8 ms·

Meet The New Boss, Worse Than The Old Boss?

71 points by pie 14y ago

pie 14y ago
This is a long post, but a fascinating dive into the business of music. Here we have facts, hard numbers, more-questionable numbers, anecdotes, experiments, and some rambling hyperbole from an industry veteran. I have rarely seen this kind of detail in discussions of online music.
anigbrowl 14y ago
This ought to be the top post on HN right now. There's a reason it sank like a stone.
- tptacek 14y ago
  I would not have seen this had you not written this comment. Thank you. This is so excellent.
- wglb 14y ago
  I am wondering if someone flagged it.
tptacek 14y ago
I realize that some of you may not know much about me or even who I am. I like to think that I am uniquely qualified as an artist, entrepreneur and geek. I was trained as a mathematician. My first job after I graduated involved being the systems operator for an MPM OS system and I wrote a lot of DBASE IV scripts. I had a fascination with the old RPG punch card programming language. I am deeply involved in the digital amateur radio world. You can sometimes find me operating PSK31 on 20 meters. I spent some time in Chicago near the CME. I worked as a “Quant” doing some semi high frequency trading. While there I became involved with a company called www.thepoint.com which evolved into www.groupon.com. This post is blowing my mind and I'm only a couple grafs into it. David Lowery was a f'ing quant for CME traders?
- anigbrowl 14y ago
  I didn't know any of that either. But I was mainly struck by how comprehensively he attacked the arguments of those he calls 'freehadists.' I sit (uncomfortably) on the fence in these things; I think the current law on copyright is a disaster on wheels, but having spent years as a Starving Artist the problem of revenue for content creators is not an abstract one to me, and I can't bring myself to download copyrighted movies and music the way other people do. I used to buy a lot of media, now I compromise by renting it or opting for what's available on YouTube (where rightsholders have a reliable mechanism for asserting ownership of their IP if they feel an upload infringes upon them). The bit that really pained me was his mention of John Perrry Barlow doing his schtick at the SF Music Summit. I was getting into the internet when the WELL was still in full swing and vividly recall Barlow's Declaration of the Independence of Cyberspace - what young digital idealist wouldn't thrill to such vaulting sentiments? Two decades later, the notions of elective citizenship and intentional nationality continue to fascinate, but not the notions that the ends justify the means and that the economics will take care of themselves. I am very happy that the technological means of production have become so much cheaper; I have several synthesizers and related audio gear sitting on this desk I'm at now, and a great camera that allows me to shoot excellent video in HD - one handed. When I first learned my way around a movie set the cameras weighed 30 pounds and I had to use a tape recorder the size of a concrete block. Unfortunately, my technical mastery (or at least commercially viable skill) came at the same time that the market for the end product fragmented drastically - as the technology became cheaper, so the skills of people who were skilled in its use became massively devalued. We had another example the other day involving a photographer talking to a calendar publisher whose photo rights budget amounted to a mere $100. Now, I'm not really an entrepreneur, and I don't dispute that there are abundant commercial opportunities that I could have exploited and haven't; I'm hopeful that the increasing popularity of crowdfunding and the possible democratization of investment from the JOBS bill will facilitate capital-raising for small projects. But the downside that Lowery so elegantly articulates here is that to succeed in the new commercial marketplace, a creative type needs to also be his or her own manager/marketer/salesperson/etc., to a far greater degree than before - and that means less time spent developing one's craft and creations. The old models of funding and distribution in the arts weren't totally fair, but they were predictable and relatively stable. If you were lucky and/or talented enough to get and exploit a few breaks, then there was a professional infrastructure within which you can find your own niche, whether as an artist or a technician. As the market for the end product has fragmented and revenue models have become obsolete, producers and publishers have become more risk-averse and increasingly channeled their funds to the surest prospects (which are often the lowest common denominator in creative terms). This naturally means fewer insiders willing to take the risk of financing and publishing an unknown prospect. And why should they, when people will bend over backwards and pay to have their films considered for inclusion in a film festival (most indies have neither the know-how nor the cash to sell their project at a film buyer's market, and film schools are in no hurry to teach them)? It's not all bad, by any means. But it's not all good either; the old system provided extremely valuable mentoring and marketing utility to emerging creatives, and trial and error isn't a very efficient alternative. Also interesting is this MetaFilter thread about the same post, though the first half is kind of Night of the Living Strawmen: http://www.metafilter.com/114955/Fool-me-once-shame-on-you-fool-me-twice-wont-get-fooled-again http://www.metafilter.com/114955/Fool-me-once-shame-on-you-f...
