Reinventing the Music Industry

Mike over at Techdirt has a very interesting read about the music business. As a long-time musician, songwriter and, most importantly, music fan, the parade of bad decisions made by the music industry over the past few years has just about driven me nuts.

As Mike points out, a large part of the problem is that portions of the music industry, primarily the record label cartel represented by its henchman the RIAA, is trying desperately to hold on to what is quickly becoming an obsolete business model. Beginning with the re-examination of industry economics that led up to Courtney Love’s excellent piece in Salon back in 2000 (which proves either the value of ghost writers or that Courtney isn’t the complete nincompoop she generally appears to be), through the emergence of online distribution as the channel of choice for the new generation, and up to the current spate of lawsuits against children and dead people that have coalesced all manners of opposition into a line of defense that is starting to turn the tide of battle, the music industry has struggled to figure out a way to preserve what has long been the highly profitable role of both gatekeeper and banker to the music.

The music industry in general and the record labels in particular have not faced the fact that the world has changed- and all of the lawyers in the world can’t change it back. The bag is empty and the cat hasn’t been seen in years.

Which leaves the music industry with two choices, and only two choices: find a new business model or hold on as hard as you can until the cash pipeline dries up. The smart choice is to take some pain now to become a part of the new world order. The dumb choice, which seems to be the way the industry is going, is to sue everybody in sight for moving your cheese. Those lawsuits work on underfunded individuals who have no choice but to capitulate. They don’t work on an entire movement or on moms from Oklahoma.

Other than the fact that you can’t turn back time, the most aggravating and self-destructive part of the record label’s strategy is that it is attacking the very people whose goodwill is a requirement to sell records. It takes biting the hands that feed you to a new level. No one would complain too loudly if the RIAA sued people who share thousands and thousands of songs with anyone who wanders by. But the RIAA decided early on to sue all comers, thus the public relations war was lost at the first battle. Sometimes it takes more than money to prove you’re right, and sometimes even the Deathstar blows up. I don’t think that ever occurred to the record label executives, even though the automated voice has to be saying in the back of their minds “auto-destruct sequence initiated, this ship will self destruct in 4 minutes.”

In my opinion, driving force behind the record labels insistence in trying to stuff the cat back into the bag is that the record labels historically made so much of their money via the creation and distribution of the media (meaning the actual CDs and before that LPs and tapes, as well as the album art, etc.), and they know that the margins of old are not going to be available under the new distribution system.

When your entire industry is based on huge margins, it’s not surprising that you’d resist anything that threatens the status quo. Additionally, if songs are sold online for a buck a piece, the artists are going to quickly realize that it’s cheaper for them to rent some studio time, pay a producer and take the finished product directly to the online distributor.

Without the ability to serve as the gatekeeper, the record labels recognize that their position in the entire process is precarious. That’s why the RIAA isn’t going to buy into Mike’s plan of artist promotion, more product and resulting loyalty. Which means that the only alternative is to take the record labels out of the equation- their own short-sighted actions in effect becoming a self-fulfilling prophecy.

Like it or not, the world has changed. While the change was bad for the record labels, they should have known the gravy train wouldn’t last forever. And over time this change will prove to be very, very good for artists and consumers.

It’s time to clean up the milk and go back to work. Let the record labels keep searching for the cat.

We know they’ll never find it.

Announcing Newsome.Org, the Magazine

I’vee been reading about MySpace‘s plan to launch a magazine.

I’ve missed reading Yahoo! Internet Life ever since it folded back in 2002. I long for the good old bubble days when I could curl up with a Buy.com magazine or eBay magazine. Add to the mix the fact that nobody clicked on my AdSense ads during the 30 days I had them up, and that 2 out of 3 people surveyed believe that diversity in revenue is a good thing- and what you have is a recipe for an idea.

Which leads me to my big announcement: Newsome.Org, the Magazine. No longer will I allow old media to invade our precious blogosphere. From now on, we’ll fight the battle on their turf. With a little work I’m sure Newsome.Org, the Magazine will drive Time and Newsweek to their knees.

