

Meet The New Boss, Worse Than The Old Boss? - pie
http://thetrichordist.wordpress.com/2012/04/15/meet-the-new-boss-worse-than-the-old-boss-full-post/

======
tptacek
This deserves so much more attention here than it's going to get. It's also
genuinely TL, and many here DR at all. For what it's worth, if he starts to
lose you, here are some of the key points:

* You'd want to know that David Lowery was the lead singer for Camper Van Beethoven (of "Take The Skinheads Bowling" fame) and Cracker (of "Low" fame). You'd quickly learn from this that Lowery was trained as a mathematician and worked as a quant near the CME, and worked with Andy Mason at his pre-Groupon company. He's a punchcard and packet radio chat nerd.

* He's tired of people telling him that musicians need to "embrace" technology. They were embracing technology in the '90s. They paid to have people run complicated websites. He's tired of people telling him to sell more t-shirts. Bands have sold t-shirts since the '70s. It's shitty money. And people pirate t-shirts too!

* Concerts are also shitty money for most artists. People thought otherwise because we inadvertently cherry pick stats from artists that happen to do crazy well at concerts. Lowery runs a serious recording studio, his wife is a notable concert booker. Musicians aren't making money at concerts. Many are living out of their vans.

* Recording albums is deceptively expensive in ways that technology doesn't address. ProTools can get marginally cheaper but the mix engineer doesn't get any cheaper. Mix engineers are expensive skilled professionals. Recordings sound like crap when you don't do them professionally. The mix engineer doesn't get to sell t-shirts at concerts.

* He's going to lose a lot of you by sniping at the industry for "defending software patents", as if that was a double standard. Get past that to his real point: technologists work in an industry that is supported by protectable IP. Even if you work solely on NetBSD, you'd make a lot less money if no software was protectable. No music is protectable anymore. There is a serious double standard.

* He gets it: you can give to get. He's been giving away music for decades. His shows were all recorded and given away for free; his bands organized CD burning trees. But that was his choice and he did it on his terms. The new terms are dictated to artists: your stuff will be available for free online.

* The old system was better for artists. Not because the labels were better. It was probably an accident. Editorial aside: or maybe tech companies are just better at squeezing surplus value out of systems.

* People tend to remark about how low artist royalties were in the label system. That didn't tell the whole story! Artists received sizable advances calibrated for "modest success" level outcome for their recordings. The overwhelming majority of artists never recouped those advances. So the _effective_ royalty rate was much higher; possibly, for most bands, over 50%.

* Not only that, but artists received a _mechanical_ 70-95 cents every time their album sold, even when they hadn't recouped. So no matter what the economics of a given contract were, when you download a pirated album instead of buying it, the artist loses nearly a buck.

* Artists don't talk about how good they have it because it's not cool to talk about how good you have it.

* Music distribution in 2012 is lockers, streaming, and stores.

* Lockers are straight-up piracy. They make huge revenues (ed aside: "MegaUpload Considers IPO" revenues) from "accelerated downloads" and from ad placement. Musicians get zero of that money.

* Speaking of piracy: recorded music sales are off over 60% since the advent of piracy. There are studies that try to show that musicians are better off in the long run. But many of them are playing games. Some pour game revenue into the same bucket as music revenue. Others use sleight of hand to equate 99 cent single downloads with album sales. One suggested a successful indie musician had seen increased revenues recently, but it turned out that musician made only 34k/yr. People circulate wildly inaccurate stories and infographics about how labels screw artists and accept them without question.

* Streaming tries to pay artists but not by viable amounts. Moreover, streaming pricing isn't transparent. Some artists get better deals, paid on different scales, than other artists.

* Stores are reliably paying artists. But the economics don't totally add up.

* The 1980s value chain: artist < store < label. The artist got the least, yes. But stores took on inventory risk and were compensated for that. Labels financed recording and distribution and were compensated. All three links in the chain provided significant value.

* The 2012 value chain: artist < iTunes < label. The artist makes marginally more. But iTunes does't add significant value: unlike the stores, which were paid to take inventory risk and predict demand, iTunes takes no risk and performs almost no service other than dealing with card processing fees.

* BUT HE'S FINE WITH THAT. He's a market guy. More competition would fix this problem.

* Except: how do you compete with Apple, Google, and Facebook? For a little while musicians could make decent money selling music on their websites. 100% of the revenue less processing fees. Then Facebook and Youtube took all the traffic. Visitor stats plummeted. New content has to be released on Facebook or Youtube; that's where the audience is. But he has no control on Facebook or Youtube. He has to fit into their revenue model, or swim against a tsunami to try to find an audience for a standalone web site, hoping to be one of the few people with outcomes like Louis CK.

