MUSIC|MEDIA|DESIGN

After our fun (and full-up!) Spring workshop, we’ve recharged our batteries and can finally announce Version 2.0, our Fall 2007 Music Recording Workshop. This time around we’re going with a smaller group, starting around September 4, 2007. Click the link in this story for details and a sign up page.

-d-

It’s hard to imagine a worse disaster for the media world than the proposed XM/Sirius merger. In spite of the hoopla, assurances, and analysis, on every level, this deal stinks by definition. While we firmly reject “zero-sum” economic models, we recognize real benefits in competition. There’s plenty of pie to go around, as long as the pie keeps growing. Competition and risk drive innovation, which in turn enables growth. Lack of competition results in market stagnation. Stagnant markets not only don’t grow, but evaporate! Take a closer look at how this merger will affect the media market.

Consumers will be hit first, if not worst, by this change. First and foremost, subscription prices will be disconnected from a real market. After you’ve invested in special hardware to listen, especially in-dash systems, you are more likely to accept a non-stop stream of small increases over time. Like health care costs, the lack of direct competition and the false appearance of choice (does DBS really compete with free radio?) mean there will be no disincentive for regular price increases.

Direct Broadcast Satellite systems are enormous technological undertakings, requiring enormous capital outlays. Since the turn of the century, XM and Sirius have continuously pushed the technology, increasing channels and quality, while making subscriptions affordable. As a result of their competition, XM has developed technology superior to their sole competitor, Sirius. Meanwhile Sirius focused on new content models, developing programming that differs from conventional radio, alongside more open talk formats, like Howard Stern’s shows, which drove subscriptions. While a merger will certainly reduce infrastructure costs, and improve Sirius’ technology and XM’s programming, the incentive to innovate in either arena will largely disappear. Today both companies deliver superior programming compared to most terrestrial broadcasts, by any measure, because they must out-do each other in the race for subscribers in a mutually exclusive market. After a merger the competition returns to earth. DBS will have to be better than broadcast radio and cable/web based “music choice” channels and home made podcasts, but the strongest competitor for each company will vanish overnight. So much for innovative programming.

Investors of both companies are also losers. While competition meant significant risk for all shareholders, it guaranteed significant reward for those of at least one company. In the worst case, the weaker broadcaster might collapse entirely, but with good management and innovation it shouldn’t be hard (much less impossible) for them to survive on less than half of a market much larger than todays. The nearly inevitable outcome of their current battle is more receivers and subscription for both, the only question is who gets more. Competition is harder than riding the gravy train for sure, but it grows the train and creates more gravy. Here’s what we know for sure: Given that there are THREE major TV networks, a few more major radio networks, dozens of cable system operators, hundreds of cable networks and literally thousands of individual broadcasters in the US alone, there are more than enough subscribers for two satellite radio systems.

It appears the management of both companies are colluding to drive down the cost of programming. The status quo has given B list celebs and radio personalities enormous raises, relative to their previous earnings on terrestrial networks. Launching and maintaining a system of satellites, not to mention creating, marketing and supporting receivers and constantly developing software is not an inexpensive proposition. The merger’s immediate effect on that investment is to severely discount one of the two company’s ground-side technology (which amortized over time becomes a long term drag on profits). There are some savings in administration, and some potential savings in consolidating facilities. But the biggest savings of all are to be found when it’s time to negotiate talent contracts and deals. Given the state of terrestrial broadcasting and podcasting, for the real stars, DBS has suddenly become a one horse town. The same is true in music: Satellite already has a better deal than webcasters, but if their music channels become star-making vehicles as radio once was, expect that deal to improve.

This deal has no winners, but it’s not really about that. It’s an early venture in “dataculture”, and like early agriculture, there are some bugs to work out of the model. These competitors have recognized the facts presented here, and determined that while the rewards accrue slowly but steadily, risk is a constant. XM and Sirius have decided that since upside growth is largely fixed (audience can never exceed population) they are better off sharing the rewards, than driving up the cost of goods through competitive pressures and adding to their risk. This merger is all about eliminating the possibility of losing at an opportune moment in time (before the next round of talent bidding and technology upgrades begin).

