Why Not Both?

Tim Lee writes: "The long-term threat to the music industry is not pirates, but musicians themselves. Many of them would rather be famous than wealthy, and will give their music away if that's what it takes to get it widely heard. As dirt-cheap, Internet based methods for getting music to fans continue to improve, labels will have less and less to offer such bands." This is almost certainly true, but it's also worth pointing out that being famous can, itself, be reasonably lucrative. I started this blog on precisely the terms Tim Lee suggests -- I had some notions, I had means of placing said notions on the internet, and I figured I'd consider myself lucky if I could get anyone to pay attention.

It was a hobby. But, of course, as things turned out I was able to get people to pay attention. But, of course, having a website that all these people read on a daily basis and that a wider family of people read at least sometimes has proven to be a valuable commodity in its own right. I've never charged anyone a dime to read the blog, and can't imagine circumstances under which I ever would, but that doesn't mean "giving it away" is necessary a terrible economic strategy.

Comments

"This is almost certainly true"

Actually, it's almost certainly untrue. At least for the bulk of the industry.

The thick body - the part furthest away from the Long Tail - is where the money is. And the thick body is precisely where artists will always need the labels. The net revolutionizes the long tail; it only evolutionizes the thick body.

Over in the motion picture industry, in the '50's, movie actors gained power, but the studios survived. In the '70's, movie producers gained power, but the studios survived. The music industry is likely to be no different.

Posted by Petey | April 10, 2007 2:58 AM

Forgot to include the helpful link for "hedgehog" ideas...

Posted by Petey | April 10, 2007 3:01 AM

Yes Petey, the rapidly improving technology will have no discernable effect on the trends established by the movie industry in the 50's and 70's. None.

Individual musicians can now produce professional quality recordings from their home computers with assistance from no one, and then distribute the recordings instantaneously and for free. The movie industry is still lagging behind a bit in this regard, but I expect musicians will continue to establish new ways to exploit their works.

Posted by Tim | April 10, 2007 3:40 AM

"Individual musicians can now produce professional quality recordings from their home computers with assistance from no one, and then distribute the recordings instantaneously and for free."

Yup. And that will only have limited effect on the business of the labels.

The liberating effects of the net are not about the mass market. This is a lesson folks seem to have a hard time wrapping their heads around, despite the fact that it keeps getting taught.

Posted by Petey | April 10, 2007 4:01 AM

"Yes Petey, the rapidly improving technology will have no discernable effect on the trends established by the movie industry in the 50's and 70's. None."

You miss the point of why I mentioned those historical analogies.

In both the 50's and 70's, changes took place in the movie industry that seemed at first to render the studios irrelevant. Much like today, the change in the 50's was rapidly improving technology - television. But in both cases, the studios ended up remaining relevant because their purpose was not the narrow one obviated by the change, but instead the much broader purpose of acting as a consolidator for the mass market.

That exact same broader purpose is why the music labels will remain relevant, no matter how much technological change transforms music distribution at the margins.

Posted by Petey | April 10, 2007 4:15 AM

My late father-in-law, a tuba player, was president of the Chicago local of the musicians' union. He _hated_ rock musicians because they wanted to be rich and famous and were happy to play cheap and live off of their parents until they became rich and famous or gave up. The swing instrumentalists' attitude, in contrast, was that they just wanted to make a good enough living to support a family while playing music. So, the old horn players had been great union members, but the electric guitarists were awful, horrible union men. They'd sell out the union and play for way under scale at the drop of a hat.

Posted by Steve Sailer | April 10, 2007 4:52 AM

Petey, the big studio change in the '50s wasn't the result of television, it was a result of the Paramount antitrust case, which separated the studios from the outlets and completely changed their business model. They moved from being self-contained, vertically integrated industries more towards being coordinators, rounding up everything you needed to make a movie and then selling it to the black box of exhibition.

