Monday, April 28, 2008

The Long Tail: When will the music industry get it?

As Chris Anderson points out to us in his article The Long Tail we have, for a very long time, had our consumer choices dictated to us by economics. As Anderson puts it the "[t]yranny of physical space" has limited our choices to the items that could 'pay' for the physical space they occupied until we decided to buy them.What this means is that the items we buy have often been produced to appeal to a mass audience. Invariably mass audience appeal has translated to a massive budget and a massive budget, naturally, translates to a huge risk. The upshot is that the cultural produce we are consuming, more often then not, will not deviate from the tried and tested, that might guarantee a box office or chart topping hit, and therefore a return on investment for the producer. That is, or was, until Web 2.0.

A new way has emerged and, I would argue, the result is that we can now access more of what we want (and less of what we are being told to want). As the uses of the internet become more sophisticated creators have are able to access their audiences directly, doing away with the need for any given product to be popular enough that it 'pay' for the right to sit on the shelf at your local store. Musicians, writers and filmmakers alike are developing niche markets enabling them to derive an income without necessarily appealing to a mass audience.

What is the problem with this new way? In a word: copyright. Many of the revenue streams available to creators through the internet are different to our straight forward 'pay per use' type system. Musicians, record companies and industry commentators are so busy whining about declining music sales that they're missing all of the great opportunities on the internet to gain an audience and a fan base. Let's remember, what really kills most musicians is not that so many people are 'stealing' their music over the internet but the fact that no-one is doing so.

Now we have all these great ways for people to make direct contact with their audience and potentially earn an income. Check out sites like Amie St and Last.fm. Sites like these pay artists directly for their work by giving a kick back for advertising or other revenue earned based on the popularity of the artists work. And then theirs all the free marketing options such as Qtrax, YouTube, MySpace and Facebook.

In recent times these options have given many artists the 'leg-up' they needed to get out of obscurity and into their career. OkGo produced a low budget film clip that they released through YouTube that made their song an overnight success. The Arctic Monkeys hit the top of the MySpace charts when a group of fans posted their music on the site without the bands permission. You can bet the band aren't complaining about this copyright infringement. In response to the success of these free marketing sites other artists, such as Lily Allen, have successfully marketed themselves by providing free access to their copyright material and enabling them to derive an income because of the popularity of their music.

Perhaps what record companies are really complaining about is that they are not getting their piece of the action anymore. More and more artists are now able to access niche markets. Maybe it's time that the recording industry got with the times and stopped trying to stifle the efficient use of internet technology in order to make it work with an old economic model.

7 comments:

Samara said...
This comment has been removed by the author.
Rokchic said...

Hi Isha! Great post - I learnt about the Long Tail in an e-book that Andrew Dubber put out (if you want a copy I can send you one - just let me know as I'm freely allowed to pass it out).

But yes, the internet has opened up a whole new world for bands/artists that would never have had a chance - and I think it's a BRILLIANT thing. I think the major labels, as a whole, have to accept that it is changing and instead of trying to control it - adapt to it and change with it.

I also run a blog on the music industry (I'm manage a rock band here in New Zealand), and it just follows my journey to getting this band known - my ups and downs will all be shared. Hopefully people can learn from my mistakes! haha

Thanks for sharing this info though, it's really interesting :)

Bianca said...

This was a very interesting blog entry, and clearly related back to our Virtual Cultures themes. I feel as though this is just a summary though. You could easily expand on the first few paragraphs in separate blog posts. It would have been especially nice to see a mention of Creative Commons (http://creativecommons.org/ ) in paragraph three.

Even though I feel as though it could have been expanded, I understand the restrains of word limit for the purpose of the assignment, and the entry still flows clearly. The inclusion of hyerlinks to explain clear terms was really helpful and used appropriately.

I completely agree what you said about the record companies disliking internet downloads, or even marketing, because they don’t get their share of the profits. I’ve done some research about DIY recording and marketing and the results are shocking – instead of making $1 per album, without a major record company, a band can make up to $8 per album! (http://www.rollingstone.com/artists/clapyourhandssayyeah/articles/story/7672163/clap_your_hands_break_out )That’s a major difference.

eerin said...

