Wired.com is one of my favourite magazines, but occasionally I think they do make B I G mistakes about choosing their opinion makers… This is probably one of them… and of course, it’s turned me into this raving lunatic…

Why in the bloody world my revered wired.com decides that Joanna is a great carrier for an opinion piece re: digital music biz eludes me completely. Or maybe not…maybe it’s all to elicit the following reaction from me…

(Here’s the link to the original article. But to save you from opening 2 tabs on your Firefox, Here’s an email style rebut…from a rather upset muso. (Italics is her – In solid B I G angry words is MEeeee….)

Joanna: Many people would consider me among the least qualified individuals to write a column about what’s wrong with the digital music industry.

They’d have good reasons, too. For one, I don’t spend any money on music. I’ve never purchased a CD by a living composer, never paid to download a tune and haven’t bought a concert ticket in years.

It gets worse. Not only do I not own an iPod, I’ve never used one. Call me a germaphobe. I don’t like the idea of using someone else’s earbud. The entirety of my music collection consists of tunes purchased or downloaded by other people. Most of the time, when I want music, I listen to over-the-air radio.

Me: Coming in from the left field we have Joanna Glasner who:
1) Never purchased a CD by a living composer
2) Never owned an iPod – germaphobe issues… she says.

Then of course, despite all encouraging credentials…nothing’s stopping this one from spewing this article.

Joanna: Music industry marketing gurus might think it wise to ignore people like me. Because they never made any money from me under the old regime of prepackaged albums and singles, why would they in the new era of digital downloads? Here’s what they might not get.

Me: Here’s what you also might not get Joanna, you never bought a CD by a living composer. I’d say from the looks of all available info, music “marketing gurus” aren’t really going to try selling you anything else. They’ve failed the last few decades yeah?

There’s a section in the demographic constantly on the bleeding edge of change and almost always ready to try something new. Market Gurus like to target those, just common sense, nothing personal. Just because this group tends to listen, try new things, or simply slam them… but at least, they listen, and in the marketing realm… Listening is good.

SILENCE is a marketing guru’s Bogeyman.

Also this, the music industry is an ideas industry. New facets pop up all day, be it new sounds or music technology. Seems that an industry involved in daily breakthroughs do not market themselves to people who are slow on the uptake of technology or ideas. i.e. LAGGARDS.

For those not in the know, a typical behaviour of a laggard is one who uses cassette tapes when the rest of the world is about to ditch CDs. In the musical context laggards can be loosely described as those who don’t buy contemporary music…AT ALL, somehow, they are a bit necrophilic in their tastes, they like DEAD people music.

There’s nothing wrong with that. BUT, marketing gurus tend to pay little attention to laggards because:

1) Expensive and fruitless to market to – laggards just don’t take to or respond to new works or ideas – no matter how much noise is made;
2) A laggard’s money is usually spent on dying industries. Cassette tapes and, in this case, classical music market;
3) If entire economies of this present future rested on the shoulders of laggards, we’d be in the throes of the GREAT DEPRESSION…chronically.

(So…before you feel ignored by the “marketing Gurus”, I recommend that you read Seth Godin’s Purple Cow to get an idea of how idea markets like the ideas-based industry works – homework 1 for you Joanna).

Joanna: I’m what I call business-model sensitive. That is, if the way something is marketed or priced doesn’t appeal, I don’t buy it — unless I desperately want it. I prefer the price of a product to bear some relation both to the cost of producing it and its value to me.

Me: We all do. I don’t know about “value to you” as for “COST of PRODUCING”, I’m about to break it all down for you baby.

Joanna: It’s this same business-model sensitivity that causes me to forgo cable television. Why should I pay for unlimited access when I don’t watch more than an hour a day? It seems akin to paying for the all-you-can-eat breakfast buffet when I just want coffee.

Me: Sure thing. You just don’t belong to the Cable TV market. No worries. Doesn’t mean that it doesn’t have value…

Joanna: Some would call such behavior cheap. I take great offense at such character assassination, although it may be true.

Me: Well you are allowed to dislike cable…as I mentioned… You are not their core market. Just because it’s something you don’t like, doesn’t mean it’s valueless. Cable TV does give non-stop movies and the anime channels available probably rock.

