Derek Sivers, founder of CD Baby, suggested in a blog post last September that musicians who sold CDs at their gigs should follow the example of the band Griffin House and let the customers decide how much they should pay. He passed on this advice:
Say to the audience, “It's really important to us that you have our CD. We worked so hard on it and are so proud of it, that we want you to have it, no matter what. Pay what you want, but even if you have no money, please take one tonight.”
Mention this again before the end of the show, adding, “Please, nobody leave here tonight without getting a copy of our CD. We've shared this great show together so it would mean a lot to us if you'd take one.”
This apparently increased the band's sales from $300 to $1200 per night, for an average price of $10. Equally important, the free copies gave the band great exposure and their attendance doubled as subsequent shows.
Silvers challenged his readers to try it and document the results. Of the 362 responses he got, this one from Richard Hunter was the most inspiring:
I brought 50 CDs to the gig. I repeated over and over to this crowd, starting with my hellos, that I wanted 50 people to go home with CDs, whether they paid for them or not. Ultimately I sold or gave away 36 CDs at prices ranging from $0 to $20 for total revenue of $156, almost exactly $4.33 per unit. (About $15 of that revenue was actually food--farmer's market, remember? When I finished performing, three farmers came over to me, one by one, and gave me apples, pears, and coffee beans. I was very moved, the food is quite good, and it's as good as money to me.)
For this size crowd--about 100 people--normally I'd have sold about 15 CDs at $10 each. So the total take was similar, my cost was about $20 higher (about $1 per CD), I collected a lot of email addresses, and over 20 people went home with my music who otherwise wouldn't have. And I don't think anyone at that gig will forget me soon. The goodwill I generated today was substantial.
One interesting thing: many people seemed to feel obligated to pay, and not to take a CD unless they did, no matter how often I told them it was perfectly okay to take a CD home for free. Go figure.
For me this experiment was a success. I'll certainly try it again. Today a lot more people have my music in their hands than is usual for a gig like this, and I got paid for it. I'd MUCH rather end up printing a couple thousand more CDs to sell at an average price of $4 apiece than sit on boxes of CDs that a lot of people won't buy at $10 apiece.
[Thanks to Benoît Felten for bringing this to my attention in an insightful look at the music industry.]
In the latest chapter of the resurgence of vinyl records, Tom Petty's reunion band, Mudcrutch this week released a vinyl version of their recent album. The package also includes an "Audiophile CD" that is made from the same master as the vinyl record. To quote one review:
The included Audiophile CD is made from the same uncompressed stereo
masters as the vinyl pressing. It reproduces the music’s full dynamic
range, so the quiet parts are quieter and the loud parts are louder--
just as they were performed. To achieve full dynamic range it’s
necessary to master with less overall level, so the Audiophile CD may
not sound as “loud” as the standard CD or download. To compensate for
this, put it on a high quality system and turn it up!
Judging from the coverage this release has garnered in the mainstream press (NY Times, USA Today), the public is gradually becoming aware of the loudness wars which have raged behind the scenes in the music industry. While all recordings undergo some amount of dynamic compression in order to avoid distortion, the situation got out of hand when songs were competing for attention on the radio, especially in autmobiles where the quiet passages could be drowned out by road noise and the listner was apt to change stations if the music wasn't immediately engaging. Just as chefs have learned that tossing in a handful of salt can make a drab dish more appealing, music engineers learned that turning up the volume can make people pay attention. And in both cases consumers eventually tire of the excess even if they can't quite pinpoint the cause. Now that the influence of radio has declined, the stage is set for a return to quality, even if that trend is currently confined to a niche audience of serious listeners.
The loudness issue illustrated that the perceived superiority of vinyl may not be inherent to the format itself but lies more in how it is used. Indeed, the signal that gets pressed into a vinyl record was most likely in digital form during part or all of its recording, mixing, and mastering. Many labels even cut the vinyl directly from the CD.
So why does vinyl sound better? There can be several reasons. The most important is that an artist who makes a vinyl version of an album is making a record for a more serious listener, and may make different decisions about dynamic compression as described above. There is also the matter of digital-to-analog conversion. Making good, linear D/A converters is expensive, and a vinyl listener can benefit from D/A conversion that is done with studio-grade equipment rather than what can be provided in the typical consumer gear. Also, some engineers theorize that although the RIAA curve that is applied in recording is theoretically balanced out by the inverse curve in playback, that in reality the result is some extra boost in the low frequencies which produces a more pleasing sound. Finally, one must not discount the listening environment itself. Just as it is more pleasant to consume a fine meal in a nice restaurant, the experience of opening a large album with artwork large enough to see creates a setting where the music may really sound better.
