Someone In The Digital Music Business Making Sense Shocker!

I’m not ready to forgive Last.fm for what its application did to my computer (although I should probably update my Commodore 128, so that might not be their fault), but the social-music site’s COO, Spencer Hyman, talked to Forbes about the company’s place in the post-MySpace Music economy–and he might have established himself as one of the few sane voices in digital music in the process.

Hyman disses MySpace for not having the database to back up its much-hyped initiative, scolds the music business for being slow on streams, and discusses outdated pricing models. After spending so much time reading about the doomed premise behind something like Comes With Music, this is all a breath of fresh air, especially coming from someone employed by CBS.

Forbes.com: MySpace Music just launched. Like Last.fm, it’s owned by major media and sells advertising against online music streams. Is there room in the market for both?

Hyman: MySpace is great as a social network: I’ve got an account. But music discovery is really much more than that. It’s about being recommended new stuff, being told new stuff. To do that, you need a huge database of information….

But aren’t recommendation algorithms old hat on the Internet by now?

It’s not just the recommendation engine; it’s all the stuff that goes with it. So I like Tina Turner, there’s an amazing group for Tina Turner on Last.fm, and I think probably before Tina Turner even knows she’s going to be in concert, they know where she’s going to be doing it. And that’s just invaluable….

Legal, free streaming is a newer phenomenon on the Internet. What’s the issue?

We always said to the labels, “You have to let us do this,” because what’s happening at the moment is people are getting the recommendations off of Last.fm and then they’re just going to all the illegal peer-to-peer sites.

They’re more than familiar with that problem. What’s the state of the digital music business today?

I think what you’ve got with the Internet is the fact that the labels and the collective side have realized that they need to make sure there is proper sharing of all the revenues which are generated with all the content creators. And I think that’s correct. I think the problem, though, is that there is a lot of posturing going on, on both sides, as to what the right model is to monetize that. The [potential] market is huge, but at the moment, it’s all on the peer-to-peer networks

What’s refreshing about this interview is that Hyman doesn’t blame the consumer or the P2P networks themselves for the dominance of piracy in today’s music marketplace, but the music business itself for not learning the lessons from the popularity of the “free music” model. Then again, we still live in an era when labels won’t allow people to embed their favorite artist’s music video on their blog, so it might be a while before the “posturing” comes to an end. Hyman recognizes that as well.

Where does that leave digital music going forward?

I think everyone understands that as the market matures, the economics will need to be revisited and re-looked at. Because it’s much better that you get 10,000 people [listening at] one-tenth of a cent [per stream] than it is to get 10 people [listening at] $.01 [per stream]. The aim of this game is to get as much money overall as possible. It’s not to get hung up on a per-stream rate or a minimum share of revenue.

It must be tough to align everyone with so many interests involved.

The music industry is blessed with a cornucopia of lawyers.

I would have liked to hear the tone in his voice as he uttered the word “blessed”.

The Digital Music Fight, Round Two [Forbes]