Vaya con Dios, muxtape
Posted by WEREbal in industry economic theory, LD
WARNING: What follows will, in all likelihood, bore you.
Over the past 8 months or so, muxtape had been making major waves in the online music scene. The service was simple: you uploaded songs to the muxtape website, and the website made those songs available for listening. All I had to do was give my friends the address that muxtape assigned to my mix, and I had a ridiculously easy way to share the music I love with people. It should be noted that there was no way to download songs off of muxtape. They were available solely for streaming and sharing. In fact, each song had a link to take you to iTunes in order to make a purchase.
Earlier this week, the RIAA, evil overlords of the mainstream music world, created some kind of legal entanglement for muxtape, resulting in a shutdown of the site that is purported to be temporary.
This is ridiculous.
The problem with the RIAA is that it either fundamentally misunderstands the market in which it are operates or it chooses to believe that it can somehow fight the tide and reverse the inevitable assmilitation of technological advances. Regardless of which strategy you assign it, it is foolish.
The music industry experienced a fundamental shift in the last 15 years. In the past, music discovery was dictated almost entirely by radio or music video play. There were always intrepid souls who would scour the shelves of hole-in-the-wall record stores looking for undiscovered gems, but they were a small enough minority to be negligible as an economic factor in the market. However, in those days, access to music was limited by the fact that you needed to purchase both the music and the media required to play it. This is, of course, no longer the case. Music has been separated from media that can be controlled by economic barriers to entry (like the purchasing of a CD production plant), and as a result, has become democratized.
This has had several massive effects on the industry, two of which are worth some focus. First, it has made the theft of music a very real factor in the industry. If one is dedicated enough to searching and unafraid of the minimal risk of prosecution, all the music that's produced is available for free. It is very difficult to convince the average consumer that they'd be better off paying $13 dollars for another mediocre Metallica album than they would be by simply downloading it for free, realizing it sucks, and then deleting it off their hard drive. Second, it has removed the economic barriers to entry for artists. Any band with a computer and a few microphones can cut a demo and place it on myspace, muxtape, 8track, etc. and hope to be discovered. The result is that more bands receive exposure to the public and acting as an independent artist has increased economic viability.
These factors combine to shift the nature of music sales themselves. Major industry artists suffer from reduced sales. They lose sales to theft of their album (which is more appealing with big bands due to marginal utility issues) and they lose sales because people have discovered new bands that better suit their tastes, thanks to easier access to music. So, the highest-selling artists sell fewer records. But, at the other end of the spectrum, the low selling artists are selling more records, because they can get their music out to the public. So, the gap in sales has closed to a degree.
The music industry has taken the obvious course dictated by these changes, reducing their investment in the huge bands and snapping up a greater number of medium-selling artists than ever before. In that sense, they've gotten things right. Where they get it so terribly wrong is that they misunderstand the nature of how to promote these bands. Getting The Decemberists a 4-page interview in Rolling Stone is great. It will raise the band's profile, and thus, their sales . But, it's still a technique grounded in the old world, where music couldn't be traded instantly and cheaply, building buzz much more rapidly than before.
This is where muxtape comes in. I'm not going to suggest a massive and unrealistic reformation of the market. The labels make significant investments in their artists and they are entitled to take steps to protect their investment. They do not need to allow rampant piracy of their music. But, the definition of piracy that they choose to apply is too broad, ultimately hurting them. Sure, they don't get paid royalties on each song streamed from muxtape. In that sense, they're losing money. But, that's a sacrifice they should be willing to make in exchange for increased sales. If we post ten decemberists tracks from four different albums on our muxtape, all that needs to happen is for one of our site's readers to fall in love with the band in order for the label to see more money from the purchase of a cd than they could possibly get from receiving royalties off of our streams.
I think the crux of the misunderstanding comes from an inherent suspicion of the consumer. Basically, the industry believes that they need to get their money from exposing consumers to artists (through radio/mtv play and the royalties that follow) rather than through album sales. Again, this was probably true at the dawn of the downloading era. We can safely assume that Bono's family will not be eating blighted potatoes simply because I downloaded Zooropa rather than paying $15 for a back-catalog title at Best Buy. But, this new market is different. Because the range of music out there encompasses more bands with more sounds, people tend to develop a more personal connection, since the music is more tailored to their tastes. This helps stave off downloading. In addition to this, there is the recognition that some of the more well-known bands out there today have never had a gold record, and very well may never have one. Take The National, for instance. Despite a string of excellent albums and a great deal of hype, the members of the band still have day jobs (or did, last time I checked). There is a clear economic incentive to purchase, rather than steal the album. In this case, it's the fact that I want to hear more music by The National, but if they can't afford to produce it, I'll be out of luck. So, I happily give them my money.