I’ve already hired dozens of Pulitzer Prize winning writers to churn out the first edition. Subscribe today, as I’m sure most of the copies of our inaugural edition will one day end up in protective sleeves under locked glass and for auction on eBay- for big bucks. Paypal accepted.

Here’s a preview of some of the things we’ll cover in our first edition…

One Man’s Triumph: The story of how Om Malik learned that there was more to the blogosphere than just Newsome.Org and started his own blog empire.

Personality Matters: Dave Winer on how to win friends and influence people.

Sweepstakes: Win backstage passes to the next blog-star party and a burned $100 bill autographed by Mike Arrington.

Lifestyles of the Rich and Sycophantic: Exclusive interviews with all 3 people Steve Gillmor doesn’t think are assholes.

Game On: Hugh, Seth, Jeff and Cory play hide and go seek. Seth wins because the others couldn’t see him.

On Blogging: Guy Kawasaki on the challenges of going 239 days without linking to Newsome.Org.

VC Corner: Fred Wilson on the top 10 reasons VC’s should fund blogazines.

And an editorial by Robert Scoble on how podcasting is better than Microsoft.

As you can see, this is going to be huge. Click here to subscribe today!

(Cover photo by Scott Beale / Laughing Squid)

Update: Steve Newson has launched his own blogazine.

Morning Reading: 8/25/06

pluto

Pluto got voted out of the planet club. No word yet if its position in the Disney club is in question.

From the TIVO Deathwatch Department: all that flailing around looking for partnerships, any partnerships, finally paid off as Cox Communications has agreed to administer a little CPR.

Fraser Kelton on branding.

TechCrunch reviews four file sharing programs.

Mathew Ingram gives a business lesson to C|Net and any number of other bubble blowers. As he correctly points out, the mad money that Sony threw at Grouper was more about the technology than the number of users. Sometimes it amazes me how little business sense seems to be applied in the Web 2.0 space. That’s reason number one why much of the real world is profoundly disinterested in Web 2.0.

New York City wants CBS to pull the upcoming season of Survivor.

A blog covering Windows Live Writer plugins. (via Kevin Briody) I just wish there were more of them to cover.

Tags: kents news, links

PBS Makes a Questionable Momentum Play

So what’s next, the U.S. Government putting ads on dollar bills? Maybe hospitals could add interactive ads to x-rays and sonograms. Consumer reports dumping its virus-writing magazine and starting a social networking site?

Jeff Chester reports that PBS has decided to run online ads this fall at PBS.org and PBSkids,org.

Why? You know why: “to benefit from the ‘explosive growth and rising demand’ of interactive advertising.” Oh, and because it is “a response to the demand of the market.” Right.

Jeff sums up this mistake nicely:

PBS should not be seeking commercial opportunities in the broadband market. Instead, it should be pioneering new forms of non-commercial content readily available throughout our ubiquitous digital system. PBS must recognize by now that online and TV (as well as mobile) is merging. The distinction about whether content is delivered via any platform no longer matters. But what does matter is that PBS, and its stations, don’t attempt to replicate what commercial media companies are doing online and with mobile networks. It will be a U.S. media universe saturated with advertising.

The reason that most people support PBS is because it offers programming that they cannot generally get elsewhere. Granted, the hundreds of channels available via cable and satellite have blurred the distinction a little. And as we all know, PBS has nosed up to, but not yet crossed, the line by adding sponsorship messages at the beginning and end of some shows. But adopting the mercenary and short sighted approach of the mainstream media (as well as all of Web 2.0) is inconsistent with the history and mission of PBS. If any of this online mistake creeps onto the television, I suspect many of PBS’s supporters will cry foul when they get the letters and phone calls about donating to the cause.

You can’t act like Fox and expect to be treated like the neighborhood co-op.

