Photo: Ende, for AdBusters.

Universal CEO Doug Morris makes an easy target for the blogosphere. This is the old-school record industry executive who called iPod owners thieves and wanted broad legal enforcement against piracy — enforcement that, in the end, seems to pale in comparison to the revenue generated by actually offering online sales. So, now that Morris has gone up against Wired, the blogosphere can easily see him as a dinosaur.

Universal’s CEO Once Called iPod Users Thieves. Now He’s Giving Songs Away. [Wired News]

But as artists, all of us face a fundamental problem: how do you put value on something that’s ephemeral? It’s an age-old issue that has faced musicians explaining to their parents why they don’t want a real job, and artists to their patrons when affixing a price tag. (And as we’ve seen from veteran software developers and the BanPiracy debate, software “artists” face the same challenge.) Sure, people love to talk piracy, because it’s easier to talk in those terms. Piracy is theft, theft is crime, and crime is bad — including making a mix tape for a friend. Or all music should be free, and never mind that artists need health insurance and rent money. They’re black and white extremes, entirely couched in moral/philosophical terms, neither of which contend with how to solve the actual real-world problem (at least, not if you stop there).

And then I came across this quote from Morris in the interview:

“Really, an album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?” Morris sighs. “People never really understand what’s happening to the artists … If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go,” he says. “That’s what happened to the record business.”

Wait a minute… a liquid that comes out of your faucet for free, but is also sold, in bottles, at retail. How much would you be willing to pay? Hmmm… this sounds familiar.

It’s called water.

And how much are people willing to pay for the privilege of packaging, control over subtle variations of taste, and mobility? Quite a lot, as it happens. More than Coke. It’s not uncommon to see Coke for $1.50 at a grocery, and $2.00 or even $3.00 for water. In fact, Coke might have gone for the running water through the tap idea, as additional revenue and a way to increase consumers’ taste for the stuff.

Oh, yeah, and that tap that runs water music into your home for free … the radio? Not a new invention. None of these things is easy to monetize, mind you (ask your local public radio station during their pledge week), but it’s clear there are ways to make people see value.

If this isn’t a lesson for the music industry in the digital age, I don’t know what is. Find a way to increase consumer perception of value, even if the thing supposedly can be gotten readily. Find a way to sell the packaging, and find a way to make that purchase part of people’s daily routine. (And music, in case you haven’t noticed, is ubiquitous these days whether you touch a torrent server or not.) And maybe the bottled water people could teach us a thing or two.

As it happens, Universal’s digital music schemes seem to be a decent start strategically. They have two prongs: one, distribute music, DRM-free, in multiple stores, breaking up the Apple iTunes/iPod monopoly with music that can be bought and played everywhere. Two, provide subscription music, with DRM, for free, subsidized by hardware manufacturers. Now, if the subsidy makes business sense for manufacturers, I honestly don’t see anything wrong with that. Universal ransomed Microsoft over the Zune, which I personally found ridiculous, but now at least the hardware makers get something in return. And while DRM on music you’ve paid for, on subscription services it actually makes some sense. In fact, usually if you really grow attached to music and want to make it mobile, you’d then buy non-DRMed music. Problem solved.

The only really strange twist: a new breed of Apple iPod fanboys, who get their panties in a bunch over the idea of music being bought anywhere other than iTunes and played on anything other than iPod. (I miss the Mac fanboys who fought for you when IT wanted to install a Dell with Windows ’98 and Novell. Those were the days.)

Personally, I don’t see the problem. With DRM-free MP3s, any device can be a playback device — iPod included. And as far as subscriptions, if you don’t want them, ignore them and buy the MP3s. If you do want them, you can already play Rhapsody over the Web with a Mac and Linux. Firefox + Rhapsody + Linux works quite nicely, in fact. You can’t use them on mobile devices yet beyond Windows, but that seems like a fixable problem — a technological problem, particularly since these devices should in future connect directly to wifi or phone networks, not your computer.

But artists don’t have to worry about such things: you want your music everywhere. And if, in fact, Universal is a dinosaur, then the question is, can you find someone else who does know how make water thicker than Coke?