So, RIAA...don't go shutting down muxtape. Your next generation of artists are depending on it and services like it. I know you're afraid of getting hurt again, but we love the artists that we're going to discover on the site. We're not going to just take their albums and not hand you a cent. Promise.
(Oh, and don't even get me started on this Pandora stuff...)
The music industry experienced a fundamental shift in the last 15 years. In the past, music discovery was dictated almost entirely by radio or music video play. There were always intrepid souls who would scour the shelves of hole-in-the-wall record stores looking for undiscovered gems, but they were a small enough minority to be negligible as an economic factor in the market. However, in those days, access to music was limited by the fact that you needed to purchase both the music and the media required to play it. This is, of course, no longer the case. Music has been separated from media that can be controlled by economic barriers to entry (like the purchasing of a CD production plant), and as a result, has become democratized.
This has had several massive effects on the industry, two of which are worth some focus. First, it has made the theft of music a very real factor in the industry. If one is dedicated enough to searching and unafraid of the minimal risk of prosecution, all the music that's produced is available for free. It is very difficult to convince the average consumer that they'd be better off paying $13 dollars for another mediocre Metallica album than they would be by simply downloading it for free, realizing it sucks, and then deleting it off their hard drive. Second, it has removed the economic barriers to entry for artists. Any band with a computer and a few microphones can cut a demo and place it on myspace, muxtape, 8track, etc. and hope to be discovered. The result is that more bands receive exposure to the public and acting as an independent artist has increased economic viability.
These factors combine to shift the nature of music sales themselves. Major industry artists suffer from reduced sales. They lose sales to theft of their album (which is more appealing with big bands due to marginal utility issues) and they lose sales because people have discovered new bands that better suit their tastes, thanks to easier access to music. So, the highest-selling artists sell fewer records. But, at the other end of the spectrum, the low selling artists are selling more records, because they can get their music out to the public. So, the gap in sales has closed to a degree.
The music industry has taken the obvious course dictated by these changes, reducing their investment in the huge bands and snapping up a greater number of medium-selling artists than ever before. In that sense, they've gotten things right. Where they get it so terribly wrong is that they misunderstand the nature of how to promote these bands. Getting The Decemberists a 4-page interview in Rolling Stone is great. It will raise the band's profile, and thus, their sales . But, it's still a technique grounded in the old world, where music couldn't be traded instantly and cheaply, building buzz much more rapidly than before.
This is where muxtape comes in. I'm not going to suggest a massive and unrealistic reformation of the market. The labels make significant investments in their artists and they are entitled to take steps to protect their investment. They do not need to allow rampant piracy of their music. But, the definition of piracy that they choose to apply is too broad, ultimately hurting them. Sure, they don't get paid royalties on each song streamed from muxtape. In that sense, they're losing money. But, that's a sacrifice they should be willing to make in exchange for increased sales. If we post ten decemberists tracks from four different albums on our muxtape, all that needs to happen is for one of our site's readers to fall in love with the band in order for the label to see more money from the purchase of a cd than they could possibly get from receiving royalties off of our streams.
I think the crux of the misunderstanding comes from an inherent suspicion of the consumer. Basically, the industry believes that they need to get their money from exposing consumers to artists (through radio/mtv play and the royalties that follow) rather than through album sales. Again, this was probably true at the dawn of the downloading era. We can safely assume that Bono's family will not be eating blighted potatoes simply because I downloaded Zooropa rather than paying $15 for a back-catalog title at Best Buy. But, this new market is different. Because the range of music out there encompasses more bands with more sounds, people tend to develop a more personal connection, since the music is more tailored to their tastes. This helps stave off downloading. In addition to this, there is the recognition that some of the more well-known bands out there today have never had a gold record, and very well may never have one. Take The National, for instance. Despite a string of excellent albums and a great deal of hype, the members of the band still have day jobs (or did, last time I checked). There is a clear economic incentive to purchase, rather than steal the album. In this case, it's the fact that I want to hear more music by The National, but if they can't afford to produce it, I'll be out of luck. So, I happily give them my money.
So, RIAA...don't go shutting down muxtape. Your next generation of artists are depending on it and services like it. I know you're afraid of getting hurt again, but we love the artists that we're going to discover on the site. We're not going to just take their albums and not hand you a cent. Promise.
(Oh, and don't even get me started on this Pandora stuff...)
