
The Dream Is Over: Music Labels Have Killed Their Digital Future - colinprince
http://finance.yahoo.com/news/The-Dream-Is-Over-Music-paidcontent-2992521264.html?x=0&.v=1
======
pg
I came to this conclusion myself about 6 months ago, after Dalton Caldwell
spoke at a YC dinner. I realized it was basically hopeless to start startups
that touch label music, because even the ones that seem to be succeeding (in
the sense of not being sued out of existence) are only allowed to live so the
labels can suck investors' money through them.

But by creating a startup-free zone around themselves, all the labels are
doing is hosing themselves, because they won't have startups working to
develop whatever would have been the new ways of delivering and using label
music. They've created an anti-platform.

~~~
physcab
The situation isn't entirely hopeless. Even within the most aggressive labels
(and by that I mean their legal departments) there are parties who do
encourage innovation. These are the people that go to bat for artists and are
trying everything imaginable to promote them. They try new advertising
campaigns, are experimenting with alternate branding, and moving to the sports
business model (ie endorsements). Its unfortunate that the legal departments
have been the ones with all the power, but this will fade with time as current
employees are replaced with ones who see the effectiveness of all these new
promotional channels.

~~~
pg
This sounds naive. The people running the labels are very cynical, and the way
they're compensated makes them even more so. They don't have equity. They're
motivated by bonuses that come out of this year's revenue. So they're not
interested in building stuff. They just want to extract large amounts of
money, this year, from whoever they can.

~~~
physcab
Yes, perhaps thinking the labels changing their ways (or hoping they do) over
time is naive. I'll admit that (but I'd like to say optimistic instead).

What the music industry needs is a platform where unsigned artists can go to
promote their music without the help of the labels. This platform could
probably act like a label, but better serve the artists and users. It would
have to garner a lot of eyeballs so it could effectively break artists into
the mainstream. It would have to be smart at targeting a specific demographic
of listeners so artists could know where to travel and know they can fill
auditoriums. Lastly it would have to be a tech company, so the Platform would
be in the hands of every listener.

MySpace might be able to do this if they gave up on the social network thing.
There certainly is room though for a new company to have this role, but it is
going to be a long and painful process. And you certainly shouldn't do it for
short term gain.

~~~
jbrennan
What I've been wondering is why Apple doesn't pony up and do just that.

They could say "Hey artists not [yet] on a label, join the iTunes Label. We're
a great distribution channel, and we'll give you a 70/30 split."

OK so it's a bit far-fetched, and it really depends on what iTunes-as-a-label
would provide (but with GarageBand/Logic/CuBase who needs tons of financing?).
Really the only thing iTunes doesn't have a great story for would be touring
(but even then, what better way to sell concert tickets than through
iTunes/Ping?).

~~~
steveklabnik
IIRC, Apple is not allowed to start a record label due to one of the
settlements they made with Apple Records.

~~~
pg
Who would have ever guessed at the time that would matter?

------
throwawaymuso
This is a throw away account, I would prefer to remain anonymous. I work for a
digital music startup and am privy to the kinds of tactics and ridiculousness
that the major labels engage in on a regular basis. I should note however that
I am a developer, not one of the guys that do the deal cutting as primary
focus.

For example; they're well aware DRM does not work, but their insistence on the
implementation of DRM is absolutely not focused anymore on the idea that they
can stop piracy, but that they can implement market segmentation and suck the
profit out of the kind of content that people actually want.

Case in point; digital music startup that charges a subscription for global
access to a large library of content from the major labels charges a flat fee
to the customer and is charged by the record labels on a pay per play basis,
thus the effective margin that the startup makes is a function of (average
amount of plays per user / subscription cost per month) - price paid to record
label for the play. It turns out that if you do not use DRM for your player
the record label leaves you around a 10% per play margin (on quite a hefty
monthly subscription fee). With DRM it's much much more profitable for the
startup in question, they bank on DRM being so repellent to customers that the
startup will pay the much higher rate for DRM free.

They also micromanage the hell out of the details of implementation, for
example they have a specific set of "acceptable DRM" standards which you must
adhere to to be eligible for the rates in question. There have been
negotiations running for _months_ with them just to get approval to run the
same kind of streaming clients as the web service provides available as
applications to android / iPhone clients. When considering implementing AWS
for site infrastructure one of the objections raised by the music companies
was that "they don't want their music on the cloud".

