A funny thing happened on the way to The National

Mflow’s tagline ‘Discovery is the best thing in music’ may or may not true, but I’ve just made a discovery myself – that the best sort of music discovery can be discovering the music that you already know. That’s a lot of discoveries in one sentence, so let me explain.

I was all set to skip the new National album. I was just going to let it pass, on account of having too much currently stacked up in the ‘recently acquired’ CD pile-up - and the download equivalent (a queue?).

Then I succumbed, having read too many glowing reviews, and put it on order from Amazon, but with self-calibrated expectations. I say this because, though I am a fan of The National (having first discovered them via their wonderful track “About Today” on an Uncut magazine cover-mount) I’ve found them to be a band of great promise if not quite the accomplished article on delivery.

I bought their previous two records “Alligator” and “Boxer” and found them both to contain great moments (notably on Boxer – “Guest Room”, “Fake Empire” and “Mistaken For Strangers”) but overall, patchy (but, aggrieved National fans, read on). I also once bought three tickets to one of the band’s shows at The Astoria on the “Boxer” tour and coaxed two friends along, eulogising about this great new band I’d discovered.

When they opened that gig with “Guest Room” I felt vindicated and all like the great “A&R” man (it sounded absolutely splendid), but the rest of the gig was somewhat marred by singer Matt Berninger’s apparent discomfort on stage. You can actually hear more about his stage-fright issues via a Guardian podcast here (small aside – what do you do when an artist on the cusp of mainstream success and potentially huge live shows – suffers from lack of stage presence? - I can’t see many artists taking much to a suggestion of stagecraft ‘coaching’).

So, I thought I’d skip ‘High Violet’. Thank god I didn’t. I only really got to play it properly because I was travelling (back from the South West) and was in a bit ‘phased out’ (after a disappointing business meeting). For those reasons, I set the album to play on repeat – and just let it run & run (four-five times over maybe) until it kind of got inside my head.

Three weeks later and it’s still there, rattling around. In fact I only really came up for air by re-visiting their previous two albums – both of which now suddenly connect with me much more than they did originally. Alligator especially, is a real treat, as it turns out.

Somehow I now ‘get’ The National. I’ve got beyond the moody baritone ‘miserabilists’ stage and moved on to appreciate the tightly-wound core of fine drumming, bass and guitar, the finely detailed, layered, textured sounds (including wonderfully understated use of piano, strings and brass), the oddly-affecting, existential lyrics and at last, the strained emotional delivery of Matt Berninger’s vocals. And more than that, his superb phrasing.

It all makes sense – and on High Violet manages to exceed the sum of all these wonderful parts – through having better tunes, with better songs – Berninger’s lyrics now more effective in connecting real-life stories with the weird inner-dialogues – effectively making him a fully-paid up member of the Genuine Pop Music Poets Society.

“Someone send a runner for the weather that I’m under for the feeling that I lost today”, for example, from ‘England’ (for me the album’s pinnacle track, and my self-adopted national world cup theme. Was that really ‘England’ playing in background on some recent world cup BBC coverage? I think it was). Or perhaps take this one, from single Bloodbuzz Ohio: “I still owe money, to the money, to the money I owe” – that’s a clever commentary on the recent financial crisis if you want my opinion. My favourite though is from Lemonworld, where that songs protagonist declares he “left my heart to the army, the only sentimental thing I could think of”. It rouses.

But why am I telling you this on Juggernaut, without due consideration for the industry? Well it actually did get me pondering on both the demand side and the supply side of things actually.

On the demand side, as with Mflow for example – we’ve become somewhat absorbed, perhaps even obsessed with, ‘discovering’ new music, with gaining ‘access’ to it, and with the ‘acquisition’ of it. It strikes me these experiences all pale with actually listening, and forming a deeper relationship with the music than you thought might be possible initially. It’s like discovering a new author and then revisiting all his or her other books, with a renewed, re-ignited pleasure. You can find yourself thanking your lucky stars, just for the serendipity of it all. Besides, the album would never have entered my consciousness in the way that it has, without that first bought of repeated listening.

On the supply side, The National’s story amounts to the way it should be for music artists and their development, does it not? ‘High Violet’ is the Band’s fifth album and represents a sure, steady growth creatively and now commercially as well. It’s refreshing, re-assuring even, that we can still witness artists in a steady ascendancy like this. Isn’t this how it used to be? I would wish the same on The Local Natives, or The Temper Trap – or any other type of band with the apparent talent and capability to arrive where The National has.

Has it got something to do with being on an indie label rather than a major labels? Perhaps, except there are plenty of indie bands on majors with what seems like longevity and ascendancy too. Most notably Elbow (though a partial 'rescue' job was done there), Kings of Leon (now so big it's hard to think of them as 'indie' but they are essentially) and others.

But The National's success seems partly down to the fact that the band didn’t get too popular too soon - that they had time to become this good. With ‘High Violet’, The National has indeed been allowed to bloom.

Going, gone & gone for good this time

Going
Some weeks, the music industry delivers nothing but disappointment. It started this time last week hearing Mark Thomson announcing at the FT Media Conference, as part of a new BBC consultation, the proposed closure of 6 Music. The logic was nothing if not cloudy. However, it has been good to note that since, there has been a really strong & swift backlash, with a groundswell of opinion rightly raging against the machine.

Now 6 Music is not perfect, but it genuinely serves a sustainable, growing niche - exactly the role of a public service broadcaster essentially. If you, like me, don't want to lose your Guy Garvey's Finest Hour (the best two hours of a Sunday evening there is second perhaps only to when Wallander's on), Gideon Coe or Adam & Joe, then go and join up the various petitions and comment on the BBC consultation site. Help make them see some sense for goodness sakes.

Gone
So I got a call yesterday from a business correspondent at the Indy asking for a quote on Elio Leoni Sceti. I hadn't heard the news even, but it took me less than a second to realise - and to not be surprised. Didn't even miss a beat in the conversation. But it's no less disturbing when reflecting on it. The italian gent was, in my view, an inspired choice - something Guy had not exactly built a reputation for in the music business, by the point to which he hired Leoni-Sceti.

I met Elio twice last year. Both times he made a point of coming from behind his desk, not a blackberry or iPhone in sight, to sit ready for pure, effective exchange. Undivided attention. That's quite rare among music leaders in my experience. He was a good listener and asker of questions. He's calm and collected and had managed to galvanise what was left of morale within EMI. The results under his tenureship (if you can call it that) were unarguably good.

But then after just 18 months in the role, he has become yet another licensed-to-innovate leader from outside the music industry that has essentially failed to innovate from within it. Not his fault. Like a legendary football manager once said, you can only do so much up to the point when it all becomes about the players on the pitch. But with music, maybe it's not the players either, but the structure by which the whole game is put together.

Gone again
Even much worse news had come the evening before via a text from a friend (you can see how much I'm keeping up with music news of my own volition right now), who sent me a link to a Tim Jonze blog titled "Sparklehorse took the ugly and made it beautiful". I knew instantly what that meant - before reading one more word of the fittingly touching piece. Turns out Mark Linkous had shot himself in the heart.

I bought Vivadixiesubmarinetransmissionplot when it was first released in 1995. Didn't get on with it, despite all the rave reviews it got. I left Sparklehorse well alone until I capitulated - again on the strength of the reviews - and bought It's A Wonderful Life on the way home from a New York trip. Fell in love with it on listen two - right there on the return flight. I saw them/him tour that album with a gig at Union Chapel Islington - quietly inspiring. I loved seeing a sedentary Linkous just play, calm & focused, his sometimes driving rock, but his oh so delicate fragile ballads - he even played the tracks with all the twiddly bits. He seemed to know the strength of the material and the way in which it was played was what mattered, more than any sense of performance. It was a privilege to witness that. And I liked the way he played guitar, like he'd learnt it only recently, but didn't want to play any better than he exactly needed to for the songs.

I've since played his weirdly abstract, utterly unique sounding music during times high & low. Most of all, I remember playing a compilation of Sparklehorse ballads I labeled 'lullabies' (on minidisk) to my first daughter for the weeks after she was born. I even nick-named her Homecoming Queen (later Queenie) after the song of that name. Kids actually love Sparklehorse, because the lyrics make sense to them maybe, somehow. And he mentions lots of animals. Somehow, of all Linkous's spaced out crazy lyrics (did I really forget to mention him when I blogged here about those before) the one I like best is from Spirit Ditch, which might actually frighten my kids a bit. It goes:

"woke up in, a burned out basement
sleeping with metal hands
in a spirit ditch"

Now I don't know what that means and you don't know either. Neither did Linkous probably. And none of us would want to end up there. But my word it is worth listening to every now & then. Linkous reminds us it's a sad & beautiful world, but also a wonderful life. Linkous was fully qualified - after all he once died for a full two minutes before making a recovery. But this time he really is in the Spirit Ditch.

