AniBlurbs (Column)

“If it was up to Spotify co-founder Daniel Ek, the music industry would be embracing the future instead of constantly fighting against it.

The new business model is “a mix between ad-supported music, downloads, subscriptions, merchandising and ticketing where the user comes first and where the key to monetization comes from portability and packaging access rights. If willing to adapt, the music industry could then have the potential to become a $40-50 billion industry…”

…Ek calls out the music industry for expecting to see business models proven “within months of inception. That’s just not how it works.” Reminding us how Apple’s iTunes was not initially the powerhouse it is today: In its first year, iTunes missed its revenue targets by 30% and most label executives doubted its staying power at the time.

The overall point: success in this industry takes time.”

Source: ReadWriteWeb – Spotify Co-Founder: Notion of Overnight Success “Misleading and Harmful”

On a similar note Denis Doeland has recently posted a sharp column –in Dutch- on his blog regarding the need for a true sense of urgency and vision regarding licensing fees and innovative business models within the (dance) music industry:

“Due to the transition from the physical to the digital age, the economic value of the master has increased by almost a factor 4 and the economic value of the copyright has increased with a factor of approximately 1,5. This is quite peculiar.

Back in the Nineties Dance-labels apparently were content with a lower licensing rate due to the bigger amounts / volumes being sold. Dance-labels apparently used to make do with 5 to 6 Eurocents for each compilation sold.

Furthermore it’s quite peculiar to note that the fees being paid for the master nowadays are up to 2 and even 5 times higher than the those being paid for the copyright itself.

In the ‘physical age’ the Dance-industry was actually a ‘compilation-driven business’. In hindsight it would now seem that, for compilations, one paid for a collection compensation of sorts.

Popular tracks received higher royalty-percentages than the less popular tracks and depending on the commercial success of said compilation the compensation fees would start pouring in. After all, one compilation would fare better than the other.

The numbers mentioned above are food for thought. Does the business model, as used by the Dance-industry, still hold up today? Hasn’t the use of ‘pay-per-unit’ in the Dance-industry become dated?”

Translated interpretation from original post in Dutch: Doeland’s Blog- ‘The Dance-industry used to make do with 5 to 6 Eurocents …’

Currently Doeland is Director of IP Services and Internet at Dutch dance event giant ID&T/Q-dance (of, amongst others, Sensation White fame) and also co-founder of Dance-Tunes.com. He has written two columns touching these subjects earlier this year, both which you can read here (translated from Dutch with Google Translate).

According to Denis, gone are the days of yore when the Electronic Dance Music (EDM) niche was the main innovator within music and in its stead we now deal with record labels unwilling of seeing or proactively taking on the challenge ahead, namely that 95% of all music consumed is done so illegally.

“Recently it became clear that the Dance-industry isn’t really thinking ‘Outside of the box’.

For the umpteenth time in the (close to five years of) existence of Dance-Tunes we’ve received a note from a certain label with the request to arrange it so that customers visiting our site from a certain given country can’t buy the music from the download store of their choosing.

A so-called ‘territorial restriction’.

A customer not originating from the country in which the download store is based may not download his favourite music or the download store may not offer this music to the customer in his own country, but may do so if he’s outside those borders.”

Translated interpretation from original post in Dutch: Doeland’s Blog- Column: Dance-corporations first ‘Out of the Box’, now ‘Back in the Box’?

The confusing situation sketched above is quite ironic as the likes of SoundCloud, iTunes, Last.FM, Beatport.com, Spotify and Dance-Tunes have finally given labels and artists the low-entry platforms and reach to connect with an audience willing to pay, on a global scale. Frictionless and with permission.

Furthermore, I’ve got to second Doeland regarding the irrational rectulance of some labels to cooperate in spreading their content across as many channels as reasonably possible and using the various opportunities to monetize it, while at the same time its these very same labels being the most vocal regarding mainstream media ignoring them and how they’re falling victim to piracy.

Now, personally though I’m an avid fan of EDM (Electronic Dance Music) and other music styles, you’d be hard pressed to find any installed torrent software or illegal content on my hard drive. Indeed, yours truly is dubbed a “Digital Native” or a member of “Generation Y” (being born in ‘81), yet I actually PAY for ALL my entertainment, be it games, music or movies.

Actually, I’m even prepared to travel up to an hour through rainy weather, stand in line for over half an hour, just to get my hands on a shrink-wrapped jewel case, containing nothing more than an optical disk and a stapled bunch of dead trees.

All of this with the knowledge in the back of my head that any colleague or friend of mine would’ve been glad to offer me the music digitally and for free weeks before it’s official country release.

It’s okay, thank you, I’ll wait. It’s worth it. And this is not just a case of N=1, as luckily there are still tens of millions of people like me, including Gen Y, buying entertainment.

If anything, the craze around the late Michael Jackson last summer proved that there’s still life left -no pun intended- in the concept of paying for your entertainment (all under the strict condition that it is made easily available for purchase, and for a fair price of course): people mournfully took their wallets and dug in, in part because his CD’s were all over the place, even down to the local grocery store.

Yet, with regards to EDM –and despite its digital nature- the situation is quite the opposite: I’ve frequently found myself waiting months, or even up to a year before a track could be purchased.