Isha, really good post that i agree with. I wrote an essay about this topic last year in my music elective. As you pointed out in your post musicians that have made a success out of internet based music distribution aren't crying about people "stealing" their music. In fact, majority of bands/musicians make little of their money from tangible CD sales, as bianca in another comment points out. Most make money through merchandise and gig sales, which loyal fans will purchase. Where do they get these loyal fans? Their myspace/facebook friends, Posting on forums, basically guerilla marketing. Where would musicians be without being able to talk totheir fans, and distribute their material in a cheap forum. Instead of trying to shove another cd into the heavily concentrated racks of jb hi fi they are able to creat a "brand loyalty" and in the long run, make a much bigger success, rather than being a one hit wonder. The controversy is fabricated by the middle man (ie the record companies) as not even they have began to miss out on much profitting. Like you said, if they act now they can secure their future, and rather there being a lull in their income there would be a steady stream as the transisition takes place. However, as Samara pointed out there is a certain satisfaction to having a tangible CD that a loyal fan would have no hesitations in buying.

Steph.A said...

I agree with your opinion that Record companies and musicians need to give in to the “trend” of the Long tail and niche markets. What they are doing wrong is still following the old business (back in the days of web 1.0 when sharing was almost unheard of). Consumers are smarter than they were before, that goes for anything, not just music. Marketing must now be more strategic than it was before to target niche audiences.
A perfect example of Strategic marketing in my opinion would be Radiohead’s release of their latest album In Rainbows. The band recognized that CD sales were declining and that digital and concert sales were growing (Gallo 2007) so they allowed people to download their music and decide which price to pay for it. Results showed that 3-5 people did not even pay for the album (Richard 2007). The release was still profitable though as it not only allowed people who had never listen to the band before get a “free” copy of the CD, it also gave Radiohead free adverting! Their revolutionary way of distributing music was documented in newspapers, blogs and even television news. The “free music” or “choose the price” strategy also proved effective in selling concert tickets since most of their shows from their around the world tour have sold out!

Chris Anderson has written a good article which expands on this topic: http://www.thelongtail.com/the_long_tail/2007/10/radiohead-econo.html

References:

Richards, Jonothan. 2007. 3 in 5 didn’t pay a cent for Radiohead’s Album. Times Online: http://technology.timesonline.co.uk/tol/news/tech_and_web/the_web/article2817679.ece

Gallo, Phil. 2007. Digital Sales boost music industry, Album sales drop again. Variety: http://www.variety.com/article/VR1117956655.html?categoryid=16&cs=1

emma marie said...

Great post! See my blog for further comments. http://emmysteph.blogspot.com/

Samara said...

I really agree with the points you have made in this article. The online success of so many artists that has transferred over into mainstream culture is a fact that record companies can no longer ignore. Artists can now bypass record companies altogether and still create a global fan base and a successful career – all with the use of the internet (Tan, 2004). The rapid advances in connectivity and compression technologies have increased online sharing and distribution of music, and this is creating a huge stir within the music community (Bhattacharjee, Gopal & Sanders, 2003)

I think the problem for record companies not jumping on this bandwagon is a lot to do with the (somewhat) lack of control in an online environment. Bands do not have the ability to be marketed in the same fashion as they once were, as channels and distribution methods change. Their popularity is most likely to be determined by talent and listenability now, rather than purely on image, which for some performers may be a positive or a negative.

I think this issue raises another question about the physical CD becoming obsolete. I personally like to have the tangible aspect of a CD, but I also like the convenience of a digital file that I can pretty much take and play anywhere. It is in my opinion that currently these two options are complements of one another, happily working in harmony. If a tangible CD is bought, it can be converted to a digital file and two copies now exist for the one owner. However, if this was to change and they worked against each other, where consumers had to decide which medium to use, people would be fairly adamant about their choice. There is still many avid supporters of the vinyl record, that refuse to convert to CD or beyond (Menta, 2007)

If record companies really want to maximise their spending dollars, they should be utilising the internet’s role in the success of today’s artists, instead of working against it and complaining when their results decline

References
Bhattacharjee, Gopal & Sanders. 2003. Communications of the ACM. Digital Music and Online Sharing: Software piracy 2.0? (accessed 14 May 2008)
http://delivery.acm.org/10.1145/800000/792707/p107-bhattacharjee.html?key1=792707&key2=9298470121&coll=GUIDE&dl=GUIDE,ACM&CFID=27833725&CFTOKEN=15663983#body-1

Menta, R. 2007. MP3 Newswire. The CD is Not Obsolete. It Just Lost Competitive Advantage. http://www.mp3newswire.net/stories/7002/cd-obsolete.html (accessed 12 May 2008)

Tan, M. 2004. M/Cyclopedia of New Media. Indie Media Online Music Distrubition. http://wiki.media-culture.org.au/index.php/Indie_Media_-_Online_Music_Distribution (accessed 29 April 2008)