Unpop.com – the music store that’s different

Before I launch into my solution for ‘music that’s different’ it’s worth pausing first to consider something amazing about 2009 (a year of otherwise distinctly gloomy trappings – a real annus horribilis as The Queen might put it) and it’s this:

2009 is the 20th anniversary year for Real World Records and the 20th anniversary year for Warp Records. It is also the 40th anniversary year for (dare I say the word ‘iconic’) jazz label ECM. And it is the 70th anniversary year for legendary folk label Topic. Of course, joining this label anniversary bonanza are Island Records (50), Bella Union (10) and Transgressive (5).

So one way or the other – music that’s different and/or eclectic is thriving. Though who knows what the bottom line looks like in these labels, there’s no denying their individual and collective endurance – as both commercial and cultural entities.

This is some ten years after Napster of course, when the first declarations were being made on the ‘death of the record label’. What a time for Simon Raymonde to launch Bella Union – a label that has since blossomed as a home for indie music with a twist. The label is home once again to my favourite recording artist of the moment – the wonderful Laura Veirs – her new album July Flame will no doubt welcome in 2010 with a refreshing air of optimism and loveliness.

It’s worth paying some dues also, to a bunch of music services – many already mentioned previously on this blog – that are making a concerted effort to serve natural niches in the marketplace, rather than aim to serve the homogenous mass that are ‘music consumers’. These would include Calabash/Mondomix (world), Bleep (dance), Lost Tunes (heritage pop), Society of Sound (lossless downloads) e-music (indie, mostly) and Boomkat (indie) among a few others. I also think it’s interesting that Naxos seems to have quietly cracked the problem of how to make music subscription model work commercially – did anyone notice?

Still, as analysed in the previous post – niche genres that so often appeal to older, wealthier and more committed music buyers – have yet to reach more than the sum of their parts. As the digital market has developed, the global long tail aggregators for niche music have yet to arrive in any way that scales beyond say, those services mentioned above. Meanwhile in the great fire of brick & mortar music retail, the ‘jazz, classical and world’ sections seem to be the first ones to shrink then disappear.

So here’s my suggestion – there for the taking for any major music retail brand currently in existence – or for any brave new music venture willing to use peripheral vision – as opposed to another vain attempt to ‘own the digital music space’ by way of a more radical pricing model.

Let’s call it ‘Unpop.com’ (though you wouldn’t actually call it that of course – that would be commercial suicide). Unpop.com stacks up as follows: for £4.99 per month (an established ‘sweet spot’ subscription price according to the surveys I read) you get access to all the niche music you want to stream + the option to buy high-quality MP3 or CD albums at a decent discount – knock a pound or two off the Amazon retail price, say. You get ‘Unpop’ quarterly – a feature catalogue with high quality editorial about classic recordings and forthcoming releases – this makes you feel special. You get one featured free MP3 download each and every week day – nicely manageable, delivered through your in-box, if you want it. A few pre-programmed or socially programmed radio channels wouldn’t hurt.

Thus the market secures a minimum of £60 per year and probably a good deal more for a-la-carte purchases on top. Offering this sort of value proposition for this market doesn’t hurt mainstream music at all – no cannibalisation. ‘Unpop’ is differentiated from mainstream ‘pop’ stuff, so the overall music market economics are unaffected – ‘Unpop.com’ customers don’t care how much standard music prices are – the mainstream can go on being mainstream.

Meanwhile ‘Unpop’ opens up a whole new world of discovery while obtaining underlying revenue from subscriptions. Now that would be different...

Music is a different business – it should do more for music that’s different

A week or so ago, I made five recommendations of music that’s a bit different to my (& maybe your) usual tastes, as part of my strategy to prioritise my music consumption – as set out in this previous post.

Those records were new or recent releases by Portico Quartet, Spiro, Steve Martin, Bill Frisell, The Unthanks and Pink Martini. None of them are ‘popular’ – but each album does fall into a category of sorts – one the many hundreds of music genres or sub-genres. Even Pink Martini – a blend of just about everything except pop, is described on Wikipedia as ‘vintage music’ – a sub genre probably, of ‘easy listening’.

As an industry – if you can really refer to the distribution of commercial music as an industry (a worthy post-grad paper perhaps) – the incredible, bewildering variety of products is what makes the music business totally unique. No other business that I know of puts full-blown produced products out there on the market without any prior knowledge of what will happen next. Sure, if you have a major pop artist with a known commercial track record and the whole dashboard of modern demand metrics, you might be able to put together a half-decent sales forecast – but you’d still be pushing it to be within + or – 100%.

But forget those, if you have any one of the above records – in niche genres – how on earth do you know if you can even hope to break even on releasing the record commercially – i.e. having funded its discovery, production, marketing and distribution? Because the one thing you do know is that you will not have a global hit on your hands.

In this sense, the music business is also unique – in that there are few genuinely ‘independent’ or ‘alternative genre’ records that become global smash hits. The movie business is different – it produces - even if it’s just a couple - of real indie smashes each year, pretty consistently. Be it Blair Witch, The March Of The Penguins, Slumdog, or the very latest example - Paranormal Activity – the small guys can make it really, really big in film.

It happens less so in music – if you look at the top fifty selling albums each year they are dominated by pop records released by majors. Neither small independent’s or niche genre artists get a look in. There are clear reasons based on industry structure. Film has an established independent film network that is supported by major festivals around the world – many of which are celebrated as significant cultural events. It has an ‘art-house’ cinema distribution network too. Film also gets significant government support on the investment side.

The music industry doesn’t have the equivalents. Yes there are numerous small venues that cater to the alternative – but they are not effectively networked and so do not make up more than the sum of their parts. Same for independent labels, really – hence there have been recent initiatives to give the sector a much needed leg-up – such as independent charts. But these often confuse ‘independence’ between source – i.e. label and actual musical style. As for retail, well we can see what’s happened there and it is almost too painful to keep watching.

Music that’s genuinely different, alternative or niche must simply submit to being commercially second-rate. The only global phenomenon of the same nature I can recall is the success of the Buena Vista Social Club Cuban music movement – and that all started with – an independent movie!

I applaud initiatives that try up the ante for the ‘movement’ that is niche music – such as the upcoming January 2010 Reverb festival of concerts at the Roundhouse, which has some support from the Arts Council of England and local Camden Council – though only small commercial sponsors.

However, I’m absolutely convinced this music can scale better than it does, if only it had the right platform. After all, this is the digital age where niche content was in fact supposed to have become the heir to the Blockbuster King, by now according to the uber-thinking-journalists.

Take this simple insight. I have three Pink Martini CDs so I like them – they have grown on me over the years without necessarily becoming an act I would recommend to others regularly. But I know I could name maybe 20-30 other people in my life who would like them as much as me if not more so – but who have never even heard of them. My feeling is that Portico Quartet could achieve the same sort of crossover potential in the UK that Jazz trio E.S.T. achieved in their native Sweden – where they regularly made the mainstream charts.

While I wouldn’t say the same for Spiro or The Unthanks – I’m am pretty convinced that they could probably triple whatever little they do sell - easily – if only they could get some effective, targeted exposure to their receptive audiences, and that could well be the difference between loss & profit.

Steve Martin, well, he doesn’t exactly need to have a hit – and has in fact spent extravagant amounts of his own money on making and touring his ‘The Crow’. But it is such a good record it deserves success in its own right, not just as some kind of vanity project. As for Bill Frisell – at least he is on exactly the right label to connect with his audience – Nonesuch – which specialises in route-to-market for eclectic, different music aimed at the more mature, discerning ear.

And here is the second insight for today. I’m a mature and enthusiastic music fan who has listened to so much stuff that I am receptive – in a state of absolute readiness – to hear more music that’s different. Where do I connect with my fellow audience? I’ve no doubt that audience is large (huge globally); fairly well-off and fairly uninterested in piracy – probably even pro-actively disposed to paying top whack for music - as the rich cultural good that it is. The reason we don’t buy much these days is we are uninspired and ill-informed. No one is putting this music in front of us.

Now I know there is the BBC and in the US, ‘public radio’ – and this is great. Programmes like ‘Late Junction’ are the equivalent of splendid cuisine for the ears – even if you sometimes have to work at it to acquire the taste first. But I don’t really do radio. I want to check this stuff out on demand and then buy it and keep playing it until I love it.

Also, I know these artists could get greater exposure in a number of ways – like what if Portico could get a support slot for Radiohead, or if Spiro got a great synch opportunity? That could break ground, but only as a one-off, transient thing – it might serve those artists well if they are lucky – but it’s not reaching that huge global audience of un-served, unlucky listeners.

And finally here’s the irony. In the UK we are about to get bombarded with new music services (again) – each one upping the ante on the ‘business model’ – more & more music for less & less cash. But the music is always the same stuff. The front-line recommendations are the big artists about to assault the radio networks, the TV and press. Spotify this week has the exclusive with Robbie Williams (do they really need each other?). Sky Songs has launched – in a promotion with The Sun newspaper. It’s like daytime radio all over again - the same music to the broadest audience possible.