So what’s the problem? First, one of these companies stands to “win” in today’s market, and in the process define the norms for both company’s future survival. Merging eliminates the rewards for the winners entirely, while guaranteeing the “losers” investment is no longer at risk (removing all possibility of rebound or turnarounds that happen all the time in every market). Similarly consumer choice will be eliminated, putting it entirely on government regulators to protect their existing investment in hardware, and subscription decisions they’ve already made. Finally artists and creative talent suffer severely when there is no competition. Entertainment monopolies are among the most difficult to police and prosecute once they get rolling, and their effect on the market has historically never been positive. This deal really smells bad for everyone other than the executives and big-time investors who are using it to hedge past bad bets.

Dave Davis
Media Designer . Sound Images

…is that they require both literacy and time to consume. While email and the web certainly enhance basic literacy, they actively consume free time. Ruthlessly Darwinian decisions are constantly made about what to read, view and consider. In many (most?) cases the rawest sensationalism will beat depth or accuracy. Of course this view comes off as sour grapes in the context of dataesthetic.org, where we spew ideas to no one. But it’s equally true for The Daily Kos and the New York Times. For many reasons, raw meat trumps meatloaf on the web. So what’s a blogger to do?! Short of “sexing up” one’s posts with inflammatory or sensational headers and content, the answer may involve expanding the concept of literacy to other media, including video and audio, so ideas may be consumed at other venues and times. Podcasting, in all it’s forms, is one such solution.

Of course simply reading this post into a microphone will not make it more interesting or compelling. Likewise, while “powerpoint” style visuals and text can improve retention and comprehension, they do nothing to attract and hold interest. In today’s media market, high production values matter more. You Tube user-generated content seems to contradict this notion, but consider the nature of viral videos: they tend to be short, and derive or assume legitimacy through low production values that suggest a “regular person” and not a professional created and delivered the package. The ideas of the author are enhanced by the individual’s autonomy from a corporation, indicated by the home-made look and sound of the work. This is just one contemporary tactic though. At the other end of the spectrum are professionally produced pre-packaged news stories, distributed on DVD, tape or via the net, and delivered by local news personalities as “original” reportage, and corporate media. This content also enhances messages in the public eye, by disconnecting the audio and video elements of the program, and augmenting the “canned” images and sounds with fresh narrative. Somewhere in between lies traditional documentary and journalistic forms. One powerful solution to our “blog problem” lies close to those classic formats.

Talk radio, all-news and sports radio formats, as well as NPR programming, attract big, loyal audiences. Part of this is content driven: Sports and news junkies will always find a fix. But just as important, time and venue (car, bus, office) encourage rich audio-centric formats. Interestingly, monologues are rarely valued. While bloviators like Rush Limbaugh fill the majority of their time with their own wind, they rely in equal measure on listeners, to provide appropriate echos of their themes, or targets for their venom and reaction. When you remove the callers, talk formats only succeed through guests. Good guests draw, no guests or outside sounds drive listeners away. Really!

By contrast, even the most popular blogs have a tiny fraction of the audience of most major metropolitan radio stations. We may frequent dozens of blogs, but visit none as frequently as we hear radio, or watch my favorite network TV series’. Podcasts fare a little better since they’re “pushed” via subscription to iPods and PC music libraries, but even there time is a critical variable. Some shows are “stale” or superceded by a new episode before we ever hear them. Still, it’s the user who decides when to delete, or listen.

While I’m not suggesting blogging is dead or obsolete (quite the opposite, we’re at the front of this curve), I am saying it may not be the most effective tool to communicate with broad audiences. The intimacy and closeness of blogging can be attractive but the fact is many people already have plenty to read in their lives. Time is a real barrier. Formats that can be delivered and consumed with less active attention from the user can overcome that barrier. Podcasts can be delivered to passive users via subscription. Many people can’t read on cars, busses or trains without getting sick, but these same folks have no problem listening to music or audio programs while riding or even driving. Podcasts don’t lash the listener to a fixed seat, nor does their quality degrade over time and distance like broadcast. Programs can be shaped and sized based on the needs of the message, or the listener, or both, instead of being clocked to wastefully fill pre-determined “time slots” and program grids. Audiences for podcasts, like blogs, are self-selecting and potentially self-qualifying, but for all the reasons mentioned, capable of attracting much wider audiences in the manner of broadcast. But unlike broadcasts, the cost/eyeball is knowable, controllable and scalable.