In any case, it is encouraging to see that artists and their record companies are taking note of the increased interest in quality - something that will benefit the fans and artists alike.
New York Times pop music critic John Pareles wrote a lengthy piece on Trent Reznor in last Sunday's paper, Frustration and Fury: Take It. It’s Free, in which he describes how Reznor, recording as Nine Inch Nails, is at the leading edge of several trends in the music business, such as eschewing a deal with a major record label in favor of distributing the music himself from his own web site. In fact, the download of his most recent album, The Slip, precedes its release on CD and is available for free, a tactic that may very well be repaid in ticket sales for the upcoming tour.
The download is available in a variety of formats:
WNYC's John Schaefer interviewed T Bone Burnett on Soundcheck this Monday. In addition to discussing T Bone's distinguished musical career and his recent collaboration with Robert Plant and Alison Krauss (who gave a fabulous concert in Boston last week), T Bone described the ΧΟΔΕ (pronounced "Code") project which he started and in which I've been privileged to take part.
ΧΟΔΕ is an effort to create a musical experience for the listener that's as close as possible to what the artist intended but often wasn't heard once the music left the studio and went through the process of digitization, down-sampling, and compression to finally arrive on CD or as a download. In its first incarnation on the forthcoming John Mellencamp album Life, Death, Love and Freedom, ΧΟΔΕ delivers Mellencamp's music on a DVD with stereo 24 bit/96 kHz uncompressed (Linear PCM) audio tracks. That's the same format used in the studio to mix and master the music, as opposed to the 16 bit/44.1 kHz files on a CD, which is included in the box, at no extra charge, for backwards compatibility. And rather than challenge the purchaser to figure out how to rip those files, the DVD also includes a file system with the 24/96 tracks as WAV files that can be played on a computer, and compressed (AAC and MP3 at 256 kbits/sec) files that can be downloaded to portable music players. Those compressed files are professionally created from the original hi-resolution masters instead of the usual practice of making them after the fact from the CDs. While all of the above files come in the CD case, those same files can be offered by download sites.
You can hear the complete interview here or read Steve Guttenberg's blog post on CNET.
Note: ΧΟΔΕ releases are not DVD-Audio, a format that required the purchase of new equipment, were heavily laden with DRM and never saw widespread adoption. The Mellencamp album is a conventional DVD that will play in any player that supports 24/96 audio, which is almost all of them. The album is formatted as a video title. The video is just a still frame, but that's enough to persuade the player to play the audio. In summary, ΧΟΔΕ is not a new format but makes maximum use of existing formats which have become available since the CD was invented 25 years ago but have not been fully exploited for music until now.
The Boston Globe recently ran a story about vinyl records are making a comeback among a generation that was raised on CDs and digital downloads.
Part of the attraction is the opportunity to collect something tangible and large enough to display real artwork and part of it is the sound, which is often described as warmer and fuller.
The irony is that sometimes the vinyl is made from the original analog tapes or high resolution digital masters, but according to my sources, these records are often made from the same low-res digital source as the CD, sort of like putting the cheap wine (or perfume) in fancy bottles. It will be interesting to see how this evolves as customers become more sophisticated.
If you read the news that ITunes has surpassed Wal-Mart as the top music retailer in the U.S., you might think that the bits-on-plastic mode of music distribution was on its way out, but even with the price of petroleum going up and bandwidth coming down, those little plastic discs still offer some advantages. For one thing, there is the sentimental attachment to and security of owning a physical artifact instead of just rearranging some magnetic domains in return for your $10 or so. Microsoft reinforced this notion when it announced it would discontinue supporting retrieval of license keys for music previously purchased from MSN Music. Also, it is so much more satisfying to give or receive a gift when an actual object changes hands instead of an email being sent and received. And if you are a musician with a new album you want someone to listen to, they are more likely to do so if they have a jewel case with some nice artwork on their desk instead of some bits on a hard drive.