Then of course on a good game and a good day, Cable keeps a majority of the human population indoors and sated with beer, TV and sports so the rest of us freaks can go out and enjoy the day in peace. No value?!! I say…keep the bloody cable!! (Don’t make me use caps…)

Joanna: Either way, for someone who is business-model sensitive (or cheap, if you must), the digital music industry doesn’t add up.

Here you have a product — recorded music — that costs very little to produce. Sure, you can spend a fortune on sound studios and videos. But even an amateurish recording of a live performance sounds OK. Nearly everyone knows some struggling band that has put out a decent-sounding release on a shoestring.

Me: Dear Joanna, this is when I really want to kill you… then again, ignorance isn’t a crime so I’ll try my very, very best, to illuminate you.

Contrary to your spectacular realms of ignorance, recorded music doesn’t cost “LITTLE to produce” – DIY or not. Either way, there is still time, blood and sweat involved. They don’t come cheap. Let me b-r-e-a-k this down for you.

I take an average of 1 week to craft a song. During this time I would have thrown away an average of 100 riffs that I consider major crap and about half a book of lyrics.

Then there’s the research mid song as well, because I happen to tell tales in my songs, I do hours of research on a theme I want to create, be it murder, psychosis or just plain human stupidity / ignorance— ah case in question.

Then of course, there’s the bit that you take the song to a producer or you DIY. Either ways, that is another few weeks. Layering, riffs, arrangements, vocal delivery are decided here…. Then there’s the sourcing of sound designs, in my case where you hit everything in the kitchen to your head to decide what sounds need to be sampled for the track.

Guess what, before you even know it, it’s been a month into the song. So yes, let’s not look at money spent here but the effort involved, then look at it all again and tell all of us musos that our art is cheap.

So let’s now talk Cash…

Indie level style
Producer – average $50/hr
Average time spent on song – 20++hrs
Total — $1,000++ (unless you beg or sign away something. Most times I sign away something called “points on a recording”).

For those not in the know giving “points on a recording” means giving away a percentage of earnings on the recording makes, when it gets licenced, played on radio… blah blah…

Bedroom computer style – What Joanna refers to as amateur methods…
Average time spent on song – 40hrs
Yearly Software upgrades — $200- $3400 (there’s always that one sample that sounds just that much better)
Hardware upgrades – higher RAM, more memory, external drives you name it $600 - $2000/yr depending on the severity of your addiction.

Opportunity Cost of skipping day job for hobby???!!! (Hint: most of us work contract?) – Let’s do a rather low estimate of maybe $15/hr make that times 7 per day of work skipped

Then there’s whoring your soul for the job you hate, because music is all you can think of but you have to pay rent.

Pretty Cheap eh? I DOUBLE DARE you to say it to my face.

I’d cover the majors, but since what I know is pretty much second hand info, I though I’d better not go into detail. But just so you know, a day in a shit hot studio can cost up to $10,000.
– No bullshit.

The big time major producers / mixing dudes need to pay their bills too. A prized equipment like an SSL mixing console costs more than $500,000 and chews up industrial amounts of electricity. I know because I’ve been to one. Upcoming album was mixed in one such studio.

Joanna: Once a recording exists, reproducing it costs next to nothing. Because most of us pay a flat monthly fee for internet access, there’s no extra cost to send or receive a music file. CDs are also cheap. A pack of blank ones sells for a few dollars.

Me: Yup, take the golden eggs, kill the barking goose.

Please refer to above cost breakdown for an idea of what a recording has to do to exist…in the first place. Of course, with peer-to-peer file sharing services and the like, we musos come real CHEAP to you don’t we?

Now let’s look at things from the musicians’ perspective. Now that a song exists we need to get it out. We sign up to stuffs like CDBaby, Tunecore, we make websites to promote the living shit out of the songs we create. Websites cost money and time to maintain. If you have done your homework instead of pulling this article out of your ass, you’ll realise that promotions can cost either heaps of time or money or both…most cases …it’s both.

I’ll have you know that production costs plus promo, most artist indie or major, don’t get to break even. That’s why we take shit jobs that pulverise our brain cells.

