The Cottagization of the Music Industry

Before delving too deeply into this issue, it is incumbent upon me to make a confession.  I am no expert in music.  In fact, I often find myself ignorant of even the most well-known musicians and their work.  I am one of those who has yet to begin the arduous process of scouring torrent sites for downloadable songs—in fact, I do not even own an iPod!  So what business do I have commenting on the future of an industry whose products I barely pay attention to?  Well, I may not understand music, but I do understand industry, and in this post I will be focusing on the ‘industry’ in ‘music industry.’ 

I am particularly interested in this subject because it represents a reversal of what we usually see in business.  In business, there is a great tradition of a few large companies emerging over time to take control of an industry that is being serviced by many small, local operations.  For an example, look to the grocery/supermarket business.  The individually owned supermarket is becoming a quaint relic of the past, replaced instead by the generic Wal-Mart’s (substitute regional replica of Wal-Mart such as Biggs or Stop & Shop, to taste) that inhabit every town; much like the seemingly omnipresent blonde, vacuous popular girl inhabits every high school class in the nation at any given time. 

The music industry, however, is in quite the opposite situation.  The music industry is becoming increasingly decentralized and the big, powerful companies are seeing their influence dwindle.  There is no doubt about this.  A dubious record was broken at the beginning of February by the singer-songwriter Amos Lee—his album, Mission Bell, managed to be the lowest selling number one album since SoundScan began tracking such statistics in 1991.  This was no fluke, nor can Amos Lee be faulted, as the record had been broken twice prior to Lee, by Taylor Swift and then the band Cake, both in the first month of 2011. 

Obviously, this trend can be attributed to new methods of listening to music.  Ask yourself, when was the last time you went to a record store and bought a CD?  If you are in your teens, you might be asking, “the last time I went to a what?”  While many of us still pay for our music, we do so through online vehicles like iTunes.  The vast majority of music listeners, though, particularly young people, would no more think of paying for music than they would for oxygen.  Music, accessible through torrents and online radio services like Pandora, has become less of a commodity and more of a universal human right in the minds of young people. 

Additionally, it is becoming increasingly unnecessary to have a huge budget in order to make and record music.  The technology that is used to produce music was, only a decade ago, inaccessible to anyone who was not a multi-million dollar corporation.  Now, it is available on any new MacBook Pro.  A friend of mine, whose name is Marco, is a part-time studio guitarist and guitar teacher and has shared some of his work with me.  As I previously admitted, I have no ear for melodies, but I have found his finished songs practically indistinguishable from professional ones.  He uses the internet to share his music with friends, family and strangers.   It is my understanding that it would be quite easy for him to begin selling his songs via iTunes, but, to my knowledge, he does not do this. 

I can fairly be accused of coming late to the game with these observations, but it serves my next point, which is that these habits have huge implications for the future of music as a business.  Barring some ingenious new strategy from the big record labels, these behemoths are becoming increasingly irrelevant to the industry they once ruled with an iron recording studio. 

If a musician can produce and disseminate her music, entirely independently, what use does she have for a huge corporation who will take most of her income? 

Perhaps she needs them for marketing and promotion?  New media seems to take care of this quite effectively.  While distribution in record stores and radio exposure may have been the way new artists were promoted in the past, these seem to be late-game endeavors now, done more out of tradition than practicality.  My friends who are up on the latest songs seem to be bored with them months before they even reach the radio.  The way people discover new music today is almost exclusively contained to social media.  Incidentally, this is also the best way to promote your music if your marketing budget is the contents of your china piggy bank.  Just look at Justin Bieber.  He is one of the biggest sensations in music at the moment because of ruthless self-promotion through social media sites like YouTube and Twitter.  Clearly, marketing is not something that can be done exclusively by the big record labels. 

When we look at this industry analytically, it seems that in the near future, there is relatively little for big record companies to actually do.  It seems that the music industry could, with the advent of new technology, become one run entirely by the musicians themselves.  Not only that, with the apparent inability of governments and record companies to stop the leakage of music for free onto the internet, it will no doubt soon become too unprofitable for them to bother to do anything.  Really, the only thing keeping record companies in business is the fact that some people (myself included) have yet to savvy up to the new generation of music technology!  Of course, relying on a shrinking minority of people who are behind a technological trend is an unsustainable business model (as any VHS manufacturer will tell you).

So what will the future of the music industry look like?  Shrinking profits, falling giants of the industry, anyone looking at this situation from an objective, business-only point of view would be comfortable asserting that in a few years we will see an end to new music!  After all, if you remove the profit motive to create something, it won’t be created. 

