David Byrne: Who Needs Record Companies?

[Guest saintjohn]

From the New York Times:

AUSTIN, Texas (Billboard) - Former Talking Heads frontman David Byrne wants record labels to focus more on marketing than on manufacturing and distribution in the face of increasing digital album sales.

Byrne gave a presentation entitled "Record Companies: Who Needs Them?'' at the South by Southwest music conference in Austin, Texas, Thursday. He offered a slide show that predicated digital sales would outstrip CD sales by 2012.

That year will be the "tipping point,'' much like the mid-to-late '80s when CDs overtook cassette sales. Once download sales became the norm, Byrne said, it will allow manufacturing and distribution costs to approach zero. "That is a fact,'' he said.

He said at that point, record labels will be faced with a sort of choice -- to ramp up marketing services to use music as a loss leader for tours and merchandise revenue, or aim only for international stars of the ilk of Britney Spears.

"Artists need help,'' said Byrne, who said he's in the final stages of negotiating a new contract with Nonesuch Records, a boutique label owned by Warner Music Group.

He said the idea of artists working completely independently of a record label is possible, and pointed to the success of singer/songwriter Aimee Mann. Yet Byrne noted that such a model won't work for smaller or developing acts, who need a team to provide marketing and tour support.

[Guest michael^heaven]

He offered a slide show that predicated digital sales would outstrip CD sales by 2012.

So that's what the Mayans were trying to tell us!

[Guest endymion]

Exceptional people who don't need help frequently overestimate the teeming masses who surround them, who do need help.

What is really happening is the commodification of music distribution. Record labels, once the only option, are now one of many options.

In a purely market-based music distribution system (as opposed to the current monopolistic system) record labels will still exist, because most people are not exceptional do-it-all Renaissance men (or women) like David Byrne. Most artists still will need help with production, marketing, and distribution even in the year 2107, and businesses ("record labels") will continue to exist to serve that need.

[Guest saintjohn]

The Winter Music Conference people need to book you for one of their industry panel discussions. It might actually be worth buying a badge again

[Guest endymion]

The Winter Music Conference people need to book you for one of their industry panel discussions. It might actually be worth buying a badge again

Yeah, the wife and I used to do that but we're too busy with 'real' work now. The actual WMC panels are unfortunately mostly attended by bedroom producers who never convert into clients.

Speculating about the future of media markets after the RIAA and the MPAA have lost control over them is what I spend an awful lot of time on, every single day. David Byrne is absolutey correct that record companies are no longer required, in the same way that Random House is no longer a gatekeeper to getting published now that anybody anywhere can start a blog. But blogs are not going to put Random House out of business. A company that provides assistance to artists is a solid niche that will never evaporate. New technology has led to new options and new business models for companies who serve writers, like Squarespace or Blogger. Those new options crop up as text publishing commodifies and becomes a purely market-driven economy with no gatekeepers.

The question for music really becomes: what will a "record company" in 2107 look like? Already we see new independent labels in 2007 that look absolutely nothing like the labels from 1997. The societal and technological shifts that are going on right now are much more profound than anything that happened during the first dot-com boom, and those changes will result in a much more diverse array of options for artists to draw on for support.

Look for example at CD Baby and Beatport. New options in music distribution for very small-time artists who want to do almost everything themselves. But do you really want to do your own distribution? Do you want to be the guy on the phone with iTunes trying to get your tracks into their database, or do you want to let CD Baby handle it for you while you produce product? It's really hard for one person to find the time to do everything.

Those services are only the tip of the iceberg in terms of what will be possible soon. The classic one-stop-shop that a "record label" provides will always be a service in high demand, but the shape and color and texture of the services that labels provide will change rapidly every month from here on out as the world changes around them.

And also: the whole entire entertainment industry is contracting. If you want to get rich don't go into music in the first place. Even if you're a renaissance man who can do it all, just don't waste your time. Today's music market is for people who love making music as its own reward. The monopolistic practices of the RIAA managed to keep the industry bubble inflated for a few years but now it's bursting for good. The forces that allow new artists to break onto the music scene without the help of the gatekeepers are the same forces that are causing the entire music industry to shrink: efficiency through new technology.

[Guest pod]

This is true, even if you can do all that, do you want to? I'm sure David Byrne is absolutely enthralled by negotiating contracts and so forth.

I can sympathize. Someone told me I know what to do with a camera once, I kind of agree with that. What I loathe is the actual business aspect. For musicians, that's where a record label would come in these days, I guess.

