The Music Industry Crawls Towards The Web

20 08 2008
Courtesy of polyvore.com

Courtesy of polyvore.com

An article in a recent SocalTech (Benjamin Kuo’s long running group devoted to the technology sector here in Southern California) noted that music web site ArtistDirect, which has for a few years been a growing site about the major music industry, is starting a section this fall that will post lyrics to popular songs.

According to ARTISTdirect, it will provide lyrics to popular songs from EMI Music Publishing and Universal Music Publishing Group, which will allow the firm to add a new lyrics section to its site. Financial details of the licenses were not disclosed. The deal with EMI gives ARTISTdirect access to more than one million lyrics for EMI songs; extent of the deal with Universal Music was not given.

Leaving aside the question of just what those “undisclosed financial details” are, this is still an interesting development for the business. [Huge Disclaimer Here: For a number of years, the Internet development company I own did consulting and development for Universal Music Publishing. I actually found everyone there pretty cool and it gave me a great insight into the workings of major company thinking.] For years they have stood by as sites like Lyrics.com, songlyrics.com, and Elyrics, have amassed large quantities of song lyrics in their databases and have become the de facto place where anyone — fan, researcher, business professional — can find lyrics to most any major pop song.  Since these music publishing companies’ job is to maximize profit for their stockholders, and to earn some money for their songwriters along the way, they’ve been trying to figure out for years how to earn money off of these lyrics.

When I was at UMPG they started doing things like marketing greeting cards with their lyrics as catch phrases, as well as imprinted tee shirts and coffee mugs. Billy The Bass, the singing fish, was also among the ancillary money-making uses of their songs.

But notice that every single one of these ideas was a brick-and-mortar concept.  No one ever quite knew how to sell music or their other intellectual property on the web, other than licensing songs or downloading recordings.

The surprise with this deal with ArtistDirect is that it took them so long to figure out how to do it, when they had several examples of a business model right in front of their web-directed eyes.

Here’s how UMPG announced the deal in a press release:

The licensing partnership opens the vaults of the publisher powerhouse to give ARTISTdirect fans for the first time easy access to legal, accurate song lyrics from top music acts past and present from current chart toppers to beloved classics.

“Universal Music Publishing Group has an amazing catalog of award-winning music and we are privileged to be able to provide the words to songs that have so profoundly impacted our culture,” said Dimitri Villard, Interim CEO of ARTISTdirect. “This partnership helps create one of the largest repositories for official lyrics as written by the songwriters.”

“Our search for new revenue opportunities for our songwriters and artists continues and this deal marks another positive step in monetizing the legal use of lyrics online,” said David Renzer, Chairman & CEO, Universal Music Publishing Group. “We are happy to partner with ARTISTdirect for this new service.”

Now I’ve never noticed any glaring inaccuracies on those web sites and I’ve used them a ton of times for research, so I’m not sure that I buy this reasoning from the companies.  However, it is true that this will be more legal, now that the companies have decided that the lyrics are intellectual property that has value on the web.

The good news for the music industry in this is not that they’ll be able to monetize another peice of IP. No, the real news is that they’ve figured out a way to do it. The music industry has historically been slow to see where the value of the net is, even down to the ludicrous RIAA lawsuits. They’ve held onto old business models long after they’ve made no sense.  I’ve long said that the big music companies should get out of the business of developing artists — they’re not really great at that. However what they are good at is distribution. With their international reach and their huge capitalization, they can raise the consumers’ awareness of a particular artist better than the smaller independents can. The recent deals, such as the one between Madonna and Live Nation, point the way towards a better use of major company resources. If you can package an artist across his or her entire output (concerts, physical or digital product, ancillary, etc.) than you can promote and market it better.

The problem, of course, is that this works a lot better with artists who have already established a marketable name. But, even with that issue to overcome (and it will be overcome, trust me on this), there is no doubt that, once again, when the music industry stops stumbling, it will point a way towards a viable model for the film and television industry.

Someday we’ll see the majors, who will (of course) still retain their prominence in the film world because of their sheer size, figure out how to distribute someone else’s content ubiquitously. And when they do that, that will be a great world for content creators.





Distribution’s Future is Now

20 10 2007

I had a conversation with some producers a few months back about the dire straits that independent film distribution is in right now.  One of them was complaining that nearly all of the independent distributors are really distributors for hire. In order to distribute his film he basically would pay the distribution company the print and ad costs for the film, and then they would use their distribution network to release the film. They weren’t really taking an equity position in the film at all.  In fact, they were merely renting out their services to a company that wanted to get their film distributed.

Years ago, there was a concept called four-walling, in which movie companies  basically rented a movie theatre to run their films. This was an alternative when the big distribution companies of the time wouldn’t buy their films.

This, in essence, is four-walling exhibitors. What we’re looking at today is four-walling distributors.

The problems are obvious. It puts all of the cost on people who can least afford it — the independent filmmakers — and removes most of the incentive for the distributor to get the film a wide audience.

However, as a look into the future, it ain’t bad.

I’ve been saying for years that major music companies really should get out of the business of producing music, and do what they do best — market and distribute music. Madonna’s latest move — to dump her record company and sign with concert promoter Live Nation — is, I think, all about that realization.  While I don’t think that movie studios are inherently without talent in terms of producing film, what they are best at is distributing it. Why not rent out those services?

I don’t think they should be without a financial interest in the film.  They need to have a vested interest in pushing the hell out of a film.  But it would be great if they could choose which films they want to distribute and then do it. [NOTE:  I am incredibly aware that studios do something sort of similar when they pick up an already produced film for distribution.]

This would then set the business model for web and digital media distribution. In the way that many independent short filmmakers are choosing to post their films on (and share the revenue with) Revver and soon to be the case on Google, the business model to distribute films should be to place your film with people who know how to distribute your particular film.

It’s the future of film distribution.  And it’s already here.








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