Here We Go Again

22/01/2014 § Leave a comment

To the cloud, again and again. When I first wrote this for MusicThinkTank, way back in 2011, Google was working on a hush-hush (though everyone seemed to know about it) service to shunt all your music up to a locker in the cloud. Since then, Apple has also pushed their iTunes up into the Cloud. The premise is you can play your music everywhere and anywhere on just about any device that the gods of I.T. can wrestle into submission.  Maybe.

Maybe not. You may not even own what you thought you bought. I knew the guys in Business Affairs at the labels wouldn’t let these kinds of services fly without some kind of hindrances, the weight of which could cause them to plummet to earth and die a slow but sure death. And here it is, a start of something sinister: be advised if you use the Apple service, iTunes Match, not all your iTunes tracks will stay as your iTunes tracks. Yes, those tracks you have purchased through Apple may disappear and you can’t get them back. “What?” you may be pondering, though with maybe an expletive sneaking in there.

Were Business Affairs people, with legalese and billable hours in their arsenal, at the ready to quash these ideas? While not hitting these services with blunt objects, it looks like they’ve been busy. Here’s how it will go for you members of the Apple universe, according to gigaom.com:

Songs you once thought were stored safely in your iTunes Match music library may have been automatically removed by Apple. If a contract between Apple and a record label expires or if songs are somehow modified, they can disappear from your iCloud library.

I would think that Google and Apple were fending their way through the music industry glad-handing and making friends — the usual business dance of flirting with deal terms, bluffs and counter-bluffs and the usual name-calling when someone refuses to step in time — in order to try and get these services launched, but like Napster and previous ventures in peer to peer, there are those in the music industry who want these things dead, doubly dead. Kicked in the head, dead.

To me, they are missing out on a key tool that will help them sell more downloads and albums than ever before, and especially more tstochkes for all those 360 deals they’ve hammered out.

Face it, the people who run this business of music — those who really run it from their offices high above the fray, poring over contracts, tallying up profits, explaining away losses and fomenting lawsuits — are not hardcore fans of music. Heck, the suited and proverbial THEY, while they may like music, the fandom’s been drained from their blood by now. Music is something they listen to in order to figure out the next percentage point gain to their salary and their artists’ income. They don’t even pay for their music. They are comped with freebies, swag, and, horrors, THEY GET FREE INTO BEST SEATS AT CONCERTS.

I know I’m going to get crap for that one paragraph, but as one in the industry I know of what I speak: most, yes not all, of the professionals in the music business that I rub elbows with in my day-to-day are not true musical fanatics. They are at gigs because they have to be, like the wahoos I stood behind at a very intimate Elvis Costello concert at Gerde’s Folk City in NYC ages ago. I knew who and what the wahoos were and they were both very successful dudes in the business. I wish I could have had their jobs and salaries, but not their sense of fandom. They did not shut up once while Elvis was doing a historic concert right within 50 feet of their banter.

If I had a knife…

Oh, the proverbial THEY profess to be music fans, like all the business affairs people at Rykodisc that I worked with, who really knew the who, what, where and why of our eclectic catalog. Don Rose, one of the founders of the label, ran a record store in his youth. Who else but a fan would even dare negotiate the rights to the Frank Zappa catalog when everyone else in the business saw those masters as equal to a soon-to-be-dead mobster, a great big fat liability, and any negotiations as those lead weights around his feet helping the whole enterprise to get quicker to the bottom.  Only a company of fans would even dare to move ahead. They did and became a successful enterprise able to go on to David Bowie, then Elvis Costello and others. I, myself, am a great fanatic who spent hours poring over lyrics in the depths of my room — back when you could read lyrics on a 12×12 inch inner sleeve — while my dad told me to turn down the FZ on my stereo, but all of us in the business have to come to the realization: we are not like the music buying public. Because we don’t really buy music, we’ve left our fandom behind. It’s our business, not our hobby.

Which is why the suits will expect, or need to make, the full sale at all costs, or through their arrogance and greed, will create these services to falter.

The suits do not fully understand the buyers and the inner workings of their fan’s minds and how they consume, and possibly, hopefully, purchase music. While I knew the workings of the suits from my days of being one at Rykodisc, this was excruciatingly painted out in broad strokes when a crew from Universal came to my later employer, iCAST; the imploded CMGi entertainment website of yore. Universal presented us with their vision of the pay download future. After the whizbang powerpoint deck, I asked what was their pricepoint for a single download? They noted, with all the legalities and costs, and royalties and such they could not make a profit unless they hit around $1.35 or so. My memory is hazy here, it could have been higher, although I know it was not that much lower as I then noted that they would have to hit under 1.00 in order to get the public interested. Since consumers were not getting the physical product, they needed the perception that they could get an albums’ worth of tracks for under the cost of a full CD. The brightest minds in the bunch reminded me that included in the price were the extras of photos, liners, lyrics, yadda and yadda. They didn’t get it. That extra stuff was all well and good, but it was the final price that would induce the sale of such an ephemeral product. You can’t hold an Mp3 file, and it cannot ever be worth more than a physical CD in the mind of the buyer, no matter how filled with additional geegaws and confections.