Even out of those six million songs in the impressively large catalogues, there’s nothing for we-who-want-different, since we don’t know what we’re looking for, or if we do and hit search, it will not be there more than half the time.

Why don’t we do something different for those people who want something different? I’m on the case...the next post will show us the way...

The new way to listen #3: Music that's 'different'

This is a two part post: first, some music I recommend; second (later in the week) – how can this music be ‘business’?

Recently I wrote about how my music consumption and listening habits are changing – including spending more time opening my ears to music that’s different. It comes not necessarily from boredom with more ‘popular’ genres, but from an adversity to their over-supply – there’s just too much of what’s essentially the same. I need something that pokes my musical senses in new places.

Just last night, at London’s Koko, was a case in point, with the rather marvelous Portico Quartet in performance. They’ve come a long way these four young men. I first heard their music some six years ago, wandering along the Waterloo south bank, where they regularly busked. My wife heard them first - and we gathered round, listened and came away with the band’s self-made CD for fiver, suitably impressed.

I didn’t play the disc much and thought nothing of it until a couple of years later when the band glimpsed the limelight with their 2008 Mercury Music Prize nomination for first album ‘Knee Deep in the North Sea’. I never got ‘round to that album either, as I was still gorging on records back then, working my way through piles & piles of CDs and streams on Napster & Rhapsody, in a futile effort to find those precious few records that get under your skin and become essential slow-burning, long-lasting fuel. I had a filter (not a very good one) for finding the good stuff but no effective mechanism for discovery of what’s really different.

But, with my new priority system in play and working nicely, a portal opens for bands like Portico. And it’s a blessing because this is genuinely thrilling music. I wouldn’t classify it as Jazz. To me its hybrid music that happens to be created by four musicians playing what they play – which happens to be the Hang (look it up on Wikipedia), Soprano Sax (the curved one that looks more like a toy instrument), Bass and Drums.

So what else is different in my music world right now?

Spiro’s ‘Lightbox’ has occupied pride of place on the 2009 playlist and could well turn out to be my album of the year. Peter Gabriel describes Spiro as “soulful and passionate” and you might find, as I did, that this is pretty much spot on. Seeing them earlier this year on a major stage at WOMAD was a life-affirming experience, as is listening to this record repeatedly.

I also recommend Bill Frisell’s fascinating ‘Disfarmer’. I love an album with a theme, a story – something that immediately sets it apart from just an album. It draws me in. Frisell’s album is homage to dustbowl America as seen through the lens of depression era photographer Michael Disfarmer. It’s on Nonesuch records – a label that’s a specialist in the eclectic like no other – look out for this blog’s forthcoming case study on that Label featuring some great insights from legendary founder Bob Hurwitz.

I’ve also recently been streaming Steve Martin’s ‘banjo record’ The Crow (as it says on the cover “truly wonderful and just as advertised”) and The Unthank’s ‘Here’s The Tender Coming’. When my conscience gets a grip on me, I will invest in both albums on CD - perhaps.

Finally – just delivered on CD from Amazon is Pink Martini’s new album Splendor In The Grass. This record is a musical equivalent of treacle – The Times review summed it up: “Mamboing transvestite district attorneys, a 90-year-old Mexican ranchera singer, a Tchaikovsky piano concerto, Italian pop kitsch, missing heads, Peter Sellers’s sitar, Sesame Street singalongs and a Neapolitan lullaby”. It’s easy listening, yes (nothing wrong with that!) but it is also authentic, beautifully performed and meticulously recorded. It’s lush – a joy to behold.

Will the music industry ever extract real value from digital?

When Steve Jobs announced the launch of iTunes back in 2004 and queued up the slide for the song price – 79 pence – there were audible gasps among the audience. People were that little bit amazed. They were impressed that Jobs had pulled off the deal to sell individual songs - at a reasonable price. It worked too, with iTunes notching up over a billion songs for each year of operation since.

But the six billion songs sold on iTunes are part of a slowing curve – the overall digital business growing by just 25% in 2008 – to $3.8 billion, 20% of the global music business. With the business generating nearly $5 billion less in 2008 than five years before in 2004, before iTunes launched and digital kicked in, the ‘holy grail’ whereby new digital revenues more than made up for lost revenues from CD sales, never arrived. If digital sales grow by more than one fifth in 2009 we’ll be lucky and it still won’t be enough.

Nearly six years on from Apple’s genuinely sensational announcement, that same service dominates the digital space, to the satisfaction of no one, much. Earlier this month Apple’s iTunes related announcement – the iTunes LP, in contrast to six years ago, distinctly underwhelmed. Just a few titles in stock, and looking distinctively expensive.

There’s nothing wrong with the attempt to add value to digital albums by adding extra content – iTunes LP, CMX etc. Other than it’s too little too late. I was all for it back in the day, but the world has since moved on. The market is polarising with high-end CD box sets still in healthy demand but digital pretty much becoming established as the way to get your music for cheap.

The digital market hasn’t developed in a logical order – and has therefore struggled to add value year-on-year – like pushing a boulder up an increasingly steep hill. Had digital albums been launched with extra content originally, or quickly after the iTunes launch, it might have worked. It might have convinced consumers that they are losing packaging, but gaining content.

But while iTunes had DRM strangling its value and held its prices at a constant, CD prices fell by one third over five years. CDs albums are now routinely cheaper than digital – that’s counterintuitive to every music fan interested in ownership.

Meanwhile, digital song value has headed south, first with subscription packages, then with free to stream ad funded services. It’s a journey that has led at least, to a challenge to iTunes’ unhealthy market dominance, but at a potentially heavy price to the industry as a whole.

I love Spotify as much as the next music fan, but its struggle to extract value is in danger of becoming a spectacle. To consumers it’s a miracle, to the industry it’s a problem to be solved. The strategy looks right – drive a developing ad-products business as much as possible, while trying to upscale users to a pay model for a better experience. It has to be the test case and I would strongly argue, deserves all the help it can get from its music partners.

We need to begin to realise though, Spotify’s potential. It has the potential to generate revenues equivalent to a large niche, while at the same time eating further into CD revenues. This is the future music market – fragmentation into a number of niches.

iTunes (i.e. the a-la-carte song market) carved a niche, delivering 10-15% of revenues to the business. Subscription services carved another, smaller nice at under 5% revenues. E-music’s hybrid model carved another niche –delivering 10-15% of revenues for its indie label partners. Ad-funded streaming will be similar. All-you-can-eat services through ISP providers similar again. With each niche there is some natural cannibalisation – gradually creating another niche – the CD market.

This is not an unhealthy long-term picture – provided each of these niches can be sustained – serviced through good partnership and the positioning of the right content and payment models. Forrester’s latest angle in content windowing provides one example of how to do this. It’s something all smart labels know is a good way forward – account managing these relationships and managing the channel conflict that is bound to arise on an almost constant basis, using shared insights and data.

What’s more – this multi-channel, multi-audience niche scenario obliterates the random thoughts of the ‘free economists’ – increasingly supercilious, unconstructive and pretty dumb. There’s value in these niches – little patches of gold in them there hills.

There is value here provided each new wave of services is not met with the expectation that it will be the next big thing – making redundant what’s gone before. Instead it’s a landscape that needs to be cultivated, managed, serviced, through shared vision, insight and data. The answer is yes, but it’s more a ‘yes we can and we will’.

Why doesn't the music industry have answers to the big questions?

It will not have escaped your attention that for the past two weeks the UK music industry has been ‘debating’ (in public, via the press) the Government’s latest proposal to clamp down on file-sharers by forcing ISP’s to issue temporary suspension notices to persistent file-sharers.

Lord Mandelson announced the move, got mixed reviews but industry-wide support from BPI, PPL and HMV, underlined his position vaguely in The Times, but then the FAC (together with BASCA & MPG) – waded in with various comments amounting to ‘serious reservations’. The main thrust of their argument being summed up by Dave Rowntree as “taking a sledgehammer to crack a nut”. UK Music (how many music-based associations are there?) has stepped in to try & broker common ground.

It’s good to see artists voice their opinions in the debate, with Lily Allen blogging and writing an op-ed in The Times against the FAC, followed by Matt Bellamy from Muse chipping in with the ‘solution’ of the compulsory collective licensing of music for digital platforms.

Having read a bunch of press about all this I have at least one observation and it’s this:

What’s happened to the facts?

Where’s the established evidence – empirical & researched – that clearly benchmarks the position that file-sharing has damaged the music industry in terms of sales, artist development, investment in new artists & creativity, and jobs? In the various articles I haven’t seen a single figure, specific or contextual. The work just hasn’t been done. Or if it has, it hasn’t been well communicated.