However, anyone who has talked to a musician will know that this observation, while totally justifiable from a business standpoint, is utterly ridiculous.  Music is just as much a hobby, even a passion, for the people who make it as it is a business.  If we take away the profit motive, people will still continue to make and publish new songs, solely for the pleasure they get out of creating something and putting it out into the world. 

Also, there will always be an appetite for live music.  People will always want to get the experience of seeing a band in concert, or playing at a bar.  That source of revenue will not be eroded by technology anytime in the near future. 

So, given these points, what can we expect the not-too-distant future of music to look like?  We can definitely expect a lot more music to be made available.  With the cost of producing a professional-quality song now reduced to a weeks’ salary for the average person (as opposed to a few decades salary), the floodgates will open to the creative impulses of the masses, for better and for worse.  Audiences will be exposed both to talents that would have once gone undiscovered and ones that should go undiscovered. 

This means that the music each person listens to will, simply by virtue of the copious options available, be more attuned to their unique tastes.  While a choice between a hip hop and a rock FM radio station may have been all a listener used to have, once the door is opened to droves of amateur musicians producing professional-quality songs, there will be enough music available for someone to devote an entire Pandora station to indie folk rock featuring raspy voiced singers and frequent cowbell intones.  It is not hard to imagine a time when the limited choices of local radio will give way to the near infinite options available on internet radio, which will be accessed through a 3G Smartphone and pumped through the speakers of a car (wirelessly, of course).  

But the biggest change we will see will be an end to the notion of the ‘pop star’ and the ‘rock star’.  There won’t be anymore ‘stars’, because the notion of exclusivity in popular music is being slowly destroyed by technology.  Rather than fifty very popular bands and artists in the public eye with millions of devoted followers each, we will see something more like 50,000 popular bands and artists, each with several thousand fans.  The notion of the ‘rock star’ will be as distant of an archaism to my grandchildren as a friendly milkman dressed in white is to me. 

Of course, this new generation of music listeners will expect the price of their music to be the same as the price of the sunrise.  Thus, musicians of the future cannot expect, as they now do, to ever make enough money from a 3-minute song to live like oil-barons for the rest of their lives.  This, as I have mentioned, will not be enough to deter the mellifluously inclined from producing their sweet melodies.  But does that mean that there will be no penny to be squeezed from music listeners?  Not necessarily.

Enterprising musicians will still find a way to profit, although far more modestly, from their craft.  They will have to get creative about it, though—no longer will it be enough to simply make good music or even to be good showmen and show-women.  Musicians who expect to carve some semblance of a living from their music will have to become businesspeople, and creative ones at that. 

One can imagine several ways a moderately popular band of the future could earn revenue without expecting a cent from record sales.  The obvious options come to mind—live shows and merchandise.  But there are other ways.  Product placement in the lyrics of songs could be a large revenue driver for a band or artist with a significant following and an insignificant amount of artistic integrity.  Legitimate online radio stations will continue to pay artists for the songs they use with revenues from advertisements.  A big break for a band might be licensing songs in a commercial, a TV show or even a movie.  And of course popular artists can always find some product or service to endorse. 

Many of these option may sound like ‘selling-out’ to one who considers themselves an artist (for some reason, the notion of ‘selling-out’ is considered a bad thing in some circles) but a musician of the future must recognize that this is an unavoidable option for anyone who wishes to make a living off their guitar.  The alternative will be to accept that music will never be more than a hobby, a way to pass time off from a day job. 

Essentially, the music industry must prepare itself for the process I am christening “cottagization.”  It will become a cottage industry.  The new technology and attitudes pertaining to music, its accessibility and its production, will destroy the old guard of the record companies and a few, widely popular artists making ungodly sums of money.  We will see many, small operations, performing at local venues and servicing the individual tastes of a core, committed group of fans.  These are my predictions, but only time will tell if they come true. 

The Bounce House Guys

This is the story of my company, The Bounce House Guys

Once upon a time, in a town called Mason, there was a little boy who wanted nothing more than a bounce house at his birthday party. His mother and father scoured the yellow pages and the internet for a company that rented them, but no matter how hard they tried, they could not find one single business that offered a good service for a reasonable price. The only ones they could find were expensive ($200 or more!), only available for short periods of time (what good is a bounce house if you only have it for two hours?), required that they, the customer, transport, set up and take down the bounce house (that’s not their job!) or, worst of all, were not licensed and insured (that’s not safe or legal!)