Where is Umusic’s download platform and where is Apple’s iTunes? Umusic is nowhere and iTunes is probably in your pocket.

Let’s see, at what price point did iTunes launch? One penny under a buck. Not that I’m a genius and neither was iTunes. They just understood the fan mentality. The cost of a track needed to be 99 cents. The suits only saw the way to the full sale, the optimum profit, and couldn’t go any further than that. They ended up yielding the floor, and the bulk of the revenue, to Apple and iTunes.

It is understandable why Record Companies look at the back catalog as revenue, since they financed the creation of said items, many of which have not returned a profit, yet. But in looking at these pieces of product, they don’t understand how essential this music is to the music fanatics well being. In a weird way, they do things bass-akwards in order to create revenue. They don’t release back-catalog, they don’t license tracks for compilations (don’t get me started on this one, I have a few good stories if you want to buy me a coffee), they don’t  reach back there into the vaults to really see everything they have and figure out how to get it out here to the music-buying public. I’m not talking the back-catalog of the known entities of rock like Supertramp or Olivia Newton John. Where is “Split” by The Groundhogs? A tour-de-force I wore my headphones out listening to in Jr High.  Or “We & The Sea” by Tamba 4? This was a little Brazillian Jazz something I found in the bins after being hipped to Creed Taylor and his CTI records by my Jazz friends.

Where can you find them on CD? Nowhere.*

Why do you think fantatics search out torrents, why do you think Napster was such a success? These criminals want their music and will resort to downloading it illegally because we, in the business, are not giving it to them in the way they want it. Yes, there are those who will never pay for their music, and guess what? They WILL NEVER pay for their music. But how can you download a tee-shirt, a live experience, even an artist mug with a bag of their favorite artists’ favorite grind of coffee? You don’t sell those criminals up the river; you sell them the proverbial bill of goods.

Okay, you can slap their wrists with a ruler if you want.

Napster would have been a fantabulous tool for finding out fans and their networks of friends: who was sharing what and how much and to whom. A treasure trove of data. Yes, it was peer2peer illegal swapping of copyrighted materials and I would think that the minds that put a man on the moon, or made it so simple that the grandparents of my kids — my then 91 year old dad and 85 year old mom — could figure out how to get a Facebook account, those software geniuses should be able to concoct a system that could create revenue for all concerned. Not a full sale, but revenue. But the dang (insert a stronger word here if you must) BzAff departments are either hampered by the corner-officers, or they wear a mighty big set of britches and are looking for a full sale. Remember, the bulk of people who were on Napster were never going to buy the music, or couldn’t find the music they could buy. Either give them what they want — free music — or forget a full sale.

Big Music Label, consider this kind of service, the Google/iTunes cloud music thing (Google Play/iTunes Match) as a marketing tool. And not only that, this could be a piece of marketing that pays for itself. Someone at Rykodisc once told me, “a fan is someone who owns three albums by an artist.” Our mission there was to get the next album we were releasing into the hands of the fans, and get them to concerts, and keep them engaged so they keep coming back for more CDs. If you can find out the “Connectors” (as from Malcolm Gladwell’s “Tipping Point”), which would be the fans with the most shares, with so many friends checking out their music, you have found the way to penetrate great swaths of the music buying public into buying great gobs of music. You’ve found the fans and you’ve found someone they trust. You should be making friends with connectors, not impeding them. Open up the hood at these services and you could find the whole series of movers and shakers key to Gladwell’s three rules of change in the tipping point of epidemics: the Connectors, the Mavens, the Salesmen at work. Get the webbies to write up some cool software and you could see all of this in action, in real time. You would see the fans you should know better, the ones with three or more albums by your struggling artist. Not hypothetically in a generic grouping inserted into a marketing plan. There, right in front of your face. Interacting with other fans of other artists. In real time! C’mon, sell ’em a Tee Shirt!

As I ‘m not privy to information being discussed at the high-level meetings by the Music Suits and the Web Suits being held to discuss these services, I can only predict the worst. Music BzAff will hold out for strangling the service before it can gain momentum and go passed the tipping point. And, most undoubtedly on the other side, Web BzAff will hold out for some other stupid stuff that BzAff people hold out for. BzAff just does these things because they know how to do these things and they get their jollies, and their paychecks, by doing these things extremely well.

