Apple Computer has been selling songs for 99 cents apiece through its new iPod technology, Napster is selling music at the same price. But will anyone make money?
The November 19 Wall Street Journal, “With the Web Shaking Up Music, A Free-for-All in Online Songs,” suggests maybe not. It is estimated that for each song, 65 to 79 cents must be paid in wholesale costs to music companies and various intermediaries. Then add credit card processing fees, bandwidth charges, and customer service costs. Not much is left over in terms of profit.
Apple hopes to make back the money by selling iPod players, Steve Jobs admitted as such publicly. But what will happen once competitors copy iPod, pushing down its price? Many of Apple’s rivals hope to make money, not on individual songs, but rather by selling music subscriptions. The subscriptions, however, typically let consumers hear the songs but not own or transfer them, a model which has yet to prove popular. It is hard to ignore that shares of Roxio, the company that owns Napster, have lost half their value in the last month or so.
Wal-Mart plans to enter the business, it will sell songs and hope to draw listeners to its web-site, where they can view and buy offerings of electronic goods.
My conclusion: None of these ideas is a proven winner. I still expect free file-sharing, whether legal or not, to serve as the industry norm.
Addendum: Winterspeak offers some interesting observations on the market.
OK, so I took off from work today to go buy Let It Be…Naked. How often do we get truly new material from these guys as a group? Working under the supervision of Paul McCartney, they’ve cut out Phil Spector’s overproduction and remastered everything. The bottom line: you’ve never heard the album before. “The Long and Winding Road,” a song I used to find unlistenable, is now a gem. Nothing is made worse. This will never be the Beatles’s best album, but buy it if you have any interest at all.
Then buy Laibach’s take on Let It Be, direct from Slovenia, the Beatles’s songs set to mock martial, heavy metal techno stomp-rock, one of the least recognized great albums I know, and no that is not a joke.
While we are on the topic of culture, Chris Mooney has an excellent post defending the commercialization of The Lord of the Rings.
OK, the end of the year is approaching, here are my “best of” lists:
1. Classical music CD: Bach, St. Matthew’s Passion, conducted by Paul McCreesh. As good a recording as you will find, and this is arguably the best piece of music ever. One voice to a part, as they did it in Bach’s day, but never stale or musty.
2. Popular music CD: Outkast, Speakerboxx/The Love Below. Starts at hip-hop but spans the entire musical map, from an immensely talented duo.
3. Book, fiction: J.M. Coetzee, Elizabeth Costello. The finest novel yet by this year’s Nobel Laureate in literature, deep and philosophical, but also a great read.
4. Book, non-fiction: Michael Lewis, Moneyball: The Art of Winning an Unfair Games. Baseball puts me to sleep, this book is actually about human irrationality and performance. Everyone should read it.
5. DVD: Jean-Luc Godard, Band of Outsiders. OK, so he was (is?) a commie. Still, he understands the power of cinema in a way that few other directors do. The screen sparkles in every frame, the release is of course by Criterion.
And if you really want to go on a shopping spree, here is an article about notable art masterpieces still in private hands. I would recommend the Pollock at $50 million, except that the owner is not selling at that price.
Why not? And it might only cost you a few thousand dollars.
A doctor in Illinois commissioned a mass from Christopher Rouse. A Twin Cities musical version of the Beardstown Ladies stock club gets together after dinner to talk about movies and family life and which oboe concerto we should commission next.
Read here for more information, including a booklet of commissioning instructions and a phone number for assistance. The bottom line: Patronage today is more active, and more decentralized, than ever before.
Last night my wife and I saw Cesare Evoria in concert, she is the closest today’s world has to a Billie Holiday or Ella Fitzgerald. Here is one of her best CDs.
As you may know, Evoria is from Cape Verde, one of the most musically creative spots on the planet. Cape Verdean music draws from traditions of Portuguese song, Brazilian samba, and American jazz, among other styles. Bittersweet and lovely at the same time. Note that this unique musical culture draws on remittances for its finance; remittances constitute more than 20 percent of Cape Verde’s gdp. Cape Verdeans migrate to Massachusetts, Portugal, France and the Netherlands. According to some estimates, there are 500,000 Cape Verdeans abroad, and about 350,000 in Cape Verde. This is yet another example of the cultural benefits of trade and migration.