No wonder it’s proving difficult to get unified agreement. Some members of the FAC have wheeled out the old adage that ‘file-sharers are also music buyers’ – an established fact, sure, until the issue of causality is considered, until the changing nature of that relationship is explored.

Now it’s easier said than done, I know. I’ve had enough experience, in music and other industries, to know that when you do work to try & know something (as opposed to a quick & dirty bit of lazy desk research to try & back-up a PR position) you open up a can of worms. People will argue over costs, methodology, timing, objectivity & god knows that else. You must be ready for that debate – and the facts, the evidence, the methodology, is what makes you ready.

It’s not a luxury. It’s necessary to try & research – from multiple sources if you have to – some kind of impact analysis that can form the basis of debate, policy and decisions. The music industry doesn’t have a great track record in this area however, due to the sheer complexity of the industry value chain, but also due to the lack of will and resources when it comes to factual, evidence-based understanding.

There shouldn’t be any room for debate left about the impact of file-sharing on the music business. But the press, academics and sizeable elements of the artist community and music consumers, remain unconvinced or at best sceptical.

It’s partly a symptom of legacy. Home taping didn’t kill music – that particular relationship was badly communicated and poorly understood and still leaves a bad taste. But the music industry has never had a good handle on other major relationships, like radio airplay and record sales (i.e. overall record sales not just for those artists on heavy rotation). Like singles and albums (it’s never been concluded whether singles promoted or cannibalised album sales). More recently, we seem to have no real analysis of the substitution effects of music streaming services (to be fair, it’s a little too early to say, but I know what my hypothesis would be).

As the current ISP & file-sharing enforcement debate moves on (hopefully soon) in the direction of alternative solutions, we will again be revisiting the idea of the collective license and whether that is a viable solution for the music industry.

I’m a sceptic of this solution – directly because of the analytical work I’ve done in this area – on a couple of separate occasions working with different parts of the industry. But that was over two years ago and things have moved on since then, what with ad-funded streaming, ISP mooted solutions and a dangerous slowdown in digital music growth.

Soon might be the time to look at collective licenses again. But once again, who is now developing the methodologies and gathering the objective facts and evidence to understand the impact for artists, music providers, ISPs, consumers and the Government?

It needs work – a budget, a methodology and a consultation process. Maybe the Government could facilitate the music and ISP industries to collaborate on doing that?

This blog asks a major question of the industry each day this week. Tomorrow's big question - Why didn't In Rainbows open the music industry floodgates?

Major Music Labels: Great Power, Great Responsibility

At the start of the summer, Billboard magazine published an opinion piece by me on Marvel Entertainment - that company's remarkable turnaround and the potential lessons for major record labels. You may have seen that in recent days, Disney has also seen the value in Marvel, acquiring the company for $4 billion.

This being a music blog, I won't go into the why's & wherefore's of Disney-Marvel, but it's one to watch as to whether Disney will get its return, without compromising Marvel's brand too much. Anyhow, with kind courtesy of Billboard, my op-ed is published here in full for anyone who missed it. For similar food for thought, you might also want to re-visit my very first blog post on HBO - Music Lessons from a Content Powerhouse. For the true believers then...

With Great Power Comes Great Responsibility

Music is being consumed by more people in more ways than ever before—we just have to figure out how to monetize it.

How many people have said that now? More people in more places than ever before, basically. Yet all is not well with the way the music industry is adapting to the new paradigm. Digital delivery may be changing the game for consumers and artists, but the bit in the middle—the industry—hasn’t yet figured out where the real money is going to come from. Meanwhile core product sales are in structural decline. What’s an industry to do?

Well, back in the late 1990s, another great entertainment business was dying on its back—comic book publishing—and specifically a great American cultural icon, Marvel Comics. In 1997, Marvel Entertainment escaped bankruptcy by a thread thinner than one of Spiderman’s. The company had failed to diversify its publishing business and flooded the market with comic book lines, effectively commoditizing its core business and leaving the company with a stock value of under $1. Yet today, Marvel is transformed with a stock value of $32 and a market capitalization of $2.5 billion. It is currently piling on the growth, riding roughshod over the global recession.

In order to rebuild, Marvel was forced to transform itself from a products business to a licensing business. With its “superstar” characters bringing in consistently lower yields, it needed to find a way to make money from its entire catalog of characters—not just the big names.

Three strategies began to turn Marvel’s fortunes around:

1. Licensing. After the success of Sam Raimi’s “Spider-Man,” Marvel had hot IP once again. Other studios took a renewed interest in its characters and there was a rush to license other major characters from the portfolio.
   
2. Product development. Nothing impacts on the culture like blockbuster movies, enabling Marvel’s characters to become hugely popular toys, video games, clothing and party accessories.
   
3. Character development. With a library of over 4,000 characters, Marvel went to work on strategies for commercializing the mid-tail brands, including Daredevil, Elektra, X-Men and Ghost Rider.

By 2003 Marvel was rejuvenated, with steadily increasing revenues and profits. One key insight that helped drive this new phase of growth was the Marvel brand itself. Marvel had created a universe where characters not only had their own compelling stories, but where those stories were carefully and complexly interwoven with other characters. That universe is what drew many fans (including me) to Marvel comic books in the first place and still does, to its increasing stable of movies and related products. Now, the Marvel Universe concept is integrated throughout the company’s strategy.

The potential is there for record companies to use their labels in a similar way. Not easy, but it could be essential to long-term success. Island’s 50th Anniversary celebrations couldn’t be achieved without focusing on its identity. Nonesuch has created a wonderfully eclectic but somehow cohesive community of artists—and loyal fans. Indie labels might argue their identity is their lifeblood, even if not directly recognized by every music consumer. The music business needs to organize communities of music lovers and buyers, not just social networks with music tacked on.

Marvel’s turnaround isn’t complete. The company made nice profits from licensing (which involves no capital outlay) but could only take a small cut of overall box office. To really scale revenues it moved directly into distribution—risky for a company so focused on content creation—forming Marvel Studios to produce “Iron Man” and “The Incredible Hulk,” a move that paid off handsomely.

Most music majors now have in-house production companies but not the strategic purpose and budgets to be equivalent to the commitment made by Marvel. But music companies should be making documentary films and session content for their artists—highly attractive to sponsors and licensable to all the digital networks increasingly desperate for quality content. [iTunes LP, announced yesterday, is a step in the right direction for example].

Direct-to-consumer is a key part of Marvel’s digital strategy—in 2007 it launched Digital Comics Unlimited—a subscription-based service with thousands of comic books available in digital format. Like another successful subscription provider in TV, HBO, Marvel realized that to offer a compelling subscription service didn’t mean having to make everything available—few subscribers want that. But they will subscribe to a service if that service contains something they do want that’s exclusive to them as subscribers.

From a successful licensing model, Marvel evolved its strategy into bigger plays: harnessing brand power, building on insight, diversifying its product and making major moves into distribution. Subsequently Marvel Entertainment now controls its destiny, when all looked hopelessly out of control a mere decade ago.

The State of independents #1

In eight years working in the music business I never attended an AIM meeting, until this week’s 10th Anniversary AGM. I have to say I rather took to it. There was an informal and certainly collective, feel to the proceedings. And a celebratory feel too but in a modest, nicely understated way. Nothing seemed too staged or rehearsed.

Hearing Alison Wenham reflect back on the ten years since AIMs inception and give her ten wishes for the new era, it wasn’t difficult to get a sense of just how much AIM has managed to achieve, against the odds I suppose, when the job in hand is basically herding cats. And what cats. Alley cats that’s for sure. As Chris Blackwell says in his forward to the AIM Anniversary brochure “The indies will always be the lifeblood, usually started by misfits who are passionate about music and the excitement of youth culture”.

Having worked on a project lately that has required partnership with a number of indie labels I can see the spot they’re in and it’s a very sticky one. If we assume a future scenario of gradual continued devaluation of recorded music (can you see any other?) then the only means to long-term survival for record labels is diversification into other revenue streams and rights ownership. In which case, only the Majors (& not all of them!) have the muscle to wrestle their way through, surely? If you run an indie label, record sales are your lifeblood – not gigs, T-shirts etc. And that means that soon enough, you’ll be relying on the true misfits of society – record buyers – to keep you going.

But surely, someone somewhere will come up with a more effective platform for indie music than those currently on the market. There are so few around, most notably e-music – the world’s number 2 music service by value. The others – Bleep.com, Beatport – are small – smaller than the sum of their parts basically.

The indie scene in the USA is a little more dynamic, but mainly due to the proliferation and popularity of music blogs – Stereogum, Aquarium Drunkard, Brooklyn Vegan et al. including my own favourites Daytrotter.com and Ear Farm. But blogs are also less than the sum of their parts. Blog aggregators like Hype Machine and Elbo.ws do a good but perfunctory job of corralling blog content, but these hardly make compelling music store experiences. The indies could do with a branded platform (digital and physical) to help them do exactly what these others fail to do – punch above weight, not below.

