Middle Men, Aggregators, And Apologies

I (and potentially many men) have a problem with posing questions as statements. Rather than say, “How can a musician sell their music online?” I stated, “A musician can’t sell their music online.” Implied in that is a parenthetical “(right? Help me out here.)”. That’s a bad habit when I actually want to know something, but it did get the result of finding out more information.

I also have the vestiges of my ranting days still in my blood so my last blog post had a tinge of “you guys don’t get it”. In this post, I’m gonna clarify some of my view points, but also point out at that many of the players I mentioned seem to actually not get it.

First Off, The Apologies

Right away, I want people to know that I don’t dislike TuneCore or CDBaby. First off, I’ve never actually used TuneCore, I just know things about them from their status as a NYC startup. I know how their business works mostly, and I know that they get their money by being an intermediary between iTunes and Amazon. That doesn’t detract from their potential value with other services. Same goes for CDBaby. I’ve bought more CDs off CDBaby than I can remember. They sell all sorts of obscure stuff that you can’t find anywhere else, and their customer service is top notch. Derek Severs is also the absolute man. He ponied up a ton of money for many Rails projects before he just rewrote his site in PHP again.

However, their quality or their services are not what I was discussing. It is their role as a fairly arbitrary middle man that exists only because the big labels have sued everyone into keeping the music business the way the labels like it.

Next up, is the sites I said “don’t get it”:

I should have said, “They don’t get musicians selling music.” Most of them aren’t trying to be that anyway, so it’s not really fair to say they don’t get something they aren’t interested in. All of these sites are worth trying out if you want to publish your music online. If these sites wanted to start helping people sell music there’s really nothing stopping them. The only thing that gets in their way is some “semantic magic tricks” I’ll discuss later that have them confused about their role.

So, just to make this really really REALLY clear: I think TuneCore and CDBaby are great services that are just in a potentially bad position because as a business they primarily serve as a middle man and/or a bit pusher. If Amazon decides one day to sell direct they are totally and absolutely screwed. I also think that the other sites I mentioned could be great music publishing sites that probably aren’t interested in charging for music. They seem to get the music publishing, but just not the sales, and they might just be afraid of trying to sell.

The Semantic Magic Tricks Of Music Online

A strange thing happened with the conversation when people responded to me. Right away people made four statements:

“We are just an aggregator, like Hacker News.”
“Any site you make to host musicians will be a middle man.”
“You need a label to make sure that nobody is selling pirated music.”
“Musicians can’t make money online without eyeballs.”

These four are very weird since I wasn’t really talking about making a site, but rather that the web site part is pretty easy and already done, it’s the music player that acts like a feed reader that’s interesting. Sure I talked about making my site, and that I could probably use the software to make other people’s sites, but, the interesting idea is the player/browser/feed reader.

I think before people can contemplate the significance of a legal music browser that isn’t in a walled garden, they have to smash the above four statements. Let’s take them on individually.

You Are Not An Aggregator

I think the weirdest comment I got from these sites was that they weren’t “middle men”, they were aggregators like Hacker News, or Slashdot, or Feed Burner. There’s no way a company like TuneCore is an aggregator like Slashdot. First off, I hate to have to clue people in to this, but did you miss the class on how the internet works? You know, a packet switched network with no real central control that allows any one peer to link or connect to any other peer? If you collect up links to other sites, and maybe comment about them then you are an aggregator. You don’t host my content, I do, but you might link to it. Hacker News links to it, they don’t host it. If they did then they’d be violating my copyright.

If, however, you host a musician’s music, charge for the service of getting money from Amazon (who’s getting money from a customer), then you are a hosting company. You do not aggregate shit. You host, and your business better charge like a hosting company.

What I think happened though is these companies got their start by claiming to be a “service to aggregate music and help people find it”. This doesn’t make money (and usually just gets you sued) so they pull a semantic magic trick and reclassify “aggregator” to mean their middle man service of getting money from amazon (who gets it from a customer).

What needs to happen is they have to admit they are a payment and hosting service and focus on that. There’s plenty of aggregators out there, and if there’s a good music browser that can hit random sites to get new music then they can cash in as a hosting service.

Any Site’s A Middle Man

Alright, this one is easy to counter with a simple ASCII art diagram. Here’s a middle man:

[ZedShaw.com] <- [TuneCore/CDBaby] <- [Amazon/iTunes] <- [$$$]

Can you guess which box isn’t needed? That’s right, [TuneCore/CDBaby] isn’t needed, and they only exist because of the way labels have brokered deals with Amazon and iTunes. The box that isn’t needed is the middle man because I must go through them to get money from a customer for no other reason than Amazon/iTunes set things up that way. Now, what happens if Amazon decides to let me push music to them directly:

[ZedShaw.com] <- ? <- [Amazon/iTunes] <- [$$$]

Hmmm, what happens to the question mark? Does a site like a “Hacker News For Music” now come in and take that spot? Not only no, but hell no. An aggregator like HN isn’t even in the chain, it’s off on an orthogonal diagonal to my site. Also, any site you make to host musicians is not a middle man service, it’s ZedShaw.com. It is actually offering the service of hosting, just like Slicehost does my site. Even if you offer payment you are offering a service directly to me, not to me through someone else.

Now why do I think these particular middle men are doomed? Take a gander at two key quotes from my post:

'A social network is completely unnecessary with the right “browser”.’
'You don’t need a PR firm pushing chunks of plastic if the search engines are good enough to find music you might like.’

