Monthly Archives: July 2008

more “offend maggie”

There are now about ten third party recordings of “Offend Maggie” up on CASH Music, and most of them *aren’t electronic*. These are live bands which took the trouble to do a killer version of a brand new and fairly hard song.

I especially like Matthew Walker’s fast prog-rock version with a full band.

Jack Hasselbring’s Arrangement for 2nd or 3rd year band (Grade 1.5 – 2) is also way cool. From his page for the project:

My experience with younger bands has taught me to arrange sparsely, with little “clutter”, so the three parts of the arrangement translated nicely to a beginning band arrangement. My primary considerations were playability and fun. The more complex rhythms of the piece would be difficult for 5th or 6th graders to read, but they would do fine if taught them “by rote”. Some of the low brass parts are a bit difficult – trombone uses 7th position unless a trigger is used. The xylophone and bell parts are important, so substitutions would be needed if they aren’t available. Enjoy!

It’s really special and unique that this is net-native Creative Commons music played on live instruments.

Most net-native music is electronic, I think because of how easy and cheap it is to use computers to make music. As soon as you touch a mic the amount of trouble goes way up, and if you need a whole band recorded then it’s not even feasible for most people to find the players, much less do a studio session. So electronic music is becoming dominant in the current generation because of the favorable economics.

But with all of these Offend Maggie versions the situation is reversed. What happened? The difference is writing out the music, which enables skilled players to perform a new piece with a bare minimum of work. Not many people can read music, but the productivity of people who can read approaches the productivity of computer musicians. And it’s significant that the live versions, like aaron novik’s moody stack of bass clarinets are mainly solo multi-track recordings.

instruments up

digitalmusicnews sez:

The sinking CD is often contrasted against healthier music industry segments like touring, publishing, merchandising, and advertising. But sales of music instruments are also quite healthy, and a reflection of an ever-increasing demand in music.

Against that trend, big boxer Best Buy is now stocking up on musical instruments, according to details revealed Monday.

If you add up gains in parts of the music industry outside of record sales, do they balance out? And if they do, why is it a bad thing for musicians who lose their job as a clerk in a record store to get a newly created job as a clerk at a guitar store?

Indies were warm in the first place

Some indies are selling more records than ever while the majors limp along:

Major labels struggle to keep platinum sellers (acts that sell a million units) from backsliding to gold (500,000 units) or worse. But some smaller labels—among them Sub Pop, Merge, and Matador—have hit a pocket of relative prosperity, with many of their top stars selling more records than ever.

A comment there by Eric Phillipson:

Having worked with both the majors and independent labels, I have seen first hand the reason why Independent labels are thriving at a time like this. Independent artists generally are able to connect with their fans more easily creating a more label fan base.

It’s like the transition from silent films to talkies, where many actors who rose because of their looks turned out to lack a good speaking voice.

Musicians in the indie circuit have always had a warmer and more intimate style than musicians on the majors, and on the internet that’s what’s called for.

upsales

Elemental Consulting on pay-per-download songs:

If Amazon has a hard time making money on music priced a little below iTunes standard pricing, how can downloads priced at a fraction of the cost be profitable for indie labels and musicians?

Applying the concept of loss leaders … it logically requires that the download is then just the gateway to other products that the musician will be selling for more money – concert tickets perhaps? Merchandise? These are probably the most common supplemental sales, but the fact of the matter is that the digital song is the most viable sale – possibly the cheapest and easiest to manufacture and distribute. The cost is unaffected by geography, unlike concert tickets where an artist has to physically be somewhere and must pay for his/her travel expenses and that of the band. So I’m not seeing how cheap downloads as a loss leader would really work for the individual artist or small label. I can see cutting the cost of a particular track or album in order to provide the gateway to buy other albums at a higher cost but I just don’t see how a viable business for indies can be made from cut-price downloads.

The use of music as a loss leader is about truly profitable products. Bands selling tracks on Amazon should seek to get a piece of anything the user buys, not just CDs. Taking this to the real world, a comparable deal would be to ask Best Buy for a percentage of the final sale.

So let’s say you’re Michael Jackson and Best Buy is doing a promotion where they give away a copy of “Thriller” to anybody who buys a Halloween costume. You’d ask for a piece of the costume, which has a decent markup, rather than a higher price on the CD.

You’re looking for stuff with a big markup that would move better if it were associated with cultural items like songs. The “Baby You Can Drive My Car” Beatles giveaway at the BMW dealership. Defense contracting. Pharmaceuticals. Software. Dating. Gourmet food. Liquor.

Piracy is dead

Unauthorized distribution has already been factored into the music economy. Valuations have been adjusted. The economic impact of filesharing is complete.

When Napster happened, it was a surprise to the music industry. The techies saw it coming but the music people didn’t. This hurt many people with investments in the music business. Highly successful musicians, who are especially loved by the public, took an especially big hit.

Then something normal happened: people adjusted their investments to accomodate the changed environment. Investors sold stock in CD stores and bought stock in guitar stores. The concert business grew. Musicians stopped doing expensive studio recording and put their money into home studios, a move from an ongoing investment in services to a one-time investment in capital. Players redirected their economic efforts from CD sales to merchandise, concerts, advertising, soundtracks and other products which benefitted from the changed environment.

It has now been nine years since Napster. The music industry has been steadily reconfiguring itself, and while the transformation to a new configuration isn’t complete, the valuation of the recording industry has already dropped to take napsterization into account.

Money lost to napsterization is already gone. There is no more to be lost.

If record labels make less money now than before, it’s not a surprise to anyone. Somebody who puts money into a recording business that is affected by napsterization does it with full knowledge of the situation. Therefore, they don’t stand to lose money on it.