There cannot be a more marked indicator of indies punching below their collective weight than a glance at the annual best-seller lists. The IFPI publishes the top fifty best-selling albums worldwide each year. Over the past two years (i.e. out of 100 slots) indie label albums have featured just four times, with all of those from one label in one fanatical marketplace – Japan (Indie label Avex is basically a Major in Japan).

Small Labels, Big Ideas

At the AIM meet, board members sponsored individuals to shout out their big idea for AIM and the indie sector going forward. This was both intriguing and engaging, and the ideas were pretty good too – many of them pragmatic – like an industry database of media contacts to assist indies with their low-cost marketing efforts (a tie-in with The Guardian Media Guide perhaps?).

My favourite big idea was ‘Death to the CD promo’ – an industry wide switch to promo streaming. This is one of those no brainers for the modern age – creating a greener and more secure network for digital distribution of all promo tracks to media and brands. Not only that, but the flow of information from this network could be so much more effective than now, i.e. phoning around in vain to see if anyone in the media received or has listened to, your tracks. Not only that, with services like SoundCloud on the market, this could be achieved within a year. I’m sure it would be supported by the Majors but would be a nice one for AIM to lead. However, the idea was voted number 2, runner up.

Number 1 was this: ‘Lobby the BBC to encourage them to play a wider range of independent music on Radio 1 and Radio 2’. Now it’s easy to see why this got the most votes even in the absence of knowing what the other eight big ideas were (they’ll be on the AIM web pages by now if you’re interested). I’ve no doubt that if I switch on the radio right now (lunchtime basically) I’ll get one of Take That, Pixie Lott or if a commercial UK radio channel, inexplicably, ‘Halo’ by Texas. Either those, or (Still) Chasing Cars by Snow Patrol (aren’t they really an indie band though?).

I’ve mentioned a few times on this blog in the past how radio has a lot to answer for, in the UK and even more so in the US. Radio is still the number one music discovery platform according to surveys (though I’m convinced the surveys are wrong and that radio’s position as tastemaker is secondary to its role as background music for people who can’t be bothered to like music that much). And because of the huge audiences radio reaches it remains priority 1 for record promotion.

However, the strategic dilemma for indies is whether AIM should bother lobbying the BBC about the R1 and 2 playlists or whether it is better off working with alternative promotional platforms to get a greater presence for indies on those. To my mind it’s the latter, because I can’t see a huge audience of indie music buyers regularly tuning in to R1 and 2 during daytime, but I can see them streaming more alternative radio shows via digital channels or reading about new music in Clash, or streaming new music on Spotify.

And so to the other great dilemma of the day for indies – to license or not to license (or perhaps more how & when to license and at what price) – new digital services like Spotify. This was also a big idea: to ‘persuade digital service providers that independent music is essential for any complete, compelling and successful music service’. This idea didn’t get such a big vote on the day, but probably only because AIMs members felt this is already very much in hand – which it is, through licensing body Merlin and through digital distributors like The Orchard, IODA and Vital.

However, speaking with my strategist hat on, I’m not sure if the indies collectively aren’t missing a trick with digital licensing. Fighting your corner on deal terms is one thing, but AIM should consider if it’s worth licensing to digital streaming services at all. I’m not advocating that the indies don’t license, I’m saying that it would be a valid strategic decision not to, on the basis of unquantifiable net value (i.e. after substitution effects and relative assessment of deal terms compared with Majors).

It would be an even more valid strategy if the indies could create an alternative platform to the current crop of streaming services. On the day, several members emphasized the exclusivity and ‘quality’ of indie music and I can’t help but think that there are better ways to leverage this than licensing to a slew of services as second fiddle to Majors catalogues. They could opt to support e-music more proactively, giving it another push, though it seems that with e-music now actively courting Majors, the opportunity is lost. Or the indies could look at creating a platform of their own – perhaps working with more innovative technologies like Songbird or similar.

Perhaps the biggest obstacle to an alternative platform strategy for indies is the music itself. Yes it is exclusive and of quality, and comes from a place of passion first, above commercial priorities. But that’s true of plenty of the repertoire on Major labels too. One out of 2 of my own favourite ‘indie’ bands are in fact released on major labels. While there is still a gap in the market for an indie music platform, consumers simply don’t divide music between Major and indie labels in that way.

So finally, to my big idea (with the benefit of a review of the ten presented on the day of course) as follows:

Launch a new branded platform for independent music (not exclusively indie label music, but it could begin there) that focuses on emphasizing the passion behind the music – the exclusivity, the quality etc. - everything that isn’t just availability, basically.

A boutique brand for indie music is what springs to mind. By necessity it would have a digital presence (downloads, streaming, radio and a licensing platform for blogs), but also very much a physical one as well – after all the brick & mortar space is somewhat less competitive these days. This could be through a small network of new stores or through a network arrangement of indie shops.

It’s contrarian, sure, but that’s the essence of indie culture, isn’t it?

The AIM meeting was the culmination of a week of events celebrating the tenth birthday and ‘Independents Day’ – when we are all meant to flock to our local indie music retailer to buy CDs & support the biz. I didn’t get around to shopping for indie music from an indie store on Independents Day, sadly. In the end I was too busy and not near an indie record shop – and in truth I would not know where to find one. Besides I suspect they wouldn’t be stocking my current wish-list of music. If I could have though, I would have!

My current indie music wish-list is the entire back catalogues of Spoon, Dinosaur Junior, Death Cab and Laura Veirs (only two of which are on Major labels).

Newsflash for latecomers: Glenn Peoples from Billboard (and formerly Coolfer of course) has alerted me to exactly what I refer to above - a new indie platform - in the US, called Thinkindie, here...http://digital.thinkindie.com/...which is interesting innit?
Nice use of the black sheep mascot too. One to keep an eye on.

New product post #3: Digipacks vs. Jewel Case - majority decision reached

I’m all for improvements in CD packaging – have been for a long time. I’ve talked about it both on this blog and during my time at the IFPI.

Indeed, in a memo to Guy Hands last year (did anyone in this industry not write a Memo For Guy?) my first recommendation was for him to take the initiative in transforming CD packaging across the piece - no more jewel cases.

Labels and music retailers should show the customer that the industry cares about its product and release all CDs in the superior digipack format (preferably using recycled materials).

After all, until we discover the value in digital music, surely the best route to monetization in the current music business, is through a better physical product?

Of course this call to action is naive, because it would cost the industry money to do this, and it isn't necessarily a cost that can be passed on to consumers. The CD is a volume product. Not only that, it is rapidly being commoditized. UK single artist CD prices have fallen by one-fifth over the past five years, from an average of £10.21 in 2003 to just £8.10 in 2008.

To reverse this trend is probably impossible. However, it's conceivable that music buyers’ perceived value of a CD album is, in this day & age, much lower than its current price. A notable shift in the quality of packaging (coupled with content extras) might be enough to hold CD prices where they are, or at least allow retailers to stem the relentless tide of discounting.

There is of course, a long list of logistical manufacturing issues to contend with. The digipack is more labour-intensive (someone has to stick the booklet on the inside card cover) and has longer lead times than jewel boxes. Demand planning is trickier, since jewel boxes are interchangeable with any CD booklet insert, whereas a digipack cover is printed specifically for that title. You need to plan carefully for how many you can sell - and who on earth can judge that accurately in this most unpredictable of businesses? In summary, it's difficult, costly and risky for any one company to move unilaterally on this issue.

Until now that is. At long last, there is a real catalyst to change CD packaging for the better. That catalyst is the environment, which music industry organization Julia’s Bicycle has articulated superbly so far.

At a recent event Hosted by Sony Music, Julie’s Bicycle took the opportunity to begin the process of aligning some key packaging goals across the whole music business. The facts are pretty compelling, as recently published in the Julie’s Bicycle report ‘Impacts & Opportunities, Reducing the Carbon Emissions of CD packaging’:

• The recording industry could reduce its packaging emissions by up to 95% by switching from the plastic jewel case to card packaging
• Consumers would prefer card packaging, particularly heavy CD buyers. More than half of those surveyed (55%) preferred the card wallet version of Coldplay’s Viva la Vida to the jewel box version
• 75% of CD buyers agreed it would be a positive step to shift to environmentally friendly packaging
• Some manufacturers are developing even more environmentally friendly versions of the digipack (the current digipack format already reduces emissions by two-thirds compared with the jewel case)

So the call to action is right there. As Tony Wadsworth put it at the event “I don’t see that there has to be a dichotomy between commercial goals and environmental goals, especially if we take a long term view”. Quite right too, especially when consumers would support packaging changes. Julie’s Bicycle has set out a roadmap for change with the ultimate goal of discontinuing the jewel case. In 2009 the major labels and Beggars Group have set a target to reduce emissions by 10%.