  • Vamana

    Fast Company had an article about the bottle water industry, which is kind of ironic its mentioned here because it describes the state of consumerism in the U.S. Heres the link:
    http://www.fastcompany.com/magazine/117/features-

    Personally I believe Morris is right, the value people place on music is ridiculous, because it is accessible so freely. Bottled water is a $15 Billion industry, if you were to pay the same price for tap water it cost about $9000 a month.

  • http://www.createdigitalmusic.com Peter Kirn

    Heheh, well, I'm a big tap water drinker myself — nothing against anyone who does choose to blow lots of money on bottles. So I didn't mean to advocate buying lots of Evian. ;)

    But I think you can learn something from the situation. Value is what the consumer makes of it. Sometimes that leaves to rotten teeth, empty pockets, and filled-up landfills, but you can also take those lessons and apply them to things you care about.

    Thanks for the Fast Company story, though, well worth a read as we reflect on consumerism. And maybe encouraging rampant consumerism isn't entirely the answer — maybe Morris' point, that you could see your funds reaching the artist, is important. Ironically, though, I think labels have obscured the value of supporting those artists some of the time.

  • Fintain

    Recorded music is modern phenomenon. Music and musicians existed before vinyl. Its happening already, cds as a method of promoting an artist as a live performer (daft punk).

    With increasing atomization of society and people spending most of their lives communicating through a keyboard, live music is important in providing a sense of community.

  • http://www.createdigitalmusic.com Peter Kirn

    Fintain, I agree — but that goes along with what I'm saying. For many artists, their additional revenue is tied to the live performance thing, too … so it's merch, it's live performance recordings selling better than the albums (because you buy the gig you were at). I sometimes go back to recordings of live performances (myself and others) for the same reason I take photos. And if that supports hearing more live music, fantastic. So that's what I mean about shifts of value.

  • Fintain

    I think there are two realities, one the big music industry, drm, ipods etc and then the everyday musician on the ground. For the latter things are looking good, for the other it seems the cash cow is drying up.

  • David

    Tap water isn't free. If you're a home owner, you pay for it directly (in most places). If you rent, it's part of your rent. And if you don't pay for it directly, it's in the taxes you pay that make it to your local municipality.

    It may be incredibly cheap, but it's not free.

  • otologic

    My favorite part of the article:

    "There was a cartoon character years ago called the Shmoo," he says in a raspy tenor. "It was in Li'l Abner. The Shmoo was a nice animal, a nice fella, but if you were hungry, you cut off a piece of him and put onions on it, and if you wanted to play football you just made him like a football. You could do anything to him. That's what was happening to the music business. Everyone was treating the music business like it was a Shmoo.

    SHMOOOO!!! The music business is and always will be like a Shmoo. There are too many channels, markets, etc.

  • otologic

    BTW, I totally boycott bottled water. It is an environmental disaster just like CD manufacturing and packaging. Digital downloads or more environmentally packaging is the way to go.

  • Tim

    Excellent article.

    @Fintain: I agree. The RIAA labels are trying very hard to drum up sympathy for their cause, but the truth of the matter is they make extremely over-inflated profits for what has become an increasingly mediocre product. I think people are finally wising up to this.

  • http://www.stranahan.com Lee Stranahan

    I'm 42 and music has always been available free to me – there's the radio, there's taping off an album, there's swapping albums. The technology is different now but it's nothing new, really.

    I bought music to help support artists I like. The record companies took away much of the incentive to buy albums – got rid of the art or cool packaging – and charged a ton for the music. And – the record companies were screwing the artists the whole time, too. I refer you to Steve Albini's 'The Problem With Music' – http://www.negativland.com/albini.html

    The big music industry needs to figure out life after affordable recording and DIY mass distribution.

  • http://www.createdigitalmusic.com Peter Kirn

    Not to stretch the bottled water metaphor any further, but I do believe packaging in general could redeem itself in music — short runs, environmentally-sustainable stuff, things you'd want to keep rather than discard. And we hope to see handmade stuff from artists at Etsy.com soon; stay tuned. So it's possible to consume physical goods in a better way; even aside from environmental impact, I think we feel better when everything isn't disposable. That's of course the irony of the record industry protecting physical media that was disposable.

