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Category: artists

The Stream: Music Without a Container

A common complaint among collectors of recorded music is that they've had to buy the same music over and over again in different formats. First the vinyl, then the cassette, then the CD, and now the digital files. Somehow the consumer believes he is buying the “music” and not the mechanical means to play the recording.

The cost of producing and distributing physical containers for music recordings has played a large part in what consumers have paid for recorded music. As the cost of producing these containers goes down, the price of recorded music remains the same. The theory is that these expanded margins allow the record labels to invest in new and undiscovered musical talent. That rarely happens anymore, the capital is deployed into other kinds of investments. It's no longer considered a good investment to develop talent.

The cut-of-the-pie taken by non-musicians is enormous, even as the risk taken by the record companies gets less and less over time. All of the risk has been shifted to the musicians. If they show up with a built-in audience ready to buy product, then there's a contract waiting for them to sign. This is true in the publishing world as well.

The issue lost in all these calculations over the cost of producing and distributing various containers for recorded music is: what is the value of the music itself? Since, for the most part, all CDs are the same price, can we assume that all music has identical value? In this model, the differential in artist compensation is based on the number of units sold. Sell a lot of records, make a lot of money. Or as it sometimes plays out: take an advance on future units sold; don't sell enough units; end up owing money to the record company; work without compensation to pay off the debt.

If you want to understand how power and morality works in business arrangements, simply ask who is taking risk and who is being compensated for it. Imagine a business where an artist is asked to take most of the risk, but isn't compensated when the risk pays off. Reducing risk and increasing profit is business as usual for corporations.

The digital file download was the last remnant of the music container. The file was downloaded and actually existed on some device. Cloud-based services parked your files in a location where network-connected devices could access the full library without specific files being physically present.

The music streaming services have done away with the container altogether. You don't even get the files. The consumer only gets access to the stream. Since the cost of the container is no longer and issue, the price of the service is lower. If you look at it from the pure consumer perspective, it's a bargain. Let's say you're big music fan and you buy two or three CDs, or album downloads, a month. For the cost of one download, you have access to a huge library of recorded music streams. For the cost of 12 album downloads a year, you get access to all popular recorded music all year long. It's pretty obvious that the economics favor a mass migration to the streaming services, and that movement is backed up by industry stats.

We're familiar with the old story about musicians who were paid a flat fee to record a set of songs. Some of those songs were turned into vinyl records that became hits. The record company took in all the profits for record sales, and the musicians had signed away their right to a piece of the action. Over time that model was adjusted to give artists some compensation for record sales. But what happens when nothing is actually sold anymore? No music is sold, streaming service revenue is based on monthly subscriber payments. Turns out the value of an individual stream of a song is a tiny fraction of a penny. That's what the artist receives each time the consumer streams a song.

For the consumer, the risk of buying an unknown album becomes zero with a music streaming service. Since nothing is bought or sold, the consumer can take a bite and if it doesn't taste good, it can just be put back on the shelf. This lack of real investment changes the whole dynamics of new music discovery. (And by the way, streaming is NOT a discovery method prior to purchase. It replaces purchase.)

Ask any investor whether it makes sense to take uncompensated risk. This is the question musicians need to ask themselves. By releasing their new music to the streaming services, they've effectively eliminated any possibility of selling physical CDs or downloads. If sales of recordings is a significant part of a musician's annual income, streaming will quickly eliminate that income category.

Working outside the music industry system used to be considered big risk. It was a risk that limited the upside of sales and popularity because big distribution only existed through the system. Even the “independent” and “alternative” categories have ended up inside the thing they're supposed to be independent of, and alternative to. Since the streaming services take sales out of the picture, all that's left is the promise of the possibility of popularity. But like the risk, it's uncompensated popularity.

Musicians are already taking risks. A risk is an investment, and musicians need to figure out where they can be fairly compensated for the risks they're taking. Music consumers need to understand that they're part of a whole ecosystem. The idea that the world owes consumers free music forever is childish and self-centered. If you don't value music enough to pay for it, then you really don't value music much at all. Do you think fair-trade coffee is a good idea? How about clothes that aren't made in a sweatshop? How about seafood that isn't the product of slave labor? How about fair-trade music? Does that sound good to you?

 

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Kentridge: Ubu and the Truth Commission

With Baltimore and Ferguson on my mind, I walked into a revival of William Kentridge's production of “Ubu and the Truth Commission.” In 1997, Kentridge collaborated with the Handspring Puppet Company on the production for the 100th anniversary of Jarry's “Ubu Roi.” Jarry's play debuted and closed on December 10th, 1896 — it caused a riot.

