Music Industry Grasping for Answers
By Pete Lester, Sr.
December 19, 2007
As 2007 comes to a close, we tend to take stock on the year: the things we accomplished, what we did well and what we need to improve upon.
Hopefully, most of us had good years. If you are a record industry executive – you are looking for answers.
The digital age has been good in a lot of ways, but for the music industry, they really have not figured out a way to make it work in their favor. Fewer CDs are being sold, and with the proliferation of computers and CD burners, people seem to ignore the copy write laws, and copy music for friends with no regard for the lost-sale that the musician has just incurred.
Truth is – this has been going on for years. Back in the late ‘70’s and early ‘80’s we made cassette tapes of the albums on our dorm hall. Invariably, I went home with more than a few songs for which I did not pay. “Musical Leverage” is what we called it: I will copy yours and you can copy mine – no duplicates purchased.
Pirating of intellectual properties and the creations of artists will undoubtedly be one of the biggest issues business must address in the 21st Century. You see, it goes beyond Goo Goo Dolls, and Fighters of Foo, Springsteen, and a “Material Girl.” It also is near and dear to Eli Lilly, Johnson & Johnson, Microsoft and Hewlett Packard.
Just as artists spend years honing their abilities and wordsmithing to find the perfect lyric, companies spend millions of dollars on Research and Development to bring new products (drugs, software, and devices) to the market. Without respect for their investment/creation/property, there is little reason to make the investment – or if the investment is made, there is no incentive for them to share it with the rest of the world.
In the music industry, it is true, technology has allowed some artists exposure to millions that, had they gone the traditional route, could have taken them years to duplicate or it would not have happened at all, because they would have never been given the chance. There are several bands that have gone from obscurity, to You Tube, to relatively successful tours. OK Go comes to mind – you know: the guys on the treadmills.
Additionally, some more established artists are embracing technology in new ways. Radiohead recently released its new album, In Rainbows , over the Internet allowing fans to "pay-what-they-liked" for the new songs. Now, its true, the CD will be released soon, with additional songs and we have been promised that the sound quality will be better.
A friend of mine is a producer in the record industry. In talking with him a few weeks ago he shared that: the record labels are really in trouble and have no clue what to do. The only way the artists can make money is to tour – very little of it is coming from the sale of the CDs.
What is even more interesting to me is how the non-traditional market-delivery systems seem to be working. When you read about how Rap and Hip-Hop artists get their start, and how they market their CD’s, it is very innovative. They are not relying on sales from record stores in the mall – and particularly for new artists, much of the momentum for sales is generated on the street, and by word-of-mouth. They have gone "old school" in this age of technology.
While technology has hurt the large distribution houses; a new boutique industry has popped up. It is dominated by garage studios. The distribution network is not with CD’s shipped by the truck load – but rather it is driven into the neighborhoods in the trunks of cars. It is downloaded from the internet – for free at first, and once the artist has a footing, it will cost the consumer $1 per song.
But let’s get back to the fundamental issue – property rights. A free economy must rely on the rule of law, and more specifically property rights as a cornerstone. If these rights are not protected, the motivation to create, invest, and acquire property is undermined, and the value placed on property is eroded.
After all, if you can get “it” for free, how much value do you really place on “it.”
Note to self – next time someone offers to burn you a CD, turn them down and go buy it for your own library. What we called “musical leverage” was really theft.
QUESTIONS for STUDENTS of ECONOMICS:
By Pete Lester, Sr.
December 19, 2007
As 2007 comes to a close, we tend to take stock on the year: the things we accomplished, what we did well and what we need to improve upon.
Hopefully, most of us had good years. If you are a record industry executive – you are looking for answers.
The digital age has been good in a lot of ways, but for the music industry, they really have not figured out a way to make it work in their favor. Fewer CDs are being sold, and with the proliferation of computers and CD burners, people seem to ignore the copy write laws, and copy music for friends with no regard for the lost-sale that the musician has just incurred.
Truth is – this has been going on for years. Back in the late ‘70’s and early ‘80’s we made cassette tapes of the albums on our dorm hall. Invariably, I went home with more than a few songs for which I did not pay. “Musical Leverage” is what we called it: I will copy yours and you can copy mine – no duplicates purchased.
Pirating of intellectual properties and the creations of artists will undoubtedly be one of the biggest issues business must address in the 21st Century. You see, it goes beyond Goo Goo Dolls, and Fighters of Foo, Springsteen, and a “Material Girl.” It also is near and dear to Eli Lilly, Johnson & Johnson, Microsoft and Hewlett Packard.
Just as artists spend years honing their abilities and wordsmithing to find the perfect lyric, companies spend millions of dollars on Research and Development to bring new products (drugs, software, and devices) to the market. Without respect for their investment/creation/property, there is little reason to make the investment – or if the investment is made, there is no incentive for them to share it with the rest of the world.
In the music industry, it is true, technology has allowed some artists exposure to millions that, had they gone the traditional route, could have taken them years to duplicate or it would not have happened at all, because they would have never been given the chance. There are several bands that have gone from obscurity, to You Tube, to relatively successful tours. OK Go comes to mind – you know: the guys on the treadmills.
Additionally, some more established artists are embracing technology in new ways. Radiohead recently released its new album, In Rainbows , over the Internet allowing fans to "pay-what-they-liked" for the new songs. Now, its true, the CD will be released soon, with additional songs and we have been promised that the sound quality will be better.
A friend of mine is a producer in the record industry. In talking with him a few weeks ago he shared that: the record labels are really in trouble and have no clue what to do. The only way the artists can make money is to tour – very little of it is coming from the sale of the CDs.
What is even more interesting to me is how the non-traditional market-delivery systems seem to be working. When you read about how Rap and Hip-Hop artists get their start, and how they market their CD’s, it is very innovative. They are not relying on sales from record stores in the mall – and particularly for new artists, much of the momentum for sales is generated on the street, and by word-of-mouth. They have gone "old school" in this age of technology.
While technology has hurt the large distribution houses; a new boutique industry has popped up. It is dominated by garage studios. The distribution network is not with CD’s shipped by the truck load – but rather it is driven into the neighborhoods in the trunks of cars. It is downloaded from the internet – for free at first, and once the artist has a footing, it will cost the consumer $1 per song.
But let’s get back to the fundamental issue – property rights. A free economy must rely on the rule of law, and more specifically property rights as a cornerstone. If these rights are not protected, the motivation to create, invest, and acquire property is undermined, and the value placed on property is eroded.
After all, if you can get “it” for free, how much value do you really place on “it.”
Note to self – next time someone offers to burn you a CD, turn them down and go buy it for your own library. What we called “musical leverage” was really theft.
QUESTIONS for STUDENTS of ECONOMICS:
- How do the current advancements in technology impact various artists?
a. Older established bands/singers/composers
b. Newer artists - If you were just getting your start in a business, would you create “properties” (songs, lyrics, software programs, video games) for free, or little pay to break into that industry?
- How do you think your attitude would change as you got older and demand grew for your talent, time, attention, services, etc.
- If you owned on old-line traditional record label, what would you do to help your old and new artists to embrace technology, increase sales, protect their (your) property?
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