In addition, there are a lot more bits on their way. Music has long been recorded and mixed at 96/24 LPCM (each second taking 96 k samples of 24 bits each, encoded with a lossless Linear Pulse Code Modulation) or in analog format, using 30 inch per second tape. However, producing a CD meant downsampling to 44.1 kHz and 16 bits, resulting in the loss of information. Digital downloads in mp3 or AAC went through compression which discarded even more information. While a new generation of consumers have grown up who have only heard digital music, musicians such as Neil Young have been quite vocal about the decline in quality. Indeed when T-Bone Burnett used a Jimmy Reed song for Divine Secrets of the Ya-Ya Sisterhood he dug up the original analog tapes rather than use the commercially available CD.
While the CD has been frozen in time since the 1980s, its cousin the DVD has evolved to contain a number of more advanced, and larger formats. Most DVD players can play audio at 96/24. This was originally intended for use in movie soundtracks, but some albums such as Neil Young's Greatest Hits and John Mellencamp's forthcoming Life, Death, Love and Freedom use this feature to deliver a static video with a high resolution stereo soundtrack, effectively turning the home DVD player into a high-res CD player. In addition, the Mellencamp album will come with computer-ready WAV, mp3, and AAC files on the disc. All of this takes a lot of space, but that's not a problem with DVDs. Then there is Neil Young's new archive project which will fill ten Blu-ray discs with music, videos, and scanned documents. That would take close to ten hours to download unless you were my neighbor with four Internet connections. Of course he is the wave of the future and soon these downloads will happen in no time. My prediction is that we will still have bits on plastic, but the plastic will just contain a digital ID that will allow the user to download the content, perhaps caching it on a local hard drive. The consumer will insert the disc in the slot and press Play, unaware of precisely where the bits are coming from or where they are stored.
Los Angeles is home to one of the last remaining real record stores, Amoeba Music. In the age of iTunes, Amazon, and Wal-Mart this this cavernous two-story establishment would be an anomaly anywhere but Los Angeles, where everyone seems to be wither working in or somehow connected with people that make music, movies, and television. (But then the store has siblings in San Francisco and Berkeley).
Amoeba has an extensive offering of CDs and DVDs of every possible genre, used music, and the largest set of vinyl records I've seen anywhere.
John Simson, Executive Director of SoundExchange, gave a talk yesterday at the Harvard Law School. SoundExchange is a non-profit organization set up to collect performance royalties from digital media such as internet and satellite radio and distribute them to artists and record labels. Simson and SoundExchange unabashedly represent the interests of the copyright owners in maximizing their revenue, but Simson 's talk explained the motivations of all of the stakeholders in this game and the complexities of arriving at a fair level of compensation in what is essentially a political process.
Simson traced the history of music copyrights from 1848 when French composer Ernest Bourget heard his music being played in a nightclub and refused to pay for his dinner. The court ruled that he did need to pay, but so also did the café owner, leading to the founding of SACEM and 150 years of legislation and litigation as the recording industry and later radio, television, and the internet created new ways for people to obtain and listen to music.
There are a number of factors that make music copyright complex, from the evolving concept of intellectual property which attempts to balance compensation of creators with the benefit to society, to the variety of stakeholders: composers, musicians, music publishers, radio, movie, and television producers, and listeners of all types. Add to that the way digital technology enables making cheap, perfect copies and blurs the distinction between performance and ownership and you have a world in which there is little precedent for how to apportion the benefits and the spoils go to whichever group can muster the best lobbysists as well as the best arguments.
Simson, who was a musician and an attorney before becoming a registered lobbyist himself described his education into the ways of Washington, where legislators are expected to vote on 2500 issues a year and may only be expert on five of them. As said was explained to him, a congressman looks at his mail. If it is all on one side, the decision is easy, but if there are even a few letters on the other side, he will go talk to a colleague who is an expert, such as Rep. Howard Berman (D-Cal) on entertainment law.
One thorny problem is the way business models are evolving on the Internet. This manifested itself in the debate over the royalties that Internet radio would pay. The largest Internet radio sites have plenty of subscription and/or advertising revenues and can pay royalties similar to those paid by terrestrial radio, but the smaller ones may have no income at all. Given the way the Internet economy works, some companies may eventually monetize by building a large user base and then being acquired, as happened when Last.fm was purchased by CBS for $280 million. It seemed that Simson and the interests he represents are pained by this scenario and if they can not partake in such gains would prefer to see all Internet radio pay on a per-use basis even if that prevents some of them from getting started. I asked him after his talk if SoundExchange would be open to more creative financial arrangements with emerging businesses. He said they would gladly participate as a clearing house for anything the Internet companies and the artists could agree upon, but the anti-trust exemption SoundExchange operates under limits its abilities to initiate schemes outside what the Congress has defined.
