One of the truly inspiring thing about ebooks is that they offer endless opportunity to iterate and morph selling and access models. Technology drives change and innovation, which in turn allows for all kinds of new and interesting features. All kinds of selling and access models are floating around out there, some that allow extension of purchase rights beyond a single user. There are models that offer no specific items to download and hold on any device, models that offer real-time content updates, models that offer print plus ebooks, ebooks plus TTS audio, subscriptions to ebooks, and on and on and on.
Coming to a Campus Near You…
To be perfectly clear, this blog is not sanctioned by, endorsed by, or even remotely associated with Oxford University Press, my fantastic employer. What I say here is my opinion and my opinion alone.
The preview of the Kindle DX on May 6th was a smart tactical maneuver in the preparation for the next front of the ebook reader wars. Even though Amazon invited the NY Times to the stage to help pump up the volume, newspapers are not the primary raison d’être of the new Kindle.
One Response to “Coming to a Campus Near You…”
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Dual Screen eInk, LCD netbook based on Android? | Netbook Reviews - Netbook Review Blog
on May 21st, 2009
@ 2:58 am:[...] browsing through the web, we came across this article describing the iPhone vs. Kindle battle in the universities. The Apple iPhone/iPod and Amazon’s Kindle are not exactly neck to neck in the ebook reader [...]
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Tags: Amazon, App Store, Apple, Cengage, College Publishing, e-ink, ebooks, econtent, Higher Education, Holtzbrinck, Houghton Mifflin, iPod, Kindle, McGraw-Hill, Pearson, publishing, University, Wiley
There Will Be Disintermediation
The first two parts of this series, Disruption and Generation On-Demand, explored my own personal content consumption disruption and traced it through the seismic shift in my reading, listening, and watching habits. My experience seems to align with the generational experience of content at one’s fingertips, on-demand. I called this phenomenon Generation On-Demand because this generation has grown up with and expects that everything and anything (content) be available to them, however, whenever, and wherever they want.
4 Responses to “There Will Be Disintermediation”
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Gary Arms
on May 11th, 2009
@ 5:43 am:As someone who teaches the Online Generation, I think it will happen the way it did with music and the way it is now happening with movies and TV shows. People with no ownership stake will put content on line so that others can “share” it. And so the dike will be breached. I agree completely with Evan’s analysis of the Online Generation and his prediction that they will increasingly ignore anything not in the cloud. Anyone who teaches knows it is increasingly difficult to get students to read books. There is a small but significant young audience for books, but a distressingly large portion of the younger generation will not read entire books unless required to do so by professors. When the online generation does research, they do it almost entirely online. Publishers and authors will continue to squabble. Again, I agree with Evan’s analysis; they will never come to general agreement. Meanwhile, the cloud will expand, gobbling up everything that exists in digital form. In music, it appears that artists will continue to make money but most of their revenue will come from live performance, the sale of tee shirts etc. To a considerable degree, the music industry has lost control of its product. “If you can’t beat ‘em, join ‘em.” The success of Hulu suggests that TV and movies can make money selling ads on their own site, a site that is easy to use, reliable and free of viruses. A huge amount of print (especially periodicals) is already on line; the magazines sell ad space too. This is the single most important problem facing all content providers. The future will belong to those able to adapt to the new environment.
[Reply]
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The Daily Square - Rockin’ of the Ten Thousand Edition | Booksquare
on May 11th, 2009
@ 4:32 pm:[...] There Will Be DisintermediationEvan Schnittman looks at the messes and possibilities we’re facing, and asks what happens on January 1, 2013. Will there be disintermediation? [...]
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Another copyright reshuffle that’s in the cards - The Shatzkin Files
on May 12th, 2009
@ 5:11 am:[...] Schnittman at Black Plastic Glasses posted the final chunk of a 3-parter yesterday that contained a real shocker (to me) at the end. The 3-part post shows through [...]
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AmazonEncore Is Amazon’s First Step Toward Dominating Publishing | Dear Author: Romance Novel Reviews, Industry News, and Commentary
on May 17th, 2009
@ 3:01 am:[...] effectively wrests control of the entire value chain. (Authors, if you don’t know what disintermediation is as it relates to publishing, you should and yes, we will talk about the very last paragraph in that blog article soon). Like [...]
