Notes on the digital-music business: Things could be worse
SAN FRANCISCO -- The last panel discussion at Monday's SF MusicTech conference here might lead you to think there's something rotten in the state of digital music.
Tim Quirk, a vice president at the Rhapsody music service, lit into the major record labels for their self-defeating greed. "They charge more than we can possibly make," he griped, summarizing their approach as "before you make $10 million, I'm going to charge you $15 million."
Quirk, whom some of you may remember from the band Too Much Joy, defined his company's core strategy as "wait" -- that is, hang on and wait for the labels to grow a little more reasonable every year.
A fellow panelist, MP3.com founder Michael Robertson, concurred, saying, "It's an impossible landscape if you're an entrepreneur."
And yet to judge from the rest of the conference -- a one-day event I'm attending for the second year in a row, thanks in part to the convenient scheduling of a Google conference here on Wednesday and Thursday -- things aren't all that bleak for the music business.
At the day's first panel, a discussion on Webcasting, Pandora founder and chief strategy officer Tim Westergren painted an optimistic picture for the Web-radio service. Although it has to pay higher royalties to the musicians whose work it broadcasts than Sirius XM's satellite-radio service -- infinitely higher than FM and AM stations that don't have to cough up any "performance royalties" -- the rates fixed in an overdue settlement last year are "survivable," Westergren said.
Meanwhile, Pandora is working on other ways to connect its listeners to new music. Westergren suggested that a future version of Pandora's software could notify you when the band you're listening to is playing in your neighborhood and ask if you'd like to buy a ticket. (I think I've seen other sites already offer that sort of function.) He compared that favorably to his experience in a band years ago: "Our idea of cost-effective marketing was to drive 2,000 miles to play before 12 people."
In other panel discussions, musicians, entrepreneurs and developers compared notes on such topics as new sorts of Web interactivity (Ben Folds discussed how he played improvised songs to users of the thoroughly weird ChatRoulette site during a concert) and what kinds of musical instruments could be crafted using computers and electronics (as seen in a mind-bending demonstration of a synthesizer controlled by a touch-sensitive screen that responded not just to taps and gestures but also to varying degrees of pressure).
My own contribution to the debate was leading a panel discussion about music on mobile devices. Warren Wan, vice president for music at Dada Entertainment, said his company shipped its software for Google's Android operating system first because he didn't want its debut to get hung up in Apple's App Store approval process and had since appreciated the ability to push out updates without a one- or two-week wait to have Apple okay each bug-fix. But SoundHound vice president Kathleen McMahon said she'd found that Apple's approval requirements made users more comfortable with the idea of paying for applications. (SoundHound's app attempts to identify a song by a sample or even a hummed or sung verse).
I was pleasantly surprised not to hear anybody fret about the market power of Apple's iTunes music store, which suggests that Amazon's MP3 store is doing well enough to keep the market honest. Nor did I hear as much venting about the banality of commercial FM as in prior music-business events. It's possible I just went to the wrong panel; it's a risk of any conference with three discussions going on in separate rooms at the same time.
But even Quirk, an especially cranky and profane critic of the music business, predicted a brighter future: "There is a forthcoming 50 years of recorded music that won't be tied down under these constraints."
Now compare things with the movie industry, in which "progress" too often counts as finding some new way to Balkanize the market a little further -- in the process, disabling features in people's homes.
Then again, the Motion Picture Association of America says things are going great, so maybe they just don't feel the same competitive pressure as the recording industry. How long will that last?
(5/19, 7:58 a.m. PST: For an overview of the musical-instruments demo, see Mashable's YouTube clip. And for another read on the conference, see Mike Masnick's wrap-up on Techdirt: "The Increasing Irrelevance Of The Major Record Labels.")
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