music: trying to get artists to let me compensate them

We should be in a golden age of abundant music creation. Record a song, upload it to iTunes and Amazon music store, blog/FB/tweet about its release, then sit back and collect most of the revenue from purchases by adoring fans. Use the profits to fund next recording. Friction-free commerce, screw the evil record company suits, master your own destiny, mutual exchange of value with fans.

But it isn't happening! Instead artists are fed up with the music business and frustrated by the declining sales of their label releases. The tired refrain from self-justifying music pirates "Artists should make money from merchandise sales and touring" is garbage; I want excellent recordings more than a T-shirt or a hit-or-miss performance that I may not be able to attend.

Whenever I hear about a recording by my heroes, I look to buy it online, but I only find songs from official album releases that I already own, which is frustrating as hell. I'm able to talk with some artists themselves about this, and the semi-conversations are dispiriting. I wind up feeling like I'm hassling them to accept my money.

From Thomas Dolby's blog post about the great set of performances he organized for the TED2010 conference

I usually put together a house band who play a short piece to open each of the 12 sessions over the 4 days of TED... After the four exhausting days of TED were over, we went to a local studio run by an old friend Chuck Mitchell, and recorded our 10 pieces for posterity. We managed to get them all down despite the onset of the familiar post-TED hangover. Perhaps I’ll include them on a TED house band compilation CD one day; and perhaps ‘Pistol’ will go on my album as-is. ...

# skierpage Says:
I don’t get it. You’re talking about some great performances to your fan base, they were obviously recorded during the TED conference, and you’ve even gone and re-recorded some of them. SO WHERE THE ^%$#@! IS THE [Buy Now!] BUTTON?!

C’mon, make some people happy and make a little money! What’s the problem?

# TMDR Says:
Interesting attitude, Skierpage. Believe it or not, the priority at a non-profit event like TED is *not* to make a ton of money from the music. As for the performances, I plan to make some of them available in due course, but I just got home jet-lagged from California and need a rest! And, as you can imagine, it’s not easy to clear copyrights for people like Sheryl Crow and David Byrne, so there’s a risk those may never get heard. A lot happens at TED that you can only experience by being there, but they’ve done a pretty good job of making a lot of the content available to the world for free, with a lot more to come. And, as I mentioned above, there was talk of a compilation CD featuring TED music.

# skierpage Says:
Dear TMDR,
Thank you so much for responding to my crass whingeing. Your performances have value, I long for a system that encourages and rewards you for making them available without it being a grinding chore. It sounds like musicians need to adopt standardized performance copyright clearance language (something concert bootleggers don’t have to mess with), and perhaps a lawyer-mandated USB pinprick accessory on the concert laptop to sign in blood after the performance?

So you know I’m not one of those “I’m not going to pay for music until it comes with a pink pony” liars on the ‘net, I just bought the SXSW version of “The Key to Her Ferrari” from Amazon MP3 Downloads while waiting. Sweet! (BTW, Amazon says “From the Album Alien’s Ate My Buick” — Apostrophes Ate Our Language.)

# TMDR Says:
Actually the point is, this is really nothing to do with the money. I have an album of my own music to finish, and that’s a higher priority than getting the TED intros–which are all cover versions bar one–out to the general public. But I promise some if not all of them will be available at some point, as audio or video or both.

Ouch, how to irritate the creative type with well-meaning exhortation. By the time “available at some point” rolls around, the excitement and interest will have dissipated. Meanwhile I can get immediate gratification from bootlegs and crummy YouTube videos, but the artist earns nothing.

I had a similar exchange with Max Tundra on Facebook:

Max Tundra: I did a cover version of "Digital Love" by Daft Punk, playing all the parts by hand/mouth. Check it out, on this great podcast full of reinterpretations: http://www.cokemachineglow.com/podcast/5145/fantasycovers2010-parttwo
You and 23 others like this.

S Page: You are a lock for Supertramp's next keyboard player! (5:34 on) How can we buy this performance, it's not on Amazon?

Max Tundra: It's not for sale, just grab it for free from the above link - there's a downloadable mp3 of the entire podcast.

S Page: Call me a crazy anachronism, but I like to compensate artists for their fine efforts ;-) Create new work, sell, profit, repeat until we die.

Max Tundra: Nice idea, but it'll never catch on

Sure I could get an audio editor such as Audacity and slice his song out of the podcast, but again the artist earns nothing. It is about the money, because if it doesn't show up artists will stop making quality (expensive) recordings.

I would love to exchange some money for these recordings and many more. Apparently it's not as simple as I make it out to be in my second sentence above. But it should be!

disintermediation part 1: ordering direct

I have a backpack from the Gap. It is utter garbage that's falling apart. So what exactly is the Gap adding when it has a Chinese factory sew its label on their part 53AF47Y?

Just let me order the best product direct from its manufacturer.

This applies whether I want a custom one-off or just their generic part. As I wrote (responding to a Gizmodo post triggered by Wired's garbled-rahrar-as-usual story about custom manufacturing about custom manufacturing:

I want the best worker in the factory cranking out quality $10 clothes to make me custom stuff after hours for five times the price (which will still be less than what some US store charges me for their worthless label). That just requires some bilingual entrepreneur to set up a web storefront to take my order and hook me up direct with the manufacturer.

This is a huge potential market. It cuts out the non-existent added value of some dumbass US brand supposedly getting me better quality goods while in reality they're just twisting their suppliers' arms to reduce costs.