And the pain of it doesn’t go away over time…

Joanna: How, then, does the list price of a new music CD get to around $18? Why does it cost a dollar to download a song on iTunes? While $1 isn’t much money, it seems high for something that costs nothing to reproduce.

Me: Say it “costs nothing” again and I will MAIM you…

Joanna: The Recording Industry Association of America maintains that CD prices are actually quite low when one factors in promotional costs, like videos, advertising and concert tours. The dollar you spend on a digital download may also seem less exorbitant when you consider it gets split between label, retailer, performer and so on.

Me: Yes I admit that half the time I don’t believe in these associations. And you are probably right to say that labels take just too freaking much. NO ONE pays the artist. Here’s an iTunes profit breakdown for a major artist.

For every 1 dollar sale
- 30 cents goes to Apple
- 65% goes to record companies
- Depending on contract – 8-14 cents goes to the artist

And of course, the artist doesn’t really get to put any money into their pockets until the recording loan is paid up.

So there…then there’s more.

Video clips can run in the tens of thousands. Cheapest decent ones are hard to come by. They usually involve calling up all sorts of favours or rounding up believers that will invest in your art.

Website designs and maintenance can go into the high thousands, even on an indie level, I’ve spent close to 2 grand on my site thus far.

Promotions and concerts, I’m not sure what sort of rocket prices we talk about in the case of majors, but for an indie charging $18 for a CD is not too exorbitant at all.

You see, most of us don’t even move more that 2,000 units per record. Most of us are lucky to move 500 all on our own. This means that at $18, and assuming that we clear 500 units, us indie artists just about break even, barely when you consider ongoing costs.

Art involving a lot less has sold for a lot more. So don’t talk to me about over-pricing.

Joanna: I’m not convinced. Plenty of other content online is free, including most news, and editors, writers and publishers are paid for their work, and in some cases, even make a profit. By comparison, the pay up-front business models of the modern digital-music industry seem like losing propositions. Surely something better will come along to decimate the status quo.

Me: Now Joanna, you don’t expect me to do research on how your publishing industry works as well do you? Well correct me if I’m wrong but I do know that a part of your bread and butter comes from a magical thing called GOOGLEAdSense. Heard of it? Maybe your magazine wired.com can explain why it’s still surviving after all that free content available. And don’t fool me with subscription numbers.

Then of course in the realms of news, big part of revenue probably comes from advert / product placements and the lot. DON’T TELL ME YOU DIDN’T FIGURE THAT OUT. Commercially owned online content is never EVER really FREE… Eeesh.

So back to the music industry, we happen to make our cash from downloads, CD sales performing and licensing. This is how we work. At present that’s pretty much how the industry functions. You have gone on about how we as musicians should make our songs available for free or close to nothing, so I keep scouring your article for what you think our source of income should be. I mean, you really did sound like you were ripped off in this article, so I guess it left me wondering how else do you think us musicians have been raking in our cash?

I found no such mention of any possible income we might have had or any proposed revenue streams… So there can only be 1 possibility.

You think that musicians, unlike other artists, are GODS

Welcome to reality Joanna. We may appear God like on stage but these Gods fart, bleed, eat and pay rent/mortgage.

Sorry to break the romance here…

Joanna: Thus far, reality has proven me wrong.

Shares of Apple have quadrupled in the last two years, boosted by iPod and iTunes sales. Stock in Napster, the music-download subscription service formed from the defunct file-trading site, surged more than 30 percent last week following news reports about a rumored alliance with Google. And shares of RealNetworks, which runs the Rhapsody music subscription service, are also up more than 50 percent in the last six months.

Sales of music downloads and streaming services are also growing at a brisk pace. The International Federation of the Phonographic Industry recently reported that global digital music sales tripled to $1.1 billion in 2005. About $400 million came from downloads of cell-phone ringtones. As for songs, people downloaded 420 million single tracks from the internet last year, about 20 times more than two years earlier.

Those numbers may sound encouraging. But put in perspective, it’s hard not to conclude that these are actually piddly sums.

Me: Ok…so we are looking at the music industry’s income (digital music sector)

Bear in mind that the digital income sector though growing (TRIPLING from last year), is still a pretty small part of whole musical picture. We are talking about 6%? (Source: International Herald Tribune 19/1/06) But ok I’ll let you continue, you are comparing this to….