As potential podcasters recognize these benefits, production values will certainly increase. Competition in the iTunes Music Store between free podcasts and paid video content is heating up, and more companies are tasking capable in-house production teams or freelancers with producing content. We see this already when established podcasts are “adopted” or “sponsored” by corporations. Typically the look and sound improves dramatically as a condition of sponsorship! This is good news for creatives, and savvy companies and individuals. Podcasting remains a natural meritocracy, where quality and content trump pervasive placement.

Podcasting combines the benefits of broadcasting and blogging, but it’s solutions to the biggest problems of those media is more significant than the similarities. Podcasting has evolved to encompass everything from entertainment to corporate communications, incorporating still imagery, web-links, and more recently, full-motion video. This richness expands the market for podcasts of all kinds, as do advancements in player technologies. Even many cell phones can deliver content these days. Podcasting and podcast players, along with digital video recorders (DVRs) like TiVo, shuffle the deck. While blogging remains a good way to communicate with the most engaged users and clients, podcasts hold greater potential to reach the masses. We can apply this potential to meeting their many and varied niche needs.

Dave Davis
Media Designer • Sound Images

NOTE: This post was cross-posted to dataesthetic.org by the author

We’ve sorted out the details and can finally announce our Spring 2007 Music Recording Workshop will be happening, starting March 22, 2007. Click the link in this story for details and sign up.

-d-

The Case for Reconstruction
Traditional labels are like prospectors or sports franchises. Their model requires them to pick “winners” and encourages them to dump “losers”. Contracts are based on the (false) assumption that the labels deliver some sort of economy of scale, and technical know-how when it comes to marketing music. They sign artists to deals that include investment for development, not only of product but artists themselves. But they cannot actually pick, breed or train “stars”, and in practice, the culture and history of the business almost precludes any sort of useful development. The concept of “the sophomore jinx” is a monument to the success of major label A&R. The problems with this model are manifold and should be obvious to all, if only in the results: Every major has historically failed to develop artists, and all profits are based on continuously churning catalogs of known, proven “hits”, usually acquired through dumb luck or licensing. Fortunately, one doesn’t have to deconstruct this mangled monster to see a better way.

Labels cannot pick winners and losers, but in a modular culture, anyone can recognize and respond to demand. Demand for products is linked to market niches and events, all of which are easily sortable by the databases driving our life. For instance, the sudden success of a local professional sports franchise creates predictable demand for merchandise of all sorts. That demand is broad-based, and not necessarily limited by official license channels. In the past, selling novelty singles and LPs in traditional music marketing chains has been a disaster: Returns tend to swamp sales, and devour most of the investment. Today a savvy label is selling the identical product in non-traditional venues (Starbucks, iTunes, supermarket checkout impulse buy), but with virtually no risk of return! Similarly, custom CD’s may be produced under license to be sold or given away as hand outs by lifestyle retailers; these deals are closed-ended and flat rate license, so there is virtually no risk, and known reward.

Given what we know about the needs of artists, the demands of the market, and the nature of our networked society, we can easily imagine deals that work to the mutual benefit of all involved, fairly compensating everyone for their contributions in a timely and appropriate manner. Other disciplines and industries have found great profit and success selling very similar products to music recordings. Awareness of those models, and the specific sales channels used suggest shortcuts in our endeavors.

Forget Winners, But Avoid Losers.
Labels cannot pick winners, but they can avoid losers through common sense and conventional business metrics. Given that recording is so affordable, many (most?) artists are capable and even willing to shop finished products, or at very least, preliminary mixes of finished recordings. Bird in the hand! A band’s merch table, previous album sales, and work ethic are evident, on display at every show (if not, a deficiency or need are apparent). Poor work-ethic need not eliminate a band from consideration, or relegate them to losers status. All shortcomings can be addressed in a systematic way, and associated costs can be factored into the larger equation. Signing the worlds most disorganized, and dysfunctional band to a deal can be a no-brainer: Other variables, like the band’s drawing power and fan base, license appeal of the artist or music, or even touring patterns or circuit suggest solutions. Again, recognizing markets and niches when you see them, and balancing demand with supply and availability of product to those markets are the key.

