Some Facts & Insights Into The Whole Discussion Of 'Ethics' And Music Business Models

from the well-needed dept

I know we've written a few times now about David Lowery's now infamous shaming of an intern because she apparently doesn't give him enough of her money, but that story keeps getting attention. Thankfully, a lot of that attention comes in the form of people from all over the music business popping up to explain (1) how Lowery's factual claims are false , (2) his ethical claims are silly and (3) it's time to get with the future, rather than pine for a mythical past that never existed. Here's a collection of some of the more interesting such posts.

First up, we have Jeff Price from Tunecore -- the company that helps thousands of artists release and sell music. Jeff has more data on how artists make money than probably anyone else alive. And he says that nearly all of Lowery's factual claims are wrong, or at best, misleading. Here's a snippet, but the whole thing is worth reading:

Well here’s some truth about the old industry that David somehow misses.

Previously, artists were not rolling in money. Most were not allowed into the system by the gatekeepers. Of those that were allowed on the major labels, over 98% of them failed. Yes, 98%
.

Of the 2% that succeeded, less than a half percent of those ever got paid a band royalty from the sale of recorded music.

How in the world is an artist making at least something, no matter how small, worse than 99% of the world’s unsigned artists making nothing and of the 1% signed, less than a half a percent of them ever making a single band royalty ever?

Finally, as much as I hate to say it, being an artist does not entitle the artist to get money. They have to earn it. And not everyone can.

This is a point that Lowery and his friends always ignore: because they don't count all the bands that failed under the old system. Those artists don't matter to them. The fact that those guys can make some money today where they made $0 before means nothing to them. The only artists who count are the artists who used to make lots of money, but don't make much money any more. Another example of Lowery being wrong that Price responds to is the claim that recorded music revenue to artists has been going down. Price has data:

This is empirically false. Revenue to labels has collapsed. Revenue to artists has gone up with more artists making more money now than at any time in history, off of the sale of pre-recorded music.

Taken a step further, a $17.98 list price CD earned a band $1.40 as a band royalty that they only got if they were recouped (over 99% of bands never recouped).

If an artist sells just two songs for $0.99 on iTunes via TuneCore, they gross $1.40.

If they sell an album for $9.99 on iTunes via TuneCore, they gross $7.00.

This is an INCREASE of over 700% in revenue to artists for recorded music sales.

Yeah, but you have to actually work at it now. Go read Jeff's entire writeup. It's pretty damning for Lowery.

Next up, we've got famed musician/producer Steve Albini's response, in which he notes that Lowery's facts are wrong and he's pining for a past that doesn't exist and ignoring all sorts of new opportunities:

In addition to vastly overstating the generosity of record labels toward artists in the old paradigm, Lowery openly sneers at the booming avenues for income that define the new music industry, merchandising and live performance.

As is true every time an industry changes, the people who used to have it easy claim the new way is not just hard for them but fundamentally wrong. The reluctance to adapt is a kind of embarrassing nostalgia that glosses over the many sins of the old ways, and it argues for a kind of pity fuck from the market.

It's doomed thinking. When it became obvious that the studio recording industry was not going to remain an analog domain, we built Electrical Audio to be as self-sufficient as possible so we could continue to use those methods we thought had important advantages despite changes in the greater industry. We didn't whine at the moon and expect the rest of the industry to indulge us. We also bought a Pro Tools rig to accommodate the sessions that weren't going to be done in the analog domain regardless.

Adapt to conditions or quit. Bitching is for bitches.

Next up, we've got successful "internet-era" musician Jonathan Coulton, who Lowery and his friends are claiming wrote a post supporting them. But that's only if you read the beginning, where Coulton claims that he agrees with Lowery. If you actually read the whole thing, Coulton's point is much more clear. He agrees that artists should get compensated, but scolding your customers is no way to do it. In fact, he talks about how exciting the future is going to be where more and more stuff is available for download for free, and how that will shake up lots of industries, beyond just music -- and just how exciting that is:

This is my bias: the decline of scarcity seems inevitable to me. I have no doubt that this fight over mp3s is just the first of many fights we're going to have about this stuff. Our laws and ethics already fail to match up with our behaviors, and for my money, those are the things we should be trying to fix. The change is already happening to us, and it's a change that WE ARE CHOOSING. It's too late to stop it, because we actually kind of like a lot of the things that we're getting out of it.

