Pretty Independent Machine: Songs as Promotions

TechCrunch vs Profy.Com This Tuesday’s post about NIN and Radiohead going independent has been on my mind. So here’s a part 2.

Now, I’m not the biggest fan of current CD prices. I don’t think anybody is. So when I read TechCrunch articles like Michael Arrington’s “The Inevitable March of Recorded Music Towards Free“, I’m filled with glee.

He’s basically arguing that the economics of recorded music will eventually drive all music to be free.

His argument has been met with some criticism, however, most notably from Paul Glazowski of Profy.Com. Glazowski argues in his post, “TechCrunch’s Founder Says Recorded Music To Eventually Be ‘Free’; Here’s Why He’s Wrong“, that there is still a cost to recording music, which will prevent it from being completely free.

This discussion got me thinking. If digital songs become free, how will that effect musicians? Listeners will love it because, hey, who doesn’t love free stuff? But how will it effect the livelihood of professional musicians?

As I understand it, a musician makes money from:

  • Album & song sales (CDs, iTunes, etc)
  • Live performances
  • Merchandising (t-shirts, posters, etc)
  • Commercial licensing (using your songs for commercials)

Not all of these provide income at the same levels. I don’t think there’s a common ratio, but album sales generally account for a small percentage, while the others offer more, according to Chris Arnold’s NPR article, “Band Tries to Make It Big Without Going Broke“.

So if songs become free, that shouldn’t gravely effect their livelihoods—since paid songs don’t effect their livelihood much already.

Also, if song distribution is no longer a means of revenue, its value changes. It becomes… perhaps… a new marketing channel?

Such is already the case in China, where music pirating has made profits from CD sales drop to zero, so writes Kevin Maney for USA Today in the article, “If pirating grows, it may not be the end of music world“, written in May 2005.

Yu Quan, like every music act in China, gets almost no income from CD sales, even though millions of its CDs have been sold. As soon as a CD is made, the pirates are on the street, offering them for a fraction of the retail price. Stores sell pirate copies. Legitimate CDs all but vanish.

So artists have to regard CDs as essentially promotional tools, not as end products. Yu Quan makes money by performing concerts, getting endorsement deals and appearing in commercials. If people hear and like Yu Quan’s songs on pirated CDs, at least they’ll be more likely to come to the concerts and buy what the duo endorses.

The primary revenue vehicles are now live performances, merchandising, commercial licensing—and even commercial endorsements and corporate sponsorships (though only the most popular acts can tout those).

So I agree with Arrington that the price of digital songs is being driven to free. But I don’t believe it’s just the economics of the situation.

My guess is that piracy and P2P networks figure larger in the equation than he thinks, especially since teenagers (and younger) are such prolific users. They are the audience of tomorrow; their habits now will lay the foundation for the landscape we’ll soon be facing.

A paradigm shift from looking at digital songs as promotional vehicles instead of income sources will also precipitate the drive to free. And this, in my opinion, is a good thing—especially for musicians, though maybe not record labels. If musicians don’t need a record label to package their CDs and market them anymore, what will they need them for, if they need them at all?

I think I have an answer for that, which I’ll write about tomorrow. (Ah, the suspense.)

Author: Mike Lee

An idealistic realist, humanistic technologist & constant student.

4 thoughts on “Pretty Independent Machine: Songs as Promotions”

  1. I think what Glazowski misses is that there’s plenty of free stuff that costs money to make. Take a look at open source software. There is a barrier to entry: you need a computer, which still costs real money (though you could perhaps argue that you can get cheap used ones for less). You need an Internet connection for distribution. You need time and tools (compilers, debuggers, maybe an IDE). If your software is a web site, you need a domain name, web hosting, and bandwidth. Yet open source software flourishes and continues to grow because of one thing: the passion of the people who write it.

    I believe, or perhaps simply choose to believe, that most musicians start out with a passion for making music. They buy their own instruments, travel around to small bars or coffeehouses on their own dime and perform at open mic nights, and generally just love what they’re doing. That love can continue to drive music creation, especially given the professional-quality sound equipment that can easily be hooked up to your Mac or PC. The cost barrier to recording your own songs is much lower now than it was 30 years ago. If an artist decides to go that route, the profit margin on self-produced songs is large enough that they may see a ROI with much fewer sales.

    Let the music be free!

  2. @ Nicholas: That’s a good point. I didn’t think to make a comparison to the open source movement, but there are some good analogies there too!

    @Svetlana: Thanks for the kind words! This is a very interesting topic, one that’s obviously been on my mind a lot lately.

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