Another thing we would have loved to hit while in Austin last week was David Byrne’s “Record Companies — Who Needs Them?” talk — which suggests new marketing models for an industry that, he says, will see digital sales out-pace CD sales by 2012 — at the Austin Convention Center. Like last time, he used powerpoint (you know he loves it) and even threw some Malcolm Gladwell in there for effect (via NYT).
[2012] 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.
The emphasis should shift, he says, to marketing, promotion, and facilitating artists’ tours; let the music go digital, let the live show be the new cash cow. But for now, the old way of thinking prohibits his vision for digital embrace:
But first, he said, labels will have to remove their digital rights management (DRM) copyright-control technology. He said he buys most of his music online via eMusic, or obtains it illegally, due to the file constraints on files sold on iTunes. Byrne predicated that once DRM is removed, iTunes will no longer “have a monopoly,” and labels will be better prepared to deal with Web sales.
And when someone from the audience expressed dismay at a future of downloads because of decreased sound quality, David replied:
It’s kind of sad, but I think of it as a boost for live music. As long as it doesn’t get to be too horrible — the sound quality — they’ll go for convenience and accessibility. It doesn’t have to sound good to move people.’
The live music junkie played a secret set in Austin, too. We knew it would happen, but no one had info. Turns out he played with guitarist Mauro Refosco’s band Forró In The Dark at the San Jose patio, singing on their tunes and some from his Uh-Oh. Bummed we missed it! Anybody go?
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I wonder how many musicians believe what David Byrne said to be true? I believe that it will be fact faster than he predicts.
yesssssssssss…very interesting…it’s good, music being a live social experience…
god i hope hes wrong. ill take holding a cd in my hand over digital media any day.
asdf-
CDs are a digital medium. You simple mean tangible media -of which vinyl is still king (at least in terms of it’s physical presence and sound). Try it, you’ll like it.
As bandwith increases and large file sizes become less of a factor, we’ll start to see CD quality (or better) downloadable music out there. And record companies have already started to sniff out tour revenues: Korn struck a deal like that last year. Scary. I think Byrne’s dead on.
I think he’s right except the declaration of music as a loss leader for the live show. Although distribution costs will approach zero, there is still TREMENDOUS value in the actual recorded music itself. More than likely we will see a move to subscription based services where you can download anything you want for a flat monthly fee. They will then use tracking software like Audioscrobbler for Last.FM to track everything we listen too (or at least a statistically close approximation like Nielsen gets for TV). Your $5-$10/month will then be put in a pool of money to be distributed to the artists based on the number of plays.
On top of the fact that there is still value in recorded music, you have to think of the fact that non-touring bands like the Beatles, Pink Floyd, etc. stand to lose TONS of money if the music as a loss leader model goes through. Not to mention every other band (small or large) who does not tour. Doesn’t seem very fair to me.
WWJD?
What would Jerry do?
Byrne is a smart man. I hope CDs aren’t abolished completely, but I could certainly deal with a switch to digital downloading. It’s certainly cheaper, in most cases. Once DRM is removed, it will open up even more, I’m certain.
Once portable players and download speeds increase in capacity to the point where you can use lossless formats instead of MP3s, the sound quality issue will be solved… the extreme ease of piracy/theft issue won’t be, though…
I figure much like the current psych/freak/avant movement where tangible media is in limited runs with exceptional art and packaging, the majors will shift to this ethos once they concede that digital is the new mainstream format. I personally like having vinyl and compact discs (and even some cassettes) from modern artists but I also enjoy having digital files available considering the wealth of releases and artists making music these days.
Downloadable music will be the only medium soon enough. I must, however, find difference with Mr. Byrne as far as the loss leader point goes. Every day when I ride the subway to work hundreds of average Joes and Janes have their iPods cranked up listening to recorded music. I’m listening to recorded, downloaded music right now, as a matter of fact. I’ll listen to it when I get sauced at the bar or in my basement tonight. As the continued popularity of portable mp3 players shows, recorded music serves an important role in our lives. Just because most recording artists don’t make buckets of cash off of the medium doesn’t make it irrelevant. Hell, most bands I know have never made any real money from selling their records. But someone gets a kick out of it. If recording and distributing music has or will become so cheap that it’s free, than it should make it more widespread than it is even today.
mr blood, he isn’t saying that recorded music will go away. he’s saying it will no longer be something an artist makes money off of. they’ll have to give it away or sell it very cheaply, hook an audience with it, and then make money off tours and merch and such.
