Thursday, March 16, 2006

Freedom's Just Another Word For Nothing Left To Lose

It's clear to me that we're somewhere in a valley between two markets.
Music Business 1.0 is screaming downhill, with the CD monkey
relentlessly perched upon it's back. In this old model, results were
quantifiable on a unit basis via Soundscan. The commodity of Music
Business 2.0 is liquid. Music ebbs and flows through a digital pipeline
according to demand.

Every time there's a new P2P innovation, the industry shudders and
prepares another set of lawsuits. The kids, doing their best
impersonation of Montgomery Burns, touch their fingertips together and
breathe a collective "excellent" under their breath. Soon after, there's
a deluge of blogs and board posts decrying the labels and how
music is going to, at long last, be free.

Why exactly is it that the very people who sing a sad song about paying
for music are the same pie eyed consumer drones who need to be force fed their music through MTV2 videos and big ads in Alternative Press? Sure, with Protools and Photoshop it's cheaper overall to make a CD. But to become well known and get the machine started, even the basics
cost money. How much money? Here are some sample costs, and by no means
a complete list:

$5000- $10,000 in studio and mastering costs
$5000 on print and web ads
$2000 on postage to send out promos
$400 on posters
$1000- $2000 per month for a publicist
$1000- $2000 per month for retail promotion personnel
$1 or $2 allocated for each CD for positioning programs at retail.
...and don't forget tour support, IF you can even FIND an agent.

If this is indeed the case, who will foot the bill for the "brand ubiquity" the marketplace demands ? Certainly not artists, who usually cannot rub two nickels together. It's not Rupert Murdoch, whose MySpace bills hundreds of millions of dollars as the middleman pimping free tracks from hundreds of thousands of willing artists.

My impulse is that it will still be some form of label- that acts more like a venture capital marketing fund. Where a corporation throws down money in exchange for a big chunk of the entire business of the band. This isn't that far fetched. Labels like Vagrant already manage many of their acts, and Victory takes merchandising and publishing from theirs. Plus we've already seen these kinds of alternative deals happen with Korn and Bowie bonds.

If this is the case, the consumer wins. But the future might not be all that bright for the bands looking to get a leg up to start their business. They will have less latitude in negotiating deals, because all the investment houses (nee labels) will need to monetize all other aspects of an artists career in order to make their investment worthwhile.


glenn said...

ah yes, the forgotten cost of actually getting somebody to buy music. people always forget about that.

deb said...

Interesting post. The Clap Your Hands phenomenon is an example of a band doing it on their own, but even they had start-up costs (not to mention a Manager w/a dayjob at Atlantic!) go figure. deb