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The Future of Music And It's Enemies 2002
Year's end is our time to reflect on the past and look forward to the future. First, let me offer holiday wishes of success in the coming year to all music industry professionals. Thank you for making this year a remarkable start towards the this industry's next, and much-needed renaissance.
It's fun to predict the future, even if you're wrong about a few things. It keeps the brain tuned and strengthens your powers of observation. This is my bi-annual report on predictions for the future of the music biz. This year I'm incorporating a special feature. I'm going to divide this into two parts. The first part below will respond to the predictions of several others, mostly, Gerd Leonhard of LicenseMusic.com, who published his predictions for the future of music on MusicDish this past month.
Some of these have caused a stir amongst the less informed, mostly due to the shotgun prediction of the death of ASCAP and BMI as well as pie-in-the-sky assertions about technology that reads like a Jetsons wet dream.
In preparing this article, I went back to my last Future of Music and It's Enemies piece published in January of 2001, just to see how accurate I was. I mean, if I'm going to retort other futurists, I best make sure that my statistics are in the black, right? My track record is posted at the end of this piece. But here's one thing I was MAJORLY wrong about:
"Just about every significant label will have some type of Napster-ready delivery-service in place by the middle of 2002."
I should have known better, given my skepticism about the marriage of technology and old-boy mired institutions like major labels. But I learned a few lessons that others apparently have not. Let's see…
Retorts To Report
It's easy to play "psychic" and say there will be an earthquake someday. It takes a bit more talent to assert there will be an earthquake at 4:30 pm 100 years from now, on this date in Scotland. Besides, even if you can predict an accurate eruption, who cares if it's going to happen in 100 years? Although I don't know him, Gerd seems like a smart dude and someone with whom I would have an enjoyable debate. My key objection is the lack of a time-line on many of his predictions. Here's what I'm talking about:
 "The performing rights organizations (PROs), as we know them, will vanish. Complete technology solutions comprised of watermarking [etc.] and instant payment solutions will do the job quicker, cheaper and with complete transparency."
This prediction's reliance on technology suffers also from the same myopia as most technocrats: they don't understand that while technology may move at the speed of light, it is filtered through the speed of bureaucracy.
At what point PROs will become obsolete would be a more useful question to ponder than if they will "vanish." Especially when the reason given is a technology-based solution. It reminds me of when scientists in 1969, drunk with success from the moon landing, were predicting a manned Mars mission by 1995.
Besides, PROs don't own their own technology anyway, they license it. So I don't see this prediction as probable in the next decade or so. PROs make money bundling their licensed, third-party technology with their service: they throw parties, sponsor events, songwriting contests, issue advances and manage rights. The desire for these services will not wane with a few new gadgets.
His other prediction about unification of music publishers and record companies drew some attention. Mainly this quote: "The traditional separation of Music Recording (Record Labels) and Music Publishing (Music Publishers) will fade away because… new markets require a uniform and concurrent exploitation of both rights in order to bring in substantial, recurring revenues."
I disagree. The fact that Gerd is right in his premise does not mean that utopia will evolve from the actual need illustrated. Publishing companies are the crown jewel of the record business. They have more power than record companies (due to more case law on their side) and will become more separate from record companies as the Record/publishing divisions of the multi-national conglomerates that own them sell off pieces of their entertainment holdings to new multi-nationals who are hoping to take their shot in this business. The corporate giants who've experienced success in music will probably keep their publishing entities and sell off their record companies.
This quote, "Radio, as we know it, will become largely irrelevant because people will have access to carefully programmed and custom-cataloged music anywhere anytime," is a theory I've debated with several "learned" colleagues. But I disagree. Radio will become more powerful than ever, finding ways to filter into the internet and TV. Broadcasting as we know it, may change, but the Howard Sterns of the future will still have a format to employ them. Radio keeps us company when we drive to work. I don't see any technology in the near future that will change that, except maybe celebrity blow-up dolls that allow us access to the HOV lanes. (Especially the Pamela Anderson Lee airbag!)