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Tags: App Store, Apple, Audio CD, Authors Guild, Business, Digital rights management, DRM, ebooks, econtent, Evan Schnittman, Google, iPhone, iPod, iTunes, Kindle, publishing
Disruption
Disruption is the first part of a 3-part series on the zeitgeist of the digital era and the significant impact it has on publishing and all other content businesses. Disruption is personal as I look at my own content consumption over the years and document its transformation. There are no answers in part 1, just the facts as I understand them and the questions they spur.
Read the rest of this entry »
7 Responses to “Disruption”
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MikeShatzkin
on May 5th, 2009
@ 6:48 am:Evan, I think just about everybody buys less music as they get older. Two reasons.
1. You get introduced to music much more readily and frequently when you’re young and single and music is inextricably bound to the discovery of social opportunities with those of whatever sex interests you.
2. As you get older, your stash of stuff you KNOW you like gets bigger, and you never stop listening to it. So your NEED for new new music diminishes.
I bet if you checked you’d find that the pace of adding new ARTISTS has slowed even more than the pace of adding new music.
None of this applies to the other forms of content because they don’t tend to be reused the way music is.
[Reply]
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Topics about Harry-potter | Disruption
on May 5th, 2009
@ 7:26 pm:[...] [CinemaRatty] Latest Articles added an interesting post on DisruptionHere’s a small excerpt…a bit of sports… all (except NFL games) on TiVo … I went to the movies by choice (taking the kids to see Harry Potter doesn’t count.) Why… [...]
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Generation On-Demand « Black Plastic Glasses
on May 6th, 2009
@ 2:52 am:[...] On-Demand is the second of a 3-part series. The first installment, Disruption, explored my personal content consumption over the years and ended with the observation that [...]
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Will Hawkins
on May 6th, 2009
@ 5:24 am:Evan,
It’s a very interesting article. I can relate to the diminishing amount of TV you watch each
week, fewer movies watched and music purchased.I find that I am reading more in my forties than ever and most of it is through blogs or my
mobile phone. I read the same amount of books but not on a Kindle or other device.The difference in habits now to those I had ten years ago to do with when I read books and news, watch TV or listen to music. More often than not, I am reading on the underground, listening to the radio through the web at home while working, or watching a video on my
mobile phone.Reading, watching and listening are far more fragmented in when I do them, whereas in the past I would have devoted long periods of a day to each of them.
Will
[Reply]
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There Will Be Disintermediation « Black Plastic Glasses
on May 11th, 2009
@ 3:28 am:[...] first two parts of this series, Disruption and Generation On-Demand, explored my own personal content consumption disruption and traced it [...]
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Best of… « Black Plastic Glasses
on Jun 11th, 2009
@ 5:31 am:[...] 4 is a series that started with Disruption, moved into Generation On-Demand (a phrase coined with Fast Company contributing writer Adam [...]
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Tags: Amazon Elastic Compute Cloud, Amazon.com, App Store, Apple, Barnes & Noble, Barney Miller, Blu-ray, Books, Brady Bunch, cable TV, DVD, ebooks, Evan Schnittman, Harry Potter, HD, hollywood, iPhone, iPod, iTunes, Kindle, movies, radio, recors labels, studios, Television, TiVo, Ulysses S. Grant
Discounts Must Align to Risks
To be perfectly clear, this blog is not sanctioned by, endorsed by, or even remotely associated with Oxford University Press, my fantastic employer. What I say here is my opinion and my opinion alone.
In my inaugural post, Why Ebooks Must Fail, I promised to follow up by exploring a variety of business models I believe could work in the long run for publishers of all sizes and shapes. This is the first part of a 3-part series in which I propose changes and new initiatives for ebooks that, I believe, will help ensure that ebooks don’t fail.
Read the rest of this entry »
12 Responses to “Discounts Must Align to Risks”
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Jenny Ruhl
on Apr 15th, 2009
@ 9:04 am:Unless publishers confront head on the monopolistic nature of the ebook market–B&N’s Fictionwise vs Amazon and not much else, you’ll have no choice of models. And as Amazon has shown, they can and in the future will determine at their owner’s command what books should be sold and how.
Isn’t it time to fund a nonprofit organization to create a mega site that would provide open access download sales? Open it to all publishers. Put in a better review/rank algorithm than Amazon’s very flawed version to allow readers to find books they’d want to read. Offer multiple discounts to publishers of the type you’ve suggested here.
