October 22nd 2016

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Articles from this issue:

COVER STORY Bill Shorten imposes his political will on the nation

UKRAINE Russia responsible for MH17 crash: investigation

EDITORIAL Learning the lessons of SA power meltdown

THE ECONOMY Warnings call for new economic policies

CULTURE WARS Shame, pride and the AFL's arrogant posturing

OBITUARY Shimon Peres: last of Israel's elder statesmen

REGIONAL AFFAIRS Shifts in Australia-Indonesia relations

EUTHANASIA Paul Kelly makes the case against euthanasia

MANUFACTURING Australia's once and future car industry

MUSIC The dolorous tale of the disappearing tail

CINEMA In praise of professionalism: Sully

BOOK REVIEWS ASIO in the spotlight: official history vols I & II


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The dolorous tale of the disappearing tail

by David James

News Weekly, October 22, 2016

It all initially looked good. The advent of the internet and digital downloading seemed to afford musicians access to a global market with very low barriers to entry and low costs. But it has all turned sour.

The contradiction, which can be observed simply by walking down the street and seeing how many pedestrians have earphones connected to digital devices, is that music has never been more popular or consumed more intensely. Yet it has rarely been harder to get anyone to pay for it.

What seemed to favour musicians, even in niche markets, was the idea that they could benefit from what is termed the “Long Tail”. This was the idea that global digital markets would shift away from a focus on a relatively small number of mainstream hits at the top of the demand curve and move towards a large number of niches in the tail.

Those who were at the bottom of the demand curve, in the long tail, would have sufficient access to audience numbers to be able to thrive. But to a large extent it has not worked out that way. It is worth analysing why.

Musical Monopoly.

One reason is that the internet has become one of the most monopolistic markets ever seen – and those monopolists are able to set pricing, or even what is paid for. With music, this can to a large degree be attributed to the negotiating skill of one man, Apple former boss Steve Jobs.

Jobs famously outpointed the record companies in 2003, themselves no strangers to monopolistic behaviour. But they had never met anyone with the ability to dominate a market like Jobs.

Jobs first persuaded Warner, then moved on to the other big labels, including Universal and Sony. The deal was that he would give the labels some digital rights management, and they would permit him to price every song at US99¢. In one stroke they lost pricing power for music and handed it over to a company that was selling digital devices first and music, if at all, only a distant second.

Ever since, the sale of digital devices has dominated the consumption of music. The interests of musicians, never well protected, became irrelevant. The pricing battle is over the device; that the music can be downloaded for free concerns no one except the musicians.

This has meant not only that there is no Long Tail but rather that the entire tail has disappeared. As recently deceased pop star Prince commented, no musician has made money from the web. He refused to release his music digitally. He memorably commented that the “internet was over” for anyone who wanted to get paid. “Tell me a musician who’s got rich off digital sales,” he told The Guardian. “Apple’s doing pretty good though, right?”

What are the lessons for musicians hoping to charge for their music? The first barrier to overcome is to deal with the polarity of superfluity and scarcity. Post-industrial Western economies are characterised by massive oversupply in many industries, and music is one of them. Not only are there many more providers of recorded music because of the lowered cost of production and the increase in the number of frequently well trained musicians, but there is no obsolescence.

Digital recordings, unlike records, stay around; the catalogue is getting ever larger. And they are also easy to store and gain access to. So, persuading audiences to pay for a new recording when there are so many older one available becomes progressively harder. It means both intense competition among contemporary producers, plus competition with what has been recorded before. The result is that the bar keeps rising.

So, how is it possible to create pricing power? One way to approach it is to look for scarcity. If recordings have become anything but scarce, how is it possible to find something that is scarce that consumers will value enough to pay for? An obvious answer is live performance, which is by its nature scarce. Given that jazz thrives in the live context, this should perhaps be the focus.

Another way to look at it is to think not of selling a “product” like a CD or an mp3, but an “experience”. The distinction was described in a Harvard Business Review article: “If one took this approach with music, the emphasis would shift from how the musicians play to what the audience experiences from listening to them play: a different point of focus. If that experience can be sold effectively, it might be easier to get remunerated for it.”

The one thing that can’t be replicated is the live experience. It may be best for musicians to imagine their craft as it was prior to creation of not just the internet, but of the phonograph — recorded music itself.

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