Effectively it chokes what it is possible to do in the market, inflates the
prices, and makes the entire offering far less appealing. It does seem like
they're headed for destruction but they seem just as steadfast in their
refusal to amend their course.

~~~
loanshark
Why, hello there Grooveshark.

------
njharman
The Dream was over a while back when digital music and Internet got popular.
Apple iTunes store kind of brought it back except Apple as the dreamer not
Record Labels.

The Dream being control over distribution. Selling over and over the same
product. Selling lots crap (most songs on album) on the backs of 1 or 2 hits.
Being the gatekeeper between artists and their fans. Near monopolistic control
over supply and demand. All of it, a cash fucking cow.

Over, for the Record Labels. Although they're doing a damn good job at
legislating their dream into law. Their government mandated welfare will live
on similar to but more insidious than farm/corn lobbies subsidy program. And
just like corn subsidy it(warping of copyright) will fuck the rest of us for
decades.

------
agentultra
The point about the labels doing it to themselves is probably only half the
story.

The other half is the culturally ingrained phenomena of "the dream." Many
artists jamming in their basements dream of "signing," and expect a big
advance, tours, radio play, and all of that old-world stuff. Many today of
course realize that there's the Internet and they can afford to distribute
their work for pennies and market to their hearts desire; but even those
artists generally still think that "signing" is the next, big logical step.

The big labels _cannot_ change. The 80s and 90s left us with a market and
taste for stadium tours, music videos, and times square billboards. Six
decades of business have given us a model that requires a huge up-front
investment for a risky, but lucrative return.

The problem is the returns are becoming scarce.

Yet I think big labels will continue to persist only because they're the loan
sharks with the money. I think the author is pretty close to right that
there's likely no one that will fund a start up that has anything to do with
music. If you have an innovative idea that you think can improve the
situation, create new markets, etc you'll have to do it on your own.

~~~
kiba
The big labels don't feel like changing, not that they cannot change. They are
a bunch of human beings at all.

Aren't human beings flexible enough to thrive anywhere on earth?

Yet, some humans choose to die rather than adapt.

The labels don't want to deal with the changing business. So they rather die.

~~~
ethank
Again, have you ever visited or spoken to anyone at a label? Next time you are
in SoCal, email me.

I'm serious. :)

~~~
chris11
I'm not sure if you can answer this or not, but in your opinion what would it
take to get some type of voluntary licensing going for music?

I personally would rather pay a monthly fee than pay for each individual song
or cd. I also want the ability to do what I want with the music. I don't want
to have to work to get music on an mp3 player or worry about whether I'm going
to randomly lose access to songs in library, which has happened with Ruckus.

~~~
ethank
In my opinion (its not in my purview), it'll take government help. Take that
for what you will.

------
bambax
Isn't this just wishful thinking? Everybody hates labels, and so wishes them
dead (and for the record, so do I). But just because everyone wants them to
die doesn't mean they will die.

Labels sit on content, and their monopoly is protected by the full force of
the law. The number of startups in the field or the evilness of label people
does seem a little bit irrelevant.

There is only one way labels can die: if they cease to have a monopoly on
music content -- which means, either the world gets rid of copyright, or
(young, new and aspiring) artists stop signing with labels.

None of this is happening anytime soon. (It may happen, but in a rather
distant future.)

~~~
olalonde
The article never said labels were going to die. It just pointed out how they
screwed their _digital future_.

~~~
bambax
You're right, but it was largely implied.

My point is that the industry is right not to care much about its digital
future, and to care more about what matters, ie, their monopoly on content.
For as long as this monopoly stands, they will be strong and prosperous.

That doesn't make them likable, but that does not make them stupid, either, as
the article implies ( _"They killed competition. Brillant."_ ).

Besides, here's what PG writes in one of his essays:

 _If you can figure out a way to turn a billion dollar industry into a fifty
million dollar industry, so much the better, if all fifty million go to you._

(<http://www.paulgraham.com/web20.html>)

So maybe the "dream" of a "digital future" is just self-preservation, and
maybe, yes, it IS brillant...

------
jbarham
> Nobody’s going to pay Google $25 a year to store their music in a cloud.

I'd pay that to be rid of iTunes.

~~~
1010011010
Me too. iTunes is just horrible. I'd love a non-iTunes way of getting my music
onto an iPod.

~~~
digitallogic
Then allow me to make your day:
<http://en.wikipedia.org/wiki/Comparison_of_iPod_managers>

~~~
thought_alarm
Yes, trying out other music managers is a very good way to come to appreciate
iTunes and how it works. I encourage everyone who thinks they're unhappy with
iTunes to check out these other applications.

~~~
bad_user
Yes, but why can't I just drag and drop mp3 files on my iPod/iPhone directly
from the file manager?