[Guest endymion]

I can sympathize. Someone told me I know what to do with a camera once, I kind of agree with that. What I loathe is the actual business aspect.

That's exactly how I feel about what I do. I want to do what I do, not run a business. More cognitive load dealing with biz details means less brainpower focused on what I do.

...so I married an intellectual property attorney who actually enjoys Quickbooks.

I'm still amazed by two things:

1) that the RIAA has managed to hold on for as long as it has without more losses, using unmodified scarcity-based business models dating back to the invention of the audio recording, and

2) that the MPAA seems to be wholly unable to learn from the RIAA's mistakes, and is doomed to repeat each and every one of them five years later

[Guest pod]

Heh good solution. I need to clean myself up and marry a Quickbooks loving girl who is willing to represent me. 8)

I can cut my drinking in half if needed.

[Guest endymion]

You need to find a girl who likes to use Quickbooks, who knows how to use Photoshop, and who wants to drink with you.

[Guest pod]

I should put a craigslist ad for that.

She can do quickbooks and rough selections. Final edits and optimizations are up to me .

[Guest endymion]

Teach her aperture then, it's the coolest for that and it's way easier to learn. That means you're down to just needing a girl who can keep books and drink heavily. Hopefully not at the same time.

Ladies?

[Guest pod]

Aperture is cool. ;D I need to get my MacBook already to use it.

[Guest saintjohn]

But do you really want to do your own distribution?

You mean it's more difficult than just making my mp3 files available for download?

I remember having a remarkably similar discussion about the DIY music movement with Ian Mackaye back in 1985. While individual artists CAN do everything, it helps to have a team of artists (like Discord Records) working together for a common goal.

[Guest endymion]

You mean it's more difficult than just making my mp3 files available for download?

Yes! Distribution is a perfect example of how the industry is changing but it's still at the very early stages of changing. There are stages of adoption that new technologies go through before they reach the mainstream. In the beginning, new technologies are only available to exceptionally skilled people like David Byrne who have the ability and the motivation to seek them out and use them.

A few years ago while we were building CoolJunkie, I was also working on building an online mp3 vending machine. It was called Digital Jay Music and it was a dance-music-only online store that competed with Beatport. Our management team wasn't as focused as the Beatport guys were, so they're no longer in business. In those early days of independent online music stores, the only options were companies like Beatport and Digital Jay who aren't really structured much differently than iTunes. You as an artist go to them, they distribute your music as your distributor, and you and your distributor both get a cut. There have been more and more others popping up over time with a similar model.

Is that really a huge enabling change from the artist's point of view? Not really. It's new technology strapped to an old business model. There are still gatekeepers. Something really new would be a high-quality online shopping cart that an artist can easily install on his OWN web site so that the artist is his own distributor. Do those products exist? They do, but we're still at the very early stages of that new advancement. All of the current do-it-yourself products require the artist to be a pretty competent web developer in addition to being a marketable music artist. That puts 100% do-it-yourself distribution out of the reach of many artists who are less exceptional than David Byrne, or maybe they just have to budget their time investment in order to hold down day jobs since most musicians don't make a lot of money.

That's why there is still a big niche for service options, like CDBaby and other services that handle distribution details. The classic lines of demarcation between the artist, the label, the publisher, the distributor, and the retailer are getting very blurry, but attention to all of those details is still necessary. Most people are not skilled at all of those things in addition to making good music, or they just don't have the time.

I remember having a remarkably similar discussion about the DIY music movement with Ian Mackaye back in 1985. While individual artists CAN do everything, it helps to have a team of artists (like Discord Records) working together for a common goal.

Cooperatives between artists are a prime niche that I see primed to explode soon because of new enabling technology. Content producer cooperatives are a concept that can be big not just in music but also in film, porn, and also in markets for raw materials such as beats, stock video, stock photography, and new forms of media building blocks like motion graphics and audio unit software. There are a lot of interesting new enabling technologies evolving to make them possible, but the enormous technosocial shifts that are going to really make things interesting are only just beginning.

Note that a music co-op solves the Renaissance Man requirement problem by finding all of the requisite skills within the group and not in an individual. Maybe one guy in your group knows how to build a music vending machine web site, another guy is a slick marketer, somebody else does great guerilla PR. One guy doesn't have to do it all. But look at what just accidentally happened, the commune has become a "record company". A communist record label is still a record label. "Power to the people! Now buy our music!"