* Again, he says: the old system was better. You could make a living more reliably as a musician under the major label system than you can today. The label system at least cared about music --- not in the "have great taste, prefer The Kinks to The Turtles" kind of way, but in a "our incentives align somewhat" kind of way. But music is just a footnote to Facebook & Google. The new players don't care at all about the music industry, because they're in the tech industry, and the only thing that matters to the tech industry is turning software into money.

You don't have to agree with any of this (I happen to buy all of it,
wholesale; maybe it's because the rest of my family are musicians). You also
don't have to believe that the tech industry owes it to musicians to change
anything so that people can make a living as musicians (that's not what I
believe, but I believe a lot of things you don't). But you should probably
_engage fully_ with what Lowery is saying before you try to claim that
startups and tech companies are making things better for musicians, because
this is him calling bullshit on you directly.

~~~
regularfry
It's _very_ hard for me not to read this as thrashing in a tar-pit. Even if
everything he says is spot-on, I don't see a positive call-to-action here. If
all this is supposed to be is someone in the know saying "don't piss down my
back and tell me it's raining," that's one thing, and I can get behind that,
in a way. What I _can't_ get behind is the implicit call for technology not to
be developed, or for new business models not to be tried.

The 20th century was a complete historical outlier in the support given to
professional musicians, brought on by a confluence of technology that had a
high barrier to entry but low barriers to distribution. That situation has now
changed, and it's inevitable that there's going to be a squeeze.

One specific issue I do take with what he's saying comes here:

    
    
        But what many of you forget is that IT IS MY CHOICE whether I choose 
        to give away my songs or sell them.  IT IS MY CHOICE how and where to
        distribute my songs.  IT IS MY CHOICE to decide which websites get to 
        exploit my songs.   Like it or not, the right to control one’s 
        intellectual property (like songs) is a constitutional right.
    

The first of those choices I have no disagreement with. That's just the nature
of how he chooses to distribute his work in the first place. However, from
then on, while he does have rights in the work, _those rights are limited_. I
wonder what he'd say the proper length for a copyright term should be? As much
as he conflates free software fans with software patent owners, I could easily
conflate this part of his talk with the actions of the copyright lobby to
extend copyright in perpetuity.

~~~
tptacek
This is just rationalizing. The system as it exists today provides him with
virtually _no_ rights over his work. Also, what right is more reasonable for a
creator to claim than the right to price and market their work on their terms?
This whole message board is full of people who post "Show HN" stories about
their random weekend projects priced at $9.99/mo.

~~~
tptacek
(This comment was overly strident; preface all sentences with "I think" and
add an implied "we", because I've been just as guilty of this rationalization
as the rest of us.)

The core point here: there was an old system with some control over
distribution. There is a new system that _dictates_ terms to artists, and
those terms are "your content will be free to all comers online, and you can
compete with other businesses to derive value from it".

When Apple applied the same terms to the app store, people freaked. And app
developers had a _choice_ of whether to deliver on the app store!

~~~
regularfry
Right. I guess what I'm not seeing is how it could be any other way, given the
economic incentives and technical landscape. This argument sails awfully close
to begging humans not to be human.

~~~
tptacek
That seems true if what you're implying is that it's human nature to cheat on
contracts, renege on promises, and free-ride whenever possible. I concede that
humans have those streaks, but I don't accept them.

As for the arc of technological improvement: it speaks very poorly of any YC
company's ability to protect its customer data, too. Or of any HN reader's
ability to retain control of their laptop. How do you feel about that?

~~~
regularfry
Pretty neutral. Everything is broken or circumvented in the long run.

------
tptacek
_I realize that some of you may not know much about me or even who I am. I
like to think that I am uniquely qualified as an artist, entrepreneur and
geek. I was trained as a mathematician. My first job after I graduated
involved being the systems operator for an MPM OS system and I wrote a lot of
DBASE IV scripts. I had a fascination with the old RPG punch card programming
language. I am deeply involved in the digital amateur radio world. You can
sometimes find me operating PSK31 on 20 meters. I spent some time in Chicago
near the CME. I worked as a “Quant” doing some semi high frequency trading.
While there I became involved with a company called www.thepoint.com which
evolved into www.groupon.com._

