The Future of music, and secret good news about independent music sales

by Harold Feld, Tales from the Sausage Factory

This week, the Future of Music Coalition (FMC) launched a major campaign for net neutrality. Called “Rock the Net” (sometimes you gotta grab that cliche by the horns so you can trample the wolves while swimming from the sharks), the campaign brings together major music groups to raise awareness of the net neutrality issue and press for network neutrality legislation (such as the Dorgan-Snowe bill pending in the Senate).

Why do musicians care about network neutrality? And who are Future of Music anyway? See below....The Future of Music Coalition began in 2002 when Jenny Toomey, an indie rocker and therefore also definitionally an entrepreneur, got frutstrated with the fact that in policy land the people speaking for the musicians were the major labels like the RIAA. This is a lot like saying that wolves speak for sheep because wolves have an interest in maintaining healthy, accessible herds and in keeping other predators away. So Jenny started FMC to create a place in DC that allows artists to speak directly to policy people.

FMC provided major early evidence on how radio consolidation was killing local music and making radio suck by standardizing playlists. They provided a thorough, detailed study with academic rigor that could not be brushed off as just “emoting” or that no problem existed. They helped raise the profile of low-power FM and really pushed to make payola an issue rather than something accepted as the way big companies do business.

All these issues have a common theme, they reduce the music industry to big companies negotiating with each other and excluding independents. Network neutrality presents the same problem. Leaving aside that one of the major cable providers is also one of the major labels (Time Warner), network neutrality actually benefits the major labors against the independents. Major labels understand that it is worth paying extra money to create a system with choke points that would drive the cost of music on the internet beyond what independent competitors can afford. So while major labels would have to pay more on a non-neutral net, it would allow them to beat back competition and allow them to maintain their absolute control over the lives and revenues of performers. As a matter of old fashioned economic incentives, paying a few extra bucks per song to mainatin market dominance is well worth it.

For those who think I'm blowing smoke, allow me to share one of the very interesting facts that came out during the "Rock the Net" campaign launch. By now, everyone who follows the industry has heard about the death of music albums and the general decline in profitability of the music industry.

Turns out, not so much. Rather, as I have argued along with the good folks at Ars Technica, what we are actually seeing is the positive effects of competition. Music lovers, no longer herded by major labors toward pre-selected “superstars” and no longer required to buy an entire overpriced CD to get the one song they want, have embraced independents and legal downloads enthusiasticly — which has prompted more independents to use the internet to sell CDs and music downloads, eating into the monopoly profits of the music cartels. (Note to all you techno-libertarians and neo-cons who think I'm an evil socialist reactionary, I like competitive markets. I just don't worship them, or confuse “unregulated” with “competitive”).

Hence my happiness and joy when Derek Sivers, the founder of CD Baby (which sells CDs of independent musicians online) confirmed all this in comments at the “Rock the Net” campaign launch (I hope FMC puts up an audio or transcript). According to Sivers, CD sales for independents are up 30% this year over last, and continue to rise. The availability of legal downloads of indpendent tracks, for which independent artists receive monetary compensation, likewise continues to rise. Leo added that of the approximately 4.5 million tracks available on iTunes, 1.5 million are from independent artists. (For anyone who wonders why Tower Records and other stores that focus almost exclusively on major labels keep going belly up, might I suggest it's because they are not giving customers what they want?)

Explaining why we never hear about this amazing growth sector of a supposedly dieing industry, Sivers said:

“Major labels are like a $100 stock that has dropped to $90, and that's oh so newsworthy. But independent labels are like a $1 stock that has risen to $5. But it's still not considered newsworthy so no one knows about it.”

So a neutral internet has allowed independents to grow and take business away from the dominant mega-corps with a crappier product. Small wonder that independent musicians have woken up to the need to fight for net neutrality and mobilize their fans to action. And small wonder that the major labels would rather pay payola equivalents for “premium tier” transit rather than compete.

Will the incumbents have to face the competition music because of network neutrality? Or will this once again prove to be the same old song of competition crushed by special interests and an indifferent public? Don't ask who decides if we won't get fooled again. It's up to us. And I'm glad to FMC and their indie musician members singing along as it comes around on the guitar.

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The media's job is to interest the public in the public interest. -John Dewey