Barenaked Ladies Prove Labels Aren't Necessary

I'm not going to say that I'm a big Barenaked Ladies fan. But I am a big fan of the ways they've gone about distributing their music:

• They give away ProTools files via MySpace to let people make their own mixes
• They don't use major labels for marketing/distribution
• They own rights to their work
  
• They sell much more than CD's - digital downloads (different versions), concert tickets, packed USB drives, licensing to TV etc.
  

And it's going pretty well for them, bringing as much as $5 of revenue per disc sold, which has brought nearly $1M to the band. This seems like a much more natural way to sell music - creating something and letting others do what they want with it. Music moves beyond something people sit and listen to, becoming something they can interact with and make better for themselves (and others). Art is not just in the eye/hear of the beholder - it's in the hands too. And that's where it's the most valuable.

The Clash on Music Industry

In a recent interview with the Guardian, former Clash/Pink Floyd manager Peter Jenner stated:

The current record company model might well morph into that of venture capitalist licensors, working in partnership with artists to develop their businesses.

Grant Robertson at the Digital Music Weblog didn't like this, saying "You can help give down and out industry executives the chance to have that much needed eyelift... Each month you'll receive a letter from your industry executive, detailing his or her progress and exactly how your money has helped them maintain their lifestyle.

I'm not sure this is what Jenner is trying to say. What I would envision is people who know the music industry (especially as it's changed) inside and out can help bands that they like market themselves. It could look like artists like Beck or producers like Brian Eno, who have done an excellent job navigating the changing music world, reaching out to younger artists to help them by sharing experiences. Sure, the experienced guy is going to take a cut - but in the long run, everyone wins. At least, that's how successful VC's work.

DRM - Why Do People Care?

Engadget's The Clicker has a nice essay on DRM today. And judging by the comments, many people feel very strongly about the issue. It's nothing new, but asks the question, "Where do people get their sense of entitlement with regard to content? At the end of the day if that's how content owners choose to sell it, isn't that their right? Isn't ours simply a choice of to buy or not to buy?"

It's a good point - copyright was created for a reason: to allow creators to sell their work. Under U.S. law, it's their choice to sell it, give it away, or Creative Commons-it. As consumers, it's our choice whether or not to buy, and laws of economics will govern their choices.

The laws of economics may or may not apply to digital content in the same way they do for tangible goods, as iTunes has found with their 99-cent pricing scheme. And there are lots of new business models emerging to handle the relatively new scenario where Marginal Costs of Production = 0.

In my opinion, we feel entitled to free access to anything where the MC = 0. As capitalists, many Americans dislike monopolies - which are the only entities that can price products above marginal costs. So by trading pirated content, consumers force the standard laws of economics. This doesn't just apply to content, but software (games, OS, etc.), a bus ride, parking, news, air at the gas station, or whatever other products exist where consumers understand that the marginal cost is essentially zero.

From the comments, however, it seems that most people dislike DRM not because it forces them to pay for music, but because it won't allow them to use it how they'd like. Maybe they're just not admitting they want to steal, but flexibility seems to be most important - so that you can listen to & manage music on any of their devices (which could rack up a lot of fixed costs for the consumer), or watch video content on things other than a computer (Tivo, etc.). Of course, Engadget commenter's are probably not a statistically balanced sample of the population!


Some of my favorite comments so far:

JAC @ Sep 22nd 2006 12:16PM

They were raping us with music CD prices and software prices before, now we have them by the balls, theyll still make loads of money, just not as much as before.

EdZ @ Sep 22nd 2006 12:17PM

They don't know they're paying the same as a CD for a file that may or may not play the next day, or at someone else's house, or on their portable player. But they'll pay anyway, because they don't know, and the seller isn't going to tell them. The buyer is agreeing to terms of which they are unaware of.

Ralph Anseus @ Sep 22nd 2006 12:23PM

You tell me. Did you pay to use the Pirate Bay logo?

Jerryg @ Sep 22nd 2006 12:27PM

The problem is that if I pay for content (music, movie, whatever) I should be able to play it, in my car, house, portable anywhere I want. I should be able to take my movie over to a friends house and watch it or take my music with me to a party and play it. If I get a new portable regardless of who makes the player, it should work it that to. Untill these things are adressed a merry pirate i shall be!

Matt @ Sep 22nd 2006 12:54PM

Let's assume that there are no grocery stores or fast food options, the owner of the overpriced gourmet restraunts have made sure of that. Then assume that you are not allowed to share a meal with any of your family or friends. Or maybe you can, but then you have to buy far more food than you really want or need including food that you don't like.

This is more comparable to the situation with digital content today. I would think that in this kind of situation, the moral qualms about not paying the restraunt owners would begin to decrease, significantly. You'd be lucky if people weren't rioting in the streets.

I'm not condoning piracy, but people are tired of the rules that the industry is forcing on them. They're tired of re-buying albums in new formats. They're tired of DRM'd files that won't play where they want them to. They're tired of having the rules dictated to them on how they can do things.

iTunes' 99-Cent Rule

Music industry execs, for a long time, have been fighting Apple to soften their fixed-price rule for songs. Currently, every track on iTunes sells for 99 cents. The music execs argue that popular songs are worth more than less-popular songs, so consumers should be charged more for them. This is simple supply-and-demand, and most Economics-101 students would agree with this line of reasoning - variable pricing can be good for everyone.

The Digital Music Weblog has a great take on this though, defending Apple:

I've said this before. A buck a tune works on a very simple level for most music buyers. It's easy to equate one thing with another; One buck? one tune. When you bring a sophisticated "black box" price structure to a service like iTunes, you increase the amount of decision making required for the user to make a purchase.

99 cent downloads make the purchase a clear choice, which simplifies the buying decision. When you introduce a more sophisticated pricing structure to the mix, the music fan is forced to have a more complex internal dialogue.

Do I like this song? What price is it? Is it worth the premium? Maybe I should just wait until it's 99 cents like the other songs I bought. If I buy this higher priced song, does that affect the number of songs I can buy in total?

The true fact of the matter is, supply and demand law doesn't apply to digital downloads. I _know_ that song will still be there if I come back later. Applying a tiered pricing structure to digital downloads applies a false market force to the equation; consumers have grown smarter about the methods used to fleece them.

I'm not sure if I completely agree. But it is interesting to see how notable Long-Tail markets (like Apple and Netflix) have had a lot of success with fixed pricing, where "premium" or "hit" content doesn't carry a premium fee.