When we were trying to compile some esoteric Nonesuch track for some not-quite-so-esoteric Rykodisc compilation, the guy on the other end of the phone at Warners, who wore some pretty big britches, guffawed and said, as I recall; “for that kind of money, I don’t get up from my desk to even find the file.” In other words, our spare change of a few thousand didn’t smoke his shorts. One could counter that having the track on an album that we were going to market could have given interest into more of the Nonesuch back catalog and driven more sales of that. One could if one didn’t mind another round of guffaws. I could see their point then, this was before iTunes and downloads. But even today, Big Music Co is not considering the whole picture. A few weeks ago I was told that Big Jazz Label had a whole warehouse of masters not finding their way to iTunes. I gave Big Jazz Label a handy idea that would again, be a kind of marketing that paid for itself–although they would have to shell out the shekels to start the campaign. They came back with, what I would term, a short-sighted reply; they would be most interested if someone licensed the material to do the same thing. Yeah, sure thing, invest in a product that is going to just about turn a profit, but makes someone else a handsomer profit as free marketing for their back catalog.

Like my late Dad used to say, “If you like that, I’ve got a bridge in Brooklyn you might be interested in.”

As a marketer, I would love to be able to use the backend of these services to triangulate fans; fans of A who love B could also love E, and then find ways to pull the fans of A + B to be interested in E. Other parts of the industry–Merchandisers, Concert Promoters/Ticketing, Artist Managers, would gladly (okay, begrudgingly) pay to use this service to examine the musical buying habits of the members. We marketers usually treat the music buying public as homogeneous groups, cutting and slicing them into distinct segments so we can market to them.

If we had that software, I noted above, during the days of Napster we could have seen odd pairings we could have explored and exploited: fans of A level artists also love B and C level artists of other genres, if you know which ones, then you know how to get more sales of the C level artists; or which C level artists should go on tour with which A Level artists and then really help sell more tickets for the tour. There, I thought of that in under fifteen minutes. Put the Brightest Minds in the Biz in a room to white board it out and you could have a few hundred ways to create B2B revenue from this service; cold cash which could help pay the Big Labels their due. And Big Artists could siphon something off the top to make themselves happy. But, I’m guessing in any situation, BzAffs will start at the top, with all expecting their best percentages out of the deal but ending up with an untenable solution, like the pay-outs needed to the Grannies in “The Producers.”

So here we go again.

It’s going to be interesting to watch how these Cloud Music Sharing services wind their way through the BzAff wranglings year after year. I’ve seen BzAff at their finest and this is surely going to be some kind of show, even from the outside. Unfortunately, I think everyone is going to wrangle this thing so much it may not survive.

Keep cutting tunes out of those lockers and you should see some kind of pissed-off consumers rattling iTunes and Google. They thought they bought something but really it was leased. They really should be complaining to the labels and the artists who are signed there, but that’s a fuzzy target at best.

One more story to end this on even a lower note. Henry Frayne, one of the artists I product managed at Rykodisc, went through a bitch of a contract negotiation with our BzAff team. Back and forth the paperwork went, until one day Henry was given “congratulations” for having the lengthiest negotiation in the history of the label. This seems ridiculous. Instead of shoving all sorts of “zingers” into the contract in order to be taken out when noted by other legal experts and lengthening the process, it should have been cut and dried. If the record went on to sell zillions, Henry would be renegotiating the contract anyway and it would make sense to spend good money after good money to work on renegotiations. If it flopped, then all that time in Zingerville was wasted. Henry’s wonderful and dreamy soundscapes entitled “Lanterna,”sold moderately well. (With all my marketing senses still intact, you should all check out Lanterna on iTunes right now.) Then Rykodisc was sold to Palm and I was out of there. The zingers still embedded into the contract also denied Henry from making any additional albums for a certain number of years. If you pause to think about this logically, this was a stupid thing for Henry to sign (Henry!) and for Rykodisc to want at all. More albums by Lanterna would have given more exposure to, and interest in, his back catalog — our one album, owned by Rykodisc then Rykodisc/Palm, and now the legalities embedded in the contract lay in some dusty box somewhere in the mighty Warner Bros basement. So they/we cut Henry off from his making more of his music to spite their bottom line.

What’s in store for our musical future? If it’s like the past, the big guys will not be able to see the possibilities, only the loss of revenue. But without the possibilities, they will lose revenue.

We all lose, to be sure. Little by little, like those tracks we thought we owned disappearing behind the curtain in iTunes Match.

_________

*Yeah, yeah, Groundhog “Split” is now on the streaming services, but that’s another story for another time, one that includes angry, underpaid Artists and the Suits who signed them to zinger-filled contracts, a tussle among royalties due, perceived profits and expensed illusions.

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