Should Pandora, Spotify, Rdio, MOG et al even exist?

A prelude to a panel discussion at SF MusicTech 9/12

Wolfman Jack John Peel
Wolfman Jack (left) and John Peel

I read this article recently: The Elusive Big Idea by Neal Gabler, a senior fellow at the Annenberg Norman Lear Center at the University of Southern California and the author of “Walt Disney: The Triumph of the American Imagination.

For me it was a fascinating reminder of how timid our contemporary thinking has become, at least as expressed in public, (are people keeping their big ideas to themselves?) and it makes me wonder what has caused this timidity. And how, as Gabler points out below, can the editors at the Atlantic not understand the difference between “ideas” and “observations.”

The July/August issue of the Atlantic trumpets the “14 Biggest Ideas of the Year.” Take a deep breath. The ideas include “The Players Own the Game” (No. 12), “Wall Street: Same as it Ever Was” (No. 6), “Nothing Stays Secret” (No. 2), and the very biggest idea of the year, “The Rise of the Middle Class — Just Not Ours,” which refers to growing economies in Brazil, Russia, India and China.

Now exhale. It may strike you that none of these ideas seem particularly breathtaking. In fact, none of them are ideas. They are more on the order of observations. But one can’t really fault the Atlantic for mistaking commonplaces for intellectual vision. Ideas just aren’t what they used to be. Once upon a time, they could ignite fires of debate, stimulate other thoughts, incite revolutions and fundamentally change the ways we look at and think about the world.

I love that last sentence. Yet here’s a question – is this lack of intellectual vision a peculiarly American problem? Gabler again:

It is no secret, especially here in America, that we live in a post-Enlightenment age in which rationality, science, evidence, logical argument and debate have lost the battle in many sectors, and perhaps even in society generally, to superstition, faith, opinion and orthodoxy.

And I might add, clichés.

If you have time read that article now, it’s not too long. Here’s the link again. Then please come back here.

Ok, now I want to go on to discuss the Lack of Disruption in Music Technology which is the title of a panel I am leading at SFMusic Tech on September 12th. Let’s start out with a couple of questions – why is there a dearth of Big Ideas around music delivery systems, particularly in the path that leads from artists to fans? And what causes that dearth – is it a lack of intellectual vision or the lack of research by technology companies when it comes to understanding the history of the recorded music business?

I invited Corey Denis to the panel and she pointed out to me recently that she knows many people inside music tech companies who have never read Frederic Dannen’s Hit Men: Power Brokers and Fast Money Inside the Music Business. This is what Billboard had to say about the book – “Hit Men is the shocking, highly controversial expose of the venality, greed, and corruption of many of the assorted kingpins and hustlers who rule over the music industry. A sobering, blunt, and unusually well-observed depiction of the sometimes sordid inner workings of the music business.”

Frederic Dannen may not exactly be the Bob Woodward and Carl Bernstein of investigative journalism but it’s an eye-opening read. It’s too late for the existing services but if you’re thinking of launching a new music service perhaps you should give it a read..my gut tells me Steve Jobs probably read it before starting to negotiate with the labels over iTunes and music catalogs.

To tie this in to Gabler’s article it’s worth pointing out that I don’t believe the lack of Big Ideas in music technology thinking sits only at the feet of music tech folks; many, many artists have failed to come up with Big Ideas themselves regarding different ways to reach their fans through technology. Yes they may embrace Facebook, Twitter and the now floundering MySpace, but those are tactics not Big Ideas.

Modern rock music is blandly conservative, which in and of itself appears to me to reflect the timidity of modern youth and young adults (can we please stand up for something?) Musicians seem to prefer the bland and banal to the barricades. They act as if they’ve been neutered by American society (and yes, I know that’s a generalization.) My current favorite exception, for which I will no doubt get some flack, is – Tyler The Creator. He should not be tamed.

I wrote recently about the London riots, London Burning, pointing out the parallels of disaffected youth in London today to those of 1980. The punk rock movement came about partly because of the disillusionment with society and politics at that time – it was the soundtrack to the 1980′s societal upheaval – and yet here we are in 2011 with multiple wars, global recession, mass unemployment, and not a peep of dissent from artists and bands, never mind a full on punk rock revolution.

Clearly something has to happen: Kids won’t sit around and do nothing. They will do something – and doing and making still requires big thinking. How do we fuel the big thinking part?