Now that people are realizing that artists don't need DRM, more and more people are beginning to explore taking more control over their distribution and bypassing the establishment entirely. DRM was a FUD tactic that the major labels used to scare artists and smaller labels away from early independent online retailers like Beatport and Digital Jay, and that fear inhibited our ability to succeed. As more artists realize that they don't need to rely on corporate-controlled DRM, more content gets distributed in new and innovative ways that bypass the RIAA.

All of these examples focus only on distribution, but every aspect of the music industry is changing. Every aspect of the greater media industry is changing.

[Guest saintjohn]

"Power to the people! Now buy our music!"

Property is theft.

And Rage Against the Machine signed with Sony.

Seriously, though, I really appreciate your perspective. I'd be willing to pay to see you share some of your views at a panel discussion - it'd be worth it just to see the reactions.

I remember the year Napster changed everything. Most of the panel discussions during that particular WMC touched on the phenomenon, although I don't remember anyone fully appreciating what was happening at the time (which isn't surprising).

The best part of that Conference, though, was the fact that Napster actually had a booth in the exhibition hall. They had refused invitations to participate in any of the discussions, but they were there, anyway, handing out black rubber wrist bands that said "THANK YOU FOR SHARING." The major record label people were not amused.

[Guest pod]

Seriously, though, I really appreciate your perspective. I'd be willing to pay to see you share some of your views at a panel discussion - it'd be worth it just to see the reactions.

Simpsons reference:

Hmm. Your ideas are intriguing to me and I wish to subscribe to your newsletter.

[Guest saintjohn]

All of the Conference panels put together aren't half as entertaining or informative as this thread.

[Guest endymion]

Bwaha, thanks! Have you been to SXSW? Or TED? I don't think that WMC is quite as forward-thinking as SXSW or TED. I've never been to either but if I have to go to WWDC then I might as well do a fun conference too. I'm hoping that maybe I¹ can build a working sneakernet Java applet in time for a real live demo at SXSW next year. I have it doing El Gamal public key encryption. That means that it could work. Very exciting.

Not sure what that has to do with the elimination of record comanies, unless maybe you're interested in tapping into the uniquely high bandwidth capabilities of the sneakernet to build some kind of spime-ish music economy for the rest of the world.² So that people anywhere could build multimedia communities with global reach around local music styles without the help of any Bushies or anybody with a speck of Chavismo in them.

The purpose of doing that, of course, would be to protect people in developing nations (the other 6/7 people on the planet) from establishing their first relationships with digital gizmos through watching old Brittney Spears videos that have been donated to corporate IT recycling/relief operations along with the old scratched-up video iPods that we don't want any more.

That's the the vision of music-as-product paradigm. The vision of music-as-spime paradigm is wildly different and better for the people. A spime ID doesn't have to point to a physical object, it can point to digital media content. New and better paradigms increase the potential variety of interaction designs that dictate how we will interact with music and each other in the future. That's good for humans, good for music, and good for how humans party and use music socially.

Progress in this area is a good thing. Systems that reward artists even more efficiently than the current system are possible, which will of course lead to more people being interested in producing good DANCE music rather than less. All kinds of music. Every day that the RIAA drags its feet and resists progress is another day closer to death for the dance music industry. Will every niche music industry adapt and survive? No. Some will and some will die as the RIAA watches revenue shink in each niche. Some will die completely before they get to the next big thing.

In my iTunes library, I have some Cachao .mp3's. Beautiful Buena Vista Social Club stuff. That's about all that's left of the entire Cuban jazz industry now. Whole niches can die completely for all kinds of reasons, music is delicate.

Now do you see why I'm not the ideal panel speaker?

1. With help? Screw it, I'm just making it happen myself so far but anybody reading this please feel free...

2. "The best way to predict the future is to invent it." - Alan Kay

[Guest saintjohn]

Now do you see why I'm not the ideal panel speaker?

I suppose. Too much imagination and eloquence for the average badge holder?

"If you want to make it in this business, you just have to believe in your music!"

Yeah, that's much better.

[Guest coach]

Bwaha, thanks! Have you been to SXSW? Or TED? I don't think that WMC is quite as forward-thinking as SXSW or TED.

I've been to SXSW and it is much more backward thinking than WMC. At least it was the last time I was there 4 years ago.

[Guest endymion]

Well I'm still hoping. The interactive section of SXSW is full of a lot of interesting web 2.0 type panels, they seem to be attracting some interesting people talking about interesting projects. Anybody been to TED?

