Jeff Price's Article in the Huffington Post

Here is the full text of TuneCore President Jeff Price's article that appeared in the first week of January, 2009's Huffington Post. Read it and reap. --Peter

From MTV to YouTube: When the Net Pays Everyone But the Musician

In 1996, taped to the wall of my now defunct record label spinART Records’ 800 square-foot, four-ikea-desk-loaded-with-unsold-CD-and-vinyl office was a $1 check from MTV. I fought hard for that stupid check. MTV wanted to use a song called “Supermerica” by a band called Poole that I released. Usually TV shows pay good money for the use of a song, but not MTV-- they required labels to allow them to use the music for free in their TV shows when you submitted a music video to be considered for programming on their network. I still don’t know why they even bothered saying they would pay a dollar. It really pissed me off. I had fronted money and worked my heart out along with the band to promote, market, manufacture and release their album and along comes a multi-national billion dollar media corporation and demands to be able to use the music for a stinking dollar. I refused to do it. The music had value to me, it was the thing we sold and the thing the band made the majority of their money off of. I could not just give it up for free. But, Harry (lead singer of Poole) convinced me to let MTV have it in anticipation of the promotional value they might get out of it. The show aired, the song appeared in the background for about 30 seconds, the show ended, MTV made money from the advertisers and the song was not mentioned anywhere. This was the way it worked. The labels fed MTV free music and videos and in return hoped to get their videos aired which in turn would drive huge music sales. And MTV made a fortune off the advertising.

And this is more or less why Warner Music recently demanded that all its videos and music be removed from YouTube. Warner previously granted YouTube the legal rights to use its content and YouTube generated a lot of money from it via advertising. Now Warner wants to be paid more by YouTube. If the Google-owned YouTube does not comply, it opens itself up to potentially tens of millions of dollars in copyright infringement fines. Universal did this same thing successfully some time ago.

When media giants fight over music, you know it has to be valuable. Looking, listening and occasionally buying a “good” song drives revenue, tremendous web traffic and generates big advertising dollars. I can kind of understand Warner’s point, but as music sales drop and the multi-national, billion dollar media giants wrestle, lobby congress and sue each other for new income streams the musician seems to be getting lost in the shuffle, and that’s a huge mistake. Creating a new revenue sharing model that focuses on allowing artists to generate enough money to continue creating music would be a win for everyone. After all, it is the music that is fueling the entire machine.

The union of music and advertising goes back decades, but it seemed to reach a new level with the launch of MTV. MTV broadcast free “TV shows” from the labels in the form of music videos. These videos brought viewers allowing MTV to charge money to advertise on its network. In return for the free videos, the labels and artists received promotion. Artists became more famous which in turn allowed labels to make more money from music sales (there were other income streams as well like money from gigs, but the labels only participated in revenue that came from the sale or license of the music). This symbiotic relationship worked very well as long as all involved made their fair share of money.

However, after over two decades of a steady annual increase in music sales generating enough revenue to feed the record industry, music sales plummeted. At about the same time, advertising revenue from music went through the roof. Internet companies made money off music via venture capital investments, going public and getting acquired for a billion dollars. And this is the crux of the problem, music is being used for profit but not everyone is getting a piece of the pie.

Music sales plummeted with broadband proliferation and the mass adoption of the Internet, MP3s, compression technology, peer to peer file sharing, instant messaging of files, email attachments, torrents and other on-line distribution vehicles. The labels found themselves wondering why they should continue to provide their music and videos for free if the channels/sites they gave them to were reaping a disproportionate financial benefit. Labels would not have given MTV free music videos in the 80’s if MTV made money off the videos but the labels did not. (Imagine ABC getting the TV show “Lost” for free, then broadcasting it and keeping all the advertising revenue.)

Move ahead in time to the launch of the original peer-to-peer music file sharing software Napster allowing anyone to get any song at any time for free. Tens of millions of users provided Napster a huge “viewing audience” that it could reach via its “channel.” Unlike MTV, most labels and artists did not give Napster permission to use their music. The one area where value could have been created – music sales from discovery – was made irrelevant by allowing users to get the songs for free. To add insult to injury, despite Napster raising almost 100 million dollars and then being bought for 8 million the artists and labels were not paid anything (some would even suggest they lost money due to pirating).

The money that labels did make came from suing Napster and getting paid settlements for copyright infringement; the artists got nothing.