~~~
aw3c2
Because you purchased an Apple product.

------
run4yourlives
I don't know if it was just me growing up, but music changed dramatically
right after Napster was forced to kill itself.

Perhaps someone else can support this: "Music" has never been the same since
then. It seemed so much more available, so much more pervasive, more
frequently invasive to my life; _better_ than it is now.

Like I said, I've grown. But it seems that as the generation behind me moved
online in a major way, the music didn't quite follow. Its not that you can't
find great music these days, it's that - ironically - it is so much more
difficult to do so.

I don't see this ever changing really. The blip that was the 20 century music
industry is dead and gone, replaced with essentially a long tail market of
grains of sand of that - occasionally if you look hard enough - has a couple
of diamonds hidden away in obscurity.

But then again, maybe I'm just getting old.

~~~
steveklabnik
"But I have a take on that - people only made money out of records for a very,
very small time. When The Rolling Stones started out, we didn't make any money
out of records because record companies wouldn't pay you! They didn't pay
anyone! Then, there was a small period from 1970 to 1997, where people did get
paid, and they got paid very handsomely and everyone made money. But now that
period has gone. So if you look at the history of recorded music from 1900 to
now, there was a 25 year period where artists did very well, but the rest of
the time they didn't."

\- Mick Jagger: <http://news.bbc.co.uk/2/hi/entertainment/8681410.stm>

~~~
run4yourlives
Very interesting quote, thank you!

------
endlessvoid94
I would absolutely pay google $25 to store my music in the cloud. I have 150GB
of the stuff and keeping it on my laptop has become impossible.

~~~
lukev
You can do this already. Write a music player client that can stuff your music
into an encrypted blob and push it out on Amazon S3 or something. $22.50/month
for storage.

The problem is that that monthly price is a bit high for most people.

~~~
il
I think "Write a music player client that can stuff your music into an
encrypted blob" is a bigger hurdle for most people than paying $25/month.

Besides, doesn't Grooveshark already do this for free?

~~~
lukev
Well, as a startup, I mean. There shouldn't be any legal hurdles, anyway -
it's really just a backup system specialized for music.

And I'll be honest, I have no clue what Grooveshark's business model is. I
_like_ it, but I don't see how the RIAA doesn't come down on them like a ton
of bricks, and I really doubt the ads they show can cover what they ought to
be paying in royalties.

~~~
pg
_There shouldn't be any legal hurdles, anyway - it's really just a backup
system specialized for music._

I would not assume that.

------
InclinedPlane
The old guard is losing power, their business models are failing, their
control is going away.

A new dream is starting. A different dream than the fantasy of being
"discovered" by a major record label and becoming rich and famous overnight
(which translated into a reality that often didn't quite match up to the
dream, for the bands or for their fans). A new dream where increasingly many
artists are bootstrapping themselves into making a living from their music
without big record labels interfering with their creative process, sucking the
bulk of the profits away with little in exchange, and adding layers of
corporate bullshit between artists and fans. Instead, bands are connecting
directly with fans, selling music directly to fans, producing their own albums
on their own schedules and releasing them however they like for whatever
prices they wish to charge, and making the lion's share of the profits for
themselves.

This is happening right now. Spreading right now. Becoming the new way that
music is produced and distributed. It's something to look forward to.

The music industry is dead! Long live the music industry!

------
66-75-63-6b
This was a foregone conclusion when the labels set this policy several years
ago. Clearly this former president of Grokster is still telling the same
story.

An interesting bit of insider info I have - a relative of mine is a young Sony
VP. Apparently their senior executive still wants their digital people to
explain things in terms of 8 tracks and tapes. No exaggeration.

------
steveklabnik
It seems to me like too many bands are trying to be startups. More bands
should try to be lifestyle businesses.

------
protomyth
I still don't get how an artist actually makes money on a streaming service.
It seems pretty good for the labels, but not for the artists. I know people
say artist should make their money off other things, but their are some good
artists who do poorly in a concert venue.

------
ethank
Personally, it's extremely simplistic to say that the labels aren't "changing"

The ecosystem, the market, and working with artists engenders a much more
complicated landscape than one might think.

agentultra has some good points there.

------
Groxx
> _Nobody’s going to pay Google $25 a year to store their music in a cloud._

I probably would. $25/year for my collection would make it by _far_ the
cheapest file hosting available, and as I have a couple machines and a couple
OSes, being able to consolidate everything, synchronize everything, and
actually _keep_ my ratings of songs across different systems would be
wonderful. Most places I go I can stream music, so I wouldn't even need to
keep most / any of it on my devices.