As for artists, ask any A&R or marketing exec, manager or indeed artist, which packaging they prefer. It’s a no brainer – artists would kiss goodbye to the jewel case in a second (probably preferring some ridiculously expensive alternative such as embroidered velvet, but hey, they care!). Beggars Group claims that nine out of ten artists request alternative packaging for their releases.

It’s about time we retired an old, much-hated, faulty product. I say product, because for some consumer goods, the product is the packaging! Packaging plays a key role in music – with CD buyers firmly attached to liner notes, artwork and tangibility. Putting music into beautiful but responsible boxes sets a great agenda in extending the lifecycle of the industry’s core product. After all, just letting the CD wither on the vine until we wait for digital revenues to materialize is a do nothing option that won't be enough in the longer term.

The future of music is: Filtered

[this post is featured as the comment editorial in this week's indespensible UK-based Record of the Day http://www.recordoftheday.com weekly magazine and is part 1 of 2 posts on innovation in music. Next week's focuses on music the product].



If the music industry is changing so much, how come the biggest promotional platforms for bands are still mainstream media - radio, press, TV and The Charts? It might be tempting to think that it’s because music label marketing is so steeped in the tradition of radio, press, TV and The Charts that they know not much else. But this is no longer true, especially in labels where digital specialists beaver away on this or that initiative for new music campaigns via apps platforms, social networks, e-tailers and blogs.

The simple fact is that radio (followed by TV) is still where the majority of consumers say they discover new music – at least it is when you look at research tracking by the likes of NPD, Viacom etc. I find that remarkable in this day & age, but the point where this changes is when it gets really interesting for music and for the way music is marketed.

It might even be the point where the business itself finally tips into a new paradigm where radio and TV matters less than digital media, or even doesn’t matter much at all. Some artists have already reached that point, such as Ingrid Michaelson, with 250k album sales and 800k downloads with barely a mainstream murmur. Indie band Metric has had recent similar success.



The reason is that many fans have reached that point too. Forward moving artists will concern themselves less with a radio-led charm offensive and more with a fan-base-building digital campaign along the lines of Michaelson.

It is in many ways surprising that mainstream media is still seen as the golden ticket to success, when we’ve had some ten years of development in digital. But then, since digital only represents just one fifth of industry revenues, perhaps it isn’t surprising at all. The business will still focus supply and marketing activities firmly towards where consumers discover the product and spend the cash.

However, over the next year or so, there are some clear signs of a more full-tilt transition to digital. An obvious one is the increasingly moribund physical retail space – you can’t buy CDs if there’s nowhere left to shop for them. Another is breakthrough digital only applications including of course, Spotify and applications platforms like the iPhone.

But what could make a greater single impact than these factors combined is if music discovery really came on leaps & bounds, digitally. It has been threatening to for a while of course, with numerous recommendation engines (most notably Last.fm) and music social networks emerging as more effective music discovery platforms than radio and retail for a sizeable segment of music fans. Such services have certainly improved upon the basic search capabilities that drove earlier generations of music services, including of course P2P.

But for all their clever functionality, no recommendation engine or social network has become the music discovery standard in the way radio has. This is for a variety of reasons: algorithms are yet to work perfectly as filters for music (if they ever will); recommendation results are still a bit hit & miss; social networks like last.fm are a bit too cluttered for mainstream use. Blog aggregators and blogs are too specialist.

But there are a number of ways in which music discovery will change in the next year or two that will collectively make a huge difference:

1. Music crawlers and mega-charts. Going beyond the boundaries of any one social network or just crawling blogs, combined web crawler services that cover all the major metrics of play-counts, profile views, search-terms, twitters etc. – for both bands and songs – will aggregate everything and provide constantly refreshed mega charts to replace the traditional charts as we know them. The BBC’s Sound Index was pioneering for band buzz, but for a more focused application of the concept take a look at We Are Hunted (wearehunted.com). Fresh out of Australia this web crawler amasses all into the 99 most popular tracks of each day, presented in a simple 9-track-a-page format with a stream & buy button on each & every track.
   
2. Social programming. So-called fourth generation discovery after the first three generations: 1. The EPG; 2. Search and 3. Recommendation. Go Fish and You Tube already pioneered social programming to some extent, allowing individual users to programme & broadcast very simple personal video channels. Now iLike & Facebook have really opened up social programming in audio. I’ve been sceptical about this - who wants to discover content through a multitude of individually programmed channels? I wasn’t sure until I tried Peoples Music Store (peoplesmusicstore.com), which I think is a fun and very social way to discover (and even shop for) new music. Judging by this week’s news, Universal music agrees, licensing some 300,000 songs to the service.
   
3. People, places & lifestyle. Geo-location technologies will allow users to use their mobiles to filter all sorts of content by location, timing and lifestyle preferences. Imagine a playlisting application that can give you a playlist relevant to a business trip you are taking today, or the mood you’re in as you are stuck in your tinderbox on the M1 on a hot sunny day.
   
4. Personalised home pages. This one is for the ISP’s to crack, although iTunes really should have done it ages ago as well. The BBC and Google are masters of it. You really don’t have to bother going anywhere for discovery other than your own personalised homepage of your preferred access provider. The likes of Sky, Virgin & BT are developing it as the holy-grail for their multi-platform customers.
   
5. New content brands. In many ways the antidote to all that goes above, new content brands are old fashioned, trusted editorial brands that thrive digitally due to their expertise in exploiting long-tail content, reduced barriers to entry and targeting of audiences previously underserved by mainstream media platforms. Think Lost Tunes, Mondomix, Pitchfork, eMusic, Daytrotter et al. Established Blogs and even Brands that do it well can create new preferred destination services for digital users.

With all this space for music discovery to develop it keeps me optimistic for generating new opportunities to drive more immediate consumption – transactional as well as streaming. Current discovery platforms like YouTube, Pandora, Last.fm & Spotify aren’t necessarily good purchase drivers for music, but that doesn’t mean new ones won’t in the future.

A cure for industry breakdown - Elbow grease

I just checked on Elbow's UK sales for The Seldom Seen Kid, which have just cruised past the 500k mark. When I first posted on Elbow's momentum and the contributing factors to it back in September, sales had just past 150k. But Fiction boss Jim Chancellor confidently suggested the album would reach platinum. I believed him. I suggested an arena or two might be in the offing at last? It was in plan said Jim – and was signed, sealed and delivered with aplomb at their triumphant Wembley show a couple of weeks back (my music mistake of the year so far: not attending that show).

At that time the band had just won the Mercury Music Prize, so platinum sales and arena shows looked very much on, but even Chancellor probably wouldn't have bet on a Brit, which the band won in February. And so, Elbow was resurrected from a languishing obscurity. Their wonderful, but very 'unpop' Seldom Seen Kid Album has become popular (let's not overdo it, The Seldom Seen Kid ranked 35th best-selling album for 2008, though is by far the most 'progish' repertoire on that list) and will probably tick-over into double-platinum (UK sales of 600k) at some stage this year.

This is all great of course, with the band themselves and Garvey in particular, seemingly able to enjoy their long-awaited success with a lovely humbleness – basking in it without melting in it, and at the same time none of the awkward embarrassment that can often come when 'indie' bands break into the mainstream. When Garvey says “it's been good being me of late” on his 6 Music show (if you haven't discovered it yet, do, it's a genuine radio gem) it comes across as genuine appreciation.

Better than great in fact, Elbow's success is refreshing. The sometimes cynical UK music press has launched no backlash at all, not a hint of it. Instead, just continued good will. I've yet to come across one hard core Elbow fan to reel from their mainstream success. Maybe in these hard times, a little glory to the underdog is simply appreciated. Of course, the whole episode is underpinned by sheer quality. Listening to “Grounds For Divorce” and “Weather To Fly” this week, those two tracks are still revealing new qualities to me now, 18 months after first hearing them, and listening to them lots.

Elbow's success is now widely recognised and often referenced. In reviews for new releases by Starsailor, Doves and The Hours (all of which are very good records) you'll find obvious references to Elbow as unlikely but welcome trailblazers. I've been thinking though, could Elbow's success have a greater significance for the music business itself? It has certainly lifted the mood (as well as raised the stakes) in many record label marketing camps for other indie bands. In these hard times that is much appreciated. Perhaps there is now room for a bit of confident swagger in the way the campaigns for these records are executed. People really want this stuff! And there's no doubt The Seldom Seen Kid has nicely created a public appetite for more of it.

Being both fun and serious and about it, Elbow's success has scratched some very stubborn itches that have plagued the ailing record business for quite a while:

• Labels: Think the 18 month long album campaign is dead in the age of immediacy and music-streaming-file-sharing ubiquity? Not necessarily - The Seldom Seen Kid


• New bands: Can you survive in the cut & thrust of today's ruthless business, with one or two album deals and at best, three-strikes-before-your out? You just might – Elbow


• Old bands: In the hole? Sales & audiences falling despite delivering your best work? Past your prime but not past your best? Do carry on – Elbow!