But as time went on, producers in the '60s-'70s and agencies in the '80s-'90s took over more and more of the production coordination, essentially creating their own black box on that side. The studios essentially survive today as venture capitalists and distributors, mediating between the black box of production and the black box of exhibition. And even then, hedge funds are moving in on the former role, and when theaters fully upgrade to digital projection, thus lowering the high barriers to entry (prints are expensive), independent distributors are going to start nibbling at the second.

So yeah, as per your 4:15 post, the studios did in fact "survive" through various changes in the market, but hardly exhibited the indispensible-role continuity your 2:58 post implies.

Posted by Senescent | April 10, 2007 5:07 AM

So MY, just how much are you making off your blog?

Posted by James B. Shearer | April 10, 2007 5:34 AM

Guys, there is a problem with your assumptions that I don't think you have addressed and that has very little to do with how labels or studios are dealing with the technological revolution.

Historically there is a lot to learn but American business models have developed to deal with a huge internal market that is the driver of "mass" consumption. For those of us outside the states there is a massive shift in perception that has simply not been factored in. That is the emerging power of Bollywood and so on.

I have to tell you that from the outside the rest of the world is not as "all American" as you may think. In fact most places openly avoid America and American products.

This is important because it means that the next superstar might not be from the USA. What if he were Chinese or Indian or African? How would the labels cope with that?

The music market is shrinking because there is a lack of respect for the producers and a disconnect between major foreign markets and internal ones.

The new barriers to entry are not financial but cultural.

Posted by Eugene Bari | April 10, 2007 6:06 AM

I second James' question -- and are you using your immense fame and wealth for good or evil?

Posted by Media Glutton | April 10, 2007 6:11 AM

So MY, just how much are you making off your blog?

At the moment, very little. I did, however, get a $100k advance to write a book. And I don't think that was unrelated to the blog.

Posted by Matthew Yglesias | April 10, 2007 7:21 AM

Matt, well done on the advance. The blogger lifestyle is of course an expensive one.

Now if you can just outsell Beinart's book by a factor of, say, three, your triumph over TNR and its henchmen will be complete.

Posted by otto | April 10, 2007 7:36 AM

Your post made me think about what is so retrograde about those walls the nyt keeps those of us behind who won't pay to link. Rather than trying to figure out how to make money from the expanded readership, the nyt retreated to that ridiculous wall it will eventually abandon. Capitalism has always harnessed the possibilities of an expanding consumer base. I write this as a socialist, not some milton freedman freak.

Posted by Tbird | April 10, 2007 7:41 AM

Speaking as someone who used to share a flat with professional musicians, I've got to lean toward Tim's and Matt's point of view. Most money for the vast majority of artists, especially emerging bands, comes from live performances not records. For the vast majority of artists, it makes economic as well as artistic/celebrity sense to make available a large amount of content cheaply or for free so as to broaden the base of potential gig goers. This has the added bonus of increasing the potential audience of devoted fans if you ever decide to release an album or single. To commit the cardinal sin of turning an anecdote into data, in the UK The Pipettes followed this model fairly closely, touring constantly while tolerating and even promoting sharing of audio on their own website. In the space of a year they've gone from playing small clubs in England to touring the world and have a chart topping album to boot.

Posted by Ginger Yellow | April 10, 2007 8:29 AM

Musicians make the highest percentage off live performances already; distributing free recordings over the internet as a way to market live shows could still be a route to wealth for contemporary bands and musicians.

Why wouldn't musicians want to destroy the music industry? Record labels are known price fixers, gatekeepers who are working as hard as they can to trap unknown musicians in binding contracts at low percentages. The best music has always come from outside the music industry. I can't imagine who WOULD want to preserve it.

Posted by Josh | April 10, 2007 9:04 AM

$100k??? As in one-hundred-thousand? I know nothing about the book industry but that sounds like a lot. Congrats Matt.

Posted by Mark Adams | April 10, 2007 9:31 AM

Especially with respect to the music business, I find it very difficult to see the case that using the government to grant music rights provides benefits that are worth the costs.