DrJokepu 14y ago
I wonder how come he didn't mention publishers, who are the people who make the real money in music these days. Sure, record labels make more money in total since they're very big, but publishers have much much juicier profit margins. There's a reason why Sony paid almost twice as much for the publishing arm of EMI than Universal for the phonographic arm. Yet nobody ever talks about them even though they are very very relevant to discussions such as this.
- tptacek 14y ago
  Probably because that's not his point; he writes as if conceding that there was something superior about the major label system makes him want to throw up in his mouth a little, but that's better than eating out of dumpsters.
tptacek 14y ago
This deserves so much more attention here than it's going to get. It's also genuinely TL, and many here DR at all. For what it's worth, if he starts to lose you, here are some of the key points: * You'd want to know that David Lowery was the lead singer for Camper Van Beethoven (of "Take The Skinheads Bowling" fame) and Cracker (of "Low" fame). You'd quickly learn from this that Lowery was trained as a mathematician and worked as a quant near the CME, and worked with Andy Mason at his pre-Groupon company. He's a punchcard and packet radio chat nerd. * He's tired of people telling him that musicians need to "embrace" technology. They were embracing technology in the '90s. They paid to have people run complicated websites. He's tired of people telling him to sell more t-shirts. Bands have sold t-shirts since the '70s. It's shitty money. And people pirate t-shirts too! * Concerts are also shitty money for most artists. People thought otherwise because we inadvertently cherry pick stats from artists that happen to do crazy well at concerts. Lowery runs a serious recording studio, his wife is a notable concert booker. Musicians aren't making money at concerts. Many are living out of their vans. * Recording albums is deceptively expensive in ways that technology doesn't address. ProTools can get marginally cheaper but the mix engineer doesn't get any cheaper. Mix engineers are expensive skilled professionals. Recordings sound like crap when you don't do them professionally. The mix engineer doesn't get to sell t-shirts at concerts. * He's going to lose a lot of you by sniping at the industry for "defending software patents", as if that was a double standard. Get past that to his real point: technologists work in an industry that is supported by protectable IP. Even if you work solely on NetBSD, you'd make a lot less money if no software was protectable. No music is protectable anymore. There is a serious double standard. * He gets it: you can give to get. He's been giving away music for decades. His shows were all recorded and given away for free; his bands organized CD burning trees. But that was his choice and he did it on his terms. The new terms are dictated to artists: your stuff will be available for free online. * The old system was better for artists. Not because the labels were better. It was probably an accident. Editorial aside: or maybe tech companies are just better at squeezing surplus value out of systems. * People tend to remark about how low artist royalties were in the label system. That didn't tell the whole story! Artists received sizable advances calibrated for "modest success" level outcome for their recordings. The overwhelming majority of artists never recouped those advances. So the effective royalty rate was much higher; possibly, for most bands, over 50%. * Not only that, but artists received a mechanical 70-95 cents every time their album sold, even when they hadn't recouped. So no matter what the economics of a given contract were, when you download a pirated album instead of buying it, the artist loses nearly a buck. * Artists don't talk about how good they have it because it's not cool to talk about how good you have it. * Music distribution in 2012 is lockers, streaming, and stores. * Lockers are straight-up piracy. They make huge revenues (ed aside: "MegaUpload Considers IPO" revenues) from "accelerated downloads" and from ad placement. Musicians get zero of that money. * Speaking of piracy: recorded music sales are off over 60% since the advent of piracy. There are studies that try to show that musicians are better off in the long run. But many of them are playing games. Some pour game revenue into the same bucket as music revenue. Others use sleight of hand to equate 99 cent single downloads with album sales. One suggested a successful indie musician had seen increased revenues recently, but it turned out that musician