• Fans: Think the age where you go to a gig and hear a charismatic front man not only talk between songs, but actually say something entertaining and informative (possibly to you directly?) are sadly gone? No! - Guy Garvey – man of the people and master of audience participation


• Music press, retailers: Think bands that don't erm, scrub up too well, will struggle to find a large audience through mainstream media? Not always – Elbow!


• Everybody: Think a complex, melancholy 'unpop' record can't become a mainstream blockbuster hit? Wrong – The Seldom Seen Kid


• Everybody: Think a band with a terribly dull name will struggle to catch on? Wrong – Elbow! (okay, there's also Coldplay, Oasis etc.).

But where does Elbow go from here? What's next? Obviously there's the question of America and subsequent global super-stardom. What about Elbow The Movie? Personally I would love to see something done in the spirit of Wilco's “I'm Trying to Break Your Heart” or “Ashes of American Flags”. I'll be there for the theatrical release and the DVD, and the coffee table book.

Probably best of all, this band of 18 years in the making, that have worked blood, sweat & tears and must have been several times on the brink of throwing in the towel, is currently writing a new album and no doubt, will make several more after that. That way, they don't miss out on anything and nor do we. At least something in the music business is working.

Quick & dirty digital state of the nation #1: Music’s future face-off - Streaming vs. Transactions

By almost popular request, this is number one of two brief posts forming a digital state-of-the-nation, so we can move on to see what could happen next and more importantly, in a post or two’s time, look at who actually decides what can happen next.

I occasionally write about music on this blog, not just the business of music. If I were to write about music that interests you, what are you most likely to do? a) park it for later/never b) stream some of the songs I mention on Spotify c) buy the music from a digital music store. File-sharing isn’t an option I’ll include for now but obviously if you really wanted to, you could. If I really wanted to know the answer I could add a voting widget on the blog, but the question is actually kind of rhetorical.

But it is no less critical for that. With Spotify probably coming in somewhere close to 1.5 million unique users by now, ad-funded streaming seems to have momentum, so you might answer b) stream it. On the other hand, if you have been persuaded by any of the arguments & threads on this blog at all, you might well opt for c) buy it. I’ve posted several times on the limitations of streaming for music discovery and enjoyment, but also many times on the lack of inspiration to buy digital. But both are accepted options on the future of recorded music’s rather limited, menu. The technology evangelists will insist that transactions aren’t even on the menu at all – and they are quite wrong about that.

State of the Nation for Digital Music: Streaming vs. Transactions

First, streaming music. Consumers love streaming when it’s free. The first generation of subscription-based streaming services (led by Rhapsody) found a limited niche. Even the free ad-funded options later released by Rhapsody & Napster couldn’t take them into the mainstream. The second generation ad-funded streaming services really worked. Last.fm gained traction as a music social network & recommendation service then introduced full-track streaming. iMeem followed. Then Spotify took off and flew in the UK and Europe.

So far so good, except for the weaknesses in music streaming we are learning more about as things unfold: the business model. It’s tough, tough, tough. These services pay the labels advances and the publishers per stream, and now operate in a recession where ad-funding isn’t flowing into digital platforms like it did last year. This has had a lot of coverage in the past few weeks but was first exposed by on Michael Robertson’s blog over a year ago.

Consumers won’t pay in numbers for streaming or recommendation. They will tolerate some advertising if the trade-off seems reasonable. They have yet to really work out how streaming music for free impacts on their overall, long-term music consumption, but the chances are they will use streaming services to listen to a greater variety of music and take the risk out of music purchases. Since this means more time listening than shopping, that will inevitably mean less music purchases.

Now, since I posted last time on this subject of streaming outweighing transactions, Spotify has done an affiliate deal with & Digital whereby all the tracks on Spotify are one or maybe two clicks away from being purchased. Good stuff. So is the problem solved? Not really. Streaming on Spotify is quite passive, quite lean back. It is unlikely users will stream on Spotify to screen music prior to any kind of purchase and then go ahead with gusto to 7 digital to buy. It’s unlikely that stream-like-buy will establish itself as a major pattern of consumer behaviour. The instant buy button for music was always overrated.

Now to transactions. Why do we buy a piece of music? We’ve been conditioned to and that trend is ingrained and is still strong – if you are over 30 at least. For under 30s not so strong perhaps, but still very much present. But plenty of under 30s music fans prefer CD to digital, which seems weird but is logical. We’ll buy digital because it’s quicker than physical, usually – slightly more convenient and slightly cheaper. Now DRM is gone it’s less risky & confusing.

We mostly buy digital to add to a device, hence iTunes has the market sewn up, occupying 80% of a large niche. As opposed to streaming, all second generation market entrants have struggled like hell. Smaller brands have made no headway into iTunes market share and Amazon & Play have done okay with aggressive pricing but not shifted the needle for the market, really.

Interestingly, none of these digital stores have introduced the ability for customers to stream the songs in full before they buy. Unlike the streamers introducing click-to-buys, these established retailers know the game too well to expect full sampling to shift their sales up. It’s likely to go the other way, they know that.

On the other hand the innovation in the transaction market has been poor compared with streaming. iTunes isn’t sexy anymore it’s a 7-11. DRM got stripped, so what. Genius is okay but not game changing. Differential pricing isn’t the same as dynamic pricing and it looks like it will leverage some standard prices up as well as down. Amazon has gone aggressive with pricing, not impressing anyone, much.

But there have been, and still are, some interesting takes on selling music. Amie Street’s dynamic pricing model. E-music’s hybrid, great value music club-type subscription for indie content. Some higher-quality & lossless song-file services etc. – all niche. We’ve had music market-places such as Burnlounge and now we have the Peoplesmusicstore (I like this, more about it in a later post).

Finally, as I wrote a few posts ago, some services are, at last, focusing around particular audiences and repertoire rather than getting hung-up on payment models - Lost Tunes for example.

That’s the digital market covered (minus file-sharing and a few mobile services, granted) – in total worth roughly $3billion, under one fifth of music and not making up for lost CD sales. Growth is slowing down already at around 25% in 2008. In short we’re in a bit of a spot. But it is early days let’s use this brief history to see what might happen next.

Digital Music: What happens next?

What we have to realise is that the consumer adoption curve is law. The mass market simply does not go for things that aren’t convenient, simple and good value compared with the alternative. We have no right to believe that digital will grow significantly unless we see greater innovation and value arrive on the supply side. There might not be one big breakthrough to rival iTunes initial impact, but some clear ways to go as follows, with my view on the medium-term (say five year) potential:

Ad-funded-streaming
The outlook isn’t too rosy. Is it really much more than personalised radio? With its simple functionality there isn’t room on the market for more than 2-3 key players and they’re already here, which becomes very challenging for new entrants like Myspace Music. Ad-funding on its own won’t sustain Spotify, but people love it, so a good chunk of users might be happy to pay around £2 per month to not have to live without it. Spotify might be able to earn £50m or so from direct subscriptions in addition to its ad-revenues. Medium-term potential: low

Music stores
Despite the dominance of iTunes there is still some ground to be made through targeting services better to audiences (particularly new digital adopters in the more mature demographic segments). See previous posts around product development in this area. Through more compelling services and some innovation around targeting the market for transactions could easily double, though in the longer term it depends how much music is commoditised in other ways. Potential: medium

Hybrid models
E-music was always a good idea, an innovative model. But it’s pricing is still way too aggressive for music producers and it is yet to convince the market that the ARPU model is an effective replacement for transactions. So it stays niche. But ISP’s (or even Spotify of Myspace) could offer a simple hybrid whereby 30 tracks per month are keep-able within a streaming subscription, maybe with some sharing capabilities. The pricing equation isn’t easy, but with a good value package and great presentation across multiple platforms this could shift the needle and could reach a hitherto indifferent digital consumer. Potential: high

Cloud-based models
These are still some way off. The cloud with everything available and consumers paying for access isn’t quite as inevitable as people think – it’s back to business models that actually work. Play Anywhere is an interesting B2B offer that bridges what we have now with some kind of future cloud-based mother jukebox but it’s too complex to be mass market. Potential: low

Recommendation
New technologies arrive weekly, but don’t seem to really get that much better. They come and go, with nothing making a mark more than Pandora or Last.fm has already. Even if someone perfected music recommendation it’s not something that consumers will pay for in itself and will not drive transactions for the same reason Spotify will struggle to – music purchases don’t work that way. Potential: low

Playlisting applications
On the brink for over a decade digitally, playlists have been a key music currency for as long as tapes existed. As with all things music though, what made mix tapes great – the time, thought and love it took to create them – has been commoditised by digital, with playlist services swamped with literally millions of crap compilations. Still, some services like Muxtape and Mixwit were built on traditional mix taping values and looked promising until licensing issues killed them off early. But now the labels are licensing project playlist, so the sector might yet deliver. Key to its potential are two factors: built-in natural friction on music use (keeping the industry comfortable and consumers tolerant) and the ability to offer great value since sales can be seen as incremental to all of the current product offers on the market, even commercial compilations. Potential: medium

Making it happen. Who decides?

