May 262012

In February, musician, coder and uber-geek David Lowery gave a talk to the SF Music Tech Summit on the difficulties musicians have making money in the online economy.

Meet the Old Boss, Worse Than The Last Boss is an excellent dissection of the economics of the music industry as it currently stands – and it doesn’t look good for artists.

David shows how the old distribution model was more rewarding for artists than today’s digital model, the old fashioned record store has largely gone out of business and has been replaced with the iTunes where Apple receive half the income of the local shop but assumes no risk, few costs and a far greater profit margin.

Similarly, the record labels’ costs and risks haven’t substantially changed but their income has plummeted.

We’ve seen the controllers of the music distribution business replaced with a far smaller, and more profitable, group of digital gatekeepers.

A  great line in David’s presentation is just how much money technology company executives are making compared to their record industry counterparts of the 1980s, without taking on the responsibilities for keeping the creative supply pipeline flowing.

Record labels value content and content creators. Sure they kept a lot of money for their executives (although even mid 90?s music executive pay is dwarfed by tech executive pay.)  But record labels unlike tech companies, know they built  their businesses on those who create content.  Therefore when they were flush with cash they set out to buy the services of as many artists as they could.  This  had the effect of sharing the wealth with musicians.  It may have been uneven it may have been wasteful, it may have not touched every artists and the labels may have pocketed most of the revenue but at least they felt they needed to give something back to the content creators.  They knew artists created something of value.

The key words in the above passage are “content creators” as the struggles of the music industry are similar to those of writers, photographers and anybody creating original works that can be digitized.

Probably one of the most interesting aspects of this are that many of the digerati David criticises for their utopian views on technology are themselves marginalised, and often impoverished, by the same economics.

David links to a number of Huffington Post articles examples, yet it’s Adrianna Huffington and her contemporaries like Chris Anderson who are aggregating paid writers work and turning most of us into digital sharecroppers.

It’s the Lords of the Digital Manor who are making a return while the bulk of content creators struggles.

Those digirati, like myself, are making just as poor a living from their work as David’s friends in the music industry.

What’s clear is we have to find the methods of distributing music and other valuable creative works that benefit the artist or writer, the old models of the publishing, broadcasting and music industries did this – not always fairly, but at least creators were rewarded.

Right now we’re in a world where information is free and a small group of gatekeepers are controlling what revenues are available.

It’s unlikely that situation is sustainable and over time we’ll see new models develop to displace the current gatekeepers who may be part of the transition effect to a changed economy.

The person who figures out the successful model will be the 21st Century’s Randolph Hearst – hopefully they’ll spread the wealth around a bit more than the current gatekeepers.

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