Facing the music and paying the Piper

Last night was the Chinwag event on "Paying the Piper" - ie where is the money in the New Music market and who wins and loses. I must admit to agreeing with @grrrth from Apple who was sitting next to me, who noted that he heard little new since the days of the dotcom era - but in my view this was not the fault of the Chinwag session, or the participants - its more a statement of the condition of the industry, which is in itself an interesting phenomenon.

(Though one new thing I picked up was that Neanderthals could sing as they had had descended larynxes)

Anyway, here are some notes I took where I felt something was said that added value

Dave Haynes (of Soundcloud) noted that the uture of music is not same as future of music industry. I think this point is often forgotten, music has been with us before the current industry structure that is now being dismembered, and will be with us afterwards too.

Dom Hodge (Frukt) - believe in the value of music ie pay the players, or at some point they will exit - trying to find a way to "be helpful" by getting brands and advertising to fund stuff "not in crass way". I think that in the current rush to Freemium it is almost forgotten that apart from CD sales, the other big post war revenue stream for music was advertising

Helienne Lindvall (Guardian Journalist and composer) - Noted that one needs to beware of people who pretend to "liberate content" but are in reality fronting hard assed businesses that are trying to build the value up in their own bit of the value chain and beat it down elsewhere. (Billy Bragg made a similar point last year).

Jon Mitchell(Spotify) did a show of hands in the room - 1 person in the room oc c 100 people didn't use it, and only 1 person paid for it. 1% takeup rate is (i) pretty standard for any Freemium services and is (ii) not enough to pay for the 99 others, whatever the promoters of Free! thinking say. "Near Zero" is not Zero. He also noted that now they are getting to 2m users, they are becoming interesting to advertisers.

Richard Jacobs (MediaCom) noted that there are currently low audience levels and high fragmentation in online music services, which makes for low values for ads. Advertisers will pay in the long run, but won't fund small plays - thus there is need for aggregators (similar to the US style network models for TV and Radio, I think).

Steve Bowbrick who chaired the meeting hypothesized that the ability to sell physical recorded music was a "Golden age" and that the replacement industry will be far smaller, as there is simply not as much money in performances and selling T Shirts. Also, it may be dominated by existing players - for example Joni Mitchell is able to put out records because she can amortize them due to the millions spent on her brand in the days of yore, new players can't justify that now

As to Rights, we didn't get much on that but the aside that although Pandora is making money now it could not on early days, so by definition these companies have to ignore rights in the early days to set up. This is exactly the same "pirate" model we have seen in other media we studied (see diagram at top) where the early players make market share by robbing the rich and giving to the poor for Free! while building market share like billy-o, eventually though they too have to find business models or they go under.

There was an interesting point made by an ex-Grokster chap whose mname I didnt catch ("Just call me Daddy") who is soon to be at Pirate Bay, that screwing the artist was not new "even Little Richard got ripped off" - and that in music today much of the economic value is gone, but the emotional value remains and that is where new revenues are to be found. He also said that Spotify et al were doomed to fail unless they could get flat pricing models, which got him roundly booed (Spotify being the Current Noo Meedja Music Darling whereas Last.fm is so Last.year). But, as my Apple neighbour @grrrth noted:

Apparenly iTunes is going to have to adopt the Spotify model. What? Have no users and make no money?Wake me up when it happens...

(But as we know, hope springs eternal....besides, everyone knows the real game is not to make money from sales but to sell to a desperate Current Media Behemoth )

Also, did you know that:

- Old people who Listen to classical music are richer and worth more to advertisers
- More people watched classic concerts than pop in the UK last year

I call this the Rory Sullivan conundrum after a talk he gave at Telco 2.0 in 2007- essentially, no matter what consumer field you look in, all the money is with the Oldies, but advertisers continually search under the Yoof lamp-post.

But as always, the killer thoughts are the ones we had afterwards in discussions - a few of us were comparing the behaviour of our own teens and those we knew, (I know, I know - its very bad to use your Teen Anecdotes, after all its Not Data Dammit ) but here is the killer point in my view. Those of us above a certain age can remember fondly/embarrassedly/guiltily the First Record We Bought. None of our teens can, because they don't buy them.

What they can remember is the First Computer Game They Bought.

(Update - Rory Cellan-Jones also covered the event here, juxtaposing it with research that says people are moving away from piracy to ad funded models like Spotify. Hmmm......)