Musicians could start with considering the issue of the ancillary use of music by corporations to their benefit at a cost to the musicians. Case in point – when my band Gang of Four made a video, the record company put the cost of that production in the band’s debit column to be paid back. And yet they gave the video away for free to MTV, a company owned by the conglomerate Viacom who honestly could afford to pay to license that content. But no, free! To add salt to the wound MTV doesn’t pay performance royalties to the artists either.

The modern version of that is the wholesale commoditizing of music catalogs by the labels who create licensing deals with the streaming music services. Those actions in turn further homogenize the streaming music service systems as the services only have access to the same catalogs – there is no differentiation. Artists get pennies, or less than a penny, when someone streams their song, and the listener gets advertising in the stream unless they pay to escape the ads.

Music streaming on the web is not a Big Idea, it’s simply a lack of intellectual vision and thinking. Worse, it has advanced the “passive listening” experience. It’s just terrestrial radio dumped on to the web in other words – including advertising. The big daddy of all of these services, because it had an IPO, is Pandora. Rich Greenfield, an analyst at BTIG, has this to say about its mobile advertising business model:

“The company also trumpeted the fact that half of its revenues now come from mobile advertising. But some analysts view that as a weakness, not a strength. He doubts that such campaigns will produce the necessary ROI those advertisers demand. The reason is, Greenfield writes, is that Pandora is a “passive listening service” and users generally aren’t inclined to be looking at their phones while these ads run. And when Pandora listeners have the site open on their PC, they’re apt to have other tabs open and therefore aren’t looking at their computer screen either.

Pandora hopes to turn a “small profit by the end of 2012.”

The Big Idea that launched Pandora was that “FM Radio sucks!” Yet, the Music Genome Project notwithstanding, the company has simply recreated the FM radio experience online. So Pandora’s fonders didn’t come up with a Big Idea, they merely made an observation. Certainly FM Radio sucks because of annoying advertising and corporate playlists, but Pandora didn’t solve the real problem – the lack of a human DJ (think John Peel or Wolfman Jack) who created their own playlists. Back in the day, those DJ’s filtered music through their vast knowledge base and personal taste in music and kept the emotional-connection-to-music continuum intact. Music is personal, no algorithm on earth can match that and provide a singular service to each and everyone of us. Last Night a DJ Saved my Life..Indeep. (Video)

A question I like to ask before embarking on a digital project is – what problem does it solve? Most streaming service founders seem to think that the problem was that we needed more interaction when we access music collections, so they provided playlist ability for music fans. They also appear to believe that they were making the radio experience “better.” Unfortunately they missed the real problem of terrestrial radio; when FM radio became homogenized and the US radio stations formed into conglomerates such as Clear Channel, they neutered the DJ. When Wolfman Jack was programming his own rock shows in the USA, and across the Atlantic in London John Peel was exposing young people’s ears to music they’d never heard, they were just two examples of the extraordinary power DJ’s had on the music business. They were tastemakers, influencers and filters of music culture. When the conglomerates did away with the role of the DJ in favor of automated playlists they ruined everything. The DJ was the voice of the station and he or she was considered dangerous to the bottom line if they were to offend their advertisers – they had to play nice, or go.

The music streaming companies didn’t see the problem that needed solving – the lack of authentic DJ’s who programmed their own shows – because they thought “interactivity” was the answer. It’s the “Did you see the Gorilla?” problem.

The bottom line is that there is no differentiation at the end of the day between Mog, Rdio, Spotify, Rhapsody, and all the others too numerous to mention, if they all have the same music catologs – widgets and tactics don’t count. One company that has embarked upon research in an attempt to fully understand its user base (it’s been surveying them as it moves toward launching a new platform this fall,) and already understands the power of niche, is eMusic.com, a company that’s attempting to give its customers what they are actually asking for. That’s the opposite of “knowing what music fans want” by the way.

I’d like to take a stand and say there is nothing new in digital. Throughout history new technologies have had a habit of turning up to disrupt systems, business and society.

Think about music – from the earliest wax cylinder, through vinyl albums and cassettes, to 8 Track cartridges to CDs, there has been constant innovation. The problem is that the technologists devising these new forms of music delivery never ask artists or music fans how they would like to deliver or receive music. I discussed this in my essay The End of the Recording Album as the Organizing Principle.

I suspect there’s an assumption amongst music technology folks that they know best, or, it’s a “we can build it so we should” mentality. And, I would argue, the proliferation of streaming music services that allow us to “interact with music” are doing exactly the opposite. We get to interact with playlists or widgets, and share etc..the music is actually subservient to those “interactions” – it becomes a passive experience..