Right now you have as much ability to negotiate discounts with Amazon as you did with Ma Bell in the 1970s.
[Reply]
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MikeShatzkin
on Apr 15th, 2009
@ 10:46 am:Evan,
Discounts shouldn’t align to “risk”. They should align to “contribution.” In this case, they’re quite similar. The “contribution” of a brick-and-mortar store is huge: maintaining a physical location, buying in stock on spec, handling heavy physical merchandise, shelving it so that customers can find it, and then pulling and sending back stock brought in with the hope of profit that now represents a loss.
I have written that compensation to ebook retailers is bound to diminish. Amazon is actually taking the lead on that, going for NEGATIVE margin in order to offer a $9.99 price point much of the time.
However, I don’t think your models have much of a chance to succeed. Aggressive buying and selling in the physical world is not done to make an economic model work; it is done because more stock equals (at least the opportunity for) more sales. I don’t think bringing the ideas of returns and distressed inventory into the ebook world constitutes progress.
Mike[Reply]
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Mike Violano
on Apr 15th, 2009
@ 12:40 pm:Evan,
I think you’re actually raising the bigger issue of publishing business models. Reseller discounts in the print book world have evolved and increased based on multiple factors such as returns, volume purchasing…and “risk” and have actually contributed to rising cover prices to accommodate both higher discounts and lower net unit sales.Ebook pricing, reseller discounts, author royalty share and publisher profit is a very perplexing equation; traditional book selling models are not an effective guide. Most trade publishers do not yet embrace ebooks as an intrinsic part of their business…they continue to consider ebook sales as incremental to “core” (hardcover, paperback, audio) formats.
eBook sales are growing but not as fast from trade publishers points of view to cause an extreme makeover of business models, discounts, author agreements or even book production processes. Until ebooks make a greater contribution to revenues most publishers will continue to apply or tweak the old print rules to handle ebook sales, reseller discounts, and authors royalties.[Reply]
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Links for 16th April 2009 | Velcro City Tourist Board
on Apr 16th, 2009
@ 6:01 pm:[...] Discounts Must Align to Risks [...]
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Why Ebooks Must Fail « Black Plastic Glasses
on Apr 18th, 2009
@ 6:09 am:[...] inflammatory title, but this article, especially when taken in context with the follow up piece Discounts Must Align to Risks, is about supporting growth in the ebook market, not predicting its demise. Ebooks are the future [...]
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bowerbird
on Apr 21st, 2009
@ 4:40 pm:when you start censoring comments,
it indicates an implicit wish for the dialog
to stop. sure enough, you got your wish.-bowerbird
[Reply]
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Anita Pyke
on Apr 22nd, 2009
@ 6:39 am:Evan, how do you see new discount models possibly rolling out in practice? Would publishers band together to negotiate with Amazon and other retailers?
What incentive would there be for ebook retails to renegotiate the current discount structure?
I still feel strongly for revision of advances. Big authors should take their cue from the players in Hollywood – the real money is in profit share.[Reply]

Evan Reply:
April 22nd, 2009 at 11:47 pmThanks for the comment.
Publishers cannot band together to negotiate with resellers as that would be collusion. Each publisher must negotiate on their own and set their own rates.
The big question is why would retailers accept this change? My answer is that it will take some work, some cooperation, and some experimentation. I am not sure the specific plan outlined here will work – though I am convinced that publishers and resellers need to find smarter ways to work out risk management in publishing. Payment terms and discounts are one obvious place to start – but there are others – profit sharing by authors is certainly one route, as you mention.
[Reply]
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Dagger DiGorro
on Apr 25th, 2009
@ 4:00 pm:I’ve been around publishing for a long time, and I can’t recall a greater feat of verbal masturbation since, perhaps, Harold Brodkey’s The Runaway Soul.
Since when do American trade publishers – light years behind the cutting edge of the eBook phenomenon – get to pick their “business model” and impose it on the retailers who’ve dictated their terms to publishers for more than two decades? Who really cares that publishers can’t meet their cash flow needs without bloating their monthly revenue numbers with money they know they will have to credit back to retailers as returns come in? Where is the model in which inefficiencies are eliminated?