I’m sure I’ve missed a few key developments above, but I hope to have demonstrated that there are plenty of elements that can still bring value to digital music and help the market grow significantly. However, most critical of all is how the various market players interact to bring these elements to consumers in coherent, sustainable ways. It’s the subject of the next post or one after so please keep a look out for it.

A weekly round-up of sorts

Well that was the week that was! I promised to post each day and did including this, a ‘cheat’ post in which I wanted to take a brief opportunity to explain The Brew itself. If you've been reading regularly, you will have ‘got it’ by now. The Brew is here to offer a deeper insight into music industry issues than you might get from mainstream press or even most specialist media blogs.

It is sometimes vaguely topical, but not news, since music industry news is so widely available. If you don't already take them you must seek out Digital Music News, Five-Eight, Hypebot, Coolfer and MusicAlly for timely & savvy insights on digital music issues. And for all-round music perspective, Record of the Day of course.

On Juggernaut, I'm trying to write about the fundamental issues in music & the music business mainly from a consumer perspective – one so easily forgotten in the relentless tide of new technology and corporate shenanigans. If I occasionally veer off to more into discussing music more than business I make no apology for that, since in the end it’s all about the music after all. And writing about music itself can bring about the best, deepest insights.

Very briefly on the name, which a few more curious folks have asked me about. Well, it was, somewhat fleetingly, going to be a blog about music AND coffee, which is another life necessity and great passion of mine. However, I quickly realised I know nothing about coffee or the business of coffee, so that was that. The play on words is derived from 2008’s theme tune to my life, Elbow’s ‘Bones Of You’ (from the now miraculously popular and no less superb for it ‘Seldom Seen Kid’) in which the highly-stressed protagonist is "charging around with a juggernaut brow" (roughly 20 seconds in). Juggernaut brow/brew (coffee), geddit? Thanks for that.

In trying to take a lighter as well as more frequent touch this week, I managed to bemuse, daze & confuse a handful of regular readers. Have no fear The Brew will be back to business as usual from next time. I did however find another platform for a lighter touch – Twitter. I know, I know, I’m late to the party. To be honest I don’t think I’m long for it either, so get my Twitter updates (there on the right) while they last! Do the people at Twitter expect us to stick with this for life? No! We can’t create an existential vacuum this big for long, surely?

I wasn’t even curious about Twitter until reading Rob Fitzpatrick’s write up in The Word and coming across one comment on the therapeutic benefits of emptying your mind - getting your thoughts out of your head and into the cloud. Seemed a nice break from getting my head out of the clouds! Having tried Twitter I’m at least more qualified to comment on its application now, which for commercial brands I think is limited. The brand and record company feeds are boring. But it’s a fun way for smaller more specialist communities to bond and certainly a great way for bands to engage with fans. As to the commercial model – same as usual with new digital phenomena – to be confirmed.

Which brings me briefly back to yesterday’s post on the ongoing commercial challenges for digital music in which I neglected to register my concern and sadness over the closure of Fabchannel. The live music streaming site had been built up over nearly a decade and had a catalogue of over 900 separate performances. Firmly setting its stall out as free to users and ad-funded, ultimately Fabchannel could not make that formula work, despite a heroic effort.

The audio-visual digital space is an area in which I’ve done enough work to know just how hard it is. Fabchannel couldn’t squeeze enough blood from the stone even with the added value of exclusive, live content. For yet another gut wrenching account of how a digital music start-up eventually turned to dust, read Justin Knight’s ‘leaving letter’ on the current homepage. Ring any bells? Not too dissimilar from Justin Ouellette’s closing remarks on his closure of the original Muxtape which I posted on in December last year. What with the week's other fallout, I do hope Fabchannel doesn’t become symbolic of what’s happening in the music video space generally.

Ending on a better note, this week it struck me for the first time this year how 2009 is shaping up to be another good year musically (personally I thought 2008 literally, rocked). Wednesday’s post waxed lyrical on great music from unexpected sources, in this case Starsailor’s magnificent ‘All The Plans’. And with new albums up soon from Doves, The Hours, Laura Viers (anyone any news on this?) there’s clearly never a shortage of creative genius out there however they might all eventually get paid!

Blood & stones: Squeezing value from music video

Juggernaut Brew only occasionally goes topical, but since I’m posting each day this week, it’s a good time. The much-covered, much-read, much-twittered Mexican Stand Off between music publisher PRS and You Tube can only benefit from The View from The Brew, no?

Perhaps not though - what hasn’t been been debated, analysed, rumoured & forum’d with this one already this week? Besides, it’ll all blow over in a few days and the issue will be resolved –temporarily. And that is the issue – the lack of longer-term viable commercial deals between content producers and digital distribution platforms.

The PRS-You Tube squabble isn’t trivial, it strikes at the very heart of the music industry’s commercial model and means to future sustenance. The debate over the value of music videos on the web is a pre-cursor to the future debate of music itself on the web, what with Spotify’s momentum signalling the true arrival of ad-funded streaming services.

The difference between the two of course (music video and music itself), is that music video has never had much in the way of transparent market value, ever. The term ‘promo’ is such for a reason. The original deal between the labels and MTV was as good as barter – license the content for nothing and broadcast it as a promotional platform for the on-sale of a transactional good – CDs. One business model: going, going, eventually gone.

Meanwhile, the digital revenue model is a work in progress, to be confirmed. To put it into perspective, radio pays roughly 5% of its revenues to the music industry in licensing fees – an amount considered by many on the label-side nowadays, to be too small – 5% isn’t much of a cut after all. But it’s negotiated regularly in absolute terms, informed by the amount of revenues radio makes from advertising rather than tied to it (public radio - the BBC - also strikes its own deal with publishers and labels). It’s not a big share but it is solid, stable revenue flow to the music industry.

Commercial radio is a global market worth roughly $33billion (2007) and falling. Google’s revenues meanwhile for 2007 were $17 billion and rising ($22 billion). There isn’t much doubt about which sector is now leveraging ad-revenues more effectively. While You Tube of course, is only a part of Google, it’s a significant part.

The basic argument the recording industry is taking is that Google and You Tube can afford to pay more than it does currently for what is a critical element of content. Music video may have little transparent value, but it does have considerable collective intrinsic value. Meanwhile You Tube takes the argument that its own commercial model (not that of its rich parent) must be viable in itself. And with ad-revenues currently small, it can’t afford higher rates. Now you will know all this of course. I only iterate it here to make one point – both sides are right – which is why this is a genuinely hard one.

In the straightforward negotiation, the music industry is on trickier ground than You Tube. It’s hard to make any kind of ‘claw back’ argument – that you’re increasing your rates because the world is changing, than it is to stake a claim to nothing more than a valid slice of what the new world has to offer. You can hardly increase prices based on the size of your customer if you offer the same product to other customers. The music video market is a non-exclusive glut of services now including DailyMotion, MTV and smaller players Muzu, Joost etc. Even Music Brigade e-mailed me this week to let me know that its back. Guys, I didn't notice you'd gone!

On the other hand, You Tube’s mission doesn’t square with the world of content creation. You Tube doesn’t want to discriminate between a free-to-produce UGC video and a high-end glossy music video costing £10k per-minute to produce. Offering absolutely every piece of video ever made under the same free-to-all terms basically means the eventual, certain end of high-end glossy. That’s a shame because high-end glossy, professionally produced video is what a lot of people want, but have come to expect to get for free.

Basically, the goals & missions of You Tube and those of music & content producers do not square. The only solution, from an end-product point of view, has to be some form of service tier development. If you the user want your music video for free, fine, get it in its current, down & dirty form and don’t expect to get EVERYTHING. But if you want it higher quality, with extras, tier-up to something better. That something better has to paid for, be it subscription, transactional or sponsorship funded rather than ad-funded.

The producer-distributor partnership must share equitably across both or all tiers, not just one. The onus is on You Tube (and its content partners) to develop a commercial solution that maximises revenues enough to pay its way. Offering everything ever made by anybody or any company will not cut it. Platforms: innovate around your commercial model (Spotify seems to be working hard at this, watch that space). Meanwhile producers: innovate with your content and leverage some exclusivity.

The most puzzling thing to me about this spat is the timing. It comes just as You Tube has announced the development of its 'Vevo' service with Universal. That seems to me like exactly the right way to be going, in the direction of a solution that can work on a slightly more sophisticated level than what we have currently. It shows again how labels and publishers are as separated in the vision of music’s future as either is from You Tube.

Footnote: With these types of fundamental debates, it’s informing to see what music artists are saying. Beth Orton defended her ‘little’ royalty cheques on NME. Find me an artist that doesn’t like a royalty cheque. It’s a living!