------
robryan
Go me thinking, wonder how successful it would be if someone like apple wrote
a program to determine people pirating music then sent then somehow got in
contact to them with a link to buy, like the Microsoft anti piracy strategy
with windows. On the whole would probably be more successful than the lawsuit
path.

Another idea for a service, something that scans a computer for pirated music,
lets a user select which albums they would like to buy and offers a big
discount.

------
elblanco
Maybe the real answer is an entirely new label, having to start from zero
(sign on new artists, establish new distribution channels, etc.), but with a
corporate philosophy diametrically opposite the existing market and simply
subvert the whole thing.

Small labels like <https://www.candyrat.com/> are signing on new and growing
artists.

 _it's not like the major labels have much in the way of good music to offer
these days anyways_

------
pontifier
God... This whole debacle is a true indicator that the patent office should
just grant my patent already. I have a non-obvious solution that has solid
legal grounding.

If anyone is interested I am going to be handing out a bunch of trial
membership codes to interested parties in a few days...

------
SkyMarshal
Somewhat related, what's the status nowadays of un-DRM'ing music you've
purchased, say from iTunes Store, to play on other players, particularly on
Linux? Is it possible? What if you don't have access to Windows or OSX (to
burn an non-DRM cd)? Legal?

~~~
ptomato
iTunes Store music isn't DRMed, at all. Neither is music from the Amazon music
store.

~~~
SkyMarshal
It used to be, young grasshopper, it used to be. I still have a bunch of DRM'd
iTunes music I bought years ago when all iTunes music was DRM'd, and want to
be able to listen to on Linux now.

And yes, Amazon is my savior for unecumbered music. I'm a very happy customer
of theirs. But they weren't always around.

------
stcredzero
_Nobody’s going to pay Google $25 a year to store their music in a cloud._

What if cloud hosting was bundled with MobileMe or the initial sale of an
iPod? I bet Apple could get people to pay $12.50 additional hidden in the
price of the iPod and $12.50 as an add-on.

------
oo7jeep
So what will music look like in 5 - 10 years? Still just iTunes and streaming?
Lets not forget labels aren't sustainable businesses in their current form.

~~~
pontifier
I can show you what I think it will be like. I have developed a media
distribution system that is unlike anything that I have seen before. I will be
opening it up to a limited number of people soon, and when I do, I can give
you a code that will let you create an account.

------
olalonde
How about funding a startup which would also act as a label? Long shot (you
would need to sign big names) but the rewards would be huge.

------
eogas
<http://www.youtube.com/watch?v=1G3dzddZ6WE>

------
wyclif
_Remember Google Wave and Buzz?_

Yeah, except the verdict on Buzz isn't in yet.

------
henrikschroder
Google music. Who cares? Oh right, you guys don't have Spotify.

I don't know anyone that has it that bothers with iTunes or actually buying
music anymore. Get the free version, and get any music anytime and the
occasional ad. Pay a few bucks a month, and you get any music anytime with no
ads.

~~~
mitjak
Spotify is great as long as you don't step out of the narrow scope of the
music offered. Try finding anything released <6 months ago and report back.
rdio and MOG are even worse in that respect. Grooveshark is the only service
that has a decent though a Kazaa-like chaotic catalogue.

~~~
Tomek_
It isn't that bad, I would say I'm listening to pretty broad spectrum of
music, most of it being not very popular, and Spotify has roughly 75% of what
I need. OK, when something that was there disappears after a while then it's
seriously irritating, but still, the true selling point of Spotify is the
quality of the program itself: it's super slick, fast and has the best
interface ever in the category of music players.

Personally, I ignored a bunch of artist just because they don't have their
music in Spotify; "you want me to listen to your music? let me do that the way
I want, otherwise go screw yourself" type of thing.

~~~
mitjak
..except availability on Spotify of their catalogue is not artists' business
but their label's, regardless of degree of indie-ness.

My attitude is the complete opposite: "I can listen to Madonna but not to
Tallest Man on Earth, who is _from_ Sweden? Kthxbye".

~~~
Tomek_
Well, the truth is in somewhere in the middle - I suppose it's not that
Spotify doesn't want Tallest Man on Earth to be in its' catalog, nor that
Tallest Man on Earth doesn't want to be in Spotify.

(Worth to note: Spotify actually has Tallest Man on Earth in its' catalog, I'm
now listening to the guy)

