November 13, 2003
Adapting to the Beat
My notes (not quotations) from:
“Adapting to the Beat: The Music Industry in Flux,”11/13, HLS
Moderator:
Walter McDonough, Future of Music Coalition
Presenters:
Ken Freundlich, Entertainment Attorney
Sean Hoess, Velour Music Group
Mark kates, Fenway Recordings
Brayn Calhoun, Label Management Solutions
Mike McGuire, GartnerG2
Derrick Ashong, ASAFO Productions
Walter: Mike, can you give general legal/business outlook?
Mike:
New services pointing things in right direction
More consolidation is reaction, but not necessarily to create best working industry
Consumer control is unparalled
Data shows people want to remix, not jsut rip and burn, and just for creative expression, not for commercial purpose
Walter: MGM v. Grokster case – important trasnition
Ken:
P2P makers are not liable secondarily – on appeal
Reflex by record companies to start suing individuals – it’s irrational behavior
82% (of students?) are undettered, data says
KaZaA environment is a test market forced upon us
–> tension
Walter: Let’s say I’ve got the new trip hop act of MA – what can I do?
Bryan:
Barriers to entry – financial
Distribution barrier is vastly decreasing
But terms of payment for artists are currently not good – won’t see any money for a year
If you go through digital, you get rid of manufactuering, shipping, you don’t have to worry about retialer returns – you get paid IMMEDIATELY
Walter: Derrick, are you optimistic?
Derrick
I am – I’m an artist, a musician, a producer
I decided early on that I wanted to be an indpednent – lot harder than I expecfted
Two things:
1. Way we imagine our interaction with music is artifical – in the natural order of things, you go to perofrmance, you experience the music, you go home – but that particular performance, that iteration, is gone forever. With advances an dtechnology, that changes.
Thus, record business is wholly predicated on technology. So, now we have a further advance and technology.
Industry faced with three choices: technolgoy advances are bad so we must regress, let’s go back to the ol way of concert business – no more record business; or, you die; or, you adapt to what is now the natural interaction with music.
When I think about that third option, I am optimistic. Everyone in a workshop with me downloads music and they’re excited. Also, as person outside of maintstream, I see certain ways to monetize that EMBRACE technology.
Mike:
Look at Grateful Dead – they felt that, once it left the strings, it wasn’t theirs. But, at the same time, it was their decision to make.
Walter: Sean, compare and contrast apsects of industry
Sean
Our artists are touring issues – lots of management income – butthey don’t really sell CDs. But goal was always to do both, really. But then you realize, hey, I don’t make money selling records – so you just end up trying to break even on the records, trying to barely make profit.
Walter: Mark, you almost began when industry was a cottage industry. Now you have your own label, what’re the big differences in last three years?
Mark:
Here’s an interesting thing: part of Itunes is sharing (Rendezvous)
When I went back to LA recently, it wasn’t as bleak as I expected.
Most interesting aspect is that I’m finding so much great stuff.
Walter: Technological advances that force people to buy new stuff AGAIN has kept business going. Now that’s taken away. So, do you really want to be in the record business?
Mark:
I think it is, in part because I work on a lower level now.
Walter: what about you Derrick? What’s your model? Mark’s still doing a traditional model.
Derrick:
I don’t want to be a label; I want to be a manager.
FAM license – don’t give rights away. I license it to whoever for commerical or non-commerical uses.
Look, industry is already dead – they’re using 6-7% to fund everything else. And someone’s gonna break your DRM. And oall that old music is already out there and it’ll stay out there.
So I say, let me remove the veil of illegality. I want performance royalites, endoresments – I want to know who you’re selling it to, so I can build a relationship with you and them.
Walter: I want to go to Brazil to research there. Theyv’e got all different price levels, and they market to people by their income level. I’ll tell you waht will kill the record industry – Walmart selling beatles back catalog for 3 bucks a CD.
Anyway, Ken, you’ve got a new client, he wants to go work with Derrick, what do you say?
Ken:
I too see light at the end of tunnel, but I do have questions.
So, it’s all well and good that you have all this stuff, but who’s apying for the marketing?
And, you generally have all these people separate – manager, label, etc. – because of potential conflicts. Now, we’re waiving those separations – consolidating functinos.
Mark:
If everyone has their eyes open, is it really a conflict?
Ken:
Well we’re headed that way. And why do we need record labels?
Mark:
And how do you get through the next 3-5 years?
Walter: I want to choke people who do this model – the Robbie wWilliams model, where the record company doesn’t just deal with copyrights, but trademarks and all sorts of other atypical platforms.
Ken, what happens when, you as a lawyer, are going through this?
Ken:
You need to be ambidexterous. I’m a trained litigator. I’m not an expert in tons of things, but I know how to to get stuff done – versatile.
We’re likely more than ever to be over our heads – but it’s also the greatest oppportunity that there’s ever been.
Sean:
Again, is there a record label any nmore? I like to look at the artist holistically – he makes copies, sells composition, players concerts, sells merch – will the record label get it’s tenteacles in all this? Why is it?
Derrick:
I learned the hard way that I’m a product, not an artist.
What you sell is noteoriety. Costs of promotion are substantively unchanged and are likely increasing. So, I turn my attention to incentivizing others to help with my promotion.
Exrapolate from dance hall and hip hop industry. Already, those artists build from notoreity from peple being heard in clubs. It’s not just for those models.
Mark:
Word of mouth is still strongest means of exposure.
Re: Robbie Wiliams – Look, that still grew out of current circumstances. they couldn’t sell him in US under typical model.
Bryan:
Happening more at small company levels, too.
Walter: Mike, how are we gonna have fun? I come out of all this depressed.
Mike:
Web and wireless tools. Really interesting relationship
Question: Ani DiFranco?
Mark:
It’s tough to do that.
Also, look at String Cheese Incident – they have this whole huge experience for fans.
Question: Diversity?
Walter: FMC has fought ClearChannel more than anyone.
Question: BigChampagne and RIAA conflict?
Ken: A&R guys too – they’re downloading to find the new band.
Derrick: Had the RIAA responded to P2P appropriately in the first place.
Ken How do you think it should look?
Derrick: share whatever you want.
ALL: But where’s the money?
Derrick: other streams
Walter: What about CLs?
Derrick: I don’t buy it – RIAA won’t buy into it.
Walter: But that’s not the point. It could be legsiative solution.
Ken: And threat of that will help lead the way.
Walter: You’d be surprised who supports it in record labels.
Ken: FvLohmann and Matt Oppenheim at a conference, and David Edelson at Hits, he got up and said, “You have a solution right there – take it!” Oppenheim says, two problems, 1. copyright holders need control (whatev), 2. why not all other IP? Jim Griffin has been saying to do this volutnarily for awhile.
Walter: each year, ASCAP/BMI make more money. Record years. They get performance rights – record comapneis doesn’t except for digital. CLs might become more attractive to people if they look at it this way.
Question: about secondarymarkets, iPOd tying
Mike: Go watch all the returns this Christmas. Format wars are going to be big – going to be really rtough on new users, much tougher than this piracy problem.
Filed by Derek Slater at 8:25 pm under
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