What disappoints me the most is that I would have expected the brains behind PBS to see through the advertising hype and avoid the temptation to make what is clearly a momentum play.

I wonder what Louis Rukeyser would say about this investment?

Tags: pbs, advertising

Lawsuits Gone Wild: Meow Edition

First, a couple of kids litigate the case of the missing iPod. This case might be too small for Nancy Drew, yet somehow it is an appropriate use of judicial resources.

Even better, a court in Pennsylvania will soon determine whether cat talk is protected speech. I asked a random sampling of cats how they felt about this attempt to stiffle their expression. They all had the same answer.

And while I’m thinking about it, if the fact that “every time he sees me, he meows” is a problem, shouldn’t we also outlaw “hello” and “howdy”?

Morning Reading: 8/24/06

What’s more pitiful, the sick puppy who gives a false confession just to get his name in the paper or the family of said sick puppy trying to make money off of it? “They’re not looking for money for themselves.” Right.

This is not going to help Dell sell laptops to those big corporations where they make all that money.

Marc Canter on Google’s strategy. He thinks they may have a master plan, contrary to appearances.

Kevin Hales on Rock Star: Supernova – “The Pixies could crap a better rock song.” Undoubtedly, but Cassidy and I met Patrice (who I read this morning just got booted) after a concert a few years ago and she was very nice to Cassidy. Cassidy has an autographed copy of one of her CDs. If Patrice had won, Cassidy might have listened to it instead of the A-Teens. Nah.

Richard Querin on photography podcasts and histograms.

Videos of the new features in Word 2007. If you want to see what’s new, but don’t want to wade through the all the geek-talk, this link’s for you.

The “one” Chip Camden (that’s his new name, courtesy of Shel Israel) on trying out for Jeopardy and an amazing web site that has all the questions and answers presented in Jeopardy board format. Here’s the first Final Jeopardy answer of the Trebek era: “The third Monday of January starting in 1986.” All three contestants got it right. Did you? Update: TDavid on game shows.

Brazil has commenced action to sue Google for allegedly refusing to hand over user information about drug dealers who use Orkut, Google’s social networking site that has been described as the MySpace of the region, to solicit, communicate and traffic illegal drugs.

Tags: kents news, links

Why Ad Dollars Alone Can’t Support Web 2.0 Forever

Steve Rubel posts about the economic conundrum that faces Web 2.0.

toomanyads

The problem, as Steve points out, is that Web 2.0 is “largely supported by ads from startups that also are hoping to capitalize in the rising interest in online advertising.” In other words much of the ad dollars generated by Web 2.0 companies are derived from other Web 2.0 companies who want gain enough traffic to make some ad money of their own.

Steve draws an analogy to Bubble 1.0, when Yahoo and many other companies were far too dependant on ads bought by dot.com companies with money to burn. I was very involved in the ad-selling frenzy of Bubble 1.0, selling ads both directly and through agencies for some very popular message board sites. We were all about old media back then, however, so anything that relied on user generated content was frowned upon to one degree or another. That problem was solved when the ad programs moved from a per impression system to a per click system.

One thing we did have in common with Bubble 2.0 was that a very limited number of advertisers were buying up the lion’s share of the ad capacity. As soon as those companies went out of business, ran out of advertising money or decided that internet advertising wasn’t the best place to spend their money, everyone’s ad revenue went from very high to very low- almost overnight.

Unless some new net buyers come into the picture, the current ad game is nothing but a disguised ponzi scheme. The ones who get in early make a lot of money. Those who come in at the middle of the curve make a little money and those who come in at the end lose it all.

The issue is whether those who are in the game now see the ad game as a long term business plan or just a short term money grab. If it’s the former, perhaps the thing to do it take a little pain now by making revenue diversification a priority.

But if it’s the latter, there’s no righting the ship. It just a matter of time.

Meanwhile the band plays on.

