How The Music Industry Can Save Itself

Ah, remember the good old days of music? The days when you’d eagerly await the release of your favorite band’s album, so that you can go back home and listen to the tape 10 times over? The days when you tuned in to your local radio station to hear the latest singles and then argue with your friends on which one’s the best? The days when record shops were veritable gold mines where you had to restrain yourself from buying as many albums as you really wanted.

Welcome to the 21st century, where the world of music has dramatically changed, and suffered for it. What we have now is an industry in a tailspin. Radio stations are playing the same old, tired popular genres so that they can try to sell the most ads. Labels are terrified of dwindling CD sales, and are striking deals with the likes of iTunes, who sell songs with restrictions. The RIAA is going on the offensive to try to stop music downloading by ironically prosecuting some of the industry’s most fervent customers. In a phrase, it’s all about how to protect the status quo, and Mr. Consumer, you better come along for the ride, because that’s the way it is.

I’ve never seen an industry hold fast to their old, tired ways with such irrational devotion as I have the major labels along with their associations like the RIAA. With every passing month, we hear of more artists going it alone, exploring ways to deliver and sell their music independently, because they’re tired of the status quo. I wonder why the music industry hasn’t at least started the process of reinventing itself in earnest, exploring new ways to deliver and monetize its product, and ultimately please its customers: people who like music and really, really want to listen to it.

So, how can the music industry save itself? Everyone has a hypothesis; here’s mine.

Distribution
Let’s face it, people are getting more and more adept at using their PCs, laptops and the Internet to get music. Downloading and sharing music without paying for it is becoming a more and more popular way of consuming music, especially in the teen-to-college age group, where demand is high and, well, cash isn’t. How do you compete with free downloads? Let’s start with a better distribution model. With downloads on the ‘Net, you have to seek out what you want and it takes a while. Popular music is pretty easy to find, but non-mainstream stuff is tougher. Even if you’re willing to pay, iTunes or Amazon still don’t have the enormous back catalogs that major labels have. And the problem grows if you’re talking minor labels. And, once you have the music, you own putting it where you need it. Forgot your iPod? Sorry. Don’t know how to setup your PC as a server so you can listen to your music at work? Oh well.

Instead, imagine a distribution system that was a virtual clearinghouse of music. Yes, we’re talking an integration among major and minor labels, domestic and international. Now, imagine a distribution scheme that leveraged the Internet, mobile phones, set-top devices, car radios, and other “direct-to-consumer” avenues. Finally, imagine an interface and model where you could, literally, ask for music from a particular artist or genre, or a particular song, or what your friends are listening to. And you get it. And you get it instantly.

And forget technology-laden prerequisites like knowing how to subscribe to podcasts or join a social network or know what Bittorrent is. The entry-level version of this technology has to be brain-dead simple. As simple as hooking in a TV in your living room, or turning on your satellite radio in your car. Mom, dad, and even grandma need to be able to use this service. Sure, offer more tweaks and experiences for people who want to geek out on the ‘Net, or download some special app on their mobile phone. But the super-simple approach needs to offer a rich experience without hardly any prior knowledge. Just like the CD, or the tape, or the record before it.

And, the device network has to work together, seamlessly, without setup. No more “I bought a CD but now I can’t listen to it on my phone because I forgot to rip it to my iTunes and then transfer it” business. Each device needs to be aware of others, and of the service in the “cloud”, and needs to be able to offer the same level of service and experience once people start using them. You listen to the Eagles on your phone? You can do the same in your house, or in your car, or on your computer. You paid money for the same Eagles tunes? Then the experience had better work flawlessly the first time, and every time thereafter.

Cost
OK, so we have a fancy distribution system. What do we charge for it, or for the devices? The answer is: zero to very little. For starters, to convince people to start using this stuff, you need to open up some back catalogs of music plus some parts of new releases and distribute them through this system for free. That’s right – zero, nada. You need to convince people this is a better way to get music, and the way to tear them off of their computers and into your system is to entice them with golden oldies and new hits for dirt cheap rates. Add some social networking and targeting for those inclined, and you start to attract people who would otherwise not be interested. Give away some devices, and sell some other ones at cost. Do some advertising. Most importantly, get people to try the system out.

