TechCrunch’s Argument For Saving The Music Industry Is Pretty Soggy

Mar 22nd, 2007 // 14 Comments

Michael Arrington’s TechCrunch is a big deal in the tech-blogosphere, which is why every record executive out there must be having a heart attack at the title of Arrington’s post on yesterday’s WSJ story about the music industry’s woes: “Good News! CD Music Sales Down 20% from 2006.” That title alone made us blink–surely an across-the-board decline can’t be good for everyone?–and then we had to endure the tortured rhetoric within, and we could do nothing but slap our foreheads.* To wit:

The problem is that [the music industry's] main product, recorded music, has a zero marginal cost to produce. It’s so cheap to make that consumers can actually make it themselves. And they do. A billion songs a month are downloaded, mostly illegally, from P2P networks.

Wait, what?

We must be missing something. Yes, a billion songs a month are downloaded from P2P networks. But unless the Infofilter top 50 is missing a good-sized chunk of file-sharing traffic, we fail to see how the simplicity of making music at home has resulted in piracy being so high; as Yancey at 17 dots points out, not everyone has the ability–or the desire–to simply create the music they want to listen to on command. And even when people do go the DIY route to much fanfare, it’s not always lapped up by a lot of people, as Tila Tequila can probably tell you.

Unfortunately, there’s more:

As the marginal price of recorded music continues to fall towards zero, its natural price, bands will need to make money elsewhere. Live concerts will become more and more popular, and will be the largest source of revenue for many artists. Recorded music will be used to promote those live events. Popular artists will still make a very, very good living. Others will have to decide if love of their art is enough to keep going.

We’re well aware that the music industry is bloated and in need of a serious correction, and that touring and merchandise are a large source of revenue for artists. (Exhibit A.) But expecting live events to become the primary source of income for artists doesn’t only replace one bloated framework with another, it completely ignores how people experience music. Let’s list a few reasons why wholly replacing the recorded-music industry with the live-music one is unlikely: the relative price, and long-term cost, of going to a concert as opposed to buying a recording; the low number of live-music opportunities in suburban, exurban, and rural areas; the fact that you can’t just head to a concert when you’re struck with the urge to listen to “My Love” at work; and the relative time-sink of going to a show, as opposed to listening to a song or an album. And that’s just for starters. But the most obvious one is this: The likelihood of breaking new artists solely through live shows is pretty low, as far as reaching audiences who aren’t necessarily musical obsessives.

Then again, it seems to us like Arrington doesn’t really care about new music: his closing line, “Others will have to decide if love of their art is enough to keep going,” is the ultimate “let them eat cake” statement, one that could only come from someone who doesn’t give a damn about musicians, or the possibility that a Darwinian approach to music as an art form could result in what we hear day-to-day becoming even more calcified than it already is.

Good News! CD Music Sales Down 20% From 2006 [Techcrunch, via 17 Dots]

* We won’t even get into the commenters, one of whom blames the music industry’s woes on “motherhood (ie. Lauryn Hill, Shania Twain, Celine Dion).” Women! You just can’t trust them to keep up their pop-star personae, can you?

idolator

  1. KaliH

    Even a little field research on this topic – say, taking the time to actually interview a musician – would help inform articles like the one cited here. As a musician, I can tell you there’s a lot about music – and I’m talking making it here – that’s plenty costly. Maybe the authors of these sorts of pieces are unaware that manufacturers continue to steadfastly refuse to produce CDs for free. Car companies have yet to waive the costs associated with purchasing a van (even when it will be used for touring the country(!)). Food? Shelter? Yes, grocers and landlords still demand money in exchange for nourishment and housing. Even the most essential parts of making music – the, um, instruments, stupid – aren’t free (or cheap, for that matter). Have you been to a Sam Ash or a Guitar Center lately? There’s not a lot of handing out of amps and drum heads going on, and it looks unlikely the policy on that will change anytime soon. Your average band basically doubles as a group of experts in duck taping and soldering not because of their genuine enthusiasm for either, but because it’s often prohibitively expensive to buy a new instrument, and nearly as much to get a broken one fixed. Why would anyone assume that those who create art are somehow exempt from the costs of living in the real world? Should I learn to subsist on air? Do you seriously expect me to refashion my guitar case into a makeshift house? Is it genuinely realistic to suggest I tour the country, but save gas money by doing it on foot?