Shop and Buy Projects, Not Artists. And… never invest in “Talent”!
Multirecord deals are sucker bets without winners in today’s market. The label execs that sign artists to the deals rarely survive the contract, so a new team is saddled with someone else’s vision. The results of such arrangements are predictable failure. The old studio system of the movie world and major sports leagues worked like modern labels, in that “stars” were signed to long term deals, based on past performance and some imagined future potential. This is a numbers game at best, so the only way to prosper is with tricky legal deals and heavy handed contracts, reinforced by monopolistic market structure. While the marketing of a project is by definition a collaborative, team effort, the team is assembled through a vicious, adversarial process, and marketing is often disrupted by team owners juggling the lineups and key players on a whim.

Modern movies are marketed alone or in packages, with studios operating mostly as the ultimate middlemen, connecting disparate groups of independent operators. While they maintain lots and staff, movies are increasingly made by freelance specialists, each refining a slice of the craft to attract future projects. Making and maintaining these connections is a full time job. Producers and marketers of movie properties sell shares of production like stocks or bonds. The more credible and advanced the concept, the greater the value of the shares. This model can be easily applied to the business of record making.

Modular Labels & Scaler Deals.
In the age of mass-customization, one size never fits all in anything. Even in conventional labels, every deal is unique, however a consistent and modular structure can be much more fair and profitable for artist and label alike. There is a fixed menu of services available for every record, each with an associated cost. Some services are inappropriate or unnecessary for projects of a certain size, or in a particular market (for instance, live recordings of jam bands are useful products, but not so much for crooners and torch singers).

Given this reality, not only must we scale deals to match the needs of each project (as distinct from the artist), but we must be prepared to scale the label and possibly the artist as well! Everyone can make money off of a record that sells only 5000 copies, provided expenses are controlled and marketing is done with consideration of scale. It makes no more sense to mass-market a niche product than it does to bury a solid pop record in a sea of indie shoe-gazing. The appeal of an album or artist is not unknowable: how crowds respond, and how previous releases are sold tell you all you need to know to break even.

Every band’s needs are different. As creative capabilities converge, it’s increasingly normal for

Realizing Value Without Control
Risk and reward are hard to balance on speculative ventures like music. While no one can know whether any record will be a hit, any record can break even. But, the key is controlling costs, not people. This is accomplished by scaling the entire project. Control of people is always tricky, and rarely positive for both sides. People make deals with the best of intentions, and expect success, or deals would not be made. The roots of conflict are control: broad contracts that seek to protect parties from one another require mechanisms of control, intimidation and interference. When signed it’s assumed these are constructive forces, but that’s not really possible to assure, and rarely realized in practice. All the control necessary for an album project is possession of physical product and masters, along with the assigned right to collect and disburse profits of digital sales.

A work-for-hire model allows creative and technical contributors to a project to be fairly compensated for actual work. Negotiating discounts for work performed, or arguing over imaginary “points” for sales that have not happened is not the only solution, just a status quo that benefits no one, and limit the success of projects. Start with a fair market rate for every service provided. Forget the discounts, throw away the points. Insert a simple risk-compensation mechanism in their place. The sooner one is paid their fair market rate, the less they are owed. As time passes, the cost of those services accrues interest at a fixed, known pace. No tricky accounting gimmicks, no points. Pay now, or pay later, it’s always the artists choice.

The choice extends far beyond production personnel, to the label itself. The artist may buy-back all inventory, and repurchase rights at any time. Again, the rate is set up front, and is always known. If another label has a better deal, both label and artist are protected. The label gets it’s original investment returned in full, with a fair profit for their effort. The artist is always free to take better deals.

To prevent artists from leaving, the deal should get sweeter with success. As work-for-hire is paid off, profit for artist and label increases. The label has a strong incentive to maintain a fair, competitive margin. If the margin is too low, the label’s ability to sell product is hindered. Too high and the other offers look competitive.

Inventory is a challenge. One must press enough to create, then meet the demands of unexpected success, yet anything over that is a waste. Fortunately, once the basic manufacturing parts have been created for a release (masters, label art, film etc), turnaround time is quite short. These days discs can be drop-shipped to retailers from the plant, and turnaround is generally less than 2 weeks! Still, the initial order quantity is critical. Too many or too few copies when you need them are equally problematic.

