Category: Music

The new music gatekeepers, namely you

Do you want to know what other people are listening to? Go to, where you can find large numbers of playlists. The old Napster used to offer user song directories, but of course the new file-sharing companies have to plead ignorance of what their downloaders are doing. So it is only natural that such a “recommendations” service should migrate elsewhere.

WebJay is designed for music that is freely available on the web, though it is not restricted to such music.

Clay Shirky writes:

…you get three filters in one – someone else has vetted the music for quality, the music is rolled up in thematic playlists, further raising the “If you like X, you might also like Y” quotient, and everything you hear is (at least putatively) music libre.

This is just a start but the idea has enormous potential. Where else can you follow “Brazilian techno pop rock experimental and (why not?) samba”?

Does file-sharing hurt CD sales?

A new study by two researchers at Harvard Business School and the University of North Carolina, Chapel Hill, finds that sharing digital music files has no effect on CD sales. This is the first study that directly compares actual downloads of music files and store sales of CDs.

The authors, Associate Professor Felix Oberholzer-Gee of Harvard Business School in Boston and Professor Koleman Strumpf of the University of North Carolina, Chapel Hill, conclude that “File sharing had no effect on the sale of popular CDs in the second half of 2002. While downloads occurred on a vast scale during this period – 3 million simultaneous users shared 500 million files on the popular network FastTrack/KaZaA alone – most people who shared files appear to be individuals who would not have bought the albums that they downloaded,” say the authors…

Even in the professors’ most pessimistic statistical model, it takes 5,000 downloads to reduce the sales of an album by a single copy. If this worst-case scenario were true, file sharing would have reduced CD sales by 2 million copies in 2002. To provide a point of reference, CD sales actually declined by 139 million copies from 2000 to 2002.

Here is another interesting tidbit:

31 percent of all individuals who download music live in the United States. Other important countries are Germany with a 13 percent share of worldwide users, Italy with 11 percent, Japan with 8 percent and France with 7 percent. File sharers in the United States are particularly active. While they represent 31 percent of worldwide users, they download 36 percent of all files.

U.S. file sharers download files from all over the world. Only 45 percent of the files downloaded in the United States come from computers in the U.S. 16 percent of music files are downloaded from computers in Germany, 7 percent from Canada, 6 percent from Italy, 4 percent from the U.K. A legal strategy that focuses mostly on the United States is unlikely to change the supply of music files.

In other words, going after domestic uploaders, as the RCAA is doing, won’t cut off supply.

Here is one summary. Here is the original research.

My take: Yes I believe the result. Most downloaders are young or just sampling songs for kicks. But I doubt if this, legal developments aside, would be true five years from now. Over time I expect more people to forgo buying the CD, unless of course the law intervenes.

Addendum: Newmark’s Door offers some additional links. Larry Lessig argues for complementarity. Here is an article that copyright is too strict more generally, and yes The Grey Album is wonderful.

Piece work

Violinists at a German orchestra are suing for a pay rise on the grounds that they play many more notes per concert than their musical colleagues – a litigation that the orchestra’s director yesterday called “absurd”.

The 16 violinists at the Beethoven Orchestra, in the former West German capital Bonn argue that they work more than their colleagues who play instruments including the flute, oboe and trombone.

The violinists also say that a collective bargaining agreement that gives bonuses to performers who play solos is unjust.

Here is the full story. Here is a useful site on the labor theory of value. How about paying composers by the number of notes as well?

Punkers for capitalism

With his mohawk, ratty fatigues, assorted chains and his menagerie of tattoos – swallows on each shoulder, a nautical star on his back and the logo of the Bouncing Souls, a New York City punk band, on his right leg – 22-year-old Nick Rizzuto is the very picture of counterculture alienation. But it’s when he talks politics that Mr. Rizzuto sounds like a real radical, for a punk anyway. Mr. Rizzuto is adamantly in favor of lowering taxes and for school vouchers, and against campaign finance laws; his favorite Supreme Court justice is Clarence Thomas; he plans to vote for President Bush in November; and he’s hard-core into capitalism.

“Punks will tell me, `Punk and capitalism don’t go together,’ ” Mr. Rizzuto said. “I don’t understand where they’re coming from. The biggest punk scenes are in capitalist countries like the U.S., Canada and Japan. I haven’t heard of any new North Korean punk bands coming out. There’s no scene in Iran.”

Here is a New York Times article, don’t forget to check out the pictures (password required). Here is a website for GOP punkers, they seem to approve of Reagan’s famous threat to bomb the Soviet Union. Or perhaps it is just irony. They stress that they are not libertarians because America is “at war” with the left, and the libertarian philosophy is not well-suited to fighting a war. Here is their cited critique of the Canadian health care model. Good economics, but these punkers, oppositional by nature, feel a kneejerk need to defend every action of the Bush administration. Here is the website, which offers an interview with right-wing punker Johnny Ramone. Here is yet another site, which cites right-thinking punk bloggers. And will National Review be pleased that links to them approvingly?