Sure, these models may look nice to publishers (though it’s hard to see a retailer jumping at the chance to share more of the risk), but it’s just another manifestation of publishing’s myopia that people of influence are wasting their time on this nonsense while the important work is done elsewhere, and while even their most crippled competitors are eclipsing them.
I’m sure newspapers would like it if subscribers would pay for content, too, but they abandoned that idea in, oh, 2002…
[Reply]
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J.
on May 3rd, 2009
@ 3:48 pm:Hey Evan,
First of all, thanks for posting all these interesting perspectives on the publishing industry. As a student I started a project about ebooks and I need to do some research for it. So I contacted several publishers but nobody gave me clear answers or possible solutions on how to (r)evolutionize the industry for the new way of reading. But your blog is very helpfull and I’m really looking forward for your other posts. There’s only one big question that rose when I read all your posts: what about the educational market? In your posts you’re only talking about the trade book market… I guess there is a big difference in the educational segment because of lower risks in that segment.
What do you think?
[Reply]

Evan Reply:
May 5th, 2009 at 8:15 amJ:
Yes, education is quite different as nothing, to date in the world of ebooks or electronic content delivery has come close to being successful. Textbooks still reign as there isn’t a direct to consumer pathway as is found in consumer (trade) oriented publishing. Textbooks are selected (adopted) by faculty and/or administrators who in turn require the purchase by students or local schools. There are too many competing interests for this to work now – but watch Amazon as they will supposedly be announcing a unique experiment in Higher Education for a new Kindle.
[Reply]

Jeroen Reply:
May 5th, 2009 at 3:07 pmThanks for replying! So a good way to get the educational market into e-reading would be to team up with universities and decide on which books need to be transformed into e-content? By teaming up with the universities an e-book distributor knows, by estimation how many students are going to buy the books so a model of Advance Purchases should be applicable. I think for the educational market this is the way to go… Or is this just to shortsighted? What about the competing interests? I dont understand that part.
[Reply]
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Tags: Amazon, App Store, Authors Guild, Baker & Taylor, Barnes & Noble, Books, CoreSource, Digital Publishing, ebooks, econtent, Evan Schnittman, Fictionwise, Filedby, Google, Hachette, HarperCollins, Hodder, IDPF, iRex, iTunes, Kindle, Libre Digital, Overdrive, Oxford University Press, Penguin, Plastic Logic, publishing, Simon & Schuster, Sony Reader, Taylor & Francis, Trade Publishing, Waterstones, XML
Bang the DRM Slowly…
Two weeks ago on NPR’s All Things Considered I had a brief sound bite about DRM (Digital Rights Management) and the music industry. What you didn’t get to hear was the larger point I was trying to pull together – which is that DRM is not bad, nor is it good. It is like any tool, only as good (or bad) as it is implemented.
Read the rest of this entry »
9 Responses to “Bang the DRM Slowly…”
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Bradley Robb
on Apr 6th, 2009
@ 8:44 am:With all due respect to you(r) position, the belief that pirated content is the source of the decline in the music industry is a flawed one, and one that placing DRM on compact discs wouldn’t have helped. While the finger is often pointed towards Napster and the programs which followed as the cause of the decline, they are more accurately described as a harbinger of change.
The rise of the CD represented the start of a bubble for the music industry in which many people rushed to replace their aging LP collection with a medium that captured the same sonic fidelity, or to upgrade their tape collection. This collector’s motivation was one of the key sources of increased sales numbers.
A second noticeable increase was that the compact disc largely killed off a large previous sales leader – the single. Prior to the early 1970s, the concept of a “full album” was indeed a rare one, the multitude of bands recorded 45 RPM singles, while earning their income from touring. With the rise of the compact disc in the middle 1990s, there was no technical difference between a full length CD and a single, and so bands were encourage to put together entire albums consisting of two or three singles, while padding the rest together with filler material. While returning greater profits for the labels, the perceived value of the album was reduced.
Putting together full albums, however, was more expensive for the record labels. Pair that fact with the number of labels shrinking into four global conglomerates, and there was a drastic reduction in risks that the labels were willing to take. This lead to cyclical trends where each label would push out copycat bands, pitting similar bands against each other in the media in order to enhance sales across the board. During the rise of the blond pop tarts in the late 1990s, it was actually common for a single label to have several essentially identical singers competing for sales. This lead to market place confusion for listeners and a further degraded the value of music.
