Tuesday, January 22, 2008

Some Not-So-Good Ideas Circulating

I've subscribed to Seth Godin's blog for many months. However, just recently I've seen two of my music-related sources cite to Seth's Blog as an authority for commentary on our industry. I always read Seth's daily anecdotes as general guidance in business philosophy, not specific business policy. He is insightful and has many years' experience. Unfortunately, none of them are in music. While I have great respect for him, Seth Godin's comments are being taken out of context by those within the industry and, rather than being viewed broadly as food for thought, are being construed as a road map for the industry's future.

First, I acknowledge that a main thrust of (and allure to) Seth's P.O.V. is his position as an outsider. For whatever reason, it seems every otherwise intelligent businessperson throws logic out the window when it comes to our industry - no one would advise an insurance salesman to lead a car dealership, or a coal operator to open a flower shop. Yet for some reason everyone thinks that either (a) the music industry is so screwed up that anyone within the industry is necessarily tarnished, or (b) the music industry is so easy that anyone can do it.

I've seen countless otherwise successful business people pour millions into their music startups - mainly publishing and record companies. 99 out of 100 fail. It's worse than the restaurant business. Let's face it, you need to have a knowledge of the industry before you can set out to change it.

Seth's two industry-related blogs are here and here. Admittedly, the latter is on film distribution, though it was discussed by a music-related news source, Digital Music News, and concerns digital media and copyrights, which is why I mention it here. I thought it shocking that Digital Music News picked it up due to the sheer impracticality of the primary suggestion - that movies be delivered for 50 cents a piece initially. The credit card fees alone would devour such a low fee. While I can't recall exactly what my processing fees were in my digital distribution days, I think it was a % of the transaction with a minimum of 26 cents. Our business model was to offer music "virtually for free," with a target price of $1.00 per live concert performance. After considering storage and bandwidth fees, as well as credit card fees, the least we could sell a show for was $5.00. While charging 50 cents per video is a nice idea in theory, it disregards reality and is a figure pulled out of thin air.

Seth's other post concerns the devaluation of recorded music through the digitization process, and is the position echoed by