My take: Punk music needs an idea of evil and an oppositional stance. So punkers will adopt every position of defiance they can find, including in-your-face right-wing politics. But in the long run? Remember what The Clash sung: “You grow up, you calm down, working for the clampdown…”

Alison Krauss + Union Station

Alison Krauss has the voice of an angel. You probably heard her on the Academy Awards singing a track from Cold Mountain or on the wonderful soundtrack for O Brother, Where Art Thou? where she sings the heart-breakingly beautiful Down to the River to Pray. She plays with the versatile Union Station whose I am a Man of Constant Sorrow was also featured in O Brother. For more, Alison Kraus + Union Station Live is an excellent place to begin.

The baby boomers take over music

For the first time, people in their 40s are buying more albums than teenagers. According to recent figures from the British Phonographic Industry (BPI), the 12-to-19 age group accounted for 16.4% of album sales in 2002, a sharp fall on 2000 (22.1%), while 40- to-49-year-olds went the other way, rising from 16.5% to 19.1%. Buyers in their 50s (14.3%) are not far behind. Soon, half of albums will be bought by people who have passed their 40th birthday.

That’s Britain, of course. Here is the full story. America is not yet at this point, but a mix of demographics and downloading has changed our music market as well. So expect more stars like Norah Jones and more Paul Simon reissues.

And does this line make you feel old?

The term “adult oriented rock”, meaning the Eagles if you were lucky and Boston if you weren’t, was common currency 30 years ago.

In the U.S. last year, the biggest musical earners were The Rolling Stones and the Eagles, largely through touring. Paul McCartney was next in line, I shelled out over $100 to see him lip synch through the high notes of “Maybe I’m Amazed.”

Is the music business dying?

…with album sales rising and the phenomenal growth of ringtones and legal downloads, plus record-breaking years for merchandising and publishing rights, it seems the death of the music industry has been greatly exaggerated.

According to recent record industry figures, UK sales rose by 4% in the first half of last year. The Publishing Rights Society reported that performance royalty collections (everything but record sales) in 2003 were the highest since records began in 1914.

In the US, Billboard Boxscore reported that the number of live music events worldwide was up by 25% in 2003 (generating £1.2bn in North America alone). Legal sales of downloadable songs topped 2m units a week for the first time last week. Apple’s iTunes service has sold more than 30m songs, and has yet to celebrate its first birthday.

Moreover, the astonishing growth of the ringtone market continues to take everyone by surprise. Estimates as to its true size vary widely from a conservative £600,000 from Jupiter Research to a bullish £1.9m by the ARC Group.

And all this is happening in the age of illegal filesharing.

Here is the full story.

So is the music business dying? Or are downloads, even illegal ones, complements to many kinds of musical services? Will the music business win its competition with DVDs for our dollars? Perhaps the real battle is not “stolen music vs. property rights in music” but rather “music as a whole vs. many other ways of grabbing your attention.” You tell me.

CD sales are up again

OK, Tower Records is bankrupt but demand for new CDs has been booming:

…a turnaround that began quietly last fall has become unmistakable with the success of Norah Jones’s new album, “Feels Like Home.” The CD, which recently sold more than a million copies in its first week in stores, helped extend a nearly consistent five-month string of industry growth, as measured by weekly sales compared with year-earlier periods.

There is more:

First-week sales of Ms. Jones’s new album were only part of the industry’s good news for seven-day period that ended Feb. 15. Through that period, the most recent for which data are available, album sales for the beginning of 2004 were up 13 percent from the comparable period of 2003, according to Nielsen SoundScan, which tracks music sales.

It was the biggest Valentine’s Day sales week since SoundScan began operating in 1991. And it was also the first week ever in which downloaded song sales topped two million.

Are illegal downloads really falling? I don’t trust any of the current numbers, but consider the following:

Even as download sales through Web stores like as iTunes are increasing, so is the number of people who illegally share music files, according to BigChampagne, which tracks file swapping. At the end of 2003, the most popular services for unauthorized file sharing had 5.6 million users, compared with 3.93 million a year earlier, a spokesman for BigChampagne, Eric Garland, said. Those users are now illegally trading about 250 million songs each week.

Here is the story.

My take: The baby boomers, with high disposable income, and fear of the law, are ascendant in the world of music. They are more likely to support a higher average quality of music, but less likely to support the next astonishing breakthrough. For that you need the younger kids in the market. Go Nirvana.

The real threat to the music industry?

I am a bit late getting MR up today because last night I took Yana to her first rock concert. We saw Fountains of Wayne, a nerdy New Jersey pop group that has numerous excellent hooks.

After they played “Stacey’s Mom,” their best known song, the band leader stopped and made an announcement. “The real problem in the music industry isn’t illegal downloads. It’s all of you who use your cell phones to broadcast the concert to your friends at home who aren’t paying for tickets.”