You don't want to see me speaking inconvenient truths to establishment people, it's just not pretty. I don't belong on the panel next to the RIAA guy talking about the latest thorn in their side is the mix tape guy and how hard they're going after him. That guy (he's a real guy) is a piece of crud in the gears of progress, jamming them up. On purpose.

The road forward for the music industry has to run directly through a few very ugly shakedowns. That doesn't make friends in the music industry if you talk too loudly about it. No matter how obvious, people don't ever accept that the downsizing of an entire industry is really happening until it's far too late. I was the CEO of a tech company (that's still in business) during the dot-com collapse and I learned this lesson well.

There is a giant machine operating that facilitates interaction between humans and other humans through music. The machine is the entire music industry. Prior to the development of that machine, humans interacted with other humans through music but only in small local groups. The machine as it exists right now, Music 1.0, is very inefficient. It's built around a scarcity-based business model that's defended heavily against efficiency improvements in order to protect the established players. The scarcities that the industry depends on no longer exist and they fight to maintain them artificially. Artificial scarcity is definitely not progress, not in a new world of networked humans looking for new possibilities.

What is the next step in the evolution of the machine that facilitates human interaction through music? What does Music 2.0 look like? It's right around the corner. Each time Music 2.0 starts to crop up, the establishment whacks it down out of fear. Pandora, one of the coolest new developments in social music technology lately, will be closed soon because the RIAA lobbied successfully against net radio. The RIAA is also fighting satellite radio in order to maintain artificial scarcity. They won't succeed forever. Once they lose their grip, music will commodify, and then really interesting things will happen.

Will artists starve? Some of them who cling to old ways as old ways become obsolete will. But more innovative new systems for compensating artists as well as identifying and acknowledging good artists will come into existence. The current machine's goal is to make its owners rich. The new machine's goal could be to make good artists rich. It all depends on how you build it, and it's being built right now.

The companies that make up the RIAA are the establishment right now because they were the original companies who were around at the beginning of the industry's lifecycle, immediately after the invention of the audio recording. Who becomes the establishment for the next music industry now that so many more new things are possible? The RIAA spent their time resisting progress instead of charting new territory while Apple sold 100 million iPods behind their backs. 100 million is a LOT, think about it.

The only way for people to move forward is to encourage the shakedown phase in the music industry's lifecycle.

[Guest coach]

The road forward for the music industry has to run directly through a few very ugly shakedowns. That doesn't make friends in the music industry if you talk too loudly about it. No matter how obvious, people don't ever accept that the downsizing of an entire industry is really happening until it's far too late.

Funny, that was just the point I was trying to make in the whole "RIAA Sues College Kids" thread. And you're right, not many want to hear it.

[Guest endymion]

Funny, that was just the point I was trying to make in the whole "RIAA Sues College Kids" thread. And you're right, not many want to hear it.

Alienating the kids who would go on to be responsible for shaping the outcome of the collision between the music industry and information technology was the single biggest dumbass move that the RIAA ever pulled in its history.

For entertainment purposes, pop some popcorn, kick back, and enjoy watching the MPAA make every single mistake that they did, five years further down the road. It's just like watching two dysfunctional brothers, where one takes after the other exactly and you can predict his fuckups before he even makes them.

[Guest endymion]

Further reading:

Digitalisation, Copyright and the Music Industries, David Hesmondhalgh, Hampton Press, 2006

"Profit-making in the cultural industries depends on, amongst other factors, the production of artificial scarcity. Digitalisation makes copying of any information relatively easy, thus threatening

that scarcity."

Section beginning page 16, "Fuck you, Lars, the music belongs to us too"

Free Culture, Lawrence Lessig, 2004

The entire book is available completely free (legally). That's an author who puts his money where his mouth is. Now that the net is here and it works, what do we do with it in order to move our culture forward? How will future systems encourage and facilitate the creation of quality content, like music?

Against Intellectual Property, N. Stephan Kinsella, Journal of Libertarian Studies, 2001

In particular, the section beginning on page 19, "IP and Property Rights: Property and Scarcity" Very widely-read and referenced paper about the obsolescence of scarcity-based economics for intellectual property after the widespread adoption of information technology.

Shaping Things, Bruce Sterling, MIT Mediaworks, 2005

Incredibly insightful pamphlet, easily-digestible, about the future design of everything. Looks at industrial life cycles from a high-level and looks into the future, beyond scarcity-based economics. What does the future look like? How does the big picture affect the future of music?