XMediaLab Sounds Digital: Ken Hertz and the music industry

Here’s some live blogging I did on Twitter and ScribbleLive about the XMediaLab Sounds Digital event in London.

First I’ll give you the ‘raw’ feed from Twitter and then ScribbleLive. After that, I’ll briefly cover some of the major themes. If you want to jump directly to my summary and analysis, just go here.

From my updates on Twitter:

Ken Hertz: In a world of overwhelming choice (in content), filters become important #xmedialab << filters, discovery, relevance

Ken Hertz: Piracy didn’t cause problems in the music industry. Connectivity created problems. #xmedialab

@kenhertz says: Pad and iTunes same model as Sony, why didn’t they win, rather than Apple? Apple sells convenience.#xmedialab

@kenhertz: “Music is the best way to sell other shit.”#xmedialab eg ‘Using Dr Dre to sell headphones’

@kenhertz: Music industry never was good at marketing. In 1998, released 32,000 albums, only 250 sold 10,000 or more#xmedialab

@kenhertz: Copyright act was intended to incentivise access to content by enabling middle men. Artists never made any money. #xmedialab

@kenhertz didn’t know title of the UKDigital Economy Bill. He thought it was called the Digital Enforcement Act. #debill#xmedialab

@kenhertz: Record industry never sold music. Sold plastic discs because it was the most convenient way to sell music.#xmedialab

@kenhertz: People with no resources and no money can become important quickly. That’s never happened in the media industry. #xmedialab

@kenhertz: (Music industry) in a world of unlimited shelf space, marketing is everything.#xmedialab

From ScribbleLive:

  • 6:07 AM: kevglobal @kenhertz: Says that Jill Sobule raised $80k for her next record.
  • 6:07 AM: kevglobal jillsnextrecord.com
  • 6:08 AM: kevglobal Jill Sobule created different levels of support.
  • 6:09 AM: kevglobal The highest level of support for Jill Sobule: $10,000 – Weapons-Grade Plutonium Level: You get to come and sing on my CD. Don’t worry if you can’t sing – we can fix that on our end. Also, you can always play the cowbell.
  • 6:10 AM: kevglobal Ken Hertz mentioning over and over how discovery, filters and marketing are the future of music “in a world with unlimited shelf space”. However, it’s also about trust, emotion and connection.
  • 6:11 AM: kevglobal Ken Hertz says that the CD was “essentially bridge technology”. All the limitations made us think that we were charging for delivery of music.
  • 6:11 AM: kevglobal Ken Hertz commenting on the Digital Economy Bill. “Holding ISPs responsible for peer-to-peer file sharing will not result in a reduction of peer-to-peer file sharing.”
  • 6:13 AM: kevglobal “In a future of unlimited memory, unlimited connectivity, the internet creates a big jukebox in the sky.” Ken Hertz. You can’t build your future on a bridge technology.

(Sorry about the odd time stamps. I didn’t set it from where I was at. No, this isn’t happening at 6am.)
The Analysis:

On a number of instances, people have drawn parallels between the music industry and its struggles to adapt to digital and the news industry. The music industry has long been fighting against peer-to-peer file sharing and piracy. (Piracy is a very contentious term, but that’s the term the industry uses. It’s not only contentious as a term but also contentious in terms of the data, see a recent US government report asking questions about the data on piracy and its impact on the music industry.)
In the news industry, we have major figures in the industry calling Google and other aggregators parasites and trying to figure out ways to charge for content in a digital age.
Much of what the music has seen and has tried the news industry is now thinking about. Well, more accurately in the news industry the state of play is this: Thinking about, shouting at each other about, thinking some more about, shouting some more just in case one wasn’t understood during the first round of shouting, threatening in case the shouting wasn’t intimidating enough and then mostly waiting for someone else to try it first.
Ken Hertz showed the problem for the music industry switching from selling CDs for $16 to selling digital downloads for 99 cents. Anyone can see how this would affect revenues for the music industry. He quoted Jeff Zucker who said that the entertainment industry was trading analogue dollars for digital dimes. This is pretty well known territory for this discussion.

However, he took the discussion in a different direction. He pointed out that in 1998 (I believe that this is a US number not a global number), that the music industry released 32,000 albums but only 250 sold more than 10,000 copies. “The music industry was never good at marketing,” he said. Copyright is not about protecting content or paying artists but about incentivising access to content by encouraging middle men, he said. “The artists have never made money,” he said.
The CD was essentially a ‘bridge technology’. It was the most convenient way to deliver music up to that point, much more effective than LPs or tapes, which is why many people replaced their collections with this new format. “The music industry never sold music,” he said, adding, “we sold plastic discs because it was the most convenient way to sell music.”

However, the internet proved even more convenient. Asking a rhetorical question, he wondered why Apple with the iPod and iTunes managed to succeed with digital music instead of Sony, which had natural advantages. He said that Apple understood that it wasn’t selling music but rather convenience.
Fundamentally though, Ken talked about a music world with “unlimited shelf space”. This returns to one of the major themes of 2010. Smart content companies are realising that abundance causes more problems than scarcity. “Piracy didn’t cause problems in the music industry. Connectivity created problems,” he said. It created more choice than anyone could possibly handle, and it created an incredibly convenient distribution mechanism.
However, in a world of overwhelming choice, filters become important. Trust, emotional connection and marketing also become important. The future that he sees is one with unlimited storage and unlimited connectivity. That takes the convenience and choice that we have now and makes it look like scarcity. That’s the future that the music industry (and actually any content) industry needs to prepare for.