Kentridge and Handspring began their project in South Africa listening to daily radio broadcasts of the witness accounts from the Truth and Reconciliation Commission. Jane Taylor was asked to write the final script combining Jarry's proto-absurdist drama with the real-life absurdity of South Africa's Apartheid politics.

The original production of “Ubu and the Truth Commission” is described in the book, “Kentridge,” in an essay by Lynne Cooke called “Mundus Inversus, Mundus Perversus”:

Cunning bully, monstrous rogue, Ubu, when challenged at the dinner table by his wife, lapses into a paranoid, punning defense riddled with Freudian slips and double entendres. This blackly comic exposure of deep-seated cowardice contrasts minutes later with a bravado vaudeville routine when Ubu, now resolute leader, sings a rally refrain in unison with his triple-headed henchman: “We are the Dogs of War.” The exuberant wit of this music-hall presentation is later matched by the hilarious episode in which the microphones flee the torrent of lies of the brash usurper, as if refusing to contribute to their conveyance.

The cutting edge of Jarry's play is as sharp as the day it first graced the stage. When combined with this vision of South Africa, the result is almost more than a person can bear. It's also the kind of theater that's needed more than ever. This is theater that is thinking through the spirit of our times.

 

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Only the Rich Can Save Us

The Sunday paper brings two related stories. Last year San Francisco was number one — it had the fastest-growing rate of income inequality of any city in the country. Now this year, it turns out that San Francisco's rich people are far richer than any other city's rich. Go us.

The other story is about a retired venture capitalist leasing a large industrial building in the Dogpatch district to create below market rate spaces for art galleries. San Francisco's art galleries are being priced out of the market, and once they're gone it will be almost impossible to bring them back. According to the article:

Andy and Deborah Rappaport, who have never been in the arts business, plan to invest “tens of millions of dollars” in a cluster of buildings that will include studios and other arts amenities under the umbrella of the Minnesota Street Project.

This for-profit business venture aims to lose as little as possible or at best break even. They have a 15-year lease and are offering galleries 3-year leases at below market rates.

One of the moral failings of the techno-rich, in the city with the richest of the rich, is that they've operated as though the city and the world around them has no relationship to them. They take no interest in the diversity of the city, the schools, the parks, no interest in the arts or culture, no interest local politics (except when it comes to tax breaks). It's possible that a few of these rich folks have looked up from their piles of cash and seen the city changing radically around them. The Minnesota Street Project was inspired by a conversation the Rappaports had with veteran gallerist Catherine Clark. Again, according to the article:

“We were talking about how we didn't want to live in a city that didn't have a vibrant arts community,” Deborah says. “There have to be galleries, and there have to be artists' non-profits, and artists have to be able to afford studios.”

Frankly, the real estate market doesn't care what kind of city you, or anybody else, wants to live in. The “market” gives the non-rich the option to move somewhere else, its invisible hand will determine what kind of city you will live in. If the market decides that art galleries, artists, non-profit workers, teachers, nurses, day-care workers and librarians are under-resourced to live in San Francisco, then they'll have to find somewhere else to put down stakes.

The non-profit achive.org has been studying the unaffordability problem and come up with its own solution to help its workers. According to their blog:

The Internet Archive and the Kahle/Austin Foundation are trying a new model to help. Foundation Housing as a name for a new housing class : Permanently Affordable housing for non-profit workers.

In this model, a new nonprofit, the Kahle/Austin Foundation House, has been set up to purchase apartment buildings. These rental units are then made available to employees of select nonprofits at a “debt free” rate– basically equivalent to the condominium fee and taxes. Typically, the debt makes up about 2/3 of the cost of a building and the other costs (tax+maintenance+insurance) makes up about 1/3. Since the employee does not pay the debt part, the monthly fee is now about $850-1000/month rather than $2700-3000 current market rent. This way, the fee to those employees is about 1/3 of the cost of market rent, and we believe more stable than market based rents.

In the face of ever expanding income inequality, these are the only solutions that seem to have a chance. Real estate is simply moved out of the real estate market to create affordability. If this kind of a proposal came from a community organizer it would be shot down as unrealistic — a socialist redistribution of wealth from the rich to the undeserving poor. And heaven help the elected official suggesting this kind of scheme. They'd be run out of town on a rail.