made only 34k/yr. People circulate wildly inaccurate stories and infographics about how labels screw artists and accept them without question. * Streaming tries to pay artists but not by viable amounts. Moreover, streaming pricing isn't transparent. Some artists get better deals, paid on different scales, than other artists. * Stores are reliably paying artists. But the economics don't totally add up. * The 1980s value chain: artist < store < label. The artist got the least, yes. But stores took on inventory risk and were compensated for that. Labels financed recording and distribution and were compensated. All three links in the chain provided significant value. * The 2012 value chain: artist < iTunes < label. The artist makes marginally more. But iTunes does't add significant value: unlike the stores, which were paid to take inventory risk and predict demand, iTunes takes no risk and performs almost no service other than dealing with card processing fees. * BUT HE'S FINE WITH THAT. He's a market guy. More competition would fix this problem. * Except: how do you compete with Apple, Google, and Facebook? For a little while musicians could make decent money selling music on their websites. 100% of the revenue less processing fees. Then Facebook and Youtube took all the traffic. Visitor stats plummeted. New content has to be released on Facebook or Youtube; that's where the audience is. But he has no control on Facebook or Youtube. He has to fit into their revenue model, or swim against a tsunami to try to find an audience for a standalone web site, hoping to be one of the few people with outcomes like Louis CK. * Again, he says: the old system was better. You could make a living more reliably as a musician under the major label system than you can today. The label system at least cared about music --- not in the "have great taste, prefer The Kinks to The Turtles" kind of way, but in a "our incentives align somewhat" kind of way. But music is just a footnote to Facebook & Google. The new players don't care at all about the music industry, because they're in the tech industry, and the only thing that matters to the tech industry is turning software into money. You don't have to agree with any of this (I happen to buy all of it, wholesale; maybe it's because the rest of my family are musicians). You also don't have to believe that the tech industry owes it to musicians to change anything so that people can make a living as musicians (that's not what I believe, but I believe a lot of things you don't). But you should probably engage fully with what Lowery is saying before you try to claim that startups and tech companies are making things better for musicians, because this is him calling bullshit on you directly.
pantaloons 14y ago
So technology companies create new means of distribution, compelling enough that people will pay for music that can, and previously was, being obtained for free -- his complaint is that the tech companies don't take over the role of talent discovery too? He makes a convincing argument that things are worse than they used to be, but not that Apple et al are to blame.
- tptacek 14y ago
  You didn't read him very carefully, because he doesn't blame Apple.
deleted 14y ago
[deleted]
hxa7241 14y ago
The backbone of this seems to be complaining about musicians having things difficult and not making as much money as they should. And accompanied by lots of numbers and information. The problem is, it is in itself irrelevant. Why should anyone else care? Maybe professional gardners are having a hard time nowadays and not making much money. Do you care about that? Perhaps they are going to lobby for a law that will increase their income -- i.e. take money from you, and otherwise inconvenience you -- how does that sound? The point is this: we do not care about musician's, or anyone else's, self-interest; we, in general, care about how much we get from them. That is ultimately the only basis of justification for any law here. The public, though laws, grants 'creators' special provisions, in order that the public as a whole benefits. If you want to argue for such special provisions, you must show the benefits that the public generally will get. If you say creators are not making enough money, show that there is, from the public's view, too little stuff being produced. So is there too little music (etc.) being produced? The article did not seem to answer that question -- yet that is the only thing that counts. And from a casual view, as anyone can see just looking around them, there seems to be a heck of a lot of music out there at the moment. Show that insufficient stuff is being produced, and show that any proposed corrective laws or provisions are overall to the public's gain. Otherwise you have failed to make a case for laws that the public must bear the costs of. If the gist is that some big companies are making lots of money using your goods therefore you should get a larger share of it, that fails too. If some industry is making too much, the answer is not to divide it up differently, it is to stop them, somehow, making so much in the first place.

