Published Dec 09, 2008Exclaim!'s Need To Know columnist and music industry insider Allison Outhit recently travelled to Vancouver to take in Transmission, "an international event with a boutique atmosphere tailored exclusively for export-ready artists and business-ready professionals." Here is the second part of Allison's report, detailing all of the different industry-saving ideas that are floating around.
If only music conference organizers everywhere could schedule nighttime music showcases so that participants aren't half asleep the next morning from staying up until three a.m. I admit, this might involve working out how to fold space-time but who can be expected to get on board a lecture on "Neuroplasticity" at ten a.m.? (Or ever, for that matter. Note to facilitator: wait until the coffee kicks in before you start trotting out the ten-dollar words!)
Transmission's day two plenary began with a review of exit data collected from the previous day's sessions. It turns out folks in the music business widely agree that (a) we're in the dumper, but (b) it's only temporary because (c) what we do has value, dammit and (d) the thing to do is to keep at it. Following this somewhat un-illuminating reveal, we were treated to the aforementioned inscrutable lecture by Paul Hoffert, followed by a much more pragmatic presentation by David Neale, Senior VP of Products and Services for Telus. Speaking on behalf of Telus and Research in Motion (the Blackberry people), Neale introduced a new, branded content loaded Blackberry (courtesy of Arts & Crafts, home of Broken Social Scene, Stars, et al.) and confirmed that, as the new distributors, ISPs and wireless ISPs consider themselves stakeholders in the new music business. This is a prospect that is both exciting and terrifying for independent music companies because the reality is ISPs are the gatekeepers. To his credit, Neale proposes that it's neither necessary nor desirable that ISP-branded stores squat on all the good download real estate. Rather, he says they can aggregate and measure content transactions... an ellipsis that can only be filled in with "for a substantial piece of the action."
Scott Cohen, founder of indie aggregator the Orchard, followed with a neat presentation addressing pricing and volume issues. One of the stronger themes emerging from Transmission overall was whether the market can sustain domination by iTunes with its .99 cent mantra. Reviewing research data, Cohen proposed that there are really only two types of music consumers: those who buy, and those who don't. Therefore, there should be two approaches to increasing market shares. For those who buy, we should find ways to increase the number and value of each transaction by bundling tracks, or adding additional content - even if it means dropping the price per track. As for people who consume but don't buy music, the strategy must be to find a way to monetize the consumer, rather than the transaction - by, for example, grabbing the dollars where the consumer logs in. By way of example, Cohen brought up the experiment by TDC, a Danish mobile operator that voluntarily paid out a year's worth of earnings to acquire content, which was then offered on a free and unlimited basis to its users.
Charles Caldas, CEO of Merlin, then spoke about the major label business model and how its short-term, shareholder-pacifying focus tends to create two tiers of copyright value in the market. Merlin is a not-for-profit agency set up 18 months ago by the members of the World Independent Network to provide a unified front for independent music companies at tables negotiating digital rights reform and, at least in the short term, to grab a slice of the massive cash settlements coming out of Kazaa and other recent lawsuits. Suing people, as Caldas pointed out, has become profitable. Revenue from lawsuits has become a significant line item in major label operating budgets. As effed up as that is, so it must also go for the indie sector, which, after all, represents 30 percent of the business worldwide and hopes to get cut in for a comparable amount.
During the smaller roundtable discussions that followed, Scott Cohen's words about "monetizing the consumer" resonated as we talked about whether profiting from P2P networks will ever be a possibility. The most interesting element of the discussion was a general agreement in the room that we should stop referring to it as "illegal P2P activity." As Eddie Schwartz, president of the Songwriters Association of Canada pointed out, what we have come to call "illegal" activity is so common, so widespread that it's the norm rather than the aberration. "We have got to stop wasting time trying to modify consumer behaviour," he asserted, describing how the SAC led the charge a year ago almost to the day with its proposal that ISPs charge a five-dollar per month levy for unlimited music access. At the time, the proposal seemed to come out of the blue and many stakeholders reacted strongly but in that year the idea has gained serious traction.
Which brings us to the elephant in the room. Throughout the conference it became clear that the music business has warmed up to the idea that the most sensible way to capture earnings that the music business feels should be coming in from P2P traffic is to park the tollbooth at the ISP login. But we have a huge problem in that ISPs aren't particularly motivated to charge their customers - and with neither a delicious carrot or a big pointy stick waved at them, why would they? ISPs in Canada are almost blissfully free of government scrutiny. As businesses, their only duty is to remain competitive, so why would any ISP take on the burden of taxing its customers for music and content access?
Apart from brave Mr Neale, no ISPs were present to discuss the "big question." Even more depressing, reps from CIRPA, CRIA and major labels were M.I.A. from the entire conference. These organizations missed an opportunity to not only contemplate the kind of coalition efforts that will be required by the music industry to bring the ISPs onside but to participate in two days of blue-sky, non-partisan brainstorming in how to make our industry work for everyone in the value chain, from artists to end consumers. Now, who wouldn't want that?