UPDATE: Stowe Boyd says it might not be as bad as Steve and I think. I hope we’re all right- that the ad bubble isn’t as inflated as it sometimes appears and that Web 2.0 realizes it can’t survive on ad revenue alone.

Tags: web 2.0, bubble 2.0, advertising

The Tech World is Not the Whole World

One the the things I noticed when I started blogging largely about tech topics is that there is a clear and consistent tendency on the part of tech developers and tech writers to view the world through tech-colored glasses. By that, I mean to believe that the values and trends in the tech-sphere are representative of the values and trends across corporate America.

I can tell you as someone who reads and writes in the tech world, but lives and works in the big-business corporate America world, that the tech world is not representative of the whole world. I wish it was, but it isn’t.

APC Magazine has an article today about the effect of internet restrictions on employee hiring and retention. It quotes Anne Kirah, Microsoft Senior Design Anthropologist (another job title for my job title hall of fame), who says:

“These kids are saying: forget it! I don’t want to work with you. I don’t want to work at a place where I can’t be freely online during the day.”

I would try to respond with a kind and gentle hand if not for the following quote that made me wonder if I had accidentally clicked over to The Onion:

“Kirah cited a Norwegian psychologist who claimed that young people were now so reliant on digital communication that ‘taking a mobile phone away from a teenage girl is the same as child abuse.'”

Obviously, that’s ludicrous on its face to anyone who have ever raised a child or worked one day at a real job, but let me try to address my point and let that softball float on past.

Would employees in corporate America prefer to surf the internet all day instead of working? Of course they would. People would spend countless hours chatting, surfing the personals, gambling, shopping on eBay, playing flash-based games and having a grand old time. All at the expense of their productivity. And, of course, in the process they would answer emails from strangers that say I Love You with a virus.

What was designed as an at the desk coffee break would grow into an obsession for some. Hours upon hours would be wasted. Jobs would be lost, resulting in the loss of mobile phones. A vicious cycle would engulf America until we were a nation of zombies clicking obsessively on our inbox, trained by intermittent reinforcement that an email or chat request would soon arrive. OK, well maybe not a nation of zombies, but you get my drift.

The internet is addictive. There’s no doubt about it. And it’s fun too. But so is beer and whiskey and nobody’s lobbying to let employees guzzle Maker’s Mark at their desk. At least not yet.

The level of internet control that companies place on their employees varies. At my office, only sites that are security risks or are obviously inappropriate (such as porn sites, etc.) are blocked. At one large company I work for, Flickr is blocked. I know of one company where news sites are blocked.

Does is suck at times? Undoubtedly, but companies have to make policies that apply to hundreds or thousands of employees. Just because one person is responsible enough to check CNN and still get his work done doesn’t mean the guy in the next office is. And non-uniform policies are invitations to a lawsuit.

The tech world did one great thing for corporate America back in the nineties- forced a lot of companies, including mine, to adopt a business casual policy. I’d love to see the tech world do it again with internet access and the acceptance of new technology.

But it ain’t gonna happen.

Corporate America and the tech world that we read and write about are not the same. You can’t view the world through tech-colored glasses.

I don’t care what some quack in Norway says.

Tags: internet, corporate policy

Blogging Mistakes: Friends, Non-Friends, and Two Lists of Ten

Two internet buddies of mine are having a spirited debate about blogging and images and basically everything from the meaning of life all the way down to the color of the sky. I’ve already had my kumbaya moment for the day, so let’s jump right in and stir thing up a little.

Randy Morin (one of the fun brokers) and TDavid are the buddies in question. I’ve read both their blogs for a long time, and they’re both smart guys. Here’s the genesis of the debate. Now for my thoughts on the matters at hand.

First, my take on Randy’s Top 10 Mistakes Made by My Blogging Friends, and then more on TDavid’s response.

1. Loss of Links – This is precisely why I am trapped in Blogger and can’t move to WordPress. It’s also why new bloggers should strongly consider which blogging platform they really like, as opposed to jumping on the first free thing that crosses their path. It’s not that Blogger is so bad- it’s just so hard to leave.

