2000. Thousands of bands have been dumped from their recording contracts by the labels. New artist signings have fallen to an all time low and labels are no longer investing in artist development.
And Apple has become one of the most powerful companies in the music business.
New Artist Model
The record business has never really been good for the vast majority of musicians. A dirty little secret of the music business is that 95% of artists never recouped their royalty advances. Labels have been notoriously unfair to their artists.
Artists have always had to make their money some other way – through touring and performing – from songwriting – or selling t-shirts, hats to make a living in music. Or working at Mickey D’s.
But everything is changing. Today artists and their managers sit in the middle of a musician enterprise and can make things happen on their own. This is redefining the music business.
Technology has shifted the power base from the record labels to the artists and mangers, and the music fans. Performer and patron are meeting again with direct relationships between artists and their fans enabled by technology.
Mobile Music
The Universal Mobile Device (UMD) that we wrote about in the book has already hit the market. It is called the iPhone. – providing communication, sharing, maps, music, pix, video, games, phone, text, email, web, the internet, hundreds of other applications, and connectivity. Nokia has similar devices and there are lots more coming. Digital media is invading our lives. Imagine what these devices will be like a few years from now.
Soon you are going to be wearing eyeglasses and jewelry that provide digital media to you anytime and anywhere.
Here are some MP3 sunglasses from Oakley
Artists as Brands
Artists today are more likely to get promoted by major brands than record companies. Their managers are setting this up for them.
Brands like Pepsi, Red Bull, Tag, Bacardi, and Nike are breaking new bands, and TV shows like Grey’s Anatomy, CSI, and House showcase new artists each episode. Getting on a show like this can be like winning the lottery for new artists, not unlike the old record deal.
Many new structures are forming that will help artists develop their fan bases and enable a career in music for smart people.
The New Music Business
At the center of the Future of Music are the creative people, the artists and songwriters along with their business managers. A middle class of musicians is forming where people can make a living or part of a living in music more predictably. They are pursuing a business model that puts them in the center of the equation and gives them more choice about their career path.
And as in the past, It is the New music that will fuel growth in the future. And it is the direct connection between artist and patron, that once again comes around into play in the music equation.
Music Like Water
Music is starting to flow all around us. It is available on the internet, on mobile networks, wifi, 3G and your home. Here are some examples of new ideas in music that are helping to redefine what the future will hold.
Music is going mobile
- hear a song anywhere and get it – can already do this on iphone
- personalized digital radio – just for you – pandora
- social filtering – what’s everyone else listening to?
You will have more chances to interact with artists and writers
- audience picks the set list collectively
- lyrics and songs streamed to your phone during the song
- the entire concert recording available to you after the show
Personalized Interactions
- Digital Living Room – intimate shows beamed into your home
- Interact with the artists and writers, help write a song
- Watch rehearsals and develop your relationship – MTV
Conclusion
It has never been a better time to be a musician or songwriter than it is today. You have a lot more control over your career than you ever did. The future is extremely bright and capital is starting to flow to the creative tech and new artist management companies.
So I am very positive about what is going to happen in music in the Future. We are coming full circle with free music and more intimate fan connection and participation. The patrons are coming back into play.
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