Over time social networking sites began to pop up and MTV moved on to showing its own TV shows (why not, they now had their own built in audience). Bands began to use these sites to get heard, discovered and to collect fans. Music lovers flocked to the sites, web traffic went up and the social networking sites began to charge advertisers for banner ads based on the “eyeballs” they were getting (for a website, any friend of the band is a friend of theirs). Once again it was the bands’ and labels’ content driving the audience, and once again someone else was making money off the music without an equitable inclusion of the labels and bands in the equation.

Which brings us back to Warner demanding that YouTube take down its content until it receives what it perceives to be its fair share of revenue. Following Google’s one billion dollar acquisition, YouTube is not yet profitable and suggests it cannot give up even more of its advertising revenue. Labels contend that this is really not their problem and need to be paid more for the use of their “products.” Unfortunately, advertisers are not paying the same sort of rates for online exposure as for TV and radio airtime, and there is not enough money to go around. And the artists, the ones who create and make the music that fuels it all, have yet to be directly included in the conversation.

As the “golden era” of MTV morphs into the world of MySpace and YouTube, a new model of advertising around music – ads appearing on artist’s WebPages or popping up on a streaming internet radio player– is not creating enough money to share. And no one is seriously discussing sharing it with the artists anyway. How then in this shifting landscape can they survive?

One possible piece of the puzzle may be the democratization of corporate sponsorship; instead of companies deciding which bands they choose to endorse or random ads appearing when music is played, let bands decide which corporations they want to work with. Bands can then tells their fans to click a link to land at a sponsor’s webpage where the fan gets a “free” song. The advertiser gets the web traffic and the artist gets their proportionate share of the advertising money for each free download. Going a step further, the artist has the ability to collect information about the fan (i.e. email address, age, zip code) thereby providing the opportunity for a targeted ad buy , i.e. 18 – 25 year old woman in the 02134 zip code. Or, taken another step further, as opposed to a random ad appearing on a streaming Internet radio player as a Pixies’ song is played, assume an ad appears for a product that the Pixies selected, i.e. The Pixies use Gibson Guitars or they love the movie Fight Club. Targeted demographic marketing allows advertising fees to go way up.

TuneCore is launching this model in January 2009 (full disclosure, I am CEO). This connection allowing artists and corporations to work with one another directly may prove to be one of the better ways to generate revenue in the new model. New companies such as TuneCore can then become facilitators providing the tools and information to the artists to collect fans, create music and provide access to opportunities such as corporate sponsorships. I by no means believe this is the magic bullet to the problem, but I do think it has the potential to be part of the solution. In 1981, video killed the radio star, here’s to hoping the Internet does not inadvertently kill the musician.

Comments

[spiele]

This is very awesome post.I have read it whole and have enjoyed it.Thanks for sharing it.EnJoY!!!

[Yaehoo]

Hi, It's the second time i'm posting you without a reply. I found your site using Yaehoo, does your site support firefox?

[Irvin]

Thank the good Lord there are still people willing to address major issues and take the risk involved in doing so. (yes, I'm sure Jeff has taken considerable time and financial risk to deliver this product, and yes he will be rewarded justly, no doubt).

I worked at STAR TV in Hong Kong in the early days, just as MTV were being ditched from the platform by Murdoch to be replaced with his own music channel (Channel [V]). I suspect MTV themselves were hit with a carrier fee which they refused to pay- just guessing!

I look forward to utilising the product myself and tracking it's progress.
BR
Irvin
The Liberators

[Esol Esek]

I would also add that in the early days of MTV, bands like the Chilli Peppers, Sex Pistols, and Metallica got zero airplay, and they all didnt give a sh*t. Of course, they made careers out of moving physical product, which is harder now, but not impossible.

You have to have some balls to be in a band and stop lying down and kissing ass. Being in a band means fighting the world on behalf of your fans and humanity. End run around the corporations..its been done before.

[Esol Esek]

This same bullsh*t is going on in almost any creative product. I sold three stock photos through istock and guess what they pay, at best $1 per picture. Now they're getting into the audio business - wonderful. Of course they act all friendly about it. Needless to say, I'm not giving them any more of my photos, nor will i give them any audio. Artists have to make a stand and not just refuse to work with them, but eviscerate them and boycott them.
I can make more money selling cards, and playing live shows. if any my songs somehow make it onto a larger stage, then I will own every cent.
These lousy media companies deserve to be broken. The only good thing about the internet is its ability to bypass the monsters, and that part of it needs to be continually fostered through music sites. The power of th machine is strong. The artist or musician has to be strong enough to break through and hang on.
Maybe its impossible, but its better than giving your stuff away for nothing, and still not getting famous. Boycotts should definitely be part of the equation. A band can produce its own music and videos on a budget while working a job. Its much cheaper than it was. Those videos can include great content, content that attacks the system in an entertaining way.