Addendum: Here is an update on what is going on in Cape Verde, with respect to economic development.
For information, reviews, links, and commentary, here is the best music site I know, AllMusic.com. It covers everything in music, not just the major stars.
Check out this page on the Byrds, for one illustrative example. Here is everything you ever wanted to know about Zakir Hussain.
Addendum: Thanks to Eric Dixon for helping to correct the links. He relates:
It’s a quirk of allmusic.com’s search engine that it will return pages with a generic “amg.dll” URL for any page that pops up directly from a search (as opposed to choosing the correct page from a list of possible matches after a search). If you want to get a replicable URL you need to click on a link for the artist, or album, or song, you want. And it’s probably a good idea to then remove the “&uid=”… database query from the URL, which is user-specific.
Did you know that AOL/Time Warner owns the rights to the Happy Birthday song? First published in 1893 the song still earns revenues of some $2 million a year. You don’t have to pay AOL for singing the song, however, unless you do it for profit – movies that feature a birthday scene can pay up to $50,000 for the rights. Interestingly, the Happy Birthday song is usually not dubbed which may account for the fact that it is sung in English in many countries around the world even by non-English speakers. Saddam Hussein was once caught on videotape singing it to his daughter.
A report on the bounty hunter conference tomorrow!
Is it legal to download music from Canada? Maybe. Read this update on the debate. The author, Jay Currie, also offers an excellent update on file-sharing and the RIAA suits, plus some analysis, consider this:
The record companies could use the P2P networks to publicize their clubs. They could flood Kazaa with current tunes, branded with their label, with a five to ten second promo at the beginning and end of the file. If you want to download Trick Daddy you can get a clean copy with the Trickster himself shilling for his record company’s club.
Adapting to the new digital, P2P reality may be painful. But in this case it is adapt or die. There will, no doubt, be deaths. I would not want to be in the retail record store business at the moment. But the creative destruction unleashed by new technology is already creating new alternatives for artists to reach their audiences.
As Terry O’Reilly pointed out in his 2002 article on P2P “Obscurity is a far greater threat to authors and creative artists than piracy.” And, as 32 time Grammy Award nominee John Snyder suggests in his Salon article, P2P file sharing represents the greatest marketing tool the music industry has ever come upon.
My take: I agree, but let’s get ready for a music industry with far lower marketing expenditures. This will not be pleasant or convenient in every way, as middlemen are not mere parasites, and property rights are not easily disposable. Our best hope is that Internet marketing can replace costly marketing campaigns, which will become increasingly unprofitable.
Addendum: Today’s Wall Street Journal, Money and Investing section, had some interesting figures on Apple’s iTunes service. You are charged 99 cents per song. It costs about 65 cents to license the song. Credit card fees are about 25 cents a transaction (which can include several songs), minus the two or three percent. Right now the service, extrapolated across a year, would bring in only $25 million in annual revenue. When the service is extended to Windows users, this could boost revenues to the store by as much as $600 million, profit by about a tenth as much.
Therefore you spend more money in restaurants, for the full story click here. You spend less when you hear Britney Spears, although you still spend more than when you hear no music. And how about Led Zeppelin? Co-blogger Alex noted not long ago that German music makes shoppers buy German wines, and French music makes shoppers buy French wines.
Here is a link to the original research, also connecting you to a variety of other pieces on music and psychology. Music also makes you more willing to wait in line. And people like pop music more, the more attractive the singer.
A search on Amazon.com yielded 276 distinct performances of Beethoven’s 5th symphony, many at bargain prices. Attendance at classical concerts is steady or slightly up. The classical share of the CD market is roughly constant at 3 to 5 percent. On the other hand, many orchestras are experiencing financial difficulties, and some are closing.
