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Quo Vadis Music: Quo Vadis Fuzz: Quo Vadis the Nightschool For Entrepreneurs
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[Note: this blog was revised on January 31 at 7:30 am to add a Lefsetz observation about Starbucks losing its core value and putting its Brand Equity in jeopardy]
Jeff posted a blog over the weekend about Music Piracy in China. In this connection he observed quite accurately, sad to say, that "Both in the US and China,...it's a cultural phenomenon whereby millions of kids feel that they are doing nothing wrong [in illegally downloading music]."
Jeff goes on to describe the reality that since people are going to share [or steal] music anyway, touring and merch is how artists pay the rent.
Over the weekend there was a blog that touched on the same issue from another angle. Pozmusic [Scott Johnson] asked in his blog: What Is The Value Of A Song?, which, given Jeff's accurate description of the existing realities in the music industry, is an extremely good question, indeed.
I have been thinking that, in building up the brand equity for Fuzz itself, beyond the Fuzz Manifesto and the Music Uprising which are powerful statements, being the "Facilitator" to transform the marketplace for Artists and Fans would be spot on because that is in essence the Fuzz undertaking - as least as growing numbers of users coming to this site now seem to have embraced as its core value - as I have.
If people pay up to 5 bucks worldwide for that large Starbucks latte that they drink up in one sitting [even in China where piracy is rampant, Starbucks is the rage], why don't they pay 99 cents for the download of transforming music that they can listen to over and over again? Answer: Starbucks [and Peets, and a few others] have been masters at building up a brand equity and aura that surrounds enjoying that cup of joe, even if the experience lasts for only about 15 to 30 minutes. What is the feeling one gets while drinking that coffee and, equally, when holding or parading around with that distinctive green and brown cup?
Starbucks [and competitors] have created the environment as a "Facilitator" where the relationship with the coffee drinker and his cup of joe is direct and enhanced rather than diminished by the intermediary/distributor, and is worth 5 bucks. As the creator of Starbucks describes the experience, he wants Starbucks to be perceived as the "third place" (besides work and home) to be.. This is what "branding" is all about! [Update: Jan 31, 2008 - see Lefsetz on Starbucks losing its Brand Equity - nothing is permanent. Lefsetz is tough on dumb]
In stark contrast, the Artist/Fan relationship in the music industry is now so screwed up because the intermediary/distributor/label gets in the way of that relationship, and it is not even worth 99 cents to buy a song. What's worse, many are willing to give up just a little bit of their precious integrity [little by little] to get what they want. The consumer electronics industry now is telling us we can store up to 40,000 songs on our download devices, with those clever white thingys dangling from our ears. How many people will be paying $39,600 [.99 X 40,000] for that treasure trove of music?
It is not surprising that the full-time Artist's livelihood now is largely dependent on gigs, touring, and merch rather than selling music [CDs, downloads]. Why is this? Same answer: The Artist/Fan relationship is direct when you are at the concert venue/night spot and/or wearing your favorite Band's t-shirt or hat, without the intermediary/distributor screwing up the nature of that direct relationship [although the increasing Fan resentment over the take of the middlemen ticket vendors may mean that the growing lack of connection [read: trust] between Artist and Fan may be in jeopardy in touring as well].
How then do we "capitalize" [that is to say, create a situation where people are willing to pay money] for a long-lasting and transforming experience in the nature of a direct Artist/Fan relationship over music, through "Facilitators" like Fuzz and/or others, that is comparable to the short-lived but important relationship we all experience with our daily cup of joe, through "Facilitators" like Starbucks and Peets?
Isn't it odd that we seem to value our daily cup of coffee more than we value our cultural heroes, the makers of our music and all that they do to inspire us? Sumptin's wrong here that needs fixin. It's actually pretty straight-forward, but more on this later in the Nightschool for Entrepreneurs.
[NB: a note to readers of blogs, comments, and reviews at thecapitalclinic: the text of all of my commentary at this site will be an organic "moveable feast" and, thus, evolve; and I hope yours will as well. Our contributions to the "knowledge-space" of the web [such as they are] should not be frozen in time. We should use the power of real-time, web-based music discovery to generate "wiki-[capital]." In this way, the time we spend here will be value-added building-blocks in our quest to advance capital formation, individually and collectively.]
Jeff posted a blog over the weekend about Music Piracy in China. In this connection he observed quite accurately, sad to say, that "Both in the US and China,...it's a cultural phenomenon whereby millions of kids feel that they are doing nothing wrong [in illegally downloading music]."
Jeff goes on to describe the reality that since people are going to share [or steal] music anyway, touring and merch is how artists pay the rent.
Over the weekend there was a blog that touched on the same issue from another angle. Pozmusic [Scott Johnson] asked in his blog: What Is The Value Of A Song?, which, given Jeff's accurate description of the existing realities in the music industry, is an extremely good question, indeed.