[jiffemiAeromy]

Hi! A good forum, glad to join you :-)

[Lee]

@ George

Sorry, that metaphor was bad and wasn't conveying what I was getting at = \ I was referring to the fact that musicians aren't given much bargaining power, what Jeff is talking about, connecting the musicians directly to advertising rather than going through a gate keeper ('cause the industry has enough of them already) gives them the negotiating rights they should have. Many starting bands/artists sign deals with record labels with almost no power to negotiate the terms, giving the label a lot of power over someone elses creation/talent. ("All your masters belong to us!") But to be honest, it's partly the bitterness from experience that's speaking here.

@ Chapman
Absolutely agree to disagree! lol At the same time, perhaps our industry needs to see more marketing/business models in action. I actually half agree with what you're saying, but not fully. I don't give out any of my own music for free distribution, however, I do re-arrange popular songs in a similar style to my own and send some of those out for free distribution. So I guess you can say we actually partly agree. = )

[wickedceltics]

Nice article. Can't wait for the new platform, Jeff. Sounds like a step in the right direction.

[Chapman]

@ Lee

Oh no, you misunderstand what I'm saying. I think Jeff and Tunecore are doing a fantastic service. Whether I *choose* to charge for tracks is my business and yours as well. Though I have not gone through the exact TuneCore process yet myself, (but will soon with the completion of a record at hand) I have seen many tracks listed free of charge in iTunes. I downloaded a free track off itunes myself just this morning, by Company of Thieves.

Itunes (and other stores) are distribution muscle, that's for sure. That's how I see it - distribution of my promotional materials. I just may or may not *charge* for those promotional materials. Others may see that quite differently than I do. But that's the beauty of it - we all have a CHOICE instead of handing our lives over to the corporate label machine that most probably will waste it anyway.

[George Ziemann]

@ Lee

"It's like someone picking the flowers from your garden and then making a living off of it. You grew those flowers, shouldn't you be compensated?"

The flaw in this argument is that musicians have lined up to give their music to the labels, MTV and YouTube. They didn't come by and pick anyone's flowers.

Exploiting someone requires their cooperation.

[George Ziemann]

Traditionally, the only thing for sale at retail has belonged to the major labels. This might give the impression that the "public wants the filtering process the major labels offer," but there were no other choices.

If you were on a military base, you'd think that everyone loved the color green and denim had reached the end of its popularity.

We used to be told that Top 40 radio was what we wanted -- the same thing over and over. Then we got FM.

By their own press release information, the RIAA claims a failure rate of at least 90%. The RIAA sold fewer CDs in 2008 than 1982. The audience does NOT rely on the major labels' filtering process. The audience has rejected it.

What sustained the industry from 1982 to 2000 was everyone repurchasing what we already owned on vinyl. The industry is back at 1982, but this time, everybody that wants one now has a copy of The White Album.

The public is looking for new again and the RIAA has successfully classified their music as "illegal."

TuneCore came at the perfect time.

[TAMARI]

1 LOVE! I AM HAPPY TO SEE THAT THERE ARE PEOPLE WHO ARE OR HAVE EXPERIENCED THE SAME THINGS THAT I AM FACED WITH ON A DAILY BASIS. IT TRULY REFRESHES MY "ARTISTICAL SANITY"! AS A NEW & UPCOMING MUSICIAN/ARTISTE, I'VE SEEN THE FOOLISHNESS THE RECOD LABELS EXPECT REAL MUSICIANS TO PUT UP WITH & I KEEP ASKING MYSELF: "ARE U SURE THAT U WANT 2 GO THROUGH THAT CRAP"? LIKE BOB MARLEY SAID: "IT'S NOT ALL THAT GLITTER IS GOLD"...
MUSIC COMES THE HEART OF
THE "MUSICIAN/ARTISTE", WHETHER IT'S "INSTUMENTALLY" OR "VOCALLY" PRODUCED/CREATED. THEREFORE I FEEL THAT THE ARTISTE SHOULD BE MORE INVOLVED IN THE BUSINESS ASPECT OF THE PROMOTION, MARKETING & SALES OF THEIR PRODUCTS. IT IS GOOD TO KNOW THAT THERE IS SOMEONE ELSE OUT THERE THAT IS ACTUALLY DEMANDING/AGITATING A CHANGE. I THINK THAT THERE IS UNLIMITED POTENTIAL, BECAUSE; NOW THE MUSICIAN/ARTISTE (PRESENTLY & THOSE IN THE FUTURE)CAN NOW BE PAID & MAINTAIN A HANDS ON CONTROL OF THEIR SALES. THERE ARE MUSICIANS/ARTISTES THAT ARE WAITING TO HEAR ABOUT THE EFFORTS THAT ARE BEING MADE TO SECURE THEIR FINANCIAL STATUS FOR THEIR CONTRIBUTIONS TO THE MUSIC/ENTERTAINMENT INDUSTRY!

