Plugged/Unplugged is an online column by Billboard digital and mobile correspondent Antony Bruno. Follow him on Twitter here twitter/billboarddigitl.
As my editor/boss was boarding a plane to return home from MIDEM, he shot me an e-mail linking to yet another Techdirt article outlining the author's formula for the future of the music business, asking me to post and discuss. For those not already aware, the formula is as follows: CwF+RtB=$$$. Translated, it means "connect with fans and give them a reason to buy." It's a mantra Techdirt founder Mike Masnick has been repeating for over a year now, and is perhaps most succinctly summarized in this recent post.
OK, part 1 of boss's directive is complete.
Now, time to discuss.
At its most basic and general level, the formula makes complete sense and in fact has been how the music business has made money for years. But while some of Masnick's points for applying this model in the digital age are valid, some have serious flaws and call into question his overarching motivations.
Masnick's basic premise is that record labels and publishers charge digital services too much for licensing content, such that they generate few users and eventually go out of business. He says they are too concerned with getting a fee for every use of their music (stream or download). And in doing so they are stifling music discovery and ignoring other ways to monetize music.
Meanwhile, as these efforts have contributed little to the bottom line, Masnick points to the example of nine artists who have eschewed this route and - without any label assistance - give away their music to draw attention to other unique products. They include the justifiable poster boy of this model - Trent Reznor - to virtual unknowns that are making a living on their own. They're about better connecting with the fans and then offering them a real, scarce, unique reason to buy -- such that in the end, everyone is happy. Fans get what they want at a price they want, and the musicians and labels make money as well. It's about recognizing that the music itself can enhance the value of everything else, whether it's shows, access or merchandise, and that letting fans share music can help increase the market and find more fans willing to buy compelling offerings. It's about recognizing that even when the music is shared freely, there are business models that work wonders.
However while some artists have replaced the income gained through selling music with income gained from selling other products (such as music in different formats, concert tickets, merch and interaction), doing so is not the future of the music business. Yes, artists and labels need to find new, unique products that both better monetize the superfan and draw into the fold more casual ones as well. It's a good strategy. But it's no reason to stop pursuing licensing deals or ignore music copyrights, as Masnick suggests.
Here's where Masnick loses me:
Adding in new licensing schemes only serves to distort this kind of market. Fans and artists are connecting directly and doing so in a way that works and makes money. Putting in place middlemen only takes a cut away from the musicians and serves to make the markets less efficient. They need to deal with overhead and bureaucracy. They need to deal with collections and allocation. They make it less likely for fans to support bands directly, because the money is going elsewhere. Even when licensing fees are officially paid further up the line, those costs are passed on to the end users, and the money might not actually go to supporting the music they really like.
In other words... because there's money to be made in selling things other than the music itself, there's no point in worrying about selling music. Just make the music freely sharable to all, and by doing so the strength of the music will create a fanbase that will then buy other things.
The first problem with this argument is that not all artists can make money selling products other than music. The way some of the artists Masnick cites look for new revenue is a bit unsettling. Really, who wants to spend the day at Disneyworld with the kind of fan who pays $10,000 for the opportunity? And is selling off clothes and equipment really a model for aspiring artists?
Some artists are better at self-marketing and promotion than others. Yet plenty of artists in both camps make music that's worth hearing. It's all well and good for artists who can't get or don't want a label deal to use this model to make a living. But some artists simply want to make music and sell, and they shouldn't be branded as archaic or naive for feeling that way.
Second, the nine artists Masnick cites to support his theory are the exception, not the rule. Jaron Lanier in his new book "You Are Not a Gadget" addresses this succinctly here:
The tiny number of success stories is worrisome. The history of the web is filled with novelty-driven success stories that can never be repeated. One you woman started a website simply asking for donations to help her pay down her credit cards, and it worked! But none of the many people who tried to replicate her trick met with success.
Masnick is cherrypicking examples of artists who have followed his formula to success through research and asking his readers of his blog to send in examples. What he's not done is print a similar list of artists who have tried and failed under the same model.
Thirdly, let's take a look at the part where he says music licensing schemes "make it less likely for fans to support bands directly, because the money is going elsewhere." It's a confusing statement that to me suggests the opinion that fans will only pay for an artist's products when all of the proceeds go to the artist rather than shared with a label. I find that very difficult to believe, and challenge Masnick to either present proof that this is the case beyond a small minority of copyleft and anti-label fanatics, or clarify the statement further.
While connecting with fans and giving them unique products to buy is sound advice, there's no reason to throw the baby out with the bathwater. Masnick and the Techdirt blog is a staunch opponent of almost any plan to monetize not only music, but almost any other type of copyrighted content. That includes any blanket music licensing plan for ISPs (which he calls a "music tax ") and journalism paywalls, among other things.
Which brings me to my last point. My problem is not just with Masnick's formula (at least not all of it) but with the way Masnick goes about promoting it. It's agenda journalism. Any example that rises up to support his theory is treated as gospel; anything that pokes holes in it is dismissed as heresy (or outright ignored). Those challenging his conclusions wind up getting flamed in the comments section of the blog, as I'm sure many will do to this post here.
Masnick's formula is designed as a rationale for eliminating copyright protections and licensing laws. It's a tactic in his broader goal of copyright "reform." Now I believe there is a case for copyright reform as well, but not to the degree Masnick and his followers do (I'll save that for another post).
It's also a nice self-promotional tool. Too many journalists and bloggers create and promote business theories as way of making money off of speaking fees or the eventual book (Masnick will speak at your company event for a mere $20,000). Now I can't fault a reporter for trying to make a buck in these trying media times, but some become so personally invested in the viability of their theories that they are no longer able to take an objective viewpoint on their reporting. Masnick is doing the same here, making what he writes more about proving himself and his theory right than about exploring the nuances of the marketplace. It's just an easier sell.
Many will read this and say I'm just a record label apologist because I work for Billboard magazine, and they'd be wrong. Any simple search on my articles will show how I opposed the RIAA's litigation campaign against music fans, and that I encouraged the elimination of DRM far before EMI became the first to do so. I'm able to do this because I don't have anything to promote. I don't have a blog designed to prop up a theory and then cherrypick the news that supports it while ignoring others. I just call it like I see it.
The music industry - and by that I include every element of the industry including labels, publishers, managers, artists, lawyers, etc. - is facing serious challenges. These challenges require serious thought, with rational consideration of all sides of an issue free of any ideology, not some catchy formula designed to promote an individual person or point of view.