I have been thinking that, in building up the brand equity for Fuzz itself, beyond the Fuzz Manifesto and the Music Uprising which are powerful statements, being the "Facilitator" to transform the marketplace for Artists and Fans would be spot on because that is in essence the Fuzz undertaking - as least as growing numbers of users coming to this site now seem to have embraced as its core value - as I have.
If people pay up to 5 bucks worldwide for that large Starbucks latte that they drink up in one sitting [even in China where piracy is rampant, Starbucks is the rage], why don't they pay 99 cents for the download of transforming music that they can listen to over and over again? Answer: Starbucks [and Peets, and a few others] have been masters at building up a brand equity and aura that surrounds enjoying that cup of joe, even if the experience lasts for only about 15 to 30 minutes. What is the feeling one gets while drinking that coffee and, equally, when holding or parading around with that distinctive green and brown cup?
Starbucks [and competitors] have created the environment as a "Facilitator" where the relationship with the coffee drinker and his cup of joe is direct and enhanced rather than diminished by the intermediary/distributor, and is worth 5 bucks. As the creator of Starbucks describes the experience, he wants Starbucks to be perceived as the "third place" (besides work and home) to be.. This is what "branding" is all about! [Update: Jan 31, 2008 - see Lefsetz on Starbucks losing its Brand Equity - nothing is permanent. Lefsetz is tough on dumb]
In stark contrast, the Artist/Fan relationship in the music industry is now so screwed up because the intermediary/distributor/label gets in the way of that relationship, and it is not even worth 99 cents to buy a song. What's worse, many are willing to give up just a little bit of their precious integrity [little by little] to get what they want. The consumer electronics industry now is telling us we can store up to 40,000 songs on our download devices, with those clever white thingys dangling from our ears. How many people will be paying $39,600 [.99 X 40,000] for that treasure trove of music?
It is not surprising that the full-time Artist's livelihood now is largely dependent on gigs, touring, and merch rather than selling music [CDs, downloads]. Why is this? Same answer: The Artist/Fan relationship is direct when you are at the concert venue/night spot and/or wearing your favorite Band's t-shirt or hat, without the intermediary/distributor screwing up the nature of that direct relationship [although the increasing Fan resentment over the take of the middlemen ticket vendors may mean that the growing lack of connection [read: trust] between Artist and Fan may be in jeopardy in touring as well].
How then do we "capitalize" [that is to say, create a situation where people are willing to pay money] for a long-lasting and transforming experience in the nature of a direct Artist/Fan relationship over music, through "Facilitators" like Fuzz and/or others, that is comparable to the short-lived but important relationship we all experience with our daily cup of joe, through "Facilitators" like Starbucks and Peets?
Isn't it odd that we seem to value our daily cup of coffee more than we value our cultural heroes, the makers of our music and all that they do to inspire us? Sumptin's wrong here that needs fixin. It's actually pretty straight-forward, but more on this later in the Nightschool for Entrepreneurs.
[NB: a note to readers of blogs, comments, and reviews at thecapitalclinic: the text of all of my commentary at this site will be an organic "moveable feast" and, thus, evolve; and I hope yours will as well. Our contributions to the "knowledge-space" of the web [such as they are] should not be frozen in time. We should use the power of real-time, web-based music discovery to generate "wiki-[capital]." In this way, the time we spend here will be value-added building-blocks in our quest to advance capital formation, individually and collectively.]
Comments
We somehow need to make people realize that just because music can be experienced without needing to physically purchase it anymore, it's still an actual product... and one that took way more physical effort to create than that cup of coffee ever does.
I think we are really getting to the heart of the problem with the music industry today: because accessing music is now virtual rather than physical people don't want to pay for it in the same way they pay for a cup of coffee. [Plus, as you note, the stealing in virtual space is not so obvious as stealing a physical product.]
We must identify the root of the problem before we can truly devise lasting solutions - rather than the occasional spikes "hits" that the music industry manages to achieve today.
In my view, there has to be a broader "sea change" in the way people think about the Artist/Fan relationship, i.e., rather than a "one-time" buy/sell event like a cup of coffee, it should evolve to be more in the nature of an ongoing "social transaction" as Fricke and Jeff wrote about.
This will not happen overnite. It will be difficult for Artists to cope with "one-on-one" relationships as and when their Fans number in the thousands. Hopefully, with better data management tools, Artists will be able to guage and adjust the nature of their response to match the "intensity" of the relationships according to their individual "finely-tuned" artistic sensibilities, which is precisely why they are great cultural icons.
It is in the arena of ongoing producer/consumer [Artist/Fan] relationships where the notion of "Branding and aura" might come into play in changing the mind-set of the consumer [read: loyal Fan], precisely in the same way that Starbucks transformed the cup of joe at Joe's diner and the Grande Latte at Starbucks with wi-fi on the side. [Also, to be fair, the Starbuck's coffee IS better than it was at Joe's diner - so it's not all just aura].