Tim Cook, the CEO of Apple, Inc., recently joined the ranks of the super rich who have pledged to give away most of their fortune. Warren Buffett and Bill Gates are two other notable members of that clan. Technology money rarely supports the arts. It's more disposed towards funding medical advances. The possibility of immortality is a primary fantasy of the techno-elite. While often quite smart, most of them have the cultural outlook of an adolescent boy. Some believe that Bill Gates will outshine Steve Jobs when we look back at these years because of his post-Microsoft charitable work. For most of the rich, helping the poor is simply beyond their control — the market will do what it will.

To address the issue of income inequality, wealth will have to be redistributed. The gap has grown so wide there's no other way to bridge it. Despite the fact that the poor are in the majority, they seem have no voice in the matter. For the moment it's up the the wealthy to do things like the Minnesota Street Project. archive.org needs to do what it can for its employees and other non-profit workers. Perhaps another retired venture capitalist can address the other half of the problem for artists. While they welcome below market rate studios and gallery space, artists still need a place to live.

New York City Mayor Bill de Blasio has proposed building 1,500 affordable housing units for artists and creatives at a cost of more than $30 million. This action came after musicians David Byrne and Patti Smith commented that New York was no longer a good place for young artists. The same could be said about San Francisco.

Great wealth confers the gift of being able to interfere with market dynamics without being called a socialist. The invisible hand can be shoved aside, and other priorities can be manifested. The Minnesota Street Project will bear watching. Let's hope they make a go of it. And here's hoping the peers of Andy and Deborah Rappaport are paying close attention. They're the only players in this game that are allowed to make a move.

 

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Dr. Dre versus the Big Bad Algorithm

We're seeing some new shapes among the feudal technology stacks. Apple has made a couple of moves that puts them on the human side of the ledger. Yahoo seems to be following in that direction. Google and Facebook remain fully automated, and they've placed their bet on male software engineers, big data and algorithms.

A few years ago, as the stacks were establishing their hold on networked computing, Nicholas Carr asked “Does IT Matter?” The question occupied the spot between home-grown corporate technical systems and the eventual outsourcing to professional cloud-based services. In most cases utility computing in central networked data centers turned out to be a better investment than a local IT team cobbling together a custom application. If the technology in question wasn't a company's core business, it didn't matter. Outsource everything possible to a vendor who counted that service as a core competency.

The networked computing platforms that have battled so fiercely to be among the few left standing have learned a bittersweet lesson. The platform is just a blank sheet of paper, a surface ready to be inscribed. Its worth is minimal, in fact, Apple has begun giving away its newest operating systems. There's no value in an individual installation of the platform, it's only the platform as a whole that has value.

When the technical press looked at Apple's acquisition of Jimmy Iovine and Dr. Dre they didn't understand. The music service didn't have enough subscribers, the head phones weren't even among the best, nothing matched up with the dollar figures that were being thrown around. Non-engineers aren't acqui-hired, non-engineers are replaceable worker parts that merit commodity pricing. Sure these guys have “taste”, but that's not really worth anything. An algorithm can be built to easily reproduce something like their taste. In a reversal of Nicholas Carr's thought, the algorithmists asked “Do Human Factors Matter?”

Jimmy Iovine's response to the machine was that something was missing from the algorithmic output. Here's how Iovine put it:

“The sequencing of an album was very important. Music is made in bite-sized pieces, but you need an hour's worth of music for certain activities. The other guys have an algorithm. For some reason, these young people aren't understanding why they aren't getting the feel they're supposed to get. We said no, no, you're supposed to have the right sequence.”

What's the value of being able to create “that feel” across a networked computing platform? There doesn't seem to be an acknowledged economic value that can be applied to in creative people working at the platform level. The technologist and the financial analysts ask “where's the game-changing technology?” That's what Apple did with the iPod, iPhone and iPad. Where's the iWatch? Where's that next big thing? No one creates a game changing technology. Steve Jobs said it best and very simply many years ago.

“Things happen fairly slowly, you know. They do. These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely it actually unfolds fairly slowly. It takes years.”

You choose the wave. You don't invent the wave. In this new era of feudal technology stacks, the technology should intrude less and less. The technology, if it's well designed, should start to recede into the background. If you're noticing it, generally that's because it's broken. Finding the feel, creating the feel of, and within, the platform, that's the thing a machine can't come up with on its own. Or at least that's what we're about to find out. Will creative people who can operate at the level of a large platform (Dre, Iovine, Ahrendts, Deneve) be more successful than an algorithm that crowd sources, sorts and filters?

 

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