Kevin vs. Kevin in an All-Music Grudge Match!

The music industry thread here has generated more interesting and thoughtful e-mail than any topic in the history of this blog. Yesterday, this included a note from Due Diligence Old Friend Kevin Kelly, pointing out his piece on the future of music, which originally ran in the NYT Sunday Magazine about a year ago.

I sent this link along to guest blogger Kevin Laws, who responded:

Interesting piece. He's right about the endgame -- the interesting part is the twists and turns we're going to go through in getting there.

Tim: Kevin, meet Kevin. As Kevin L alludes to [above], one of my goals in running this series of posts from both of us is to get people thinking about the concrete, specific business and strategic issues in getting from today's debacle to a viable endgame, with or without the labels. There's an awful lot of theorizing out there about the final outcome, but a very large part of it is driven by the political or philosophical preconceptions of the advocates, and not backed by any real business or strategic analysis. I'm trying to stimulate that discussion, in the hopes that it prove deadly to the industry if they don't get their act together.

Kevin L: Nice to meet you -- good article. Prior to VC, my background included quite a bit of consulting to the music industry (my last job in the industry prior to becoming VP Product for Epinions was redoing the all the music pricing for one of the major distributors). Like Tim, I've been seeing quite a bit of writing about the industry that doesn't seem informed by why things shaped up the way they did in the first place. Personally, I think the most fascinating story is why, if there are smart people in the industry (and there are), the industry appears to be incredibly slow to adapt to the changes that seem inevitable.

The answer comes in two parts, but I'm still working out some of the implications. The first is the same old story of channel conflict that's come up in so many other industries (I'll be writing more on this soon). The second has to do with the nature of a hit driven industry -- the smartest people don't drive things, since a good deal of luck is involved. That side of it will take some more working out.

Kevin K: Part of my argument (that literately didn't fit to print in the Times piece) was that the music business as a whole would diminish, so that it begins to resemble the photography business. How many photography stars can you name? How about studios making their living producing photography content? The photography business as such is not a content business but tools, supplies, methods, processes, etc. trade.

Kevin L: That's very interesting -- I'm not sure I completely agree since you still have the aspect of live experience that is tied to music. People will pay to see the Ansel Adams exhibit, but how many would pay to go watch Ansel Adams take a photograph (outside photographers trying to learn)?

Kevin K: In the right context -- probably more than you might imagine. In fact, here's a prediction. Someday soon people will pay to attend fashion shoots, and not by model but by photographer.

As more people around the world record music and the net succeeds in distributing attention to them, I believe the music business as a whole will shift away from "content" and towards processes -- the fluidity I spoke of [in the article]. But at the same time, even more music will be created -- it becomes the free that the other businesses work off of -- just like most photographs are "free" (not sold). I think the slide we are seeing with current CD sales is not so much the siphoning by pirates, but the start of a large-scale dimunition of the role of the music business itself. In this context the hunt for viable business models has to be annexed with the question "for what?" In general I think the quest for a working model to make money by recording music is only going to get tougher and tougher because I think the new regime will simply not support many making it solely by making recorded music.

Kevin L: Given the star power that some can generate, isn't there still an incentive to use some of that to help new artists? As long as that's true, there should be a good role for an intermediary to help channel the finances appropriately and leverage that star power to create the next generation of stars.

I have a slight variation on [your] prediction -- that the music industry will shape up more like the movie industry, with much of the power flowing to the agencies that put together packages (CAA, etc.). Stripped of all the distribution control, that's essentially what the music labels are doing.

Given your affinity for long predictions, I predict the rise of the "virtual label" that ties together the services needed by artists, provides some financing in return for shares of future revenues, and helps facilitate tie-ins with bigger artists under contract. However, the distribution will be handled by outsourced contractors -- and perhaps the music companies end up spinning out their distribution arms as non-core.

Kevin K: I'd go along with that -- as one of several modes that will be available.

Tim: Kevin K seems to be suggesting that the days of the big star are numbered. That - in power law terms - the (log log) curve is seriously flattened as an inevitable consequence of the change of the medium. All is niche, some are a bit bigger than others. Kevin L believes that the big act will always be with us, giving those acts or their promoters a franchise not just in the (no longer scarce) content, but in the attention they can direct to other acts, for love or money. Do I summarize correctly?

I'm more of the latter view. Just as the cable networks - and then the Net - chewed into the audiences of the old TV networks, but did not eliminate them, the Net will enhance the viability of a great many more choices, but it won't eliminate the psychological and sociological factors that make objects-of-common-attention a likely and useful outcome of media with global reach. The power law curve flattens out some, but still has a significant slope.

Kevin K: Actually I go along with the powerlaw of stardom. What I am suggesting is closer to this thesis: that we  haven't had a balanced powerlaw in music stardom -- we have too many stars standing on too small a base. The only viable music business position has been to be a high-paying star, but the powerlaw can't sustain that many. The industry has managed this feat in recent times by warping the system (payola, etc.) but this will no longer be sustainable.  What the new regime will create is a vaster pyramid of a music BUISNESS at the bottom end, which in effect changes the percentage of stars at the top....

Undoubtedly to be continued...
11:32:03 AM