His other related comment: "Access will replace ownership. In 3 years, consumers will have access to 'their' music anytime anywhere." I'd like to see it happen. But for a while, it's pure science fiction. Maybe before 2015.
"Mechanical royalties as we know them today will cease to exist within 15 years." No. If anything they will become more important due to new media outlets, like cell phones.
"Since CD prices will drop to $5 per unit, and unlimited 'all you can eat' subscription services will deliver music 24/7, the current music publishing fee structures are destined for extinction." Not in the next five years. Maybe in 15 years, by which point CDs probably wont exist anymore.
And this batch of predictions centering on Public Domain Music left me scratching my head:
--"The fair use provisions effective in the legal structure today will prevail and may even be expanded, because in a 'new' system that is based on affordable membership schemes…"
--"The lifetime of copyright will be cut back to 15-25 years, to reflect the fast pace of innovation and cultural development."
--"Music that then ends up in Public Domain will prove to be powerful driver of incremental revenues,"
Wow!! Tell that to Disney, Sonny Bono, AOL and a host of others who are just rolling up for a siege on Washington to extend copyrights. I think they have a very, very good chance. And on the Public Domain item-- I don't get this at all. Since when are the major media giants going to agree to expanded status to anything that liberates their inventory?
About the only opinion that somewhat stuck me as possible, was this: "perpetualized fear will continue to reign [over major labels] until revenues are down 25%-40%, giving rise to a whole new generation of young leaders"
But, aside from the fact that this one is a gimme, there is some hope for majors. Some labels are taking a hard look at altering their business models and streamlining their contracts. BUT…
The jury is still out, though, until we see the ACTUAL new contracts with our own eyes! As yet, all the majors have shown us is press releases with high claims.
HOW'S MY RANTING? CALL: 1-800 - AM I -RIGHT
Here's what I predicted in my last edition of the Future of Music and Its Enemies 2001 (viewable in its entirety on MosesAvalon.com. Click on the Home page: Scam Of The Month And Industry News). I have to say that I'm quite impressed with my track record here. I think I'll raise my consulting rates ;-).
--The FCC will redefine the meaning of a "radio station market" allowing conglomerates to own far more stations in a market. Soon, before the end of 2002, it will be possible for one corporate entity to completely control the radio airwaves in a given market, something that by law they are not supposed to be allowed to do.
--The Copyright Office of the United States will not set a standard for the "Interactive Streaming Statutory Rate" (that's what I'm calling it) until 2002, buying time for several internet radio stations. But in the end, most small Internet radio stations will go bye-bye or be absorbed by conglomerates.
-- BMG will disconnect from Napster, probably before the end of 2002 and will be dismantled. All that will remain is the brand name, which, by that time, will be an empty shell.
--The AOL/Time Warner merger will happen before the end of 2001. (But, I was REALLY wrong about this… ) AOL stock will return to close to its former glory (about $90 a share) in September. AOL will announce a subscriber based model that will be faster and cheaper than any of its competitors. (Oops! Wishful thinking on my part)
-- The subscriber based model for Internet Record Clubs, in general, will fail miserably. Record companies will be forced to adopt one of the two scenarios (or both): improve the technology standard or sell out to advertisers in a big way.
--The Cell phone will start to become the most significant new contributor of revenue for writers by the end of 2002.
--The music-on-demand service will be truncated because the technology will not find its way into economy cars anytime this year (2001).
--Internet record sales will level off at about 1.6% of total sales.
Not bad for a former producer/engineer/musician. Stay tuned for my predictions for 2003-2005 coming in the Future of Music and Its Enemies Part II, in the January 2003 Moses Supposes.
Moses Avalon Disclaimer:
This is not news... News is allegedly objective. This is anything but. This is about interpreting the news into information that you can use. The key to predicting the future is in interpreting the past. In real terms, this means understanding how the big players interpret their mistakes and their recent acquisitions.
Related MusicDish e-Journal Articles:
» The Future of the Music Business - General Trends (2002-11-13)
» The Future of the Music Business - Predictions (2002-11-19)
» The Future of the Music Business - Other Trends (2002-12-08)
» The Future of the Music Business: An Alternate Viewpoint (2002-12-16)
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