    Musicians need money to eat, and to live, which is a fundamental requirement of making music (being alive, that is). These are not, after all, luxurious desires. Romantic notions aside, recording, putting on shows, printing flyers, renting a practice space, etc., etc. (I could go on because, really, there’s so much more) – they all ultimately add up to make music one of the few pursuits that actually costs money (that most musicians will never make back).

    Surely the irony isn’t lost on you.

  2. AcidReign

    …..I can’t imagine live music being a way to break new national acts. Maybe new acts for the rich. Going to a concert these days is WAY more of a financial risk than buying a CD blind! SOMEbody’s going to produce recorded music, whether it’s in a mega-studio, or recorded on their harddrive with Walmart mikes and Garage Band (TM). And I refuse to make concert-going my primary way of enjoying music. (Sez the old fart, who’s blasting “I can’t Quit You Baby” Led Zep, and “Waitin’ on the Bus” ZZ Top, on his headphone amp while writing this!)

  3. ravisharnell

    This could only have been written by a blogger. We forget how many people — even kids, by Zune! (that’s a god of some sort, right?) — don’t steal or buy music online at all. The record stores in my town aren’t exactly getting out the money rake at the end of business each evening, but they’re still open.

  4. yancey

    responding to coolfer’s post and some others i have heard on this topic, you are correct that both idolator, myself and some others are somewhat willingly misreading the techcrunch argument. but the problem is, the cost of manufacturing (reproduction) is pretty hard to split from the costs of initial production. it’s the old argument people use to discuss prescription drugs, how it costs $.02 to manufacture a pill, but, in r&d etc, it took $40 million to make the first one. art is a very difficult place in which to apply the lessons of marginal cost. is the value of a painting the cost of the oils and canvas, or does it attain a higher value when those properties are applied in a certain way?

    the overall problem is something that kali was getting at above: that there is a dramatically different way of looking at this depending on what side of the fence you are on. as a music listener, it’s easy to not really think about where the music came from or how it came about. and so we see the proliferation of pirating because we just accept that it’s there, and surely they are being compensated for it in some way. but the sad thing is, so many musicians who we think of as being “big” (relatively speaking here) still have day jobs, still struggle the same as the rest of us. it sucks, sure, and i’m sure many will counter by saying no one said it would be easy, lots of people suffer, work hard, etc., but we like to pretend that this is not so, or at the very least ignore it.

    and sure, touring/merch are the only slight avenues of income for artists (note that i do not say revenue), but being on the road is hard! the band members need to have jobs that will allow them to leave, they need to be able to afford to rent a van, etc, etc. just cuz it’s easy for us to buy a $10 ticket (or, more likely, leech our way onto the list), have a few beers and rock out doesn’t mean it’s the same for the folks we’re seeing.

    anyway, lots of obviousness here, but i do love hearing myself talk. xoxo

  5. CantBeatThisHeat

    Arrington is merely verbalizing an economic fact. The cost of physical production for music has fallen to essentially zero. Since the birth of recording, the record companies continually found ways to lower the cost of production: records to tapes to CDs to online. In each case, they attempted to widen, not lessen, the line between cost of production and profit. Now, they’re merely getting what they asked for… zero cost of production, but with a catch… zero profit. File trading is an economic innovation. That’s what Arrington is observing.

    For thousands of years, musicians had to make their living performing live. Certainly, people will still record in order to preserve the music itself (not entirely unlike sheet music, but more perfect) and to promote their shows. However, the costs associated with recording that music will be spent with the intention that they’ll be made back via merchandise and attendance, not in “record sales.” Frankly, this will result in a serious raise in the quality of performers, as the most competent artists should logically be the most successful.