As for the "branding and aura" point in my blog as it specifically related to Starbucks [as opposed to, possibly, Fuzz in the future - which will be up to you folks and your ultimate constituencies], I was really making the point about the differential between the actual cost of production of a cup of coffee [what, 50 cents?] and the cost to buy it [5 bucks]; as contrasted with, as you correctly point out, the cost of production of a song [countless hours of creative effort] and the cost to buy it [99 cents a pop that people don't want to pay].
Without massive sales, the economics of deriving acceptable profit margins from song sales are challenging to say the least - particularly if you have the unsustainable fixed cost structure of an hierarchy of middlemen, such as borne by the major labels today, that you also have to defray.
I totally accept that these are all tough issues the music industry has to address and overcome before the "new economics" can come to pass.
I agree that the live show has been, and is, becoming more and more the main focus for bands out there (especially in the true sense of a "live band"). At the same time though, I think it can be more difficult sometimes to get people to come to shows compared to how it used to be, even just as as recently as the nineties. I think this is mainly due to there being so many more styles, genres and sub - genres of music, and the whole dance club - techno - shake your ass off until 4 a.m. scene is more appealing to a huge quantity of people, over going to see a live band at a local club/venue. This relates more to band's on a starting out or up and coming local/regional plateau or level, more so than to a national or worldwide touring act of course. However for artist of all sizes, I think the days of selling large amounts of CD's at CD/record stores are sadly diminishing at a very fast rate. It's down right sad in my opinion. I love going to CD/record stores, especially the smaller ones where you find good, hard to find, or out of print stuff. Shit, I love listening to my vinyl albums, reading the liner notes, looking at the artwork... There is an entire generation of kids that have no clue what an album even is... Man, .... (insert your sigh or laugh or whatever here), its true... before too long we will have generations of kids that don't really know what a CD is. They will quite possibly be viewed as these ancient frisbee like, coaster looking things that there Mom's and Dad's still have laying around the house in boxes, that the kids and their friends can go through for a taste of nostalgia, just as I used to go through my Mom's old Beatles and Elvis records when I was kid. When that day comes, forget about explaining what an album was... Adventurous times are ahead...
I like the ideas and thoughts around this particular blog. It brings to mind the fact that a certain quality exists for Starbucks, and has helped allow for a build-up of a brand equity and aura to its customers around the world. People know that they can go into just about any Starbucks store on Earth and, within reason, receive a quality cup of coffee. Websites and music are very different, and therefore much more difficult to find quality music for the consumer. The kind of quality that the consumer will pay for without a second thought.
I notice on the web that many music websites are about quantity over quality. I agree with another blogger’s post on this site that music today is available in many varying degrees of quality, due to the relative ease that one finds to purchase the equipment to create it. Just because one can create music in the privacy of their own homes, doesn’t mean that it will be of the highest quality available to the consumer. Artists that have the assistance of experienced professionals, or artists who are experienced professionals in their own right have an advantage here in the quality of music they can produce. Artists and songwriters who have achieved radio air play, publishing, or licensing for film and television understand the demanding quality placed on their works. Those who continue to enjoy this success are the ones who have built up a “brand equity and aura” with their works that keeps these areas of the music industry coming back to them for more of their works.
This level of quality also works with the music consumer too. Artists who put in a great amount of time and effort on their material, and are very serious about what the quality outcome of their material is, is often heard and felt by the music consumer, whether the artist has a vast amount of experience in the music industry or not, and no matter the genre of music.
Which brings me back to the subject at hand, the artist/fan relationship and the build up of a brand equity and aura. For this to happen with music websites, sooner or later an accent on quality must be put in place to assure the music consumer that all the genres of music posted there are of a high quality. It will not be easy for website administrators to screen all the music offered for uploading, and the subjectiveness of the decision making about such music offerings will undoubtedly create further difficulty in the process. But if that is overcome, then that website will more than likely have an easier time with the build up toward brand equity, and an aura all its own.
It is up to Fuzz’s administrators to decide its future on the quality of music its website offers the music consumer. It helps that the artist has the choice in offering free music downloads at the site or not. I also believe that in the future, people will not leave their hands thrown in the air about the illegal download problem, and call it a commonplace occurrence. Technology and the next generations of the internet are coming, along with the devices to support it. Stay Tuned.