This post is blowing my mind and I'm only a couple grafs into it. David Lowery
was a f'ing quant for CME traders?

~~~
anigbrowl
I didn't know any of that either. But I was mainly struck by how
comprehensively he attacked the arguments of those he calls 'freehadists.' I
sit (uncomfortably) on the fence in these things; I think the current law on
copyright is a disaster on wheels, but having spent years as a Starving Artist
the problem of revenue for content creators is not an abstract one to me, and
I can't bring myself to download copyrighted movies and music the way other
people do. I used to buy a lot of media, now I compromise by renting it or
opting for what's available on YouTube (where rightsholders have a reliable
mechanism for asserting ownership of their IP if they feel an upload infringes
upon them).

The bit that really pained me was his mention of John Perrry Barlow doing his
schtick at the SF Music Summit. I was getting into the internet when the WELL
was still in full swing and vividly recall Barlow's Declaration of the
Independence of Cyberspace - what young digital idealist _wouldn't_ thrill to
such vaulting sentiments? Two decades later, the notions of elective
citizenship and intentional nationality continue to fascinate, but not the
notions that the ends justify the means and that the economics will take care
of themselves.

I am very happy that the technological means of production have become so much
cheaper; I have several synthesizers and related audio gear sitting on this
desk I'm at now, and a great camera that allows me to shoot excellent video in
HD - one handed. When I first learned my way around a movie set the cameras
weighed 30 pounds and I had to use a tape recorder the size of a concrete
block. Unfortunately, my technical mastery (or at least commercially viable
skill) came at the same time that the market for the end product fragmented
drastically - as the technology became cheaper, so the skills of people who
were skilled in its use became massively devalued. We had another example the
other day involving a photographer talking to a calendar publisher whose photo
rights budget amounted to a mere $100. Now, I'm not really an entrepreneur,
and I don't dispute that there are abundant commercial opportunities that I
could have exploited and haven't; I'm hopeful that the increasing popularity
of crowdfunding and the possible democratization of investment from the JOBS
bill will facilitate capital-raising for small projects.

But the downside that Lowery so elegantly articulates here is that to succeed
in the new commercial marketplace, a creative type needs to also be his or her
own manager/marketer/salesperson/etc., to a far greater degree than before -
and that means less time spent developing one's craft and creations. The old
models of funding and distribution in the arts weren't totally fair, but they
_were_ predictable and relatively stable. If you were lucky and/or talented
enough to get and exploit a few breaks, then there was a professional
infrastructure within which you can find your own niche, whether as an artist
or a technician. As the market for the end product has fragmented and revenue
models have become obsolete, producers and publishers have become more risk-
averse and increasingly channeled their funds to the surest prospects (which
are often the lowest common denominator in creative terms). This naturally
means fewer insiders willing to take the risk of financing and publishing an
unknown prospect. And why should they, when people will bend over backwards
and pay to have their films considered for inclusion in a film festival (most
indies have neither the know-how nor the cash to sell their project at a film
buyer's market, and film schools are in no hurry to teach them)?

It's not all bad, by any means. But it's not all good either; the old system
provided extremely valuable mentoring and marketing utility to emerging
creatives, and trial and error isn't a very efficient alternative.

Also interesting is this MetaFilter thread about the same post, though the
first half is kind of Night of the Living Strawmen:
[http://www.metafilter.com/114955/Fool-me-once-shame-on-
you-f...](http://www.metafilter.com/114955/Fool-me-once-shame-on-you-fool-me-
twice-wont-get-fooled-again)

~~~
tptacek
I am pretty much of exactly the same mind, down to my take on copyright
policy, with a couple provisos:

* Promises should be kept. There's nothing unconscionable about conditioning a sale on "don't share this with the world for free" terms.

* Piracy has had a massive disruptive effect on the music industry. It isn't that technology simply devalued the professional skills of musicians (it did that, too). Much of what's happened to music with technology _wasn't planned by the industry_ , but rather abetted by it once it started happening. That's why we have one dominant iTunes Music Store; they got to be the first mover on "downloading music not for free" when the whole industry was getting shellacked by pirates.

* The tech industry is fundamentally more heartless and efficient than the music industry was. Lowery thinks musicians had a better deal under the labels than the tech giants "by accident". It's not an accident: tech companies are much better at extracting surplus value than most industries, and they're merciless about it. And I think for the most part (with the possible exception of Apple) he's right: the tech industry could give a flying fuck about the economics of professional musicianship. The musicians could all go broke tomorrow; they'd get their pageviews somewhere else.

Ultimately, and this is pretty navel-gazey and arrogant so I apologize in
advance, I have a diagnosis. At least with regards to the geek mindset. We're
bullies. It's ironic, since so many of us got picked on in school, but the
prevailing attitude among technologists is "if you can do it with a computer,
it's pointless to reason about whether you should do it". Maybe it's because
my particular field spends so much time discovering things people _really
shouldn't be doing with computers_ , but this is an especially aggravating and
hollow attitude to me. It's bullying when you break contracts, promises, and
the law just to get convenient access to a piece of music by a guy who's
making less than a McDonalds manager; it's especially bullying when you tell
him he should get a better business model. "Stop hitting yourself. Stop
hitting yourself!"