With the onset of a digital music, listeners were able to once again upgrade their music libraries, and had access to extensive back catalogs. However, this time around, music listeners were able to purchase individual songs, which left record labels footing the bill for continuing to churn out LP-length song collections which only contained a handful of songs which the listener actually cared about.
The real harm which was done to the music industry was not downloading, or even the shift to digital, but rather the belief that the compact disc bubble would extend indefinitely, when since the dawn of the wax tube, music format shifts have been happening at an increasingly rapid rate.
If the record labels had put DRM on the compact disc from it’s inception, one could make the argument that customers would have likewise been forced to repurchase all of their favorite music over again in digital format. However, as the real world has shown, music listeners have grown disinterested with the major labels willingness to pad singles into LPs, and given the option, will purchase just the single.
The other major stumbling block for the belief that placing DRM on the compact disc would prevent people from ripping their own CDs is the very real fact that no DRM scheme has ever lasted. True, some require a certain amount of tech-savvy amongst the user, and current law makes the act of removing DRM a criminal one, but that has yet to stop people. Even the flaunted DRM schemes attached to the Blu Ray disc, claimed to be unbreakable, are broken with rapid success each time the format is updated.
[Reply]
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Bradley Robb
on Apr 6th, 2009
@ 8:58 am:Hit enter too soon.
Forrester Research, which you have cited in your own article, has their own study regarding the habits of music downloaders. It would seem that those who download music, either through legal or illegal avenues, actually buy more music than those who don’t. Further than than that, I’ve yet to find a single independent study which suggests that piracy had any statistically significant and quantifiable impact on music sales. The argument typically made by record labels, sighting the number of people engaged in piracy and attempting to directly assert that pirated content is lost sales, is a logical fallacy.
Someone who downloads content is not necessarily someone who would have otherwise purchased that same content. Not with the increased competition for the much vaunted entertainment dollar.
However, this logic does convey in the opposite direction. That is to say, that someone who purchases a digital download is someone who might not have otherwise purchased an album. There is not yet proof that I have seen which says that a digital purchase actually hinders physical sales.
The key to understanding how digital content has affected the music industry, which is acting as the true vanguard in this area, is to look at a much longer time line, and attempt to pull out as many lessons as possible.
- Conglomeration was bad, as it lowered willingness to take risks while encouraging copycat behavior.
- The digital medium has led to more people listening to music, and more avenues for sales.
-The new medium does require some tighter general bookkeeping, but with the shift to digital, the new content can be produced less-expensively.
- Digital distribution is significantly less expensive than physical, which could have empowered the labels, allowing the loss of the middleman.
-The long tail means that back catalog can sell forever, which pushes sales from the front to the back, but allows for perpetual sales and even unexpected success.[Reply]
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Marshall T. Vandegrift
on Apr 6th, 2009
@ 9:33 am:I’m afraid I have to disagree with your assertion that the Kindle’s DRM scheme is “smart,” or that a “smart” DRM scheme is possible. Amazon has made it easier to read a book on multiple devices linked to the same account, but this feature is present in various forms in all the existing commercial e-book formats and viewers. The Amazon system is still DRM, and still contains the two fundamental flaws of DRM: (1) it inherently treats the reader like a criminal and attempts to lock the content into a system which prohibits legitimate fair use and uses possible with print books; and (2) it is inherently ineffective, providing no true barrier preventing actual pirates from decrypting the content and distributing it as they wish.
[Reply]
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Global Color » Bang the DRM Slowly… « Black Plastic Glasses
on Apr 6th, 2009
@ 11:57 am:[...] View original post here: Bang the DRM Slowly… « Black Plastic Glasses [...]
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Kirk Biglione
on Apr 6th, 2009
@ 1:30 pm:What you’re talking about in this post is transparent DRM. That’s pretty much the holy grail for anyone trying to sell content protected by DRM. The ideal is that DRM should be so unobtrusive that consumers don’t notice it. To achieve this goal content publishers need to minimize friction during the initial purchase and media transfer process, and provide consumers with freedom to use their legally purchased digital media in a variety of ways. For Apple that meant allowing consumers to transfer songs to a certain number of devices and the ability to burn songs to CD. For Amazon that means the ability to transfer ebooks to multiple Kindles, and now to the Kindle iPhone app.
