The USS Quad Damage

“The cynical musician” Krzysztof Wiszniewski (Faza) wrote an article about the music industry which was turned into a graphic on Information is Beautiful. Clearly, not having to read an article is a great way of getting people to comment on an article (including myself).

In general, his point is well made, and the numbers do look good. Especially from the point of view of the general idea that “musicians can make money so much easier now on the internet” that the crazies spout is well put to rest here. Tom Slee talks about this from a more general viewpoint and a different perspective — that the internet has an even stronger “winner takes all” dynamic than real life. That is, that if you could make some money in RL and you are “niche” or “indie”, then even fewer people will care about you on the internet.

However, his analysis has a few issues, which I will attempt to put more tactfully than I did in his comments:

1. The Starving Indie Musician (hereafter Sim) is no longer beholden to what the record company wants her to do. She can effectively make whatever she wants at a price which suits her. In the “record deal” model she may be forced to spend thousands on a studio she doesn’t want to use to make an album she didn’t want to make. However, he’s talking about stamping his own CD here, so my point is practically moot.
2. Sim may be on the breadline, but her business model isn’t that of a wage slave. The effort required to sell a single CD is none, but she needs to advertise it, produce it, etc. From an ROI perspective, the picture may be far rosier, considering that it is actually cheaper to make music nowadays (with a quality superior to ye olde indie music).

These were just niggles though. It does not change a few of the fundamental problems that musicians are really having.

1. Part of the problem is that artists are not really marketers, and don’t really think of it from a “so what do people really want, and how do I give it to them” perspective. That is to say, Sim is effectively using a digital distribution framework that already exists. She could buy web space and make a web site and distribute the music the way Trent Reznor did, but this is not really her “core business”.
2. The other part of the problem is that despite the fact that money is also a “digital good”, it’s really hard to transfer money over the internet, and some of this is because of the number of con-men on the internet, but there’s also an overly high “transaction chargeâ€� that the various people who the money changes hands with will charge. There are two resultant issues with this:
   1. People feel reluctant to pay because they will either pay with a credit card (hassle) or with something like paypal (huge overhead).
   2. iTunes takes 1/3 of the money, CDBaby needs a cut, etc. etc. A large part of this is basically because no one is competing with them. Everyone hates iTunes, but no one can compete. The companies that do are owned by major record labels and frankly make iTunes look good. This is the reality of why it’s cheaper to make a physical CD. There’s also the problem of major record companies trying not to compete with the physical CD version of themselves.

My point here is, this is not a “paradise that could've been, but wasn't” it’s basically “a paradise that hasn't been built yet”. Why not? And how can we build it? What are the barriers?

One barrier is mainstream music. If you don’t have it on your platform, no one will come even if your platform is a million times better than iTunes. However, if you sign a deal with a record company, you end up in the same situation that CDBaby is in. If you had great indie music only, but it was also available on iTunes, people would just get it on iTunes. Contrariwise, if people did use your system, then they would need an iTunes account anyway. This is a total hassle. You could sign exclusive deals with great indie bands, but this is just like the old world, and you’re still making the listener get two different systems.

The system also needs to do things that last.fm, for example, does. If it’s indie music only, it needs to quickly tie the listener’s taste to similar great music in the system’s catalog. It should probably also be a plugin to things such as Winamp or WMP. It could use things like bittorrent to minimise costs. The biggest barrier is good music that gets into the listener’s ears quickly. This way, even at a lower cost, people will still be able to enjoy great music and Sim can make some money.

In any case, the reason I don’t agree with Faza’s “The paradise that should have been” is not that his numbers or logic is flawed, it’s because the online world is currently held back by the real world. When there’s a killer app for great indie music, then things will start looking up.