My one quibble with Coulton is that he seems to accept it as fact that artists make less money these days. His own experience and number from folks like Jeff Price above show that's simply not true. It may be true that the small circle of folks, like Lowery, who had some success in the past under the old system, and who then fail to adapt, may make less money, but that's the nature of a competitive marketplace.

Former record label guy Ethan Kaplan, whose insights we've discussed before, also weighed in with a more philosophical take, which is worth reading too. He makes two key points. As a guy who ran technology for Warner Music, he certainly has first hand knowledge about the role of innovation in the music business, and according to him, innovation was seen as a problem, because it broke the gatekeeper basis on which the old labels were built:

Innovation was antithetical to value for content, as it diminished the use of accessibility to increase relative worth.

Get that? He's pointing out that the labels' entire model was built on them being the gatekeeper -- limiting accessibility, in order to artificially suppress supply to keep prices high. The problem with innovation is that it inevitably moves towards greater efficiency. And that means pulling down artificial barriers. In the end, that's what Lowery is really complaining about, even if he doesn't realize it. He and his friends who once had some success as musicians face a more difficult world not because of unethical kids or because of technology... but because the way they used to make money was based on an artificial barrier that limited supply and competition, and allowed them to artificially inflate prices. It was good for them, but sucked for everyone who was kept out of the market. Why do you think this same crew is now arguing for a "new elitism" and directly insulting artists who succeed through more open means? It's because they want to go back to a limited supply. That's not happening.

And that brings up Ethan's second key point. There is no right to make money:

It is not a musician’s god given right to make money from their art. No one ever said this would continue as is.

This is a hard lesson. It doesn’t mean that copyright isn’t important. It doesn’t mean that artists can’t make money. It just means that it’s not a given, nor is it the responsibility of others to make this possible.

No one has ever had a "right" to make money from what they create. They have a right to try to do so. And many people have figured out how to do so under the current system. Those complaining don't seem to understand that you don't just get to sit back and have people give you money. You have to work at it, every day. That's the lesson Amanda Palmer provided everyone with her massively successful fundraising. She didn't raise that money based on any "ethical" arguments or anything having to do with copyright at all. In fact, she's explained how infringement has always helped her. She's able to do that because she works hard every single day to not just create great music, but to connect with her fans at a very deep level. She doesn't scold her fans -- she celebrates them. And because of that, she can make a ton of money and her fans love her for it.

Finally, we've got musician Travis Morrison, who was in a decently successful band (Dismemberment Plan) for a while and now works for the Huffington Post. He points out that this argument that there's some sort of ethical issue with the "kids these days" ignores the fact that past generations got music for free too, and for him, it was a huge boost to both his fandom and his desire to become a musician:

Music is so important to people. It is majorly important to young people. And to me? Literally somewhere below water and air but above food. And I just went for it. I bought a lot of music; I got a lot of free music from whatever sources were at hand; I just had to have it by any means necessary. If you duped a copy of a Dismemberment Plan record in college or something, it's cool. I guess I'd like to have the money, but you know what, I hope you just listened to it with even 1/10 of the consciousness I gave to the music I listened to as a kid--copied, stolen, or bought. And you know, maybe take some of the sermonizing from my peer group with a grain of salt. I think some of them did some of the things I did. Or... maybe a lot of them.

He's basically reinforcing the original point that Emily made and which kicked this whole thing off. Access to music and compensation of artists are two separate issues. The fact is that people know that the technology today enables access to pretty much every piece of music around. And it's a shame that we try to suppress that. The issue of compensation is somewhat separate from that -- and plenty of smart musicians are figuring it out. But arguing that access automatically means you need to compensate musicians at a high level (remember, Spotify's no good according to this bunch) or it's "unethical" just doesn't make sense, and has never made sense.

This debate has been interesting, but I'm glad to see that tons of people who live directly in that world have been coming out to correct the many inaccuracies in Lowery's post, which a few too many people took as gospel without understanding the details.