When the system catches on, sell some devices or some services for additional fees. But those are add-ons: the basic experience needs to have a very low barrier to entry, and needs to have an immediate payback. What you’re looking for here is a “wow” as soon as someone plugs in. You get that when you realize what you can download from the ‘Net. You need even more of that when you plug in to this system. Lots more.

Upsell
OK, so you have a fancy distribution system and you’ve convinced people to jump on it. Maybe they’ve hooked their phones up to it. Or maybe they’ve paid a bit to get a set-top device for their TVs or stereos. They’re jamming to some tunes and they really like it. What’s next? Upsell them.

People dig music. But the audio itself is not the end-all of your industry, or at least shouldn’t be. Imagine giving away some tracks from an artist, but then selling an entire album and offering some sweet artwork or videos or preview songs to go along with it. Again, instantly available, high quality, and works right out of the box. Or, imagine selling a new box set of a popular artist, and offering one free concert ticket to the next local showing of that artist along with it. What about offering subscriptions to artists’ “portions” of this service (or web sites, if you’re thinking conventionally) where they can interact with artists and have conversations with fellow fans, if they pay a bit up-front (or monthly) along with their free music? How about selling some new tunes from an artist well before they hit the mainstream, at a small price? How about holding a remix contest where people download the mix components and the winner of the popular vote gets some free goods from the artist? And, finally, how about some ad-supported music for those who truly want to spend nothing and are willing to listen to some jingles to get that?

Music is so much more than just audio. Clothing, videos, concerts, communities, remixes, collectors’ items. I could go on. The point is: get people hooked on the music for next to nothing, and then charge them for stuff they really want on top.

In other words, give them what they want, and sell them what they don’t know yet they need.

Know your customer
There are many different types of music buyers and listeners out there. You have everything from the poor college student who’s tech-savvy and wants to listen to some new music on his or her portable music device. You have the serious collector who enjoys amassing and showing off a library and pays for high quality recordings. You have people who are casual listeners of music and want something “in the background” when they workout or when they have people over. You have kids who want entertainment and education (or at least that’s what their parents want).

The music industry needs to appeal to each of these types of consumers, and needs to mold their service and their upsells to each user. Yes, that means for some customers you continue to sell hardcopy albums with beautiful artwork and display cases. And yes, that also means you offer high quality digital-only downloads and digitized album art for others. The point is, a common service that is unified, cross-device, targeted, and wonderfully easy to use should be the common thread across all of these types of music listeners. You just tweak the offering and the experience for the specific type of customer.

But, but…
I know, I can hear you saying this already. Let me anticipate a few arguments off the bat. We can have more in the comments section of this post.

But people will take the music they buy and share it with others.
Well, yes, they could. The system could prevent this by using DRM. But that would be suicide. Instead, why not make the service so brain-dead compelling that people don’t want to go to the hassle of copying content out of a device or the service and sharing it with their friends? “Wow, I just listened to (or bought) some music and it’s available everywhere I am, instantly!” Why would you go back to downloading after that? And, keep in mind, the upsell is where the money is, and the upsell shouldn’t be on the audio itself (which is the easiest to copy).

But this network of devices and this service you’re describing sounds expensive and hard to setup.
It could be, yes. I think the reality is the music industry has to setup some new infrastructure to drive this experience. That said, there are existing networks (cable, mobile, Internet) that could be tapped to offset some of the upfront costs. But, I agree, what I’m describing below isn’t cheap. But you can’t go cheap if you’re trying to reinvent yourself.

But you can’t make up the money in lost CD sales by upselling people to stuff alone.
Yes and no. If all you do is sell them a t-shirt along with some tracks, then yes, I agree. But the point here is that you have to reinvent the pricing as well as the products. There are so many dimensions to sell people on, including quality of music (super high quality, better than CD, surround), availability and timing (early releases, re-releases of “lost” stuff), scarcity (limited number of audio or products), interactivity (remixes, community, chats and forums), and so on. Each of these dimensions can be exercised, and I believe each can generate revenue that isn’t being generated today, simply because the distribution and the service haven’t been there to help people find, spend, and consume.