71 points by pie 14y ago

pie 14y ago

This is a long post, but a fascinating dive into the business of music. Here we have facts, hard numbers, more-questionable numbers, anecdotes, experiments, and some rambling hyperbole from an industry veteran. I have rarely seen this kind of detail in discussions of online music.

anigbrowl 14y ago

This ought to be the top post on HN right now. There's a reason it sank like a stone.

tptacek 14y ago
I would not have seen this had you not written this comment. Thank you. This is so excellent.
wglb 14y ago
I am wondering if someone flagged it.

tptacek 14y ago

I realize that some of you may not know much about me or even who I am. I like to think that I am uniquely qualified as an artist, entrepreneur and geek. I was trained as a mathematician. My first job after I graduated involved being the systems operator for an MPM OS system and I wrote a lot of DBASE IV scripts. I had a fascination with the old RPG punch card programming language. I am deeply involved in the digital amateur radio world. You can sometimes find me operating PSK31 on 20 meters. I spent some time in Chicago near the CME. I worked as a “Quant” doing some semi high frequency trading. While there I became involved with a company called www.thepoint.com which evolved into www.groupon.com. This post is blowing my mind and I'm only a couple grafs into it. David Lowery was a f'ing quant for CME traders?

anigbrowl 14y ago
I didn't know any of that either. But I was mainly struck by how comprehensively he attacked the arguments of those he calls 'freehadists.' I sit (uncomfortably) on the fence in these things; I think the current law on copyright is a disaster on wheels, but having spent years as a Starving Artist the problem of revenue for content creators is not an abstract one to me, and I can't bring myself to download copyrighted movies and music the way other people do. I used to buy a lot of media, now I compromise by renting it or opting for what's available on YouTube (where rightsholders have a reliable mechanism for asserting ownership of their IP if they feel an upload infringes upon them). The bit that really pained me was his mention of John Perrry Barlow doing his schtick at the SF Music Summit. I was getting into the internet when the WELL was still in full swing and vividly recall Barlow's Declaration of the Independence of Cyberspace - what young digital idealist wouldn't thrill to such vaulting sentiments? Two decades later, the notions of elective citizenship and intentional nationality continue to fascinate, but not the notions that the ends justify the means and that the economics will take care of themselves. I am very happy that the technological means of production have become so much cheaper; I have several synthesizers and related audio gear sitting on this desk I'm at now, and a great camera that allows me to shoot excellent video in HD - one handed. When I first learned my way around a movie set the cameras weighed 30 pounds and I had to use a tape recorder the size of a concrete block. Unfortunately, my technical mastery (or at least commercially viable skill) came at the same time that the market for the end product fragmented drastically - as the technology became cheaper, so the skills of people who were skilled in its use became massively devalued. We had another example the other day involving a photographer talking to a calendar publisher whose photo rights budget amounted to a mere $100. Now, I'm not really an entrepreneur, and I don't dispute that there are abundant commercial opportunities that I could have exploited and haven't; I'm hopeful that the increasing popularity of crowdfunding and the possible democratization of investment from the JOBS bill will facilitate capital-raising for small projects. But the downside that Lowery so elegantly articulates here is that to succeed in the new commercial marketplace, a creative type needs to also be his or her own manager/marketer/salesperson/etc., to a far greater degree than before - and that means less time spent developing one's craft and creations. The old models of funding and distribution in the arts weren't totally fair, but they were predictable and relatively stable. If you were lucky and/or talented enough to get and exploit a few breaks, then there was a professional infrastructure within which you can find your own niche, whether as an artist or a technician. As the market for the end product has fragmented and revenue models have become obsolete, producers and publishers have become more risk-averse and increasingly channeled their funds to the surest prospects (which are often the lowest common denominator in creative terms). This naturally means fewer insiders willing to take the risk of financing and publishing an unknown prospect. And why should they, when people will bend over backwards and pay to have their films considered for inclusion in a film festival (most indies have neither the know-how nor the cash to sell their project at a film buyer's market, and film schools are in no hurry to teach them)? It's not all bad, by any means. But it's not all good either; the old system provided extremely valuable mentoring and marketing utility to emerging creatives, and trial and error isn't a very efficient alternative. Also interesting is this MetaFilter thread about the same post, though the first half is kind of Night of the Living Strawmen: http://www.metafilter.com/114955/Fool-me-once-shame-on-you-fool-me-twice-wont-get-fooled-again http://www.metafilter.com/114955/Fool-me-once-shame-on-you-f...