As someone mentioned above, the internationalization of this should also provide some interesting contours -- for example, given a communist ideology, why would the Chinese want to grant monopoly rights to US intellectual property? It seems contrary to ideology in general and, with the vast majority of benefit going toward the US, against interest unless it is tied to the opening of other markets as well.

MY, you should have held out for more -- tell em you want the HRC deal.

Posted by theCoach | April 10, 2007 9:31 AM

"Obscurity is a far greater threat to authors and creative artists than piracy."
--- Tim O'Reilly, Publisher

Posted by Mike | April 10, 2007 9:48 AM

I like the idea of musicians mainly performing for tips, or, if they're good enough, being hired for large gigs for a good chunk of the gate.

The internet might let people do that with a computer instead of performing in a park or at a subway station.

That is, I can see the internet revolutionizing the busking industry, that is, making it easier for truly interesting new artists to self-promote.

I may be one of the clueless people Petey mentioned, because I don't know what indispensable role the music industry is playing now. Lately, I don't have much reason to buy an album. I have two hundred or more albums in my pocket mp3 player. Album art stopped mattering to me when vinyl went out in the 80's.

Posted by Scott from Baltimore | April 10, 2007 9:51 AM

We gave away vinyl to promote our tours and shows in the early eighties. Now I give away mp3's to promote my current laptop creations. All our early recordings are now digitized and available on the web. More downloads of our music have occured in the last 6 months than any sales of analog material. For an artist that is central..exposure is all. Money (power) will come with popularity.

ps an old vinyl record of ours sold on ebay for $100..whatever that means?

Posted by judson | April 10, 2007 10:05 AM

How many books would need to sell for a $100,000 advance to make sense?

I suppose this money is expected to come from us. I feel suddenly a little poorer.

Posted by otto | April 10, 2007 10:09 AM

How bout a move back toward the patronage system of financing creative works?

Posted by theCoach | April 10, 2007 10:42 AM

100k, I am impressed. However unless your publisher is planning to give your book away I am not sure this really supports your argument.

Posted by James B. Shearer | April 10, 2007 2:19 PM

It's a huge pain to scan a book and upload it onto the internet, unlike music piracy. It's also hard to copy a bunch of books and sell them on the street. Authors have some built-in protections for their content, although it certainly could be pirated.

Do the labels do the concert tour booking and promotion or does someone else? The label marketing machine basically creates most popular music, so I don't think this holds true for that stuff. Most people aren't listening to Wilco or whoever.

http://www.billboard.com/bbcom/charts/chart_display.jsp?g=Singles&f=The+Billboard+Hot+100#

Posted by ohiomeister | April 10, 2007 4:06 PM

The key to understanding the entertainment industries, music, movies, television, even publishing, is that there is actually an inversion of the usual success formula. No entertainment company has ever been able to wave its hand and create a successful career for any given person ("I'm going to make you a star!"). Generally speaking, they're not even that good at recognizing talented people and giving them much of a boost, although there have certainly been "golden ears" like John Hammond and David Geffen in the music business.

What the entertainment industry can do however, is _destroy careers_. That is a sizeable power. So the "big break" is usually as much about both getting a chance and not having someone decide to destroy your career just to show that they can "throw somebody up against the wall to show they mean business." The working business model within most entertainment companies is "dog in the manger" and they will do practically eanything to maintain that power to hinder, harrass, and destroy.

Posted by James Killus | April 10, 2007 5:10 PM

The RIAA took my baby away...

Posted by Greggy Ramone | April 10, 2007 6:06 PM

Whenever new methods of connecting with an audience are tried, those in the existing business argue vehemently it's a bad idea doomed to fail.
I'm old enough to remember when the Grateful Dead allowed people to tape and trade their concerts. Not one industry person considered it anything short of suicide, yet the band prospered because of, not in spite of, that very decision.

Posted by Bob | April 10, 2007 6:31 PM