BB
Scott
Since Lesson 2 was about harnassing the power of "Brands" [at least in its initial iteration], I will limit my response here to this subject [but, hey, this is an open university of the possible so don't feel constrained in any way yourself]:
1. I think we are addressing several levels of "Brands" here -
(i) Quo Vadis Fuzz:a Fuzz brand - whatever that brand may evolve to become through the dynamics of the site itself, as "guided" by the administrators,
(ii) Quo Vadis Entrepreneurs:distinct brands of individual Artists which are a melange of elments, starting in the first instance with the "quality" of music [itself a subjective concept to be explored] but including "aura", "persona", or similar compelling intangible quality reflected in everything one does to project and communicate [this could be a pro-active process or a passive default imposition by others]; and
(iii) Quo Vadis Music:the new music ecosystem itself [the artist/fan relationship] in search of a new Ethos which, in more modern garb, we hope to brand, package, and sell as the "lifestyle of choice" [this where the image of Starbucks and those dangling white thingys came into the "Branding" discussion].
2. What I find most exciting is the prospect of learning first-hand about the power of "Branding" in all three contexts and to be front-line participants in making it happen if we have the gumption.
3. Branding is all about "framing". How we frame (i) this evolving site, (ii) ourselves as individual Artists/Entrepreneurs or individual truth-seekers/entrepreneurs, and (iii) the future of music, will all be invaluable lessons learned at our Nightschool For Entrepreneurs
Downloading music is still a good way to learn about a band and websites like BEATPORT and iTunes are making money hand over fist. Maybe you should point fingers at your shitty records label for not adapting to the new world we live in.
I wonder how good actual Vinyl sales are doing... I buy more vinyl than cds.
lets step back and look at what the real problem is here.
Lets all embrace online sales and promotion, its they way of NOW!!
Dig!
The N
I think the "new business model" of the music industry should be taken from a chapter from the old days of performers setting up shop on the street and collecting coins after the performance. The internet is a virtual street corner. Each domain or website is just a stop on the virtual highway.
Music should be free, and up to the fans or listeners to "donate" or pay what ever they chose for hearing the tunes.
Artists should just make money from the TOUR or CONCERT. That is how you bring the physical back to the virtual on-line world, and where artists make money the old fashion entertainment way.
This is just my 2 cents worth.
Whether "music should be free" or fans should "donate" is, in my view, a semantic rather than real distinction, depending on the perspective you adopt when looking at the basic proposition: "value = money" or "money = value". That is to say, if your perspective is the point of view of the artist, you want to "get paid" or "receive donations" for your value-added effort. On the other hand, if you are a fan/listener, you are willing to pay/donate for a transforming [i.e. value-added] experience in your relationship with a work of art.
In the good ol' days, this two-side transaction was generally in balance where the artist got his/her due and the fan got his/her benefit of the bargain and the "intermediary", largely the major labels and/or indie labels, performed a value-added balancing function [to permit the "market to clear"] and got their yard as well. Of course, the system of intermediation has now broken down, and both artists and fans are still in search of a new solution and new [virtual] intermediaries in the modern web-based era.
The key to making virtual capital into financial capital [and I'm not saying that this is necessarily the "end game", but it certainly is a prerequisite to an artist's survival] is to master "the discipline of equivalences" , an idea I advance at the nightschool for entrepreneurs. I hope you have time to read about the notion and share your own insights.
The new social environment is about finding something cool and being the first to share it, or at least pass it along. To me that's what the spirit of social networking is all about. Frankly, the crappy YouTube video of some kid dancing around in a turtle suit (I made that up, but I'm sure there is one somewhere) is more "newsworthy" in this virtual world of user-propagated information than the latest Britney Spears song, which has already been force fed down everyone's throats anyway. The joy is in the finding and the being found.
I think there is a fear that continued proliferation of unscreened user-generated content will lead to a situation where the good stuff can't be found amidst the junk, but I disagree. Because the general population, the average user, will become the A&R person, finding the cool new thing and spreading the word through the grassroots press of Gmail and MySpace and text messaging. If it's worth hearing or seeing, we'll know about it.
---
VJ, I love your idea that music should be free and that artists can just make money from touring and T-Shirts... except that I don't tour or sell T-Shirts. The fact that I'd rather spend ALL of my time creating new music than rehashing the same songs for years in front of drunk twenty-somethings doesn't mean that my music has no value. The pay-what-you-will model is interesting, even promising, but I fear in the end that it will just validate the average surfer's mindset that it's OK to take the music and run.
On my street corner, it is free to listen to the music all you want, and come back as often as you like. But if you want to take it home with you, you gotta put something in the case.
I think the paradigm shift has to come in the form of retraining consumers about what that 99 cents is really about. In the world of unsigned artists with little to no financial backing and a dream to spend the majority of their time making music, it's not about "selling" anything really. It's about needing support. It's about feeling that people actually care whether you survive or not, or have the money to go into the studio ever again. Fans need to come to understand as the major and indie label budgets dwindle that it is their responsibility to support the artists in order to keep the music coming. It's about all the albums that won't be made when the band breaks up because they can't afford to tour or go into the studio... or realize they have obligations that require a career that makes money.
A little off-topic, but I think I came around at the end there ;)