    Even if he wasn’t so eloquent about it, Arrington’s essential point was right. Lots of competing outlets for distribution (some of which are willing to distribute for free out of love of the whole thing) equals a comparable profit: zero. Arrington doesn’t “hate music.” I’ve been a touring musician for about ten years and I agree with him on almost every point.

  6. yancey

    “the most competent artists should logically be the most successful.”

    hahaha!

  7. CantBeatThisHeat

    @yancey:

    Hey man, it’s true. Good luck getting Ashley Simpson to tour 10 months out of the year in a broken old van trying to keep costs as close to zero as possible, sleeping on floors to promote her art. I didn’t necessarily mean “artistically competent” either: the most economically competent is just as pertinent, but being able to satisfy your customers is another big part of the picture with a live show. Hopefully, you’ll have to suck less to survive.

    It also depends how you measure “success.” I was thinking about longevity as well.

  8. coolfer

    This marginal cost argument is an old one — and a bad one. It ignores the considerable cost of recording and marketing that is at the heart of every album. A near-zero cost for distribution does not mean music has no cost. I appreciate the effort to use an economic metric to further an argument, but this one is misplaced. Marginal cost is a good tool for measuring *incremental* sales, not *all* sales.

    Some bands use free/cheap music to help their touring. Some do not. It would be unfair to require recording acts to hit the road so people can get their free music fix. Some want to stay at home with their families. Some are only studio musicians. Some are in other countries and can’t spend a few months driving to and from tertiary U.S. markets.

    Flash back to the early ’90s…”Sorry REM. We all love ‘Out of Time’ but you’re going to have to tour to support it. Its marginal cost is zero. Hit the road.”

    Right.

  9. alarusse

    And I think Idolator’s argument against TechCrunch’s argument is a bit mistaken.

    There are two points where I believe there is confusion and misunderstanding. When he refers to the marginal cost approaching zero, I think he is referring to how it takes virtually zero money to make and disseminate copies of digital files versus physical CD’s, which themselves cost almost nothing (the physical product itself). I don’t believe he was referring to the cost of recording with regards to producers and sound engineers, etc.

    Secondly, I think the author of the Idolator response article misunderstood the point that Arrington was trying to make about live shows becoming the main source of income for musicians.

    When Arrington states that live concerts will become the largest source of revenue for artists, this does not equate to “wholly replacing the recorded-music industry with the live-music one.” He is not stating that recorded music will cease to exist, simply that it will not be the main source of revenue.

    Further, and in the same vein, the argument that “[t]he likelihood of breaking new artists solely through live shows is pretty low” ignores the same subtle difference mentioned in the previous paragraph. Arrington wasn’t arguing that live shows will become the main vehicle for exposing new bands. Recordings over the internet seems to be the future holder of that role. It is not that recordings themselves will diminish or disappear that Arrington is asserting, but rather that the money from their sales will.

    The response from the music industry should not be to continue clinging to hope (ironically, by suing their would-be customers) that people will still shell out 13-17 dollars for a CD, when they can get an only-slightly degraded digital copy of it for free. Their response should be, argues Arrington, a refocusing on other aspects of music-making, namely live shows.

    If I might make a personal note – since when did recordings become such a hallowed ground? You can’t tell me Glenn Gould had Lily Allen in mind when he was arguing for studio recordings over live shows. Live performance has historically always been the heart and soul of music. I simply don’t believe that artists should be paid over and over and over again, exorbitant amounts of money, for what is essentially, one performance in a studio. I believe they should be compensated, and fairly, for each performance they give. After all, they aren’t re-performing the works each time a CD is sold. Just a thought.

  10. dcSteve

    Do you define playing bars to smaller and smaller audiences every year as success? I guess it’s a living, but it’s a tough one. I’m also not sure why such an approach is more noble than recording music and releasing it on cd or digitally.

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