That little boy was my brother and his plight made me decide to start my own bounce house rental business. I realized that the other moonwalk rental companies were really only concerned with the big-ticket clients—churches, festivals, schools—and to attract that clientele, they purchased huge, extravagant inflatables that cost tens of thousands of dollars. Because these companies carry so much overhead, they are unable to offer parents who are just hosting a small backyard party a medium-sized bounce house at a fair price. So, when I was only a junior in high school, I took all the money I had saved up from the past two summers of working in an amusement park and bought a bounce house.  Along with my good friend and business partner Andrew (who also bought a bounce house), I took out an ad in our local paper in July of 2006 and started renting out the bounce houses. They were a big hit at birthday parties, neighborhood get-togethers and, surprisingly, graduation parties. Because we kept our costs low by only purchasing basic bounce houses, we were also able to keep our prices low. After Andrew left for college, I took over the business by myself and, with the help of my very supportive family, the amount of rentals has increased each and every year since the business was started, including the summers of 2009 and 2010, times that most other businesses struggled.

I have been amazed and delighted to see how well my little idea for a business has been received by parents and kids alike. Seeing how excited all the children get when I set up a bounce house is my favorite part about this business. There has been such a positive reaction to what I am doing that I have expanded the business to include seven bounce houses, and a set of Sumo Suits for the summer of 2011. I truly am one of the few people fortunate enough to have found a way to make money doing something he loves, and for that I am grateful to all the customers who have made it possible for me.

The Great Bridge

Thank you for taking the time to read my new blog, The Ownership Path.  Some of you may be familiar with my first blog, Fool of Psalms, which is devoted to the topic of religion.  While I very much enjoy that topic, I find it to be somewhat controversial, so I wanted to create a separate brand for this blog which, I am sure, people will find much more agreeable.  I will still attempt to take you to the edge of your comfort zone in my writing here, but in a different way. 

For my first blog post, I would like to briefly talk about what commerce is and what it means to me.  I have several friends who work or are studying for careers in music, art, fashion and academia.  I even have a couple of friends who are philosophy majors!  We have a tendency to think of people pursuing these subjects as following their dreams at the expense of practicality.  If we criticize someone for getting a degree in philosophy, the typical criticism will be, “how are you going to get a job doing that?”  If we praise them, the typical praise will be, “Good for you for studying something that interests you rather than just selling out and going for a corporate career.” 

Of course, in many instances, my friends who have set themselves upon these educational paths have indeed rejected a career in something safe and opted instead for their passion.  I would not deny them this.  The corollary of this criticism and praise, however, is that we tend to also think of those individuals who pursue careers in business and commerce as having been faced with a similar dilemma—between a practical career and a passion—and having gone with the practical at the expense of their passion.  The assumption is that those of us who endeavor to be successful in entrepreneurial or intrepreneurial ventures do so only after making a conscious decision to toss our paint brushes or guitars into a fire along with any dreams we may have had about being the next Picasso or Clapton, resigning ourselves to a life of chasing dollar bills and upper middle class mediocrity. 

This, emphatically, is not so.  I will admit to a personal affinity for all things scientific, and, had I the intellectual capacity, I may have studied science at some deeper level than a reading of A Brief History of Time and River out of Eden.  I will also freely say that I consider myself a writer at the very core of my being and I hope to have more than one book to my name before my days are over (although I am reminded of Christopher Hitchens saying that “everyone has a book in them, but in most cases that is where it should stay”!)

However, given my current personality, interests and abilities, I could not think of a single pursuit that would give me more happiness or fulfillment than running my company.  I have never been as completely satisfied with my life as I have been since, less than a year ago, I left (or, more accurately, was politely asked to leave) my job at a large regional bank and began to work full-time on my business.  I answer to no one except myself.  I am building something that has the potential to touch hundreds of thousands of lives.  I have a great relationship with my customers.  I have the least demanding schedule imaginable.  I get excited when I think about the work I do and, probably best of all; I get to make children happy.  If any person living can claim that they are passionate about what they do, I can. 

For me, a career in business is not a settlement.  It is not a resignation of ones dreams.  It is the fulfillment of them.  Although I do want to pursue other things later in life, if I could spend the rest of my days running and building my company I would die a happy man. 

I look at it like this:  Without commerce, you have those few genius individuals making discoveries and doing theoretical science, composing beautiful music, writing compelling works of fiction and nonfiction alike, and they are separated from the general public, who sit on the other side of a vast gulf of mutual irrelevance.  Enterprising individuals come in and find ways to bridge that gulf by taking the new discoveries, the films, the art, the music, and developing new channels through which to bring those enrichments to the general public, and to do so in a way that is relevant to them. 

To be a part of that process, to aid in whatever small amount in building the great bridge across that vast gulf of mutual irrelevance, is, to me, no resignation.  It does not involve shelving my passions in any sense.  It invokes my passion.  It is my passion.