It’s like buying a house in an expensive neighborhood and losing money when the neighborhood becomes less popular. If the expensive house loses value as a result of the neighborhood becoming less popular, money is lost. But once that change has happened, the transformation is over. If somebody buys the devalued expensive house at the new market rate and the house stays at the lower value, no money is lost.

Which is to say that unauthorized distribution is having no further impact on the recording industry now that it is simply a basis part of the environment. Piracy is dead.

value of samples

An insight on the economics of remixes from the Creative Commons blog:

On a music remix site such as ccMixter, the best fully mixed tracks are most enjoyable to listen to, but the best a cappellas and samples are probably the most valuable content in the sense that the former build upon and require the latter.

So the value of a sample in isolation is low, but when it is used in mixes the value grows. Over time the growth compounds as use of the sample gives it more exposure and increases the likelihood of being used in yet more mixes. The most popular sample sources are exponentially more valuable than the least.

Myspace music / Amazon deal

In the upcoming Myspace Music launch, Amazon is likely to be the provider for paid downloads. This is per TechCrunch:

The as-yet unlaunched MySpace Music will likely partner with Amazon to handle all music ecommerce transactions, we’ve heard from multiple sources. Apple and Rhapsody are also bidding for the business, however, and one source says a final decision hasn’t yet been made.

This is a wise decision on Myspace’s part. Rather than building out the entire ecommerce setup, which includes page development, label negotiations, customer support, and transaction handling, they’re offloading it to a partner. It’s a sign of Myspace’s growth as a development organization that they know when to avoid work.

TC also says that:

Music download sales are just one revenue stream for the property. … But downloads are going to be a big part of total revenue, and while margins on music sales are low, the volume could be massive as MySpace directs its traffic to the new site.

I’m skeptical that downloads will ever be a non-trivial revenue source for Myspace. The margins are too low.

Amazon itself doesn’t make anything on them; it makes money on downloads by using them to attract shoppers, and then upselling products with a real margin. For example, a user will click into Amazon to buy a download, see a recommendation for an MP3 player, and buy the MP3 player.

This is the same music strategy used by physical retailers like Best Buy. They sell CDs at close to cost in order to attract shoppers. The shoppers come for the cheapo Guns N Roses and pick up a barbeque, linen set, etc while they’re at the store. And it’s the same strategy used by clubs that do live music. The band gets the door for good or ill, while the club gets the liquor sales.

A smarter band would drop the door charge to maximize their draw and take a piece of the bar instead. And if Myspace gets affiliate revenues on the entire purchase at Amazon rather than just the download sales — which I assume they do — that’s exactly what they’re doing.

Except that the downloads aren’t free, so the funnel into Amazon isn’t as good as it could be. They can’t be free because that’s how the labels and musicians get paid. On the door.

hybrid label+blog economics

After I thought more about RCRD LBL‘s economics, I came to a couple conclusions.

I don’t think they’re selling their spots at the listed rates. I think the ads they are selling might be part of package deals with other sites that I don’t know about, because they can’t deliver enough traffic for major brands to pay attention to them. And I think the actual rates are lower.

I also think that I understand their business strategy. They’re able to put major brands inside the world of way-cool MP3 blogging without risking association with copyright infringement. It’s hip but also clean. The business is relying on their squeaky clean copyright status to charge a premium for ads. So even though I don’t think they’re getting the listed rates, I do think they’re getting much better rates than ordinary MP3 blogs.

This points towards an elegant and innovative business model.

Ordinarily internet music companies are forked between two deaths. If they keep it clean they get killed on royalties for licensing. If they’re fast and loose with copyright, they get killed on legal bills and eventually are forced to license anyway. But either problem assumes that they have to carry a broad selection of everything with cultural presence.

RCRD LBL avoids both forks by doing their own A&R, then packaging the results as a blog. The reason they’re a label is that they do their own research work to find obscure gems. It’s important that these are obscure, because it means that licensing costs can be kept down. It’s important that they do their own research, because there aren’t yet strong discovery tools for digging out the gems in the mountain of unknowns. The reason they’re a blog is that they aren’t expected to carry everything everywhere. If they were a search engine like Seeqpod or an encompassing content browser environment like All Music Guide, they would need to carry music that they couldn’t afford to license. The blog format puts them in position to limit what they release.

Note that the importance of lowering royalty costs doesn’t imply that the musicians are getting screwed. If the musicians earn exactly the same as they do on a traditional label, RCRD LBL can still have a winning cost structure by keeping royalties that would normally go to label and publishing bills.

Will it work? It depends on execution. They need to get their traffic up enough to do business with the brand advertisers who will pay a premium for RCRD LBL’s clean but edgy product line. This range is about a million uniques a month.

Deerhoof ‘offend maggie’

Over on CASH Music, Deerhoof released a new song as sheet music, and did it under a Creative Commons Attribution-Sharealike-NonCommercial license. Their version is a nice hand made piece of writing with a good vibe, but it’s easier to work with this stuff if it’s digitized so I retranscribed their source into Sibelious. Given that I was able to auto-create a MIDI file for the whole thing, an MP3 file for the whole thing, and parts for each instrument, including guitar tablature, sheet music, and a MIDI file for each instrument so that you can feed them all into a sequencer and tweak each one individually.

There is no Deerhoof recording of this song yet, just a how-to in the form of sheet music. I am in awe that the band *led* with the interactive element in this release.

The MIDI file can lead straight to remixes. And the MP3 I produced from it can give people an idea of what this song sounds like, which most people won’t get until recordings come out.

The goods are all over in the dedicated page for this on my music site.