Music, YouTube, and Making Money

A very interesting article on the front page of the Wall Street Journal today called Sales of Music, Long in Decline, Plunge Sharply.  I can't help but thinking this foreshadows the big TV versus YouTube and other video sharing sites battle.  However, before we jump into that, here are the high or low lights from the article:

• CD sales declined 20% this year and they account for 85% of music sold
• 800 music stores including 89 Tower locations closed
• Apple sold 100 million iPods proving that someone still listens to music :-P
• Digital sales of music has picked up by 54%
• According to one source, one billion songs are downloaded illegally

The article also talked about how individual CD sales are declining for folks like Norah Jones.   However, those individual declines can easily be explained if you believe in The Long Tail and that record companies should no longer be relying on mega hits.  This also explains the decline in retail stores and shelf space where storing music and songs online and downloading what you want, legally, is more efficient and cheaper than stocking shelves and betting on a hit.  BTW - I don't feel sorry for Norah Jones because she stole a Grammy from Springsteen for The Rising.

Enough background and back to my post.  Do I care about retailers?  No and I don't care about the music industry having to change how they produce music because the term hits is quickly fading as individuals determine what they like and join communities around their music tastes.  What I do think is interesting is that the music industry has paid to produce the CDs and paid the musicians who made the CDs.  That gives them rights to protect their product just like Viacom in their battle with YouTube.

Who are we to say how someone makes money?  If a musician signs on with a label who produces their music, why should they have that stolen from them.  Who are you to say how someone makes a living?  Don't give me - well tough, they should tour more or figure out some other way to get paid.  Or, the classic, well take less money.  Who is to tell you how much is too much money? Isn't this America where you can plot your own way?  Last time I checked it was.

If you want to distribute your music for free, good for you.  If you think you have a better revenue model that gets you paid what you think it is worth; then go for it.  How about a share of the advertising revenue from the downloading site?  Great.  If you sign on with a record company because you believe it is more efficient or you'll get paid more;  great, but guess what, they are going to want to protect their investment which means your fans may get in trouble for illegal downloads.  Or, sometime in the near future your contracts will get smaller and smaller.

This is simple.  A company produces your work, they want copyright protections which means places like YouTube and music download sites have to pay attention.  Why should the dollars involved with this transaction (viewing TV clips or listening to music) be shifted from going to the legal copyright owners to the sites that facilitated the transaction? 

Advertising revenue is generated because someone paid the site owner who stores the information and makes it easy to download; what gives you the right to determine how the transaction is paid?  Last time I checked, nobody should tell you how much you should sell your product for or how to push it out.   Again, this is simple - it is about how someone gets paid and their rights to determine that method.

PardonMyFrench,

Eric

Comments

[Mike Ferry]

Interesting points, Eric. As an independent songwriter specializing in "geek-rock for people who laugh" (later-Beatles, Talking Heads, They Might Be Giants), I feel that there has never been a more exciting time to produce music. Will artists be appropriately compensated for their work? Time will tell, but physical recordings of compositions will most likely become less and less profitable in the future.

[PardonMyFrench]

Thanks Mike. Believe it or not, I hesitated to publish this post because it goes against the Web 2.0 "expert" analysis that it should all be free. I agree that physical recordings will become less profitable. BTW - your songs remind me of my college days!! Thanks for the link.

Eric