But people are stealing music!
This is the mindset that the music industry has to break free from. Imagine, your customers are so into your product that they’re willing to manually scour web sites and networks, wait lots of time to download, transfer the music to devices, just so they can listen to them. Now imagine if you built a great service that had all the music they could ever want and was light-years easier to use, and had a low-to-zero entry fee. Why wouldn’t they start using it?

Conclusion
I’m envious of the music industry. They have a product that I believe most of the human beings on this planet desire, and that is music. I’m also envious of their opportunity to build and deliver on a truly great service to let people consume what they want, where they want it. I’m also quite sad that this hasn’t happened yet, and it doesn’t look like the industry is interested in making it happen.

Admittedly the above is one view of how the industry could save itself. You may disagree on its viability or value. But I think most of us would agree with this: the industry has to make some changes now, or else artists and consumers will continue to be left to their own devices.

Photo: Yarn

Sometimes, you encounter art that captures you.

Sometimes, an image just calls out and catches your attention.

And then, sometimes, you look over and see some big balls of yarn on the ends of poles and go, "Um...hmm?".

Microspotting Shows Microsofties Have Depth

Microsoft is a faceless empire, and its people are nodes in a borg cube. Right? Not so fast. We're all people, with passion about software but also about other things in life.

Microspotting is a blog that profiles real Microsoft employees and shows that in fact they're not faceless drones, but interesting and well-rounded individuals. Don't believe me? Check out some of the profiles on the site.

And, hey, watch for me and a (hopefully) new t-shirt to help advertise the site on my chest.

Review: California Dreamin' (Endless) (SIFF 2008)

California Dreamin' is a story of a culture clash, a colonial vs. native conflict that evokes humor among the bitter pain of the 1999 bombing of Yugoslavia.

The story begins when a train full of American NATO soldiers carrying weapons gets stopped by a station agent in a small Romanian town. The agent claims he needs to see the appropriate customs papers to let the train pass. Neither the American Captain Jones on the train, nor his Romanian soldier counterparts, have such papers. The agent smugly shrugs his shoulders and offers an ultimatum: either they produce papers, or they don't pass.

So begins the slow acclimation of the NATO soldiers into Romanian village life, politics and all. At first, the NATO soldiers and Captain try to push back against what they see as podunk hillbillies. But soon, they realize that because of its remoteness, the village politics seem to win out over any will of theirs or any external help they may be trying to wrangle.

Soon, the NATO soldiers start intermingling with the locals, flirting with the women, drinking with the men, and partying thanks to the mayor's re-introduction of the village's anniversary celebration (despite the fact they had one just last month). And, as you watch the soldiers start to relate and empathize with the locals, you watch their will to leave trickle away.

One of the most delightful aspects of this movie is the candid way in which the actors and scenes are presented. All the major characters play their roles in an effortless, "I've lived this life for 10 years" sort of way. And the humor is mixed in at measured doses, never delving into camp or melodrama, and always keeping an eye at the painful backdrop of the historical setting of the movie.

Sadly, the director of the film, Cristian Nemescu, passed away before the completion of the movie. The only thing you really notice as a result of this is the film's length: at 2 hours and 30 minutes, it could have been edited down a bit more. But I respect the fact the producers left the film as is instead of wanting to finish editing it, and the film doesn't suffer at all because of this.

Overall rating: 8.5/10.0

Details:
Runtime: 155m
Country: Romania
Languages: Romanian, English, Spanish, Italian

Review: Continental, A Film Without Guns (SIFF 2008)

It's night. An insurance salesman is riding the bus home. The bus arrives at a deserted stop, and he's the only one left on the bus. He gets out of the bus, stares out into the dark, and wanders off the road and into the forest.

So begins Continental, a film about death. But there's no funerals and caskets in this movie. Instead, the film portrays a set of characters, each experiencing their own version of death as part of changes happening in life, and shows how each character's story casually intertwines with others.

Take the wife of the aforementioned insurance salesman, dealing with the loss of her husband and an apathetic police force who suspects he ran off with a mistress. Or, take the guy who replaces the aforementioned salesman and is dealing with a shaky marriage while he lives out of a hotel room. Or, consider the shop owner with medical problems who's dealing with a gambling problem and trying to raise money for surgery. In each case, we have a death of some part of a character's life (husband, marriage, health) and we witness their struggle to deal with it.