2. Forfeiting Your RSS Feed – I have used Feedburner from day one. You can, however, sort of have it both ways by having a hosted link that forwards to Feedburner. I don’t care that much, so I just used Feedburner from the get go.

3. Broken RSS Feeds – I noticed hundreds of those when I did my Scoblefeeds review. Some of those people probably didn’t care that the feeds to their abandoned blogs were broken, but I bet a lot of them did. Subscribe to your own blog in various applications and monitor it to make sure everything is working as expected. Broken feeds are blog-killers.

4. Making it Difficult to Subscribe – Good advice. RSS auto-discovery is a must. Your feed subscription information should be way above the fold and obvious. I have few email subscribers, but I still keep the option in place because it’s free and none of my real world friends know a news reader from a flashlight.

5. Blocking Your Readers – I can tell you from years of operating message boards that bandwidth theft concerns are all over the internet as it relates to hot linking to images. I get emails all the time from web sites whose images have been added to a popular thread on a message board. I won’t hot link to images except where expressly permitted (like Flickr), even if the opportunity is there, because I don’t want some pissed off web master to change the picture of a kitten to some hardcore porn or whatnot. This happens all the time, believe me. Allyoucanupload.com is an easy and free place to host images, so I just use it for images. The uploader gives you all sorts of linking code automatically upon upload.

6. Sucking Up to A-listers – I see both sides of this argument. My buddy Dwight thinks I suck up to them all the time. I don’t think that I do, but I also knew when I began this blog that they weren’t going to come knocking on my door and that if I wanted to join the conversation, the initiative was going to have to originate here. In sum, it’s a balancing act. I don’t think it’s that hard to get links from most of those guys. For example, Steve Newson posted the other day after being inactive for a month or so, and right away he got a link from Scoble (as well as me and others) and was on Techmeme.

Basically, most of those guys are regular guys who will eventually respond to you if you come across their radar. Just like the hosts of a party, however small that party may be, they have a lot of people trying to talk to them and so you have to be patient. Others (Jeff Jarvis, Seth Godin [OK, so I was wrong about Seth] and Mike Arrington come to mind) are not going to engage you no matter what- just identify them and treat them like the old media they criticize while emulating.

A more productive approach might be to find some similarly interested B or C listers and get to know them via comments, links and trackbacks. You’ll get a better bang for your linking buck. Plus by the time those guys become A-Listers, you’ll be an old buddy.

7. Not Reading Your Readers – I agree with this point the most of all. Anyone who is a regular reader and commenter on my blog will find their way onto my blogroll. Absolutely, all the time. And if someone can get and stay on my blogroll, it’s only a matter of time before they’ll say something I find link-worthy. I can tell you that I had worked my way onto the blogrolls of a lot of so-called A-Listers long before I started getting links from them. Your best customers are always your existing customers.

8. Accepting Trolls – I make a distinction between someone who thinks I’m an idiot, but adds value by engaging others in conversation and someone who is there solely as a disrupter. I’m OK with the former, but years of experience have taught me that you can’t tame the latter. So you need to get rid of them and, above all, avoid engaging them.

9. Putting Yourself on a Pedestal – Amen. I suspect, but can’t prove, that the ones most prone to do this are the ones who have not had the recognition they seek in the real world.

10. Partial Feeds – Partial feeds are a way to try to make money off of me, as a reader. You better be a damn good writer if you expect me to click over to your site to read what I ought to be reading right here in my news reader. Even worse is the Obscure approach- headlines only with a forced ad-stop between the click and the story.

And now about TDavid’s rebuttal:

1. I guess if I had ads (which I don’t because nobody clicks on ads, as I will be proving in an upcoming post) and I also put ads on the page where my images were located, maybe I’d be more likely to want to keep people within the boundaries of Newsome.Org, but I don’t. I can’t say there isn’t logic here for others and, sure, I wish every Flickr page and the Amazon store had big, obvious links back to my site, but based on my AdSense experience, I don’t think I’m leaving much money on the table by having my images served from afar.

