paid content means badly paid musicians

Jaron Lanier editorial in the New York Times:

How long must creative people wait for the Web’s new wealth to find a path to their doors? […] Information is free on the Internet because we created the system to be that way.

We could design information systems so that people can pay for content — so that anyone has the chance of becoming a widely read author and yet can also be paid. Information could be universally accessible but on an affordable instead of an absolutely free basis.

Lanier doesn’t understand music economics.

Advertising allows some people to specialize in attracting eyeballs and others to specialize in turning attention into revenue. Content creators, like musicians, do the attracting. Advertisers do the monetizing.

If you have the musicians do the monetizing, they will do very stupid things like sell $80 CD box sets, which have a high ticket value but don’t move enough units to be a great business. If you have the advertisers do the monetizing, and you take the ones who pay the highest prices, you will have an alliance with whoever is best at turning these eyeballs into a living.

If some musician is putting his music on the web because he wants to sell CDs, he’s competing with advertisers to monetize the eyeballs his music is attracting. Maybe he’s the natural winner of this competition, but probably not. Frozen peas are generally a better product than CDs. Cars are a better product. iPods are a better product. Pretty much anything is a better product than a CD.

And that applies to downloaded song files as well as songs on hard media. The packaging and distribution are not the issue. The issue is that not many people want to continually purchase music. It’s a small market.

The business of music is not to maximize the number of songs sold. It is to maximize the amount of money earned. And it happens that lots of people want to enjoy music in a transient context. They like a good DJ at the club. They like radio when they’re stuck in traffic. They are interested by whatever their friend plays when they visit. This is a market that’s big enough to matter.

Musicians will make less money from paid content than ad-sponsored content because there is less demand for paid content. Regardless of whether paying for music is a declining business, it was never much of a business in the first place. The economics have always sucked and they simply continue to suck. The rate of decline in the CD business just doesn’t matter because the CD business is so small in comparison with other businesses that music can complement via advertising.

Paid content means you sell the music. Ad sponsored content means you use the music to sell whatever is most profitable. Since paid content means that musicians are probably not selling the most profitable product, it’s a bad business.

6 thoughts on “paid content means badly paid musicians

  1. If there are enough people who hate advertising (like me) and are willing to pay for content by subscription (whether direct or incidental as part of a broadband package), then there’s still a market for paid content. That sounds like what Lanier could be describing, particularly if you talk about selling music, rather than selling CDs.

  2. It’s true that there are market opportunities for paid content, just like there are market opportunities for lawn mowing. They just aren’t on the scale of the ad business. If you’re good with lawns, you can make a little money doing chores or more money selling lawn mowers.

    Advertising is often annoying, but the amount of friction it brings to a transaction is still a lot less than per-unit transactions. You’re not buying a regular stream of CDs or downloads or subscribing to any music service, right? And yet music is a big part of many of your transactions. It’s with you at the grocery store, at the bar, in the car, on the subway. In all those contexts it is affecting your purchases. *Those* purchases are the pool of cash that advertisers live on.

  3. Great post. I think there’s a historical view on this too: there’s always been only a small demand for a “pure music” (music-only) experience, which is provided at a relatively high cost when it’s sold (and not given away as a public service). Classical music concerts are a good example of this.

    People who are into the pure music experience with recorded music also spend a lot on it–both through purchasing good recordings in the best formats available, and also through purchasing hi-fi playback systems.

    But, then there’s most other music experiences: these are paired with other public or commercial services. And, people expect to pay for those services–the music comes with the service “for free” in some sense, but the service is paid for.

    So, allowing / featuring advertising is one way to cover service costs and make profit. But, there are other services that work with music, e.g., a restaurant that’s successful for serving good food and playing cool music probably doesn’t need to allow outside advertising on its premises.

    IMHO, musicians who want to be savvy about making money with their music need to understand in what places they (can) fit into the pure music vs paired music spectrum. There are actually a bunch of different music businesses that have little or nothing to do with the record business. I think in the long run, record sales will be seen as another one of the many attributes of these musical businesses, rather than much of a business in itself.

  4. I share your belief that ad-sponsored content is likely to be the way for musicians in the aggregate to make the most from web music.

    I don’t believe, though, that it’s an either/or situation. I notice a growing niche of artists who seek to exploit each of the available outlets–limited release “premium” CDs, paid digital downloads, and licensing. I believe that
    in the long run, we’ll see netlabels utilize artists as the “attractor” to side-of-page advertising, with revenue sharing with the artists built into the deal.

    As someone whose listening tastes run something like 80/20 free-netlabel v. commercial these days,I believe that a vibrant niche music culture will be built on free downloads. I don’t have any problem with the idea that a “free but premium” download “label” could arise which charges nothing to the mp3 consumer, but which
    sells advertising and cuts the artist in on x percent of the royalty.

    The key to this being a workable model, to me, is that enough “buzz” would have to arise that the artist is in some artistic/popular way perceived as “premium” that site traffic generates a revenue stream worth the trouble.
    This, in turn, requires the right sort of website builder, with the right sort of integrity. This is so obvious, inexpensive, and do-able that I believe it is inevitable. The thing that is not clear to me is if this is “the” solution to the monetization of small-label web-music, or merely one niche.

    I don’t make commercial music, in any sense of the word, and I’m all in favor of sharing music outside those make-a-buck contructs. Yet I’m delighted with the idea of an ad-sponsored label, as an alternative way to get consumers what they want and still find an income stream for the artist.

    Just as netlabel owners are artists who understand the beauty of sharing culture, I suspect that the ad-based label will be an artist-owned label by someone who is not only gifted (and “commercial” in the sense of attracting a broad base of listeners) but also
    business-savvy.

    I believe that the new philosopher-king will be a musician with web skills who has the business savvy to treat fellow musicians fairly in an ad-based revenue stream split.

  5. For those who do not think paid for music is already dead then you should have a 14 year old in your house who has one of the most comprehensive knowledges of all music genres from the 60s to present day and yet has never bought a tune ever.

    The mobile phone is the weapon of distribution choice amongst his friends.

    That generation will make decisions about what buisness will do in the future than the so called industry pilots who think they have it and the consumer all under control.

    The horse has already bolted. Time to find a new ride.

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