He made as if he was joking, but the crowd took him quite seriously.

CDs as loss leaders

An increasing percentage of compact discs are sold in mega-chains, such as Best Buy or Wal-Mart, as loss leaders. Offer the CD at a very cheap price, and hope that the buyers also take home a television set. This practice is the central reason why Tower Records recently went bankrupt.

Loss leader CDs push music in a more mainstream direction. The impulse buy is for the TV, the musical purchase is planned, which favors established stars with new releases. Sudden impulse buys of unknown musical products, by definition, do not bring people into the store. In essence consumers have decided they would rather bundle hit musical releases with TV sets and computers (the Best Buy model), than with more obscure musical releases (the Tower model).

Consumers with mainstream musical tastes are better off, but how about consumers who prefer the niche products? On the downside, hit CDs are cross-subsidizing obscure CDs to a lesser degree than before.

Nonetheless not all hope is lost for buyers with indie tastes. and other Internet services offer a wide variety of releases and lessen the need for such a cross-subsidy. And keep in mind that the cross-subsidy went two ways. The customers who prefer music from Madagascar no longer have to cross-subsidize the Eminem displays in Tower. The CDs are held in Amazon-linked warehouses, which is cheaper, even once you take shipping into account. Furthermore the desire to build up the Amazon brand name cross-subsidizes obscure products of all kinds, many of which Amazon makes little or no money from.

The other key musical trend of our time is illegal downloading, which hurts the top artists most of all. Indie releases use the Internet for publicity, and world music artists learned to live without copyright protection a long time ago. Legal downloading, through iPod, subsidizes music of all kinds. None of the iTunes songs make money for Apple, rather music of your choice (if they can get the rights) is a loss leader for hardware. Most people buy iTunes, not for the latest hits, but to hold a diverse mix of their past and yet-to-be-known future favorites. And most satellite radio channels do not play hits but rather serve niche tastes. XM offers a wide variety of channels, in part to make its brand name well-known and focal.

The bottom line: Don’t worry about music as a loss leader. Cross-subsidies all over the place, and point in many differing directions. But at the end of the day, both the demand and supply for musical diversity are alive and well.

Why Ed Sullivan is important

This coming Sunday marks the fortieth anniversary of the Beatles on The Ed Sullivan Show. We look back on Sullivan as an antiquated, somewhat quaint relic of a bygone era. In reality he was a daring market entrepreneur who promoted important music and broke down racial barriers.

Sullivan was especially important for his advocacy of African-American music and entertainment. He helped Bill “Bojangles” Robinson, Ethel Waters, Nat “King” Cole, Leontine Price, Louis Armstrong, George Kirby, Duke Ellington, Richie Havens, Mahalia Jackson, Louis Armstrong, Diana Ross and the Supremes, and Marvin Gaye, among others. At the time the major networks typically shied away from carrying such performers, primarily for racial reasons. Sullivan consistently fought with his conservative sponsors and insisted on booking these individuals.

Sullivan was a musical visionary more generally. In addition to the Beatles, he promoted The Rolling Stones, Elvis Presley, and Barbra Streisand. In comedy he showcased Woody Allen, Richard Pryor, and Jerry Lewis, among many others. In each case the performers had not yet established their later significance.

Sullivan’s show, of course, was an institution. At its peak it regularly commanded an audience of over 50 million Americans and it ran for 23 years. Here’s a hat tip to Sullivan, who exemplified the best of entrepreneurship and cosmopolitan vision.

Frequent flyers and the new world of music

Recently I suggested that the on-line music world had yet to settle on a workable business model. Now Gary Leff reports the following new arrangement, whereby you use frequent flyer miles to buy music:

Sony has partnered with United Airlines to introduce another business model
for downloadable music — paying for songs with alternative currency
(frequent flyer miles) rather than money.

Details are still being worked on, I understand, and the website is still a
few months from launch, but it looks like Sony and United will offer
consumers both
* the ability to buy songs while earning United Mileage Plus miles, making
United’s loyalty currency a reason for consumers to pick the Sony site over
rivals (and tapping a 37 million member marketing database on top of Sony’s
own lists).
* the ability to pay in miles rather than money, which will be perfect for
infrequent flyers with a small unused stash of miles (a free ticket starts
at 25,000 miles – a song may cost 100 or 250 or 500 miles, price has yet to
be set).

Keep in mind, the recorded music market is a mere $12 billion or so a year. For purposes of comparison, Kraft sold for $13 billion. Southwest has had a capitalization comparable as well. Tobacco advertising for one year is about $11.5 billion. Now I don’t expect the whole music market to be driven by frequent flyer miles. But neither is it obvious that the best way to proceed is to first sue people and then get them to fork over $12 billion into your coffers. The music industry is small relative to the economy as a whole, and relative to advertising as a whole. Here’s hoping for some new and creative solutions to the property rights problem.