Duff Breaks Down Music Business
This was just too good pass up. I am a weekly reader of Duff McKagen's financial advice on Playboy.com. Stop snickering, I actually do read it for only his article.
Anyway, this week he opined about Napster and where the music industry screwed up. Some of the words are below, the others you are going to have to run to Playboy.com and read.
"Back when I was in GN'R, bands like us could pretty much operate at a break-even point on the road because acts were selling more records than is even imaginable these days. The reason for the dramatic downturn in record sales, of course, was the digitizing music. Putting music on CDs meant it had to be in digital form; eventually this led to the situation where digital files like the MP3 were divorced from any physical product, making the Internet and home computers the prime means of distributing music. A rock tour back then, at the dawn of the digital era, was really just a huge commercial to sell your record. Because a larger portion of people get their music for free via piracy these days, touring, 'merch' sales (mostly t-shirts, but also stickers and pins and anything else you can slap your band's logo onto), and licensing of one's music for ads and ringtones must support the average music act these days.
"The major record labels missed the only real opportunity to get paid from illegal downloading back in 1997 or so. We all remember the Napster conundrum when METALLICA sued them, right? Hey, as far as I'm concerned, METALLICA had every right to demand payment for their hard-wrought recordings. But there was another deal on the table then from Napster that was never really publicized — and this where the 'major labels' fucked up in my opinion.
"Napster was making truckloads of dough off banner ads back then. It seemed the site was the most looked-at space on the Web and therefore a hot property. Car companies, cola bottlers, movie companies, and many others were paying top-dollar to get access to those Napster-glued eyeballs back then. Napster offered to share this ad revenue with the major labels so that artists would get paid for the downloading of songs that Napster made available for free. It now seems like the perfect business model for what was then a largely unanticipated future of digitized music. The majors balked and a huge opportunity was missed."
Read McKagan's entire column at Playboy.com.
Anyway, this week he opined about Napster and where the music industry screwed up. Some of the words are below, the others you are going to have to run to Playboy.com and read.
"Back when I was in GN'R, bands like us could pretty much operate at a break-even point on the road because acts were selling more records than is even imaginable these days. The reason for the dramatic downturn in record sales, of course, was the digitizing music. Putting music on CDs meant it had to be in digital form; eventually this led to the situation where digital files like the MP3 were divorced from any physical product, making the Internet and home computers the prime means of distributing music. A rock tour back then, at the dawn of the digital era, was really just a huge commercial to sell your record. Because a larger portion of people get their music for free via piracy these days, touring, 'merch' sales (mostly t-shirts, but also stickers and pins and anything else you can slap your band's logo onto), and licensing of one's music for ads and ringtones must support the average music act these days.
"The major record labels missed the only real opportunity to get paid from illegal downloading back in 1997 or so. We all remember the Napster conundrum when METALLICA sued them, right? Hey, as far as I'm concerned, METALLICA had every right to demand payment for their hard-wrought recordings. But there was another deal on the table then from Napster that was never really publicized — and this where the 'major labels' fucked up in my opinion.
"Napster was making truckloads of dough off banner ads back then. It seemed the site was the most looked-at space on the Web and therefore a hot property. Car companies, cola bottlers, movie companies, and many others were paying top-dollar to get access to those Napster-glued eyeballs back then. Napster offered to share this ad revenue with the major labels so that artists would get paid for the downloading of songs that Napster made available for free. It now seems like the perfect business model for what was then a largely unanticipated future of digitized music. The majors balked and a huge opportunity was missed."
Read McKagan's entire column at Playboy.com.
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