Joanna: Look at it this way. According to Box Office Mojo, a movie-data site, the top-grossing films of 2005 (based on worldwide revenue recorded as of Monday) were:

1. Harry Potter and the Goblet of Fire: $880.2 million
2. Star Wars: Episode II — Revenge of the Sith: $848.5 million
3. The Chronicles of Narnia: The Lion, the Witch and the Wardrobe: $638 million
4. War of the Worlds: $591.4 million
5. King Kong: $534.6 million
6. Madagascar: $527.6 million
7. Mr. & Mrs. Smith: $477.5 million
8. Charlie and the Chocolate Factory: $473.4 million
9. Batman Begins: $371.9 million
10. Hitch: $368.1 million

Me: Ok…now I feel like spraying you with insecticide. BUT that’s illegal, so I’ll continue to point out the error in your comparisons.

Simple maths. When comparing revenue DO NOT compare 6% income (digital music sector) to another industry’s 60%-70% income (movie box office figures). Not freaking fair. Of course I’m taking into account DVD sales and rentals…

Also, movies cost significantly more to make. An average decent song takes $100 - $1000-ish to make. A decent movie costs an average of $10000-100000. Ok? I know Robert Rodriguez broke everyone’s record by making El Mariachi for $7000 but that’s beside the freaking point.

My point is simply that if you want to compare profitability of two industries, you better be looking at actual profit figures, NOT gross revenue as it is grossly misleading.

You know, simple maths. Simple common sense. $30,000/mth income for a family of 20 is not as rich a sum for a family of 2. I hope the analogy is simple enough for you.

Joanna: Remember, these are the revenues of an industry that’s also reeling from rampant piracy. You’d think the global online music business would at least be able to outdo the combined take of No. 5, a remake starring a giant ape and No. 4, a Tom Cruise flick about alien invaders with all the visual appeal, according Roger Ebert, of an “ungainly erector set.”

Me: Did you just insult one of my favourite movies? As above. Do your homework.

Joanna: Even cat litter is selling better. In the United States alone, people spent an estimated $1.2 billion last year on the stuff, according to Information for Industry, the corporate sponsor of Business Trend Analysts. Granted, cat litter is a much more mature market, having been around since the 1960s. But still, what does it say when the global download business doesn’t even exceed the amount Americans spent to fill boxes that collect feline faeces?

Me: Again, homework, you need to compare actual market size of cat litter vs music industry. Then when you are done, find out the amount of profit these firms are actually making from cat litter? The Gross income factor that you keep using is very misleading when you are comparing such disparate industries.

Joanna: Among other things, it says something is probably unappealing about the current model for selling downloads.

Me: Maybe that’s just your lack of research.

Joanna: I like the idea of pricing digital music at a level that makes it disposable. So, if my hard drive gets fried, my CDs get scratched or my iPod falls into the toilet, and I don’t have backups, I’d be able to repopulate my music collection at reasonable cost.

Me: Yes yes, I hope you wished the same for your family photos too…cheap and replaceable.

Back up is gold, it is a good thing whether it’s Microsoft or not.

Joanna: By this line of reasoning, the appropriate price for a song download should probably be no higher than a quarter. I think a quarter is still too much to motivate me to spend money on music. I’d rather pay 10 cents, or, ideally, get songs for free.

Me: Yes, lines of reasoning that lack research and thought BREED piracy. It’s views like these that ensure that the best arts continue to die. I hope you don’t get paid for your work as a writer too. I mean, they’re just words and you don’t even have to pay for paper. I’m just trying to follow your reasoning here.

Joanna: But like I said, I’m probably not the best target market. I’m still fiddling with the antenna on my TV to see if I can receive one or two stations clearly. That way, I won’t have to pay for cable.

Me: Yeah…not the best market at all. You need to be very quiet. My minions need to stop sending me articles that shock me into bitch-dom. I also urge you to make fixing the antennae on your head a major priority; it is receiving some very old and distorted technological news.

AMEN till next week.

This entry was posted on Saturday, February 25th, 2006 at 12:26 pm and is filed under Book of fairy tales: Tales from the Music industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.