But Continental isn't all doom and gloom. Surprisingly, it makes one laugh much more often than it makes one lament. There are several awkward situations that the characters are placed in that makes the audience first sigh, then snicker, and finally all-out laugh at the restrained reactions of the characters. This black-comedy approach balances the otherwise dark material that the film deals with, and thankfully so.

The acting of the film is spot-on. The pacing is a bit slow, but as long as you're in a casual, calm mood entering the film, the pacing combined with the musical overlays on some beautiful long landscape shots will leave you some breathing room and some time to ponder what's going on. Continental isn't a movie you'll talk about for years on end, but it does a decent job of making you care about the characters and their problems. And, the scenes of comic relief give you several chuckles to take home with you.

Overall rating: 6.5/10.0

Details:
Runtime: 103m
Countries: Canada
Languages: French / English

AmazonFresh Won't Deliver To Its Own Backyard

People at work were talking about AmazonFresh, Amazon's grocery delivery service that serves the Seattle area. I browsed their site, was impressed with their selection and their delivery options (pre-dawn delivery by 6am? Awesome!), and wanted to give them a try.

Trouble is, they won't deliver to our house.

Now, of course, they can't deliver everywhere. But we're pretty centrally located: we can walk to the I District, and bike to downtown and the ball fields. And get this: we live in proximity to the Amazon building. You know, the big PacMed building on Beacon Hill? Yeah, we can see it from our street.

Come on, Amazon, we know you can't deliver everywhere. But how come you deliver to West Seattle now, and can't deliver to folks living in your own backyard?

SIFF 2008

It's time once again for the Seattle International Film Festival. We've picked out 10 movies to watch. As always, I'll post reviews. And, as always, I'll point at the irony of Seattleites crowding into dark theaters to watch movies just about the time the weather's getting nice.

Mega Unhealthy Milk Shake

There's junk food. And then, there's mega-insanely-unhealthy junk food. Exhibit A: The Baskin-Robbins Heath Bar Shake.

That's right:

• 2310 calories
• 100 grams of fat
• 1560 grams of sodium
• dozens of processed and synthesized ingredients

Seriously, why is there not a Surgeon General sticker on this thing?

Heat Wave Is Coming

Normally I would not be excited about a heat wave, but given this is for an otherwise cloudy Seattle Spring season, and "heat wave" translates to mid-80s, I'm very excited that warm weather is coming! Steven posted about the details and probabilities of what we may see on this blog.

Nine Inch Nails Does Something Great

A few days ago Nine Inch Nails released their latest album on the 'net. For free. The album itself isn't their absolute best work (solid, though). The key here is the distribution and pricing.

• If you're a current fan, you'll probably download and listen to the album, taking note that NiN offered it to you for free.
• If you're a former fan, you'll probably consider listening to it, since it's free.
  
• If you're not a fan, you may consider listening to it to see if you like it, again since it's free.

The point? If you like what you listen to, I believe you'll be more likely to purchase NiN music in the future (or fill your collection with their back catalog). If not, you walk away with only a small time investment.

I think this move will both build the NiN fanbase and earn them more cash to boot. All by doing what musicians have been doing for ages: creating music for the enjoyment of others.

Lunchbox Laboratory Is Where Your Meat-Eating Dreams Will Come True

You know those ideas that come up when you're sitting around with friends while drinking, and pretty soon people are coming up with more and more outlandish things to pile on top of the original idea? For example,

"Hey, wouldn't it be cool if we opened a burger joint? One that specialized in burgers and went all out?"
"Yeah! But not just beef. Buffalo, pork..."
"...and duck! Maybe duck-pork?"
"And what if we served cool sides like tater tots, and milkshakes in lab beakers?"

"Yeah!" everyone would shout, take a swig of their drinks, and move on to other ideas.

Well, Lunchbox Laboratory to me is one of these outlandish, yet wonderful, ideas come to life. Run by Chef Scott Simpson of Fork fame, who's been through a lot in the past several months, this place is a burger joint to end all burger joints.