One interesting bit of data was on the long tail nature of Internet radio. SoundExchange brings in $140 million per year in revenue which is split 50/50 between the performers and the owner of the copyright of the recording. There are 31,000 performers SoundExchange has tracked down who represent 75% of the performers share of the revenue. However, there are another 40,000 performers who have yet to be tracked down. Most of them are owed $50 or less, but occasionally SoundExchange gets in touch with one and sends them a check for $8,000 or more. Simson said they are always glad to get the money, but these days people are very suspicious when they get an unsolicited email or a phone call from a total stranger offering them a check. [The preceding paragraph was edited to incorporate comments I received.]
Another aspect of the long tail is the need to get accurate data on which songs are being played. When SoundExchange compared the results of using the sampling done by ASCAP and BMI to getting actual census data, they found that the sampling method missed 41% of the artists and 26% of the titles. This phenomenon has caused no small amount of grumbling from "middle class" artists who are waiting for their first royalty check and SoundExchange would like to avoid this problem, but the Internet radio businesses have claimed that gathering this information is too cumbersome and expensive.
After the talk, I asked Simson about Pandora. They have been paying SoundExchange as if they were an Internet radio station, but under the Digital Performance Right in Sound Recordings Act of 1995 (DPRA) the license which SoundExchange administers does not apply to an "interactive service" which is defined as "one that enables a member of the public to receive, on request, a transmission of a particular sound recording chosen by or on behalf of the recipient." One could argue that since Pandora creates a separate stream for each user that it is "interactive" but no one wants to rock the boat right now since (a) they are paying real money, (b) there is no other convenient way for Pandora to pay, and (c) there are other pending cases seeking to define what is interactive.
In summary, Simson's talk highlighted the complexity of innovation in music licensing. The only thing everyone can agree on is that the music industry is in trouble and needs new business models. This talk illustrated how challenging that will be.
In part 1 I shared a few observations about how the music industry had gotten to its current state. In this part, I'll start looking at some proposed solutions.
One concept that keeps surfacing is replacing some or all of the revenues currently raised by music sales with some sort of tax. The revenues so raised would be distributed to artists through a clearinghouse mechanism similar to the way the fees assessed on radio stations are apportioned by ASCAP, BMI and SESAC. William Fisher has explored this idea in detail in Promises to Keep from which the diagram at right is excerpted. Fisher expends considerable effort on determining the appropriate compensation level, which is essentially a political decision. After considering using the "full social value" of the creations he concludes that number would be too high, given that most other professions, e.g. teaching, don't enjoy that luxury. He also rejects giving creators what they "deserve" since economists have struggled with that concept for centuries without success. What he settles on is preserving the status quo by substituting new taxes for old sales revenues. Since the book was written in 2004 there is now the additional problem of deciding which status quo to preserve. He proposes 2000, which was when music revenues began to fall, although that argument dodges the issue of how much of the fall was due to unauthorized copying and how much was due to other factors.
In the long run, the amount of tax money to funnel to the entertainment industry would be a political one, as would the precise method of collecting and distributing it. If you thought the $125 million appropriation for the National Endowment for the Arts engendered controversy, wait until the battles break out over the $2.5 billion FIsher estimates would be needed under his proposal. And that was before the Iraq war and the current economic problems.
While Fisher makes a good argument for the efficiency of funding his scheme out of general revenues, he also explores levying a tax on recording devices and Internet access. Such schemes would likely be more politically palatable although they would be more expensive to administer and more likely to cause distortions in the marketplace. There are also issues with the accuracy and privacy of any system that was used to measure what material was consumed, topics which Fisher covers in considerable detail.
None of these problems have prevented Warner Music from proposing a $5.00/month music tax in the US and others from proposing similar schemes in Europe.
Somehow with the governments worldwide dealing with the rescue of Bear Stearns and others to follow, rescuing the music industry is likely to take a back burner for a while. Still, anyone considering any redistribution scheme whether mandated or voluntary should find Fisher's analysis highly valuable.
In the latest chapter of the resurgence of vinyl records, Tom Petty's reunion band, 