WHY. DO. PEOPLE. PAY. FOR. M. P. 3s???????????
All this de-personalization of music through mp3s and digital downloads and whatnot has created a huge backlash in vinyl sales. From my perspective (and I work for a vinyl manufacturer), mp3s and digital distribution only helps labels that make gargantuan triple gatefold vinyls with hologram covers and custom vinyl sell them for $30 a piece. The market isn’t disappearing, it’s changing, and thank god, fucking CDs are awful, the artwork is too small, and they’re worthless to our popular culture-d minds since AOL sent them out in the trillions to anyone with an address. Viva la vinyl!!!
Looks like Byrne makes the frequent mistake of assuming manufacturing and distribution costs make up the bulk of an album’s cost structure (aka the “zero marginal cost” misnomer). Take away manufacturing and distribution and a CD’s cost drops only a few bucks. (Physical distribution offers more marketing opportunities, too.) Though most people don’t believe it, digital distribution isn’t exactly a cost-free operation. He’s right to say labels will become service-oriented — somebody has to market the stuff, after all. The digital world will offer an incredible amount of content. Those who market most effectively will have the most sales.
His statement implies that all artists can or will tour, and it ignores the considerable number of people who *will* pay for music. Not all music need be a loss leader. (And this from a guy who doesn’t exactly spend 11 out of 12 months playing live gigs.) When you’re David Byrne and you’ve got numerous revenue streams, recorded music may not be your focal point. To most others, recorded music is at the heart of their careers. Any Tom, Dick or Harry can give away free music and get some takers. Creating something with enough value so that people will want to buy it … now *that’s* what artists should be aiming for. And does the typical American go to enough live shows? No.
His loss-leader plan can succeed only for artists who cater to the blog-reading, indie-rock loving, disposable-income-spending, stay-up-late-on-Sunday-or-Monday youngsters who have no kids and live in the few major metro areas that get a lot of touring acts. 98% of Americans attend two or fewer concerts per year. Looks like a limited market to me.
Two Cents: CDs will disappear long before vinyl goes into that good night.
Byrne should talk with Steve Jobs considering they’re both anti-DRM. And I would really hate to see tour revenue be the sort of “cash cow”, as he put it, that everyone starts to take a dip into (labels, etc.)
Korn started doing that last year (likely because they’re dreadlocked gold-toilet-owners) and I think (especially for the type of artists WE appreciate – read: NOT Korn) it would be a great disservice and have and adverse affect on smaller touring bands, that is of course they all don’t decide to go the self-released album route.
Yes George, I misspoke. Or wrote, as it were. I suppose what I’m trying to say is not one band that I know personally (self included, of course) makes any significant money from cd/mp3/record sales anyway, and hasn’t for quite some time. Touring (and selling t-shirts and a few cds on the way) is the only way for most bands to make any sort of money. And a good deal of that is eaten up with the high cost of fuel and food (fuel again, I suppose). Touring is simply not terribly economical for a great deal of bands and all they have is the recorded medium. So he may be saying that those bands should just get out of the water to make room for those that can manage touring more readily. He may be right.
Record companies certainly must shift their paradigm, I just don’t think the loss-leader plan is the way it will go. After all, everyone who bought Madonna’s last album did not go to see her live. Only the ones who sownloaded it for free could afford to go.
Missed the set, caught the talk. I was kindof impressed how “secret” things really stayed secret this year.
I’m having trouble with him, because this whole thing smacks of Byrne trying too hard to be a svengali/seer. He’s had that vibe for years. I don’t like being told what’s cool, and I don’t want people like him to replace one narrow vision or definition with another (his).
I was at Byrne’s “lecture” in Austin…transcripts of the speech don’t really do it justice, since a lot of it was delivered with a chuckle or a funny powerpoint page. I found the whole thing more entertaining than informative…I think he was shooting for both.
I went to the wrong Forró show as it turned out, showing up on Thursday night. Then a publicist told me Byrne would be playing with them the next day, but I couldn’t go. Yes, I had the advance scoop, so I at least should have hooked up a few pals here and there. Sorry Scott & Amrit!
one thing no one has mentioned is licensing. corporations spend more money on music than consumers do. the real revenue for bands today, and in the future, is licensing their songs to programming and advertising.
richard, i hope you are so so wrong. that is a sickening future you propose, where artists must bend over for the man before making a buck.