The problem for consumers is that this freedom is illusory. DRM protected songs purchased from iTunes will only play on an Apple brand media player. DRM protected books purchased from Amazon will only play on the Kindle or Kindle iPhone app. Consumers are not only locked into a specific brand of device, they’re also locked into a specific marketplace where content may be purchased.
The real challenge is not so much creating a transparent DRM scheme (Apple and Amazon have both demonstrated it can be done), but rather creating transparent and *interoperable* DRM in an *open* marketplace. The market leaders aren’t about to provide any assistance.
Apple could have licensed Microsoft’s DRM for use on the iPod, but there was no reason to. Why willingly make your device compatibility with rival digital music retailers when you’ve already built the industry leading marketplace for digital music?
Amazon could easily build support for Adobe DRM into the Kindle. They won’t. Again, there’s no reason for them to.
The real reason iTunes went DRM free is because the recording industry eventually realized that the only hope of overcoming Apple’s dominance in the marketplace for digital music was to eliminate the one thing that locked consumers into iTunes — DRM.
As publishers consider these issues it’s important to fully understand the many ways that DRM shapes the marketplace for digital content.
[Reply]
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Keith Stoneman
on Apr 6th, 2009
@ 6:21 pm:I’m old like you, and personally think the recording industry is getting what it deserves. The DIY stuff that people are able to put out on a mass scale from their spare bedroom is amazing for its quality and variety and freshness.
The only trouble is finding it, but I’m sure I will have less trouble with that without having 99.9% of my choices limited by overpaid small-minded A&R dinks in LA, NY, Memphis, or wherever. I’m actually hoping that Apple will ultimately fail, too, since their success simply means they will employ the same kind of people Atlantic and Virgin and Geffen and Mercury and Motown and the others did…er, do still, on a reduced scale, I guess.
As for the Kindle, I’m old enough to refuse to buy one. The very many books I want to read before I die are nearly all off of anyone’s backlist, except for a few reprints of 19th-century theologians by specialty houses. (There simply are no good 20th- or 21st-century theologians, especially when compared with the older ones…but I digress.) It is nearly certain they will not make it to electronic format, and even if they do, I can get them cheaper from even older guys, with the benefit of whatever stray notes they may have left in them.
Further, as long as there is sunshine or candles and matches, I can read an actual book even when the power goes out for a day, or a week, or a month, but all the Kindles and iPhones will eventually lose their charge in such an eventuality. (Couldn’t happen in America, you say? I would have thought so too, until (among other things) the president decided who the CEO of GM would be.)
And don’t think I didn’t notice the sneer in the general direction of Swedish anarchists, by the way…
[Reply]
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Aaron Ardiri
on Apr 6th, 2009
@ 7:58 pm:As a swede – i had to say something *g*
I think DRM in its current form is flawed because it doesn’t adapt to the changing environment of the end-user. DRM should be transparent; it should not be an inconvenience. Instead of putting anti-copy measures in place; why not turn DRM into a validation environment – is that a real CD you are extracting that song from? are you person X, trying to use item Y – on devices A, B and C?
In today’s model; we are living in a connected world and digital signatures should rule the DRM scene. if the device isn’t sure your allowed to use it; make a network request and validate/generate a new digital signature. if someone copies the file; they’ll have to revalidate and hence, fail validation.
One of the biggest issues is that the audio/video format’s were designed first; then DRM came into play. what needs to be done by these “giants” if they want to provide a fair-play environment is to re-design the audio/video formats so they include DRM. sony tried this; and failed. does this mean doom for anyone else who tries?
i think the minute someone realizes they can make money of something; it’s just too late – proof of concepts are typically DRM free and they form the foundations of anti-DRM (once free, always free)
every DRM system will eventually be beaten – so, there is no ultimate solution; just a delay.