There are several factors that can establish a baseline for sales, with minimal consideration to quality of music, production and packaging. An established artist or band will generally be able to sell a consistent number of copies for each title they release, using the same approach. This number can be used as a starting point for an initial order. It’s not smart to add pre-orders and other anticipated windfalls to the original quantity. There’s no real benefit to maintaining a large inventory, and significant risk. The more novel the niche, the less dependable it is as a revenue stream.

With bands, the benefits of experience and longevity are offset by the risk of break-up. The longer a group has been together, the less time you have until they break up! This risk is minimized in several ways. Having a finished master, or at least a set of final mixes to evaluate is more important with established bands, since this provides a context for the new work, and some means to predict sales. Younger bands have less of a track record, but often more buzz, which can be leveraged and enhanced within a project. By enabling these groups to get the most out of their budgets, and setting modest sales goals they can make products they’re proud to sell, and take advantage of the expertise of those around them. In short, good habits can be set for a career, through enlightened self-interest and opportunity. The risk with younger bands is that they can be easily discouraged, or worse, distracted by major label leeches offering bad deals with greater ego appeal.

Point-Of-Purchase Accounting
Starbucks, CD Baby and iTunes are modern sales models. Best Buy, Sam Goody, Tower, et al represent a backwards approach to an otherwise soluble problem. New models treat records like other retail goods, purchased to be sold. Old models treat them as a tease, to be ordered and returned, greatly complicating accounting and minimizing every artists exposure to their true fans. Modern models use technology to modulate cost directly with demand. Archaic models attempt to predict and manipulate entire markets. They can do this because, unlike modern outlets, the old school is built on the industrial model: they make money selling identical, cookie-cutter copies of a single property to millions of people. This spam-the-market approach is anachronistic. Leveraging scarcity in a world of plenty is not a winning formula. Identifying niches, and selling music products as special and unique makes far more sense.

Starbuck’s is one of the largest retail sellers of music. Their markup is absurdly high, relative to the competition, and their selection is extremely limited, in other words, the opposite of Wal-Mart’s music formula (every milk toast artist who ever put out a record, at the cheapest possible price). No doubt Wal-Mart has made billions for the labels, as the McDonald’s of the music industry (clean restrooms assured!). But Starbucks has made dozens of artists by knowing their own customers and introducing them to new and old sounds that match their tastes. Wal-Mart will never break a new artist, but worse, they will never offer a fair profit for the most established and hottest artists. Through accounting tricks, stiff-arm negotiation, and inattention, the margins for these sales are barely worth the trouble to artists (although labels can and do profit by their association).

iTune’s is another example of a highly profitable, artist-building model, that is resisted by labels, who have poisoned their artists minds with collective attorney-think. iTunes is unfriendly to middlemen and margin-feeders because there’s no inventory, no costs, no deal to cut or physical product to move around and mark up. Put a song in one end of iTunes music store, all that comes out are profits to be divided. By contrast, every major label alternative is a black hole: Subscriptions only seem like a great deal, until you ask how you get paid. Fractional pennies (or no pennies at all, for younger artists) don’t compare to the better part of a dollar, and a persistent connection to a fan. Compared to the iTunes store, Napster, MusicMatch and every major label driven online initiative is a cheesy, old time scam.

Clearly modern labels have many new avenues to sell records and help artists develop artistically and professionally. By starting with a project-based focus, rather than multi-record deals, the modern label removes a lot of incentive for artistic meddling. The New Deal encourages everyone involved to work every angle by directly linking compensation to success. The only metric for success is unit sales. Every pressed disc and every download represents real money. The modern label’s primary mission is to centralize inventory and collection, and clearly communicate an honest accounting to all parties. The label must be the honest broker of information, and seller of discs. Upon demand, every party to the deal has a right to know where the product is, what has been sold, and what remains.