Sadly for the USA, this innovation is more likely to come from a Chinese bilingual near the factory rather than someone living in America.

Meanwhile every American brand that only spends on marketing while ordering up generic crap (clothes, luggage, sunglasses, tools, ANYTHING, etc., etc.) from overseas factories DESERVES TO DIE. The actual factory can be the brand, and can offer custom work through these entrepreneurs. The moment Happy Dong Manufacturing gets a great rating from Consumer Reports and you can order its widget on eBay, a lot of USA specialty stores will really suffer.

This is starting to happen on Amazon. Go search for a replacement battery or USB and you'll find some entrepreneur from Asia selling them absurdly cheap.

disintermediation part 2: Amazon should be/buy UPS

I used to compare items for price using MySimon and Froogle, now I usually go to Amazon and pay whatever they ask. There are still companies competing on price: you can buy LCD TVs from obscure companies in Nebraska that sound like they are operating out of a bedroom, some dot com sites are still trying "shopping innovations" such as buying circles (get 15 friends to buy the same product and it's 5% less), and of course there are people selling new stock on auction sites.

All of these are a waste. A third party coming between the manufacture and me can do no more than jack up the price. My thesis is simple: the lowest possible price of an item is the price at which the manufacture is willing to put it on the loading dock, plus shipping to your door. Everything else is overhead.

You may respond "But shipping 50,000 widgets to Walmart is a lot cheaper than shipping widgets to 50,000 addresses." Sure, but Walmart has its overhead. They have to uncreate 50,000 items and put them on the shelves of big stores, then wait for them to sell.

No manufacturer wants the hassle of shipping to 50,000 customers. But manufacturers don't really want the hassle of shipping even to 100 stores either. The whole process of getting goods to you is called logistics:

Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security.

Many manufacturers already outsource this. What's stupid is the manufacturer pays for one logistics chain that gets widgets from it to the store, then the store pays for another chain that gets the widgets to customers' houses.

You could argue that manufacturers need stores to aggregate individual purchases into bulk orders; they can't run their assembly line in response to individual orders dribbling in, but they can intelligently respond to a 50,000 item order from a store. But bulk orders just hide inefficiency and mistakes. Some of a big order winds up on sale or dumped in discounters and outlet stores, which jacks up costs for the store. You could claim that stores should know their customers' tastes better than the manufacturer, e.g. the Super Bowl is coming up but economic conditions are poor so cheap 720p TVs will do well while 1080p will languish; but that's part of the problem: manufacturers need this information as much as stores do! A manufacturer whose customers are big stores knows less than a manufacturer whose customers are the actual users.

For years I've believed the obvious answer is for Amazon (market cap $ 52 bn, revenue $22 bn) to buy or become UPS (market cap $58 bn, revenue $ 45 bn). This results in one chain from the loading dock to the customer! Returning to my thesis, the manufacturer tells UPS/Amazon what price it's willing to put it on the loading dock, and Amazon/UPS puts it in the customer's hands. The manufacturer and Amazon/UPS can work out whether to manufacture 50,000 at once or do smaller runs, it all ends up in one supply chain. And Amazon/UPS has all the customer knowledge and programming smarts to offer sales approaches that reduce prices like bulk-buying circles, limited-time promotions, auctions, reverse auctions, overstock, etc. but in conjunction with the manufacturer.

Anyone know Jeff Bezos' e-mail address?

disintermediation part 3: universal spiff

Retail stores are struggling because it's cheaper and better to buy things on the web. I see something I want in the store, but I wonder if that model is highly rated, and I know I can get it cheaper online. Yet manufacturers still need to get goods in front of customers in the real world where they can see, touch, and use them in order to make the sale. Some companies have tried manufacturer stores, but they are hampered by not undercutting other stores (my local Sony Style store closed a year ago).

When I worked in tech support, if a support engineer was able to convince a customer that they needed a product (often a paid upgrade to the new version that addressed the problem) , the employee would transfer the phone call to sales and get a small commission on the sale. This is called a “spiff”: A bonus or other remuneration, given for ... promoting the goods of a particular manufacturer.. The problem is if the customer later on bought the product because of that person's assistance, there was no way the employee could get compensated. I've also gone out on sales calls where my technical knowledge sealed the deal, yet the sales person got the commission.

My thesis is companies have a certain promotional budget for the sale of an item, and they should be willing to hand sum over to anyone on ANY sale. They already do this on click-through ads for web sites, but they should extend this to the world of people.

It would work somewhat like this:
Enter the e-mail address of the person who led you to buy this product: __@___

So whether someone demonstrated the laptop at the Sony lifestyle store, or someone showed it to you at a convention, or you saw a book at a bookstore but guiltily purchased it online instead, or your mechanic told you to buy some accessory, or you read a rave review about something on a blog, you can credit the person who led to your purchase.

This would encourage and liberate millions of people to sell things, and it would break down the artificial division between salespeople selling a product and the many people whose efforts can lead to a sale. It would provide a financial model for company "stores" and marketing events that merely demonstrate items yet often spur sales.

Companies probably wouldn't allow any e-mail address, they would have a known list of approved promoters: all their employees, partners, people on certain web sites. The system has vast potential for "abuse", e.g. someone who had nothing to do with the sale would offer to split the spiff with the buyer. But the abuse still leads to increased sales!