Complaints about the economic fate of classical music have been common for many decades. In fact parts of the 1980s and 1990s — not long ago — were a financial golden age for the classics, driven by The Three Tenors, Gorecki, and replacing albums with CDs. The entire story comes from the Federal Reserve Bank of Boston, click here.
In my view, the biggest single dilemma is whether the next generation of philanthropists will have any loyalty to classical music institutions.
How about classical music on the radio?
Classical music stations have disappeared in many cities; one-third of the nation’s top 100 radio markets do not have a classical station. After 63 years, ChevronTexaco’s radio broadcast from the Metropolitan Opera House will be off the air next year.
I suspect that the future of classical music on the radio lies in satellite radio, read this article from today’s Washington Post. XM satellite radio has about one million subscribers and its classical stations are excellent, long pieces with high sound quality, not just another rendition of a Telemann shortie or a Boccherini guitar quintet.
Thanks to William Sjostrom for the pointer to the article.
Addendum: Kevin Brancato tells us that fewer than one percent of American symphony orchestras have gone bankrupt in recent years.
It’s not surprising that background music can have a significant effect on how people shop (fast versus slow has the expected effect on shopping and dining time, for example). I am amazed, however, that the style of music can affect what people buy. British researcher Adrian North (includes many abstracts of North’s music research) and colleagues split up a wine shelf into French and German wines. On alternate days they played French and German music.
When the tape deck wafted French accordion tunes down the aisle, shoppers bought a total of 40 French wines and only eight German wines. On days when the pounding beat of a German oompah band greeted shoppers, they bought only 12 French wines but 22 bottles of German wine.
Lawrence Solum tells us no.
Here is an early part of his insightful, multi-tiered post:
On the one hand, the RIAA simply cannot bring enough lawsuits to create a real deterrent effect. First, the number of suits is so small that the actual risk of becoming a defendant times the cost of settlement equals a miniscule amount. Second, the perception among users of P2P programs is that one can avoid any risk of suit by keeping the number of files shared on any one service below a threshold (usually thought to be 1000 files). On the other hand, there is no evidence that the RIAA is changing copynorms.
When the RIAA sends the message, “copying is theft,” they are fighting the norms. No one believes that copying is the moral equivalent of theft, because everyone thinks that private, noncommercial copying is just fine. Even the RIAA seems to have thought that when they agreed to the provisions of the Audio Home Recording Act that permit noncommercial analog copying. And the fact that copynorms diverge from norms about theft is rooted in the underlying economic reality–consumption of intellectual property is nonrivalrous, whereas consumption of tangible property is rivalrous.
So here is an alternative message that the RIAA could try:
Share with your friends, not with strangers!
In other words, the RIAA could try to get the public to see that P2P programs are the moral equivalent of giving away hundreds of videotapes or compilation tapes. Those activities are not socially acceptable. They may not be socially unacceptable either. Mass giveaways are rarely a social problem, because the cost is high enough to deter the behavior without either legal or social sanction. That is what the P2P technology changed. P2P enables the low cost mass gift.
It is worth reading Solum’s whole post, I might add he is one of the smartest bloggers out there.
Click here to hear an Internet radio show about the role of market capitalism in supporting the evolution of the musical. The site offers some remarks on capitalism and the arts more generally. Thanks to Carl Close for the pointer.
No, I am not one of those people who thinks you can fund an entire music industry through the sale of T-shirts. But file-sharing appears to have been a boon for some indepedent labels, which otherwise have a hard time getting their music to customers. Here is a money quote:
Today he [Mr. Egan] says – seemingly counterintuitively – his label simply would not exist without file-sharing services like Napster and its successors KaZaA and Morpheus.
Even as the major labels of the music industry pursue file traders for copyright infringement through lawsuits and the court of public opinion, Vagrant and many other independent label owners cheer them on. File sharing, these owners say, helps their small companies compete against conglomerates with deeper pockets for advertising and greater access to radio programmers.
“Our music, by and large, when kids listen to it, they share it with their friends,” Mr. Egan said. “Then they go buy the record; they take ownership of it.”
The New York Times offers the full account (registration required).