Applying a Music Business Model To a Blog

An anonymous reader writes "Many of you may be familiar with Mike Masnick, from the site Techdirt. Beyond just chronicling tech stories for years, he's also been following various music and media industry business models as well. While he's usually among the first (like Slashdot) to express dismay at silly activities from the recording industry, lately he's been cataloging numerous success stories, like business models from Trent Reznor, Amanda Palmer, and Josh Freese. Mike and Techdirt are now taking things a step further, and wondering what would happen if they took the lessons from those success stories and applied it to a media publication: their own Techdirt. The result is 'Connect with Fans + Reason to Buy.' Check out the very special offer for the RIAA."

Comments

who can afford that?

[alain94040]

Some monetization techniques make sense (charging $5 for a premium account), but I'm shocked by this one:

Techdirt Reviews Your Business Plan, only $5,000. Describe your business, and what you're trying to accomplish... We'll run it as a case on the Insight Community

There are better ways to crowdsource a business idea. At least you'll get unbiased feedback (caveat: I'm one of the founders).

To everyone starting out there: conserve your cash, don't spend it on any of those "magical programs" or consultants that promise you the moon.

What almost makes more sense, if you really want to pick the brains of the TechDirt guys is to fork the $1,000 for spending one day with them (even tough I think it's only worth maybe $200).

Re:who can afford that?

[Trepidity]

That part in particular seems more like a middleman role, proposing that Techdirt, with its built-in connections to fans, platform for distribution and marketing of its content, and so on, sell that access to people who want their material (like a proposed business plan) distributed through that network. That's analogous to what traditional record labels, book publishers, and movie studios do, more than it resembles Trent Reznor selling his own products directly to fans without a middleman.

Re:who can afford that?

[idontgno]

There are better ways to crowdsource a business idea.

True. And we're free, and worth every penny.

What almost makes more sense, if you really want to pick the brains of the TechDirt guys is to fork the $1,000 for spending one day with them (even tough I think it's only worth maybe $200).

Meh. You monetize your business model, TechDirt monetizes its business model, but our abuse ^w advice is completely free.

RIAA model

[Hatta]

Here I thought he would be suing his readers.

Re:Bad idea

[OMEGA Power]

Why only people who link to it?

A true student of the RIAA would just start suing people at random and offering them the chance to "settle" for less then the cost of defending themselves at trial.

Re:Bad idea

[DoofusOfDeath]

Why only people who link to it?

A true student of the RIAA would just start suing people at random and offering them the chance to "settle" for less then the cost of defending themselves at trial.

No, a true student of the RIAA would sue you for this current discussion. And then get a judge to slap you with a gag ord----

Their problem: Balancing the pricing!

[Hurricane78]

The idea in itself is great, and what I always said. The only problem is, that their prices are not from this world.

They absolutely and without discussion need some proper pre-buyer pricing acceptance feedback.

What I recommend, is asking the user, what he would like to pay. And only showing the price you want, after they chose their price. Then when their pricing is above it, you say that they can get it cheaper, and when it is below it, you say that you're sorry, but that you do not want do give that away for that price.
This way you get instant feedback and a free survey. Also people feel involved.

Then you change the prices to the value, where "price * people who want to buy at that price" is maximized, and send anyone who did not buy but might now, a little note about the change in price. Make it clear that the price fell because of their feedback.

Ok, the only problem with this would be, that it could be manipulated, because the people could give more than one vote, or might not be honest in the first place.

Anyone got a real solution for this? (I bet there is a solution that you learn when you study economics & co. Which I never did.)

Free Content?

[NeRMe]

I'm familiar with Mr. Masnick and I've seen him speak about his "Connect with Fans + Reason to Buy" model for musicians. It seemed to make sense. He even attempted to squash the perception that this model only works for established musicians. I was sort of buying his mantra of having music be free and having it act as a loss leader. I'm a musician myself, so this is was all very pertinent.

Recently, my brother visited from New Zealand. He's a professional record producer and sound engineer, and he's very interested in questions like this as well.