// Aaron Ardiri
[Reply]
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tycho garen
on Apr 9th, 2009
@ 8:37 pm:I’ve always been under the impression that the music industry; that
is, musicians, songwriters, etc., derived the lions share of their
profits and money from touring? That is selling
tickets plus tshirts, bumperstickers, and CDs *at their concerts*,
rather than what sells at [Insert Record Store Name Here]? Not that
distributed sales don’t count, but touring is where the money is, not
in records sales.In light of that, all this talk about DRM and music sales and CDs are
all mystification of the business model.Ultimately DRM makes the technology harder to use. That’s really
simple, and really core to the nature of what DRM is. One can’t have
DRM that doesn’t impinge upon the range of technological
possibility.Because of that there’ll always be an incentive to break DRM. You buy
your family’s sixth mac and can’t sync your music collection. You buy
a music player that isn’t made by Apple, you buy DRM’d music from
someone who isn’t Apple, etc. You choose to use Linux and can’t load
iTunes. etc. And no DRM that lets you play back your media is
unbreakable, and most methods of breaking DRM don’t resort to the
“analog loop.”But all this is aside the point that concert attendance, not song
sales, is what the music industry is about and has always been
about.[Reply]

Evan Reply:
April 10th, 2009 at 6:27 amTycho:
I have some personal experience that may perhaps help or shed some light. I am friends with a band that has been around since the late 1980’s, the Smithereens, and have enjoyed a role which they have referred to me a “consigliere” as I occasionally help with business issues in an impartial way as I have nothing to gain… in other words, I can be trusted as my only stake is friendship.
What I have learned as I have watched their career is that the only real money in music comes from creating and owning original music “publishing.” Everything else we associate with music money making – records, touring, etc., are about building the “publishing” aspect of music. For a band, records pay out twice as they receive direct income for the sales of the album (although usually that is paid in advance and is very hard to earn out) and indirectly through mechanisms such as ASCAP where uses of the music such as on radio, etc, are paid out. The band is paid more for their version of the music as they get “publishing” and “performance” fees, but they also get paid when someone else records or uses their music but not their performance.
Touring is set up to promote record sales – or promote the band itself which is trying to get a record deal. That said, mature bands such as the Smithereens have a following that can support them with 25 – 50 gigs a year. That doesn’t add up to very much, however, as touring is expensive – bands need transportation, they need hotels, they need to eat and drink and pay roadies or at least hire local sound and lighting tech’s, and they need to give the tax man a third off the top, a manager 10% off the tp, a booking agent another 10%, their accountant 5%, etc, etc etc… so even a high paying corporate gig for a 1 hour show $25,000 – 50,000 will net the band members 40% or $10,000 – $20,000 – and then they have to split that 4 or 5 ways (or more!). While $2500 – $5000 sounds like a lot, those are rare and far in between… so the reality is that after expenses the average take home is more like $1000 and at 25-50 a year, you are hardly feeling as if you are making your money off touring!
[Reply]
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Tags: AAC, Amazon, App Store, Apple, Audio CD, Babjak, Books, Cory Doctorow, Diken, Dinizio, DRM, ebooks, econtent, Evan Schnittman, Google, IDG, iPhone, iPod, iTunes, Kindle, macworld, MP3, Music Industry, publishing, Smithereens, Sony Reader, XML
Mike Shatzkin
on Jun 21st, 2009
@ 9:52 am:
I like the thinking here, but I will pick a couple of nits.
1. Going to a licensing model does not necessarily require that an advance be paid on “royalties.” In fact, more and more publishers are trying to do “no advance” deals with authors so I think we’ll also see more “no advance” deals with rights. So whatever the problems with the rights paradigm in the retailer space, the requirement for an advance doesn’t have to be the thing which knocks it out.
2. The problem with your “net pricing” idea, I think, is that it doesn’t account for the fact that, in the digital download world, eventually most publishers WILL sell direct to end users even if they didn’t in the past. And they will sell at some price, which will be, de facto, the publisher’s retail price. This is already happening, of course, and Amazon has apparently raised the point with some publishers that their “discount” is meant to be off the publisher’s price, and if the publisher is selling for less on their web site, their discount should be based on the lower price.
That’s why I have advocated cutting the DISCOUNTS to intermediaries and have the publisher continue to sell at “full retail” (except for special promotional offers, bundles, etc) Seems like that would give us a cleaner playing field, if not a more level one.
This is all still in the stage of getting more complicated, not simpler.
[Reply]
bowerbird
on Jul 6th, 2009
@ 11:06 am:
still tryin’ to find a way to make your slice of the pie bigger, are you?
good luck with that…
because, yeah, amazon is gonna let you lower their discount, i’m quite sure of it, because they need you more than you need them, right? yeah, sure they do…
-bowerbird
[Reply]
Evan
on Jul 6th, 2009
@ 12:18 pm:
Welcome back. Miss me?
[Reply]