Bits trump plastic

Reading the first post on a new blog is a little like watching the first voyage of a vessel designed by amateurs. Will she sail proudly out of the mooring field,  heeling gently to the freshening breeze? Or will she do a Wasa and turn turtle a mile into her maiden outing, drowning all aboard? (a few mixed metaphors there, I know). Bill Stensrud, in his very first post on his new blog The Business of Classical Music (hat tip to Charles Noble at Daily Observations) keeps the shiny side on the upside for the most part, and poses some provocative ideas about the future of classical music recording (as well as a few misconceptions, but then everyone gets a little wet the first time out):

In the 20th century, recording and distributing music was an economically viable industry. It satisfied the needs of the consumer (to have access to recordings of artists and repertoire) and it compensated the performers, composers, labels and distributors for their efforts.

Truer of the first nine decades of the 20th century than of the last one, perhaps.

The Internet and attendant digital technology has fundamentally disrupted the recording industry. Today anyone can make an infinite numbers of copies of a recording and can share those copies with anyone else at no cost and with little or no effort….Technology has no ethics. It may be wrong to copy a recording and share it but you cannot base an industry on a presumption of moral behavior. Even if a significant number of industry participants follow the rules, a large percentage will not. …Attempts to legislate or to litigate proper behavior have completely failed. There is no practical and/or scalable way to enforce the desired behavior. The 20th century recording industry is dead.

Actually it was dying even before Internet distribution of music came along. The Internet may have hastened the process a bit, but the intersection of the set of classical music fans and the set of Internet geeks is a pretty small set. Sales of classical music recordings began to slow long before large numbers of our audience were technologically savvy enough to steal and share our recordings, which may not have happened yet anyway.

Why it was dying in the 90s is another question, and one to which I’ve never heard a really good answer. But it was. Trust me; I was there.

The remaining 3 “major” labels – Universal, Sony and EMI – will be out of the classical business within 2 years. …. The remaining viable classical label will be Naxos. Their costs are dramatically lower and their business model allows them to operate profitably in a smaller industry and with much lower sales numbers. A primary contributor to Naxos’ lower costs is the fact that they don’t pay any residuals to the performers. There is no income potential for performers in the Naxos model!

The real cost advantage that Naxos has is that it pays almost nothing upfront to artists. It’s possible to make money in classical recording by sharing revenue; it’s not possible while paying high 5-digit figures for masters upfront – which means, in practical terms, that Naxos pays essentially none of the labor costs for studio recordings of American orchestras at least. Of course, doing studio sessions for free is not a viable business model for orchestra musicians either; hence the conundrum.

Virtually the entire recorded history of classical music will vanish from the world. None of the pre-2000 material had digital rights cleared when it was recorded and the cost of clearing these rights now dwarfs any income that could result. There is no commercially viable model for reviving this material.

What is he talking about? I’m not even sure what the author means by “digital rights.” There is a separate area of copyright law that applies to digital transmission of audio material, but it has to do with statutory licensing, which requires no rights clearances in the sense the author seems to mean. Statutory licensing, by definition, means not having to clear rights.

At least as far as orchestral recordings are concerned, rights to reproduce and sell recordings are generally owned by the record companies. The obstacle to re-releasing older material is primarily the cost of manufacturing and distributing niche material to enough retail outlets to sell enough product to justify the upfront cost. Nonetheless, there’s a lot of older material released on CD, and some companies are now allowing Internet outlets to manufacture such CDs on demand for their customers. At least one orchestra I know has explored (and may have obtained) the right to remanufacture material it recorded with a record company under a similar licensing agreement.

Music will still be recorded but it will have to be recorded very inexpensively. Cost considerations will dictate that music will be recorded live and music will be distributed “raw” – without the extensive engineering designed to make it “perfect”. This music will capture the excitement of live performance and the audience will expect character, excitement and imperfection rather than the homogenized perfection of the studio recordings of the past (This is a big issue for many performers – Get over it!).

We had better hope that the audience will value character and excitement over perfection, because the author is right that most recordings, of necessity, will be based on live performances. Fortunately archestras have an advantage here, in that most orchestras perform a program several times in succession, making editing without a studio “patch” session possible. I know from our experience in Milwaukee that it’s possible to produce, on a regular basis, very clean edited recordings from two or three recorded performances, assuming you’ve got a good orchestra to start with.

… new recordings will completely replace old recordings, the shelf life of (most) recordings will be brief, fresh recordings will have maximum value to the audience.

There are many recordings I never plan to throw out or replace. Good performances have a life of their own.

Payments to everyone involved in the recording of live music will be reduced or eliminated reflecting the repurposing of recorded music. When recording was a revenue generating industry it made sense to share that revenue with all participants. Now it is a brand building and audience development industry. The value of brand building and audience development is still shared by all participants. It preserves, sustains and enhances the brand equity and commercial viability of the performers and everyone shares in that value.

I think it still makes sense to “share that revenue with all participants.” As I pointed out above, revenue sharing isn’t an economic obstacle to producing recordings. But I think the author is right that the real value of recording, at least for orchestras, is in its potential to build audiences, bind our current patrons more tightly to us, and generally to enhance our ability to do our day jobs – which is perform music live for live audiences.

Everyone will have an internet connected home theater. Webcasting live music into the home will still retain significant economic value. The audience will pay either through subscription or pay-per-view models. Live performances will be perceived as an “event” rather than a recording. Reaching a broader audience through webcasting will be a critical strategic component of any 21st century performing arts organization.

Dunno about this one. I don’t think webcasting live music into the home has any “significant economic value” now. I sure don’t want to experience an orchestra through an “Internet-connected home theater” – especially if that involves watching one. And I want to do it on my own schedule. I suspect that, as in the past, most people will regard listening at home and attending a live concert as two very different experiences, and will want it to remain that way.

The 3 Laws of Classical Music in the 21st Century

  1. Money will be made by performing, by donations and sponsorship and, in some cases, by endorsements.
  2. Recorded music will have no commercial value other than promotion. It is not a tool for revenue generation – it is a tool for brand building and audience development.
  3. Every download and every stream of recorded music increases the promotional value of that music and increases the brand equity of the performer and presenter.

In other words, the 21st centure will not be so different for most musicians than was the 20th century. Our day jobs will remain live performance.

There have been some informal estimates done of the percentage of orchestra musician compensation that has come, over time, from electronic media done by their orchestra. There have been exceptions in a few places during a few periods, but those estimate generally put the percentage from media activity at well under 10% for musicians industry-wide. In the 90s it appeared to be around 2-3%. If it weren’t that a few musicians, and orchestras, have on occasion made more, and that media has always been a “sexy” topic in the orchestra industry, we wouldn’t consider it worthy of arguing about.

In general, though, this post has mostly got it right. It’s not quite as original a thesis as the author seems to think, though – some managers, and a few activists on the union side, have been preaching this for years (the line “bits trump plastic,” meaning that Internet distribution is going to put CDs on the recycling bin of history, is one I coined at an ASOL seminar a few years ago.) And a handful of orchestras (with mine leading the way), have been acting on this thesis, although nothing new has really been shown yet about the promotional value of recorded music for orchestras. Sadly, we do seem to have proven that there’s not much direct revenue in downloading and streaming.


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