Seth Godin gives good advice to the music industry

Seth Godin has posted a transcript of a fantastic talk he gave to some music execs about the future of the music industry and the Internet. This is some good straight-shooting insight about what the music industry will never succeed at (suing fans) and what they could do instead (courting fans):

So if I put all this together I’m going to come up with what I call the Merchant Solution. It has nothing to do with stores, it has to do with Natalie Merchant. (laughter) So, Natalie Merchant shows up in the New York Times last week saying not only do I not have a record label, I’m not going to make records anymore because I just figure out how to do it. And that is the biggest opportunity times 10,000 because Natalie doesn’t want to be in business, Natalie wants to make records. Thirty years ago Natalie couldn’t put together the scratch to record an album because she couldn’t afford a recording studio. Thats what you guys did for her. She couldn’t come up with the time and energy to go out to California to sell and pay for shelf space at Tower, thats what you guys did for her. The point is, now she needs somebody to say “let us take care of your tribe”. Let us figure out the business model that says you get to do what you’re great at, write songs, perform them, find people who love you, not like you, and they are A LOT in the case of Natalie Merchant, and we will figure out not how to exploit that, not how to write a contract that you’re going to regret for the rest of your life, but to sit next to you and say guess what, there are all these people in the tribe [and] we need to figure out how to make stuff for them. And, because we have three other artists that are just like you, Cowboy Junkies, we can start mixing tribes together in appropriate ways that makes everybody happy. Because you [record label] could go to the Cowboy Junkies tribe and say Natalie Merchant is coming to town and they’ll all go. Because they love her and they love each other and they want to see each other again because they can’t wait a whole year till the [Cowboy] Junkies come back.

So if the model that we loved about the record business in 1968 was A&R, taking care of artists, finding artists who people will love, and the model that we hated was brand management, I want to argue that the next model is tribal management. That the next model is to say, what you do for a living is manage a tribe...many tribes...silos of tribes. That your job is to make the people in that tribe delighted to know each other and trust you to go find music for them. And, in exchange, it could be way out on the long tail, no one wants to be on the long tail by themselves, the polka lovers like the polka lovers, they want to be together. But that you, maybe it is only one person, technology makes this really easy, your job is to curate for that tribe, like the curators upstairs [at the museum]. There is a museum of modern art tribe, you can see them here every Thursday. And if you can curate for them guess what the [musical] artists need...you! Guess what the tribe needs...you! You add an enormous amount of value by becoming a new kind of middleman.

Link (Thanks, Jason!)

• [themagus]

  yeah that was really hard to follow

• [Downpressor]

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• [Michael R. Bernstein]

  Hmm. I think Godin’s business model here is a bit bogus. The tribal management business is likely one with thin margins, unless they figure out a way to raise the switching costs for the artists.

  But, aside from the business model, a lot of what he says rings true. It also resembles Josh Ellis’ 2003 article on ‘Taste Tribes’:

  http://www.mindjack.com/feature/tastetribes.html

• [Takuan]

  it’s too much work to puzzle out your post, why don’t you summarize it – inoffensively this time – and I’ll read it then?

• [Teresa Nielsen Hayden / Moderator]

  Downpressor, when are you and DCer going to stop taking potshots at Cory? He’s not responsible for the sorry state of the music industry.

• [Takuan]

  it’s too much work to puzzle out your post, why don’t you summarize it – inoffensively this time – and I’ll read it then?

• [pspinrad]

  Generally agree. It all comes down to manufacturing celebrity, which can only be done (reliably, anyway) by an industry. Then you monetize via concerts, fan clubs, merch, etc.

  The concert experience, being surrounded by other humans focused on the same thing in a shared time and place, cannot be pirated. It helps if there’s also some spectacle, and it helps doubly if some of the spectacle comes from the crowd itself.

  Hi-res simulcast concerts, to save on tour costs, might work at some point. Probably safest to start with bubblegum groups.

  Good point, Dcer, about PR firms managing fan clubs!

• [moonracer23]

  So, instead of paying for music I pay someone to tell me what music to listen to?

• [DCer]

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• [Downpressor]

  Teresa

  I wasn’t aware that disagreement and pointing out percieved gaps in logic now qualified as “potshots”. Its not personal at all, but my belief is that Cory errs on a number of points and since he is considered an opinion leader in current discussions on maters of copyright, I wish to express my opinions to him.

  I think that amongst adults, “I disagree with X and here’s why” or even “I think that X’s opinions are slanted” is quite different from “X is a doo doo head”. The second might reasonably be considered worthy of exclusion from conversation amongst adults.