[Lee]

@ Chapman

You have to understand that touring cannot be the ONLY source of income for a musician. Not all types of music are the type to attract enough audiences for a big concert. Furthermore, not all band members are single, free-riding spirits, some have families to provide for. What Jeff is referring to is the fact that other people are supporting their families and themselves while the creator of the works they are exploiting isn't getting compensated.

Without the music you wouldn't have music labels, you wouldn't have MTV, and YouTube certainly wouldn't have the advertising dollars. It's like someone picking the flowers from your garden and then making a living off of it. You grew those flowers, shouldn't you be compensated?

[Lee]

@ Chapman

You have to understand that touring cannot be the ONLY source of income for a musician. Not all types of music are the type to attract enough audiences for a big concert. Furthermore, not all band members are single, free-riding spirits, some have families to provide for. What Jeff is referring to is the fact that other people are supporting their families and themselves while the creator of the works they are exploiting isn't getting compensated.

Without the music you wouldn't have music labels, you wouldn't have MTV, and YouTube certainly wouldn't have the advertising dollars. It's like someone picking the flowers from your garden and then making a living off of it. You grew those flowers, shouldn't you be compensated?

[Chapman]

You have to remember there are two things at work here.

1) Bands typically make a majority of their revenue from ticket and merchandise sales at their concerts. This is true from the lowly bar band to national touring acts.

2) Bands seek labels for financial support in return for guaranteed distribution and promotion of their work. Why? See point 1.

The labels have succeeded in making themselves irrelevant in today's industry because they DO NOT guarantee distribution and do very little in terms of real promotion. Labels exist to rape 90% of their represented artists and exploit the other 10% to the extreme, just to keep the business afloat. They wink at the artist, say 'they're going places' and promise the moon. They front the dough for recordings (at exorbitant rates) and provide what they call "promotion" in return for owning the artist, their work and ANY chance of success. ANY money made is fed to the top 10% in their catalog in an effort to push the super-acts, the real money makers. Just like pimps who heavily push the pretty girls. Some contracts are now even insisting the labels get a cut of the ticket and merchandise sales - the traditional lifeblood of the band. Most "represented" artists never have a chance to make a dime.

With those odds, why even bother?

Terrestrial radio has done themselves in via a similar fashion, only promoting what the labels feed them - usually acts aimed at the 10-15 year olds of the world. Anyone over the age of 15 and with a brain rarely listens to radio anymore. (Sure, I agree there are exceptions of the handful of great INDEPENDENT stations around the country) No - radio and the labels have THEMSELVES driven consumers to seek music elsewhere. Since decent music is simply not available on the radio or tv, the avenue naturally expanded to the internet. Why? NOBODY CONTROLS WHAT YOU **CHOOSE** TO LISTEN TO.

And it's not really any different than it has ever been. Your peers influence what you hear. How many times have you heard a song in a friend's car or home and asked who it was? How many times have you sought records by artists purely based upon a mixtape a friend made you?

But even the great level playing field of the internet has its drawbacks. That's because it truly is LEVEL. When bands post their songs to myspace, facebook or any number of music sites out there, they are simply fooling themselves that it's going to get them the fame and fortune they dream of. That's because the internet is not a promotion tool -- It's distribution, silly. Recordings are your PROMOTION to get asses in the seats, where the money really lies.

So, I say make it free. Give it all away. Or at best, let consumers give what they want to give. It works - ask Radiohead about their recent sold-out tour. Did the method of distribution of In Rainbows help or hurt the daily revenue from ticket sales? Which made them more - the tour or the record? My money is on the tour.

Represented artists rarely make a dime in return for a record anyway. Why not make the records and give them away? The cost to produce a good recording simply pales in comparison to the cost of 'traditional' advertising and promotion, whose effectiveness is sketchy at best. Internet distribution has a cost of next to nothing. And it sure beats the hole you'll be in if the label fronts the dough. As an artist, I'd rather pay the ACTUAL cost for a record, maintain control over it and get it potentially in the hands of ANYBODY willing to listen. If 10% of those folks show up to a gig, that's the real payoff.

Think about it.