If musicians, record labels and music technology companies can’t get beyond the fact that innovation occurs regularly, ie digital is not an aberration it’s just part of the cosmic order of things, then we’ll never get to the Big Idea.

And now, to undermine my entire argument above, I’d like to ask: Do we even need a Big Idea in Music Technology?

Just last weekend the New York Times ran an article about a company called Qtrax. Yet another music tech startup. The company failed big a few years ago, but incredibly it’s back again. Once bitten, twice shy doesn’t seem to rub off on these guys.

From the article:

“Still, the false start and missteps raise credibility questions for prospective investors, says Michael H. Baniak, a partner at McDonnell Boehnen Hulbert & Berghoff, based in Chicago.

And the issues don’t end with the over-the-top promises it made in 2008. The company has also been sued by at least four entities: Oracle, the software giant; Osher Capital, a private investment company; Millennium Information Technologies, a networking solutions company; and the Las Vegas Wall Street Group, an investment company based in Brooklyn. Some of the suits are related to technology licenses while others are associated with unpaid loans.”

All of the above is but one example of trust and authenticity issues, or what my good friend and fellow panelist at SF MusicTech, David Ewald, calls “trust erosion..”

As we know, record companies and music tech companies are often at odds, but not all the time. For instance record companies have been known to take a piece of ownership in some music startups as well as also charging them a premium for licensing their catalogs. Still, both sides are quick to litigate when they feel wronged. These type of schizophrenic relationships create a large churn rate for the startups, one that is almost constant – someone raises venture capital, someone else sues them, lawyers get paid, startup goes away – repeat.

Meanwhile as David says, “why would the average music fan have any reason to trust any of these folks, especially when they offer free players that are merely vehicles to serve some ads in between the music that fans are trying to find.” As he also says, we’ve all endured our music collections quickly becoming relics over and over – vinyl, tapes, CDs, mp3s, cloud services, next?

He correctly laments “There’s nothing or no one left to trust…except the artists we’re all trying to listen to.”

It’s a digital minefield out there for music startups. Check out the ongoing heated dispute between Robert Fripp of King Crimson fame and Grooveshark. Fripp is simply attempting to protect his rights in the work of King Crimson. He says he has never given permission to anyone that allows them to sell or license his music, or be made available for downloading or streaming. Seems pretty straightforward to me but you really ought to click on this link and see what Grooveshark’s lawyers are getting in to.. Fripp wants transparency in his communications with them, Grooveshark’s lawyers are pushing hard to stop that. They are acting just like recording company lawyers to me.

Another great friend and thinker who’ll also be on my panel is Roy Christopher. He has this to say: “More and more, I’m doubting how much I really care about the Big Idea, at least where music is concerned. For a lifelong music fan like me (my foremost point-of-view on all of this is that of a fan), music is better now than it has ever been. The Big Idea, when it happens, is likely to harm the situation (for the fans). I hope they (the music and tech companies) never get control of it again.”

Maybe everyone has been looking in the wrong direction? The labels, the music tech companies, the musicians and their fans. The advent of the MP3 file changed the course of music delivery and retailing and with it created disruption at all levels of the recorded music industry.

What’s interesting to me is that there became an almost common cause to “save the record industry” as if the record industry had always had musician’s rights at heart. That was never the case. When you signed to a label it was the equivalent of having a mortgage on your home, except when you paid back the “mortgage” to the label you never got to own the “home.”

Today it’s slightly more complicated because we have to add in the venture capitalists who are out to make a buck or two.. If I were to insert a Venn diagram here it would consist of two large circles – one side for the record labels, the other for the VC’s. In the middle would be the music tech startups. The VC’s and the record labels can hardly contain their smirks.. and of course, the musicians and music fans are not in on the joke.

I’ll end with a question for music lovers: Would you rather save the recording industry, the VC’s, the music technology startup companies or the musicians that provide the means for both those entities to actually exist? I trust that we all know the right answer.

If you are attending SF MusicTech drop by the panel and ask us some questions. Other than Roy, David and Corey mentioned above, two other panelists are Jesse Von Doom of CashMusic and Alexander Ljung of Soundcloud

Some reading that could be considered research for this article:

Time Warner to Subsidize Subscriber TV Device
Revamped MySpace will have iTunes, Spotify and Vevo in its Crosshairs (Yeah, I’d really like to go up against iTunes..sheesh!)
The Elusive Big Idea
Let Readers Share E-books and They’ll Really Take Off
Pandora Revenues Jump, Chance of Breaking Even in 2012
From Scroll to Screen: The Reading Device, a Short History
Confessions of an Ex-Moralist

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