Man, what I wouldn't give to hear Steve Albini's response to Lowery's rant.
They had to have met; Andy Mason worked at Electrical Audio before he started
ThePoint.com, where Lowery worked. It blows my mind that the lead singer from
Camper Van Beethoven worked for Andy Mason in Chicago at ThePoint.com.

~~~
arohner
> That's why we have one dominant iTunes Music Store; they got to be the first
> mover on "downloading music not for free" when the whole industry was
> getting shellacked by pirates.

I largely agree with your points (that musicians are getting screwed), but
this seems to place too much blame on technology. The record labels actively
fought digital distribution for a decade before iTunes won. If the record
industry wanted a better position, maybe it should have been more strategic.

> I have a diagnosis. At least with regards to the geek mindset. We're
> bullies....It's bullying when you break contracts, promises, and the law
> just to get convenient access to a piece of music by a guy who's making less
> than a McDonalds manager

I'd argue it's not that techies are bullies, but that techies are human, and
humans are lazy. One person builds DeCSS or Napster because it's fun and cool,
and then someone else downloads because they're lazy, or they don't feel like
spending $20, or they get irritated by unskippable ads at the beginning of a
movie. I've certainly done all of the above.

I don't want to say "That's human nature" and let it be, but any
economic/political system should take into account the skills and motivations
of several billion humans.

~~~
anigbrowl
The labels fought digital distribution, but musicians embraced it. Now that
it's ubiquitous, the musicians are arguably worse off than before.

------
anigbrowl
This ought to be the top post on HN right now. There's a reason it sank like a
stone.

~~~
tptacek
I would not have seen this had you not written this comment. Thank you. This
is so excellent.

------
pie
This is a long post, but a fascinating dive into the business of music. Here
we have facts, hard numbers, more-questionable numbers, anecdotes,
experiments, and some rambling hyperbole from an industry veteran. I have
rarely seen this kind of detail in discussions of online music.

------
hxa7241
The backbone of this seems to be complaining about musicians having things
difficult and not making as much money as they should. And accompanied by lots
of numbers and information. The problem is, it is in itself irrelevant.

Why should anyone else care? Maybe professional gardners are having a hard
time nowadays and not making much money. Do you care about that? Perhaps they
are going to lobby for a law that will increase their income -- i.e. take
money from you, and otherwise inconvenience you -- how does that sound?

The point is this: we do not care about musician's, or anyone else's, self-
interest; we, in general, care about how much _we_ get from them. That is
ultimately the only basis of justification for any law here. The public,
though laws, grants 'creators' special provisions, in order that the public as
a whole benefits.

If you want to argue for such special provisions, you must show the benefits
that the public generally will get. If you say creators are not making enough
money, show that there is, from the public's view, too little stuff being
produced.

So _is_ there too little music (etc.) being produced? The article did not seem
to answer that question -- yet that is the only thing that counts. And from a
casual view, as anyone can see just looking around them, there seems to be a
heck of a lot of music out there at the moment.

Show that insufficient stuff is being produced, and show that any proposed
corrective laws or provisions are overall to the public's gain. Otherwise you
have failed to make a case for laws that the public must bear the costs of.

If the gist is that some big companies are making lots of money using your
goods therefore you should get a larger share of it, that fails too. If some
industry is making too much, the answer is not to divide it up differently, it
is to stop them, somehow, making so much in the first place.

------
DrJokepu
I wonder how come he didn't mention publishers, who are the people who make
the real money in music these days. Sure, record labels make more money in
total since they're very big, but publishers have much much juicier profit
margins. There's a reason why Sony paid almost twice as much for the
publishing arm of EMI than Universal for the phonographic arm. Yet nobody ever
talks about them even though they are very very relevant to discussions such
as this.

~~~
tptacek
Probably because that's not his point; he writes as if conceding that there
was something superior about the major label system makes him want to throw up
in his mouth a little, but that's better than eating out of dumpsters.

------
pantaloons
So technology companies create new means of distribution, compelling enough
that people will pay for music that can, and previously was, being obtained
for free -- his complaint is that the tech companies don't take over the role
of talent discovery too?

He makes a convincing argument that things are worse than they used to be, but
not that Apple et al are to blame.

~~~
tptacek
You didn't read him very carefully, because he doesn't blame Apple.