DrJokepu 14y ago

I wonder how come he didn't mention publishers, who are the people who make the real money in music these days. Sure, record labels make more money in total since they're very big, but publishers have much much juicier profit margins. There's a reason why Sony paid almost twice as much for the publishing arm of EMI than Universal for the phonographic arm. Yet nobody ever talks about them even though they are very very relevant to discussions such as this.

tptacek 14y ago
Probably because that's not his point; he writes as if conceding that there was something superior about the major label system makes him want to throw up in his mouth a little, but that's better than eating out of dumpsters.

tptacek 14y ago

This deserves so much more attention here than it's going to get. It's also genuinely TL, and many here DR at all. For what it's worth, if he starts to lose you, here are some of the key points: * You'd want to know that David Lowery was the lead singer for Camper Van Beethoven (of "Take The Skinheads Bowling" fame) and Cracker (of "Low" fame). You'd quickly learn from this that Lowery was trained as a mathematician and worked as a quant near the CME, and worked with Andy Mason at his pre-Groupon company. He's a punchcard and packet radio chat nerd. * He's tired of people telling him that musicians need to "embrace" technology. They were embracing technology in the '90s. They paid to have people run complicated websites. He's tired of people telling him to sell more t-shirts. Bands have sold t-shirts since the '70s. It's shitty money. And people pirate t-shirts too! * Concerts are also shitty money for most artists. People thought otherwise because we inadvertently cherry pick stats from artists that happen to do crazy well at concerts. Lowery runs a serious recording studio, his wife is a notable concert booker. Musicians aren't making money at concerts. Many are living out of their vans. * Recording albums is deceptively expensive in ways that technology doesn't address. ProTools can get marginally cheaper but the mix engineer doesn't get any cheaper. Mix engineers are expensive skilled professionals. Recordings sound like crap when you don't do them professionally. The mix engineer doesn't get to sell t-shirts at concerts. * He's going to lose a lot of you by sniping at the industry for "defending software patents", as if that was a double standard. Get past that to his real point: technologists work in an industry that is supported by protectable IP. Even if you work solely on NetBSD, you'd make a lot less money if no software was protectable. No music is protectable anymore. There is a serious double standard. * He gets it: you can give to get. He's been giving away music for decades. His shows were all recorded and given away for free; his bands organized CD burning trees. But that was his choice and he did it on his terms. The new terms are dictated to artists: your stuff will be available for free online. * The old system was better for artists. Not because the labels were better. It was probably an accident. Editorial aside: or maybe tech companies are just better at squeezing surplus value out of systems. * People tend to remark about how low artist royalties were in the label system. That didn't tell the whole story! Artists received sizable advances calibrated for "modest success" level outcome for their recordings. The overwhelming majority of artists never recouped those advances. So the effective royalty rate was much higher; possibly, for most bands, over 50%. * Not only that, but artists received a mechanical 70-95 cents every time their album sold, even when they hadn't recouped. So no matter what the economics of a given contract were, when you download a pirated album instead of buying it, the artist loses nearly a buck. * Artists don't talk about how good they have it because it's not cool to talk about how good you have it. * Music distribution in 2012 is lockers, streaming, and stores. * Lockers are straight-up piracy. They make huge revenues (ed aside: "MegaUpload Considers IPO" revenues) from "accelerated downloads" and from ad placement. Musicians get zero of that money. * Speaking of piracy: recorded music sales are off over 60% since the advent of piracy. There are studies that try to show that musicians are better off in the long run. But many of them are playing games. Some pour game revenue into the same bucket as music revenue. Others use sleight of hand to equate 99 cent single downloads with album sales. One suggested a successful indie musician had seen increased revenues recently, but it turned out that musician made only 34k/yr. People circulate wildly inaccurate stories and infographics about how labels screw artists and accept them without question. * Streaming tries to pay artists but not by viable amounts. Moreover, streaming pricing isn't transparent. Some artists get better deals, paid on different scales, than other artists. * Stores are reliably paying artists. But the economics don't totally add up. * The 1980s value chain: artist < store < label. The artist got the least, yes. But stores took on inventory risk and were compensated for that. Labels financed recording and distribution and were compensated. All three links in the chain provided significant value. * The 2012 value chain: artist < iTunes < label. The artist makes marginally more. But iTunes does't add significant value: unlike the stores, which were paid to take inventory risk and predict demand, iTunes takes no risk and performs almost no service other than dealing with card processing fees. * BUT HE'S FINE WITH THAT. He's a market guy. More competition would fix this problem. * Except: how do you compete with Apple, Google, and Facebook? For a little while musicians could make decent money selling music on their websites. 100% of the revenue less processing fees. Then Facebook and Youtube took all the traffic. Visitor stats plummeted. New content has to be released on Facebook or Youtube; that's where the audience is. But he has no control on Facebook or Youtube. He has to fit into their revenue model, or swim against a tsunami to try to find an audience for a standalone web site, hoping to be one of the few people with outcomes like Louis CK. * Again, he says: the old system was better. You could make a living more reliably as a musician under the major label system than you can today. The label system at least cared about music --- not in the "have great taste, prefer The Kinks to The Turtles" kind of way, but in a "our incentives align somewhat" kind of way. But music is just a footnote to Facebook & Google. The new players don't care at all about the music industry, because they're in the tech industry, and the only thing that matters to the tech industry is turning software into money. You don't have to agree with any of this (I happen to buy all of it, wholesale; maybe it's because the rest of my family are musicians). You also don't have to believe that the tech industry owes it to musicians to change anything so that people can make a living as musicians (that's not what I believe, but I believe a lot of things you don't). But you should probably engage fully with what Lowery is saying before you try to claim that startups and tech companies are making things better for musicians, because this is him calling bullshit on you directly.