[I’m skipping 2, 3, 7 and 9.]

4. I understand TDavid’s point about control, but as I discussed above, I’m comfortable with Feedburner, if for no other reason than its turnkey approach to RSS and email subscriptions. I do agree that those click-through URLs are a pain in the ass.

5&6. TDavid and Randy aren’t that far apart about trolls. I suspect both would agree with my approach described above.

8. I believe that good content over time will get you all sorts of links, A-List and others. But there’s more too it than that. Selling links is like selling any other product and a good salesman can sell an inferior product easier than a bad salesman can sell a superior product. If you really want to sell links, you have to develop relationships with these people, if not the easy way via conferences and blog-star parties, then the hard way via comments and trackbacks.

10. One of the things I like the most about Live Writer is its spell checker. I have a 100% failure rate at typing than as that- which sadly isn’t picked up by spell checkers. I don’t think spelling is a huge deal in blog posts, but like anything else it’s a matter of degree. I don’t think anyone could argue any differently that than 🙂

So there you have it…

At Long Last: The Convergence of Phones and PCs

I remember a few years ago when we were selecting new telephones for my office. A few of us got to test out some of the possilibities and we later talked about the pros and cons of each.

I made the point over and over again (as I know I am prone to do, but at least I’m consistent) that I couldn’t believe there wasn’t more convergence between the PC and the good old phone. Specifically, I was amazed then, and I am still amazed now, at the lack of communication between PCs and phones, particularly in the corporate environment. If you’d told me back in the eighties that in 2006 there would not be an easy and widely used way to click on a name in your Outlook contacts and have your phone dial that person’s number, I would have laughed in your face. Yet, if anything it’s gotten worse over the years. One click dialing actually worked back in the dial up with your slow modem days. If I were creating the tech universe, once click address book dialing would have been the next thing I did after word processing and email.

But is hasn’t happened. And the inroads that have been made are much better suited for you home telephone than your office one. There’s still not easy way to get your office PC to talk to your office phone.

Sure, I have a Skype account at home and I know we could use some fancy VOIP phones at work that integrate, at least somewhat, with your PC. In fact, I tested a Cisco VOIP phone for almost a year. It was fine for me, as someone who is very tech savvy. But it would have been a disaster to roll them out to thousands of people who aren’t. Not to mention very expensive.

So we continue to plug along tethered to our regular old phones, which sit beside but never speak to our PCs.

But things are finally starting to change.

Jajah, for example, allows you to make phone to phone calls from their website. Just add your number to the first blank, the number you want to call to the second one and click “Call.” Your phone will ring, the other person’s phone will ring and, presto, you’re talking. It is easy and it works. Even better, there is an Outlook plugin that promises one click dialing from within Outlook- including both contacts and phone numbers that appear in the email you’re reading. The plugin would not install correctly in my exchange-driven office computer, but it is still in beta, so whatever problem I experienced may be fixed before the plugin is finalized. I will contact Jajah and see if I can get a fix on the issue.

Another startup, Hullo, provides similar services. Plus it lets you talk either via your regular phone or over the internet via VOIP. Plus, you can also add others to the call, creating easy conference calls. You can even switch between your regular phone and VOIP during a call.

Pinger, which I just read about today, takes things one step further. It allows you to store a special number in your mobile phone’s speed dial. You press the button for that number and, via voice prompts, you can access a person’s information from your phone’s address book and send that person an audio message, either to his email account or via SMS. Handy for when you need to leave a quick message, but don’t have time to talk. It’s in invitation-only beta right now but it looks very promising.

The big winner will be the company that combines most or all of these features in a cross-platform application that can be used in with corporate phone systems.

We’ve got a long way to go, but I’m excited about the possibility that my PC and my phone might soon be on speaking terms.