I told him about this talk I had just seen and asked him what he thought. He thought that it was ridiculous to be a musician and have your primary product, the art that you create, be free, and try to make money off of things such as t-shirts and dinner nights with fans. He pointed out that people do in fact pay for music online, even when using a site such as ThePirateBay. They pay their ISPs every month. They are will to pay for this content. He called this the "swindle of the century".

See, this stuff matters very much for him. He's not a brand that he can sell to fans. He's a brand that he sells to record labels and musicians. He can't survive off of selling t-shirts with his face plastered on them. This model doesn't get him payed and depends on a functional industry to operate. Contrary to popular belief, it is not any easier to get a great sounding recording than it was 25 years ago. Great recordings and mixes still take a lot of talent, and that talent doesn't come cheap. How is a burgeoning young band or artist supposed to get studio and mixing time? $12,000 would be a budget recording and mixing session, good enough for maybe an EP. You can be sure that Radiohead and NIN are spending a lot more than that.

Take a look at Time Warner or AT&T's broadband advertisements. They've got tiered prices, based on bandwidth. Both have similar columned designs showing what plan works for you. Both have "Downloading music." Whose music, dare I ask? Listen, I know this opens up a huge can of worms, because Time Warner and AT&T both pay their own upstream providers, but you get my point. People are not getting music for free. They are paying for it, only the artists or the owners of the content don't see a dime.

I remember when I first heard about ESPN360.com. It made me slightly furious. A website that only works for certain ISPs? Well, that goes against the whole free love on the Internet thing, right? But it just clicked for me. This actually makes sense. ESPN nailed it on the head. They are forcing ISPs to pay for the content, while leaving it free for the end user. This would work brilliantly for music.

Imagine if the RIAA decided to make an ESPN360-like service. All music, for free. The catch? Your ISP is paying the bill. You can't tell me that the consumer wouldn't use this service and not pick a local ISP that offered it, even if at first it cost a little bit more than some other provider.

I know there are TONS of holes in these lines of though, but the madness has got to stop. People are paying for all of this content but it is not getting to the people that actually make the content.

Re:Free Content?

[Leviathant]

When a band saves up enough to pay for a producer and sound engineer, they can hire your brother. Bands and artists don't need studio time and mixing time the way they used to - you can handle a LOT of that yourself at a fraction of the cost, thanks to inexpensive recording hardware and software. Won't sound as good as a well practiced producer? Some of my favorite music sounds like balls from an engineering standpoint. In fact, as bands get more and more budget and afford better production, more often than not, the actual quality of the music goes downhill anyway.

As far as record labels getting a cut of ISP fees, that's a bogus argument. When I pay for DRM-free MP3s from Amazon, the label gets MORE than their fair cut, same as it ever was. They've been making money hand over foot, and rather than reinvesting it into researching decent business models, they pocketed the money, financed their own lavish lifestyles.

Yes, I pay for my internet connection. Websites pay their hosting bills. No one deserves a cut of that unless they're providing me with an extra service. That whining sound that comes out of buggy-whip vendors, I'm sorry, the established music industry, that's the sound of an overinflated sense of entitlement being emitted by greedy, short-sighted people out of touch with reality.

You're upset about ESPN360? I don't even know what that is, but apparently ESPN has their thinking caps on where the RIAA sat on their thumbs.

Re:Free Content?

[Moridin42]

Your brother is a producer and an engineer. No kidding he can't sell tshirts to fans. He isn't the musician. Musicians market to fans. Or they would, if the record label they signed with didn't agree to do that part for them. Your brother, as a recording engineer, markets himself to musicians, not fans. The fact that he can't make money from fans is entirely pointless. He isn't supposed to make money from fans. His work is done for the artists, and his pay should be negotiated with the artists. Artists can opt to either pay people like your brother for their specialty and expertise, or they learn to do it themselves. Or, they're cute girls, and they talk some recording geek into doing it.