How many of you remember the original yahoo? Remember when the web was just a few sites and nobody knew where to find them? Remember how people new to the internet didn’t even have email, so the only way to find sites was through the yahoo aggregator? Remember that? Ok, what happened to yahoo? They changed from an aggregator to a good search engine pretty quickly, and then google basically perfected the search engine and they had to change again. Remember when Netscape came out? Before that the web was lame, but then Netscape came along with built-in usenet, email, and graphics for browsing (and wicked great porn). The internet changed dramatically after Netscape and search engines, but music services are still stuck in the pre-internet walled garden “channel partners” biz models.

As soon as there’s good search engines for music, and a good browser for music that does not honor walled gardens we’ll see a massive change in the business. First to go will be these middle men, and we’ll potentially have this diagram:

[ZedShaw.com] <- [$$$$]

A Quick Note About Pricing

Here’s an actual question: If I sell my music on Amazon or iTunes can I sell it for $0.10 or $20.00? Do I have to charge $0.99? Just like the labels?

If it’s true that I can’t set the price to compete with the labels, then the labels are guilty of collusion and price fixing. Someone should look into that.

I Need A Label To Prevent Piracy?

I heard this idea that I need a label to prevent piracy quite often. Maybe the labels have basically sued the shit out of everyone that offers a wide open hosting service or music search engine. Who knows, but I got two words for you: SAFE HARBOR.

That’s right, as long as you don’t edit the content, when you provide hosting and search for an artist, and they pirate music, then you are safe. It’s the reason google can index and store content without being sued for copyright infringement. It’s the reason blog services can let anyone make a blog. As long as they don’t edit the content, and make a reasonable effort to take down content reported as stolen by the original copyright holder, then they’re safe. That’s the safe harbor.

This means you don’t need a fucking label to prevent piracy. Just get that one out of your head. However, there’s an interesting side note to this. What about ASCAP?

You see, when you walk into Macy’s and hear Dianna Ross playing, chances are Macy’s didn’t pay a label for it, they paid ASCAP who paid the artists. ASCAP is a royalty collection service that goes all over the world and finds people playing music and then charges them. It wasn’t always like this, which is why we had the musician’s strike of 1940 in order to force the labels to pay royalties.

The reality is, the musicians own the copyright generally, and usually get royalties when someone plays their music. It’s that way with books, music, and many other art forms that have a publisher model. Since music can be played by anyone, there’s a service like ASCAP to collect royalties. As mentioned above, musicians had to go on strike to get this, and many pride themselves on owning their music. Dolly Parton passed on Elvis Presley using one of her songs simply because he wanted half her rights. She said she actually cried over it, but she had to have the rights. The rights to a song are the life of a musician.

Now, if we have ASCAP, then why can’t I take a Dianna Ross song, put it on my site, track how many times it was downloaded, and then send ASCAP a check? I mean, the way I understand it, labels only own the rights to distribute, and things like radio play, internet play, and others should really be paid to musicians directly through ASCAP like services. How’d the labels re-inject themselves into the royalty stream?

Musicians Need EYEBALLS To Make Money

Wait, you’re telling me that the same guys who can bang six groupies in a night just for being in a shitty AC/DC cover band cannot promote themselves? Their entire existence is promotion and performance. They have eyeballs every night they’re on stage. You’re telling me that if I do a show I can’t say:

“Hey, if you like my music go to ZedShaw.com and you can get more.”

Hell, the second I say that half the hipsters will whip out their iPod and hit my site. If I keep doing that I’ll get … wait for it … faaaannns! That’s right, you know, people who like my music and go to my site to get more.

Musicians don’t need eyeballs, what they need is a dirt simple way to publish their art on a site and tell people to go get it in the easiest way. The people then need a way to one click subscribe and keep getting the music.

Yes, I really believe it is that simple, so how did it go wrong? I really think that the companies who think most musicians need eyeballs are thinking like a big label. They are thinking something like, “If a musician can get the eyeballs they can blow up!” That’s backwards, because many musicians build their fan base by actually gigging, talking to people, and it’s only after they’ve built a loyal following that they have the critical mass to explode. It’s rare that someone will be like Soulja Boy and explode from just online “eyeballs”, and I bet if you look Soulja Boy probably did a lot of gigging and spent time getting good before that happened.

Of course, they want to be the company getting these musicians the eyeballs, which leads to the second part about making money. What these companies are really saying is, “I want to make money off musicians by bringing them eyeballs.” That probably started with, “How can I make money off musicians trying to make money? I know, eyeballs!”

I Smell Desperation

You know what was the first question someone asked me at my music school? “Can you build me a website?!” I don’t get asked, “Can you help me get eyeballs?!” That’s because musicians love promoting themselves. In fact, entertaining and promoting your works so you can entertain more people is the essence of musical performance. They don’t have a problem with that, what is blocking them is the shitty technology they have to deal with to get online.

You Probably Could Sell Through Amazon

Finally, what if you could still sell through Amazon without really selling through Amazon. Let’s break down some of Amazon’s services:

Flexible Payment System for payment processing.
S3 for file serving and hosting.
EC2 for software hosting.
SimpleDB for data retention.

Alright, so they don’t prevent someone from putting those together to make a site that allows for selling of music. All the services you need are there, and they’d scale up fairly easily. I’m thinking maybe this could be a back door solution.

Next Up…

I think my next post will be some more music ideas I’m playing with, and more talk about this “legal music browser/feed reader” thing. Stay tuned for that, and as always shoot me comments.

Zed Shaw

Enjoy the show.