The basic gist is this: you pick a meat (beef, duck-pork, buffalo, among others) and a sauce (simple like ketchup to fancy like an aioli), and then add extras (cheese, bacon, olives). Tack on a side if you wish (tots, fries, topped with interesting things like bacon salt). Don't forget the milkshakes. While you wait, find a seat on a bench or chair and study all of the quirky Americana antiques on the wall, including the lunchboxes under the counter. In a few minutes, you get a giant, steaming burger, fries, and thick shake at your glass-top table. Dig in, and throw your granola-flax conscience out of the window for a glorious respite of meat-eating fun.

One word of caution: the burgers are large. Quite large. We ordered two, plus a side of fries and one shake, and were stuffed. Light eaters may wish to split one burger.

Lunchbox Laboratory will be even better as the weather improves in Seattle. While seating is limited inside the small building, they have several seats outside that will eventually be great to take in the summer weather, sip a cold soda, and bite into a juicy burger.

Photo: Smallpipes

I was practicing my smallpipes a couple of weeks ago, in prep for a St. Patrick's Day Ceilidh, and decided a good picture could be had.

Photo: Watson Staring

So we've started taking pictures with our new digital SLR camera. We're still learning, but the sheer quality of these photos compared to the point-and-shoot variety are great.

I'll be posting a subset of the pics I share on Flickr. Here's one of Watson, one of our cats, looking kind of miffed, perhaps because we're giving a treat to one of our other cats and not him?

Fidelity Magellan? No Thanks.

I just saw an advertisement in the New Yorker that Fidelity's Magellan stock fund is opening up to new investors again. Magellan is an old actively-managed stock fund that likes to tout it's above-average returns, and push an air of exclusivity due to it being closed to new investors for some time.

But is it truly an above-average fund? If you look at the return on your investment if you had invested in Magellan around seven years ago, it would be down about 27%. If you had taken the same money and put it in an index fund that tracked the S&P 500, you'd be up 15%.

No thanks, Fidelity. I'll stick to indexing.

In The World Of Vodka, Image Apparently Trumps Taste

There's a lot of vodkas out there. Some are cheap and come in plastic bottles. Others are fancy and have frosted glass and artwork peeking through the inside of the bottle. So which one's the best? And are expensive vodkas somehow better than moderately priced ones?

David Kiley wrote up an article in BusinessWeek recently, exploring that same question. He did an informal, unscientific taste test with loyal brand drinkers, and asked them to pick out their brand. The result? People couldn't tell which vodka was which, despite their loyalty to a given brand.

I buy that some vodkas burn and taste weird, and others are milder and taste purer. But after you get past the purity and mildness bar, does it matter what material is used to ferment and distill the vodka, or how pretty the bottle is, or what the story is behind the vodka? I'm thinking not so much. I don't have a super-sensitive palette, nor do I drink the stuff straight, so why bother with the premium?

Happy Pi Day

Yesterday was Pi Day. For the non-nerds, this is the day whose month and date correspond to the first few digits of Pi (3.14 -> 3/14).

Working in a somewhat nerdy environs, someone suggested we celebrate this day yesterday. Off this person went to get 3.14 pies. Arriving at a grocery store, this person inquires about pies. "Sorry, we're out, but we're baking some more that should be ready soon," the bakery people say. Apparently, lots of people had the same idea we did. Still, pies were eventually had.

Further proof as to the fact that we have a relatively high nerdy population at work, a population in which I count myself.

The $40 mark

Last week, I spent just over $40 to fill up about 11 gallons of gasoline in my car. $40 is very close to $36 or $38, but it caused a psychological reaction for me.

"Wow, $40? I remember when SUVs paid that, and I paid more like $15 or $20."

This will definitely make me take the bus more. But what's sad is:

• I can take the bus more. Not everyone has good (or even passable) public transit, and has to commute by car.
• Of those that have to commute by car, not everyone can really afford gas at these levels.

How do we support people who fall into the above description, while continuing to incent people like me to drive less and bus more?

Another Reason Why I Don't Eat Beef

There was one reason a while ago. Now there's another.

Yes, this is just a fraction of the annual US beef production. But I believe there are many more cases of tainted beef that go unreported.