We suggest a new, unique feature for this Point of Purchase accounting model: An implicit buy out is available to every party in the deal, in the form of actual product. For instance, a major label might wish to sign an artist, and acquire license to a catalog item under The New Deal. In the bad old days, this simple, sometimes reasonable request often initiated legal battles, and crippled artist, label and catalog alike! The New Deal would allow artists to purchase unsold inventory at a pre-agreed cost-based price. The longer that inventory sits unsold, the higher the ultimate buyout price, which grows at a fixed rate, acting as interest to modulate risk and provide reward to everyone concerned.

Dave Davis • Media Designer
Sound Images

Over the past few years at panel meetings, bars, in sessions and in email, I’ve been asked whether I teach or give lessons in audio production and new media techniques locally. In fact I’ve do things like this all the time, at least seminar-like events at Midpoint Music Festival and other AES events. I’ve developed courses and taught audio production (University of Cincinnati/CCM Electronic Media program) and audio design (my alma mater UC/DAAP’s Digital Design program) part time since 1998. But unfortunately, both classes are perennially over-booked, and virtually unavailable to non-majors. My former Ultrasuede partner, John Curley and I have been talking about doing it on our own for years – we’ve worked with many interns, and realized there’s often a gap between expectations and experience on both ends of those relationships. We felt a workshop might resolve this, and provide a baseline of experience in real-world production techniques. A recent thread on CincyMusic, occurred at the same time I received a phone call and an email asking the familiar question that started this paragraph. John called me around then, and we talked. The time had clearly come to act!

To kick things off, I put up a survey on another part of this site, to clarify my questions for the various interested parties. We quickly got enough responses to draw some conclusions and make some proposals on going forward with workshops. A recap for your collective perusal (with my conclusions below):

- All respondents said they’re willing to do homework, and use online-based forums for review and communication. (we will use these heavily to generate ideas, feedback and experience. Thus some sort of recording/mixing rig will be needed at home to participate.)

- Most of you have taken no formal training, or hands on audio workshops.

- Most people want a broad curriculum in recording, with a bit more focus on tracking and mixing. (these are areas where outside/extra teachers can really contribute and provide broader perspective)

- Most of you consider yourselves intermediate level, based mostly on experience I presume. (we will be able to skip some interconnect basics, but must kill some common myths, and build a common vocabulary early on in the course).

- There was an even split between weekday evenings and weekend days, but almost no one wants to work in the week-daytime. (we’ll meet at either of those times, depending on individual schedules).

- Small preference for half day over shorter sessions (as a teacher and engineer, I find longer sessions are often counter-productive, in spite of the small preference here).

- Most folks strongly prefer small groups to large (4-8), and demonstrations over critique.

- The LEAST preferred format: 6 2-3 hour workshops with >12 people for $100. The MOST preferred format: 10 2-3 hour workshops with <10 people for $200 or 8 workshops with <10 for $150. Content mattered more to most people than teachers or price. (it looks like either format would work, so we’ll need to discuss this more. The day-long and 6 meeting approach are out.).

That last one was interesting, and the reason I mentioned more price points than the initial $100 from earlier in the thread. Had I stuck to that number, the workshop clearly wouldn’t have met the preferences of our potential group on a couple levels. Most important being content: jamming it all into the cheapest package means leaving things out, especially feedback opportunity.

So where does this leave things? Well, hopefully ready to float a proposal! Now that I know what I’m asking for, I’ll nail down some venues and teachers and get all of that together. In the meantime, please feel free to comment on and discuss my conclusions above, especially if you DIDN’T take the survey or feel very strongly about the way I’m leaning.

To summarize my leanings:

A group of no more than 10 folks would meet once a week for at least 8 2-3 hour sessions, primarily meeting on weekday evenings in professional recording studios. The meetings will be primarily demonstration and hands-on work, featuring myself and some invited guest lecturers (so far John Curley and Brian Niesz have graciously offered their services to this effort - I’m still working details out on whose doing what) In between participants would work on specific assignments, and post work to an online discussion area for comment. The topics will broadly cover the recording process, with special emphasis on mics/mic’ing and mix techniques/editing. While most folks say they’re intermediate, we’ll start with foundations, in particular developing a common language to talk about what we hear, and later, what we do.

Beyond that, this will evolve over in the workshop area, and drop off the blog. But still, we thought this was important enough to announce here in the main content part of the site. Exciting stuff!

Dave Davis • Media Designer
Sound Images Inc • ScreamingBob.com