If they're a new band, they can sacrifice and save to be able to afford a quality professional. They can find/develop their own sound engineers. They can become their own engineers. Pretty much the options that bands have always had. Only now its easier to do an adequate job with some software you can run on your home machine. Will it be Reznor level of quality? Well .. no. But new bands aren't likely to hit that mark, anyway. And it won't have anything to do with the recording engineer they choose, if you catch my meaning.

ESPN360 isn't free to the end user. The cost of the service is merely distributed to all the ISP's customers. Even if you couldn't care less about sports, you pay. If you want to go that route, you can start paying me for .. well .. nothing that you'd want, I'd imagine. But since you're not concerned with that sort of requirement for a business transaction, I'm okay with it too. We'll even bury it in the fees for your ISP. Or your property taxes. Or whatever. Something you already pay for, so that it'll be "free to you" too.

Re:Free Content?

[lennier]

"He pointed out that people do in fact pay for music online, even when using a site such as ThePirateBay. They pay their ISPs every month. They are will to pay for this content. He called this the "swindle of the century". "

Your brother's argument restated, in the 1970s, when cassette tapes first arose:

"People DO pay for music. They pay their power utility, their hi-fi manufacturers, their living room lounge chair manufacturers, their carpet installers, their landlord/mortgage company, their supermarket... so we should add a 'music bill' to all of these.

Or maybe just your electrical power company - they're the prime culprit. When you think about it, paying for electricity without paying a music licence is outright theft!"

The problem is that an ISP isn't selling a content licence; they're just selling the service of moving bits, and they shouldn't care what those bits represent. And as the copyright industry has long been at pains to grind into us, bits are not licences.

If you're going to roll bits in WITH content licences, then the price for equivalent Internet service is going to go way up. We'll all have to have mandatory long-term subscriptions to iTunes, or the equivalent. (In which case, if you want to go that route, funding it through taxes might be a sensible proposition; since what you would have created would be a natural monopoly, to which efficiencies of scale and fairness/equal access would need to apply, and a national government seems like the best institution created to address such issues.)

"I know there are TONS of holes in these lines of though, but the madness has got to stop. People are paying for all of this content but it is not getting to the people that actually make the content."

No, they're not paying for the content at present, so nobody's actually being 'swindled'. That's the whole problem. Consumers (and servers; nobody's getting a free bandwidth ride) are merely paying the marginal cost of *distributing* that content, which is near-zero, and makes no discrimination between 'free' and 'copy-restricted' content. What is wanted is a system that somehow funds the much bigger *creation* cost of content (at least for certain types of capital-heavy content like studio recordings; webcomics and funny blog posts might have distribution costs that actually outweigh their creation costs), preferably without setting up an industrialised, automated prison-state system to ensure compliance with your Mandatory Monthly Potential Happiness Bill.

do we yet understand what we're applying?

[Trepidity]

I'm not sure we understand yet what the new music business models are, at least not well enough to start applying them to other fields. We have a few examples of things that seem to work, and some blog-based argumentation about why they work, and how those can be generalized. Is saying "let's do that, but for blogs now" really anything more than a really hand-wavy argument that we do New Economy Stuff? Blogs are already pretty much by definition participating in some variety of new-ish economic model. What specifically are they taking from the music business? Just selling shirts directly to consumers is not it; websites have done that forever.

Presumably it means something like, "from observing this experimental phase in the music industry, we've learned some important general lessons about economic activity in the early 21st century, and useful things to do and avoid". But what are those lessons? And are they anything not super-generic, like "sell shirts and stuff"?

Even if Techdirt hasn't given that explanation, I'm curious if anyone knows of a good one. The only book-length discussion of recent music-industry developments (that isn't already dated) that I know of is Ripped: How the Wired Generation Revolutionized Music (came out about 2 months ago), which is a reasonable historical summary of the past 10 years, with a bit of analysis. It's not exactly a distillation of lessons suitable for universal application, though; more of a history just collecting the facts about what's gone on, mixed in with a little bit of breathless tech-hype (as the title suggests; it's got good content beyond that, though, fortunately). Anyone know of any other informative/insightful books (or articles) in this area?