Caucus 2008

It was my first time caucusing, so I didn't know what to expect. Overall, things went smoothly. Here's a play by play:

• Showed up at the nick of time (1:30 pm), though they were fairly lenient about when people could sign in (5-10 minutes even after that deadline).
• They put 4 precincts in this little middle school library. It was hard to hear each precinct head describe the rules as they talked over each other.
  
• There were 120 voters in our precinct, and 9 local delegates. Originally that came out to 6-2-1 Obama, Clinton, and undecided.
• Then, people could change their votes - a few did, most didn't.
  
• We then split up into our representative groups (Obama supporters, Clinton supporters, undecided supporters) and hung around for a bit.
• Then, it was announced that it was 7-2 Obama, Clinton. Apparently, enough undecideds voters got off the fence.
• We then elected people from our group to go to the county convention. 7 primary and 7 alternate delegates. We had a couple more than 7 primary, so people just volunteered to be alternates instead.
• Then, we split.

It took about an hour overall once things got rolling. Kind of a neat way of doing it, given the community nature and the "we elect our delegates" part of it.

Second Life And Changing The Rules Of Capitalism

If you're not familiar with Second Life, the Wikipedia article will get you up to speed. In a nutshell, it's a virtual world where you can build an avatar (virtual character) and interact in the world, including socializing, buying property, doing business, and the like.

A weird pastime, you may initially think. But Second Life has another side to it. Consider that Second Life manages its own economy and resources. For example:

• Second Life has its own currency, the Linden Dollar.
• Second Life controls who can purchase land, including property taxation for the land.
• Second Life also controls how much land there exists for sale, and the quality of the real estate (Private Estates).
• Second Life controls what activities can or cannot go on in the virtual world, including gambling, pornography, and banking.

Sounds like a pretty totalitarian system, right? A "government" of sorts (Linden Labs) controlling most every aspect of life for its virtual residents. Now, imagine if Second Life breaks out of the fringes and into the true mainstream. As in, imagine if everyone you knew spent at least 30-60 minutes a day in Second Life. Now, imagine one company being the gatekeeper to all activities in this virtual world. Even more so, imagine one company being in control what is even virtually possible in this world. What would happen, or could happen, here?

Let's take an example: in the real world, if I have the resources and the labor, I can make cuckoo clocks and sell them in my shop. My shop is limited to whether I can have a license to open it, and the rent to lease it, and the staff to run it, and my clocks are limited by how much time my laborers and I have to put into the clocks, our wood and metal resources, and our skills. Fortunately our government lets us open a shop and sell our wares, since cuckoo clocks are legal, and fortunately there is a market for them (however niche).

Now, let's imagine this same example in Second Life. You may say, "Wow! Think of all the people you can reach with your products in this world!". Well, first of all, opening a shop is limited by whether I can lease or own the virtual property in order to present my storefront in the world. Who decides that? Second Life. Next, I need resources to produce cuckoo clocks. Who provides the resources (in this case, 3D graphic modeling and interaction modeling)? Second Life. Now, I need some people to help me make these clocks. Where do I find them? Second Life (although technically you can model outside of the world, chances are you want someone familiar with the world to build stuff for the world).

What if the modeling tools aren't up to snuff? What if I can't secure a good property? What if all of a sudden a prime location for my store becomes not so prime because of land being created and removed around it? What if the currency exchange rate suddenly changes? In essence, building and selling cuckoo clocks in Second Life is equivalent to doing business in a world where all rules are subject to be changed or broken, including the laws of physics.

Now, you may be thinking, "Ah, but it's not in the interest of Second Life to tick off its users." To some extent, I agree. But I'm sure Second Life will follow the money here, just like the real world: if a big company comes in and says, "Hey, I want to build a giant new store here and I want to advertise it with a big floating airship that you can't avoid seeing anytime, day or night," this is much easier to do in a virtual world than a physical one (no need for fuel, or a physical arsenal of airships, or figuring out how to be truly everywhere in the sky at the same time). I believe, for the right price, Second Life would comply with such requests.

Yes, there is a market of attention here, and people may choose to gravitate away from Second Life if they go too far. But a world (virtual or physical) where the rules can be so easily re-written is not a world that I would feel safe conducting myself in, or doing business in.