Sometimes the record wouldn’t get released at all, or was made available exclusively for certain territories or download stores, where my wallet or IP address location couldn’t reach it. So much for the internet being international or stateless…

Then, when said release wouldn’t sell (sufficiently), the self-fulfilling prophecy to the eye of the label manager was complete:

“See, I told you people weren’t waiting for this “product”, put in on the front page of obscure download shop X in country Y but only one tune sold, digital music stores don’t work, people only listen to 3 minute radio edits, we need a higher cut, we want an advance, where’s my lawyer, nag, nag, nag…”

Most label managers and representatives still seem to be bereft of any sense of basics such as Time-to-Market, Availability, Distribution, Multi-Channel Marketing, Pricing or Customer Centricity.

As a side note, the latter is a trait common to the whole entertainment sector, yet one they’ve managed to get away with. Until now.

Having worked at Dance-Tunes.com a few years back, I recall sitting on the other side of the table, no longer “just” a fan, but as an “insider”, slowly beginning to see –not understand- how on earth it was possible that so many great tunes and artists were not represented and made available legally online in a timely manner: their label management knew of the possibilities, but explicitly refrained from taking advantage of them.

This wasn’t an oversight on their part, it was a deliberate decision.

A decision made not based on data, insights or Business Intelligence, but based on assumptions and emotion, thus de facto spurring illegal file sharing or use of (mobile phone)recorded live sets and performances amongst the community.

After all, how else could these fans relive and enjoy those moments? How else could they gain access to that obscure remix by their favourite DJ/Producer? How else could they share the alleged Magnus Opus of an underground idol and use this to root for support for their upcoming talent of choice?

Let me get this straight: These fans are the core audience, committed ambassadors AND they’re happily willing to let labels part with their money, yet all those labels seem to be able to do is refuse this legal transaction based on invalid argumentation?

Reading the blog posts from both Ek and Doeland it would seem not much has changed over the past two years. All in all a strange paradox and an unnecessary one at that (and it wasn’t about unbalanced licensing fees either, as to my experience at Dance-Tunes at least, everything was negotionable).

Mind you, this is not a column to bash the music industry, it’s a rant by a concerned fan calling and lashing out to not only label moguls but conservative (small) label owners as well.

This column is written by an ambassador, a loyal customer, a paying fan, who wants nothing more but to see musicians succeed; who feels that talent has the right to be heard and should be supported: The very thing that record labels originally set out to do in the first place, right?

Though your “good old days” of getting-rich-quick may be over, at least now you’ll truly get to fulfill your raison d’être.

Music Industry; Indies and the Big Four alike: you need initiatives such as Spotify, Last.FM and (niche, local) download stores more than you realize. And we, the fans, consumers and artists, need you to understand and act on this.

Change your culture, innovate your business model.

Seeing as music and entertainment are known to be one of the main pillars of any culture, and certainly our modern culture today, it would be a fruitful endeavour if you as an industry took a leaf out of the book from leading labels, innovative start-ups, daring pioneers and bold thought leaders.

Make more haste -and take pride(!)- in acting collectively, with a positive, constructive mindset, instead of endlessly debating fickle things such as fees amongst your kin and punishing your fans and propagators (like BUMA did here in The Netherlands).

You’ve spent the last 10 years doing the latter and we all know where and what that has brought you…

[Disclaimer: Though I’ve had the honour of working, in part as a trainee/intern, with Denis Doeland and Peter Hillebrands at Dance-Tunes, I’m currently not tied to them or any company directly aligned to ID&T/Q-dance/Dance-Tunes. I’ve written and posted this column as a music aficionado to tie in with the annually held Amsterdam Dance Event (ADE), which is taking place this week in my home-town of Amsterdam, The Netherlands. Here’s hoping that the various international attendants, regardless if they read this column or not, take these issues to heart, discuss them and take concrete action in 2010 and beyond.]

“Ford’s Chief Marketing Executive James Farley says the company has made a bigger digital and social media bet than rivals because, “If you are trying to communicate, as we are, that you have been reinventing the company , you can’t just say it. You have to get the people to say it to each other.”

Perhaps Ford’s biggest single bet on digital and social media has been the Fiesta Movement, a program that began in 2008, 18 months before the cars will actually arrive in dealerships.

Ford gave 100 European Fiestas to people to drive and live with. The results of the blogging, Facebooking, YouTubing and Tweeting by those people, plus the echoing of those messages by the blogosphere, followers, etc. has been an eye opener.

Consider this: The awareness level of Fiesta, a car that is not even in the U.S. yet (though it has been a fixture in Europe for years), is 37% among Generation Y…

That is about equal to the awareness level of Fusion and Flex, models that have received hundreds of millions of dollars in traditional media spend.”

Source: Business Week – Ford Spending 25% of Marketing on Digital and Social Media

“But maybe… just maybe, we need to stop looking at when the Internet will surpass television and benchmark it against something else entirely. The Internet is much more than a media channel and it is much more than a communications platform. It’s both of those and so much more.

We should start benchmarking the Internet against electricity.

Electricity is a utility. The phone is a utility. The Internet is a utility (and so much more).”

Mitch Joel (Twist Image) on Benchmarking The Internet Against TV