  Takuan,

  Thank you for at least attempting to read my comments. To restate as blandly as possible: I found the linked post uninformative rather than good advice. Secondly, I also agreed with DCER on something regarding Mr. Doctorow’s public opinions regarding musicians. #15 Was a complaint regarding the modification of #14 in which I stated the above.

• [Downpressor]

  DCR cmmntd:

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• [NikFromNYC]

  Who’s Natalie Merchant? Let’s Pirate Bay her entire life’s work and find out! Aw heck, only one of her albums is on there. I’d have to sample dozens of songs at the iTunes store. Nah. Sorry Natalie. But wait, they are user-*rated* there, so I’d just have to test the top three. Here goes…. Popish country music. Nah. Sorry again, Natalie, I’m not in your tribe.

• [DCer]

  First off, how nice of Seth to describe how Public Relations companies work! I’m sure that companies that have been providing this service for the last 20-40 years (fan club operations) would enjoy the increased business. I believe the two companies that do most of this nationally are Live Nation and Signatures Network, but correct me if I’m wrong. All I know is that in the 1980s I knew interns doing exactly what he talked about, but via snail mail and phone calls.

  Ok, so what happens when there’s a great band that doesn’t have a tribe yet? They are introduced to someone else’s tribe and no one goes because no one wants to pay money for music anymore? Already the new music fail-conomy is requesting this band pay for recording production up-front and the “Fans” are requesting free downloads that the won’t pay for. Then, does the band play for free to get noticed? At what point does the band break even?

  I love the idea that you can notify people that Natalie Merchant is coming to town and “they’ll all go.” Raise your hand if you bought Vista when Microsoft released it. Did you “all go?” No, you didn’t. Having toured with bands before, I’ll let you in on a secret, maybe 10% of the people who own your music will go at best and more often than not, we’d see 25% of the people at a show were people who went to ALL the shows, but didn’t know your band except for record reviews in the newspaper.

  This idea of tribes is not how people consume music. You have a large group of people who don’t care much about music or bands and look for songs. You have a smaller group of hipsters who go everywhere. You have a small small group of people who absolutely love your band. These “tribes” may pay to see you all over the place, but they may only account for 300 seats at a show. Basically brokefying your band.

• [Philipshade]

  Looks like some good advice. Too bad it seems that the majors would sooner see every American locked up in jail for copyright infringement rather than change their business model.

• [DCer]

  Oh, and what any good internet entrepreneur will tell you is that there is nothing stopping some teenager from providing this service for their favorite band for free, eliminating the label’s flow of money there.

  There is nothing that can fix the music industry short of “fans” paying for songs.

• [ritholtz]

  On a related note:

  A not at all surprising article in the L.A. Times reveals that the recording industry has alienated its future clients:

  More teenagers ignoring CDs, report says http://www.latimes.com/business/la-fi-music27feb27,0,4432240.story

  The article goes into a lot of detail, but here’s the specifics:

  • 48% of teenagers bought no CDs at all in 2007, up from 38% in 2006.
  • Apple iTunes (AAPL) has surpassed Best Buy to become the second-largest music retailer < http://opinion.latimes.com/bitplayer/2008/02/apples-itunes-w.html> in the U.S. They now trail only Wal-Mart Stores (WMT)
  • The number of CDs sold in the U.S. fell 19% in 2007 from the previous year while sales of digital songs jumped 45%, Nielsen SoundScan said.
  • Legal online music sales jumped 21% to 29 million last year from 24 million in 2006. The increase in legal online sales was driven by people 36 to 50;
  • In 2005, teenagers accounted for 15% of CD sales. In 2007, the figure was 10%.

  Whoever thinks they can harass, menace, threaten and sue their biggest clients without repercussion obviously has never worked a retail business.
  Teenagers have quite predictably responded with a giant “/fuck-you-and-your-shiny-silver-discs, dude/.”

  Teenagers Shun CDs
  http://bigpicture.typepad.com/comments/2008/03/teenagers-shun.html

• [Clumpy]

  He does an excellent job of speaking from the perspective of an industry insider while chastising them pretty severely for their missteps. Whether they incorporate his suggestions or not, they got something to think about.

• [Downpressor]

  Good points by DCER, blather by Seth Godin. Too bad he couldnt come up with a better buzzword than “tribe”, that one burned itself out at least twice during the 90s.

• [Piper]

  Oh dear GOD –that was exhausting. Reading Seth’s diatribe is like being trapped at a boring party with a coke-addled motivational speaker.
  His contrived “tribal” marketing theory is naive and simplistic, not to mention as outdated as his pat references to Jerry Seinfeld and Natalie Merchant.