pantaloons 14y ago

So technology companies create new means of distribution, compelling enough that people will pay for music that can, and previously was, being obtained for free -- his complaint is that the tech companies don't take over the role of talent discovery too? He makes a convincing argument that things are worse than they used to be, but not that Apple et al are to blame.

tptacek 14y ago
You didn't read him very carefully, because he doesn't blame Apple.

deleted 14y ago

[deleted]

hxa7241 14y ago

The backbone of this seems to be complaining about musicians having things difficult and not making as much money as they should. And accompanied by lots of numbers and information. The problem is, it is in itself irrelevant. Why should anyone else care? Maybe professional gardners are having a hard time nowadays and not making much money. Do you care about that? Perhaps they are going to lobby for a law that will increase their income -- i.e. take money from you, and otherwise inconvenience you -- how does that sound? The point is this: we do not care about musician's, or anyone else's, self-interest; we, in general, care about how much we get from them. That is ultimately the only basis of justification for any law here. The public, though laws, grants 'creators' special provisions, in order that the public as a whole benefits. If you want to argue for such special provisions, you must show the benefits that the public generally will get. If you say creators are not making enough money, show that there is, from the public's view, too little stuff being produced. So is there too little music (etc.) being produced? The article did not seem to answer that question -- yet that is the only thing that counts. And from a casual view, as anyone can see just looking around them, there seems to be a heck of a lot of music out there at the moment. Show that insufficient stuff is being produced, and show that any proposed corrective laws or provisions are overall to the public's gain. Otherwise you have failed to make a case for laws that the public must bear the costs of. If the gist is that some big companies are making lots of money using your goods therefore you should get a larger share of it, that fails too. If some industry is making too much, the answer is not to divide it up differently, it is to stop them, somehow, making so much in the first place.