  • Vamana

    Audio recording was invented in 1877, so selling anything but live performances is relatively new. Still I think marketing, will have more to do with sales, than actual music.

  • _object.session

    sorry if this is covered in the article or comments, but the unfortunate thing about bottled water is that people don't really care what's on the inside. is that the way we want people to feel about buying CD "packages"?

  • http://www.createdigitalmusic.com Peter Kirn

    I think people do care about what's inside a water bottle — and may even prefer that taste to what comes out of the tap; at the same time, their perception is altered by the package. So you can use that for good or for evil.

  • Thomas Cermak

    Man, I needed to laugh hard today. Thanks Peter, and keep it coming. You have an ear for tongue-tying doublespeakers!

  • Bats

    I don't know about you guys, but I get a water bill every month…

  • Thomas Cermak

    Have to add though, that you're wrong on the bottled water thing Pete. Bottled water is a horrible disaster that the world's people must abandon, the cost to the ecology is huge. And the bottling companies simply want to privatize access to water everywhere, and they've begun in the developing world already. Although I hardly use this terminology, I have to say that Evian (and company) is, in fact, an evil corporation.

    If you'd like more evidence, just send me an email.

  • Thomas Cermak

    "I don’t know about you guys, but I get a water bill every month…"

    And so do a lot of people. I was going to add, to Peter's dismay, that the bottled water metaphor can be stretched further.

    A guy by the name of Hal Niedzviecki, from Toronto, once made the argument, in a Canadian debate over this issue, that the government should start paying artists (like many did in the old days), and that Canadians should be willing to pay a tax to help subsidize the life of cultural creatives. In Canada, like in parts of Europe, we have various government funded donor bodies (federal, provincial and often municipal) that help to subsidize artist's works already. I'm not too sure if such institutions exist already in the states. So this idea may be more far-fetched for you libertarian/free-market types. (;

  • http://www.createdigitalmusic.com Peter Kirn

    Well, back in the United States, not only do we have ridiculously scant government funding for the arts, we don't have basic protections for freelancers of any kind — artists being hit especially hard. In an ideal world, we'd have funding for artists and a revised tax code that didn't punish people for being self-employed. But I'd start with this: American artists badly need health care. Even if it's not "universal" health care, I'd love to see more affordable and available health care for artists. I think it's a bigger deal than lost revenue from piracy, frankly.

    Oh, yeah, but I don't get a water bill. That's good. :)

  • http://www.createdigitalmusic.com Peter Kirn

    I'm really, really not trying to encourage people to drink bottled water. I'm just saying: it's a marketing feat. Marketing, like propaganda, can be applied to bad things and good. I think if you believe in what you're selling, then figuring out how to package that is important. It doesn't have to mean selling out or misleading people. It just comes back to people's perception of value. And it's unfortunate that people would fail to see the value in a lot of music — a unique, non-renewable resource — yet would spend lots of cash buying plastic and someone else's tap water. Ahem.

  • Greg

    I'm surprised nobody's mentioned vinyl.

    I really get a lot more out of LP packaging/artwork than jewel cases or digipacks, and the sound quality alone is something that I gladly fork over for, even considering cheaper options like CDs or even torrents.

    The vinyl revival, I think, can be very positive for musicians, especially if it's encouraged correctly by the right people.

  • Thomas Cermak

    Ya,

    My musical partner (a DJ) and I are going vinyl with one of our releases. It's all about the vinyl packaging man. You're totally dot on.

    I get ya Peter don't worry. Love the metaphor still.

  • http://www.johnnyrandom.com/ flip

    Argh. MP3s? When will this compression format die? AAC or better, please. That aside, I think the water metaphor would have been more accurate of it was the RIAA being flushed down the toilet.

  • fuzz

    people labor in south american countries for starbucks coffee beans, but i'd still rather give 15$ for my favorite artist's cds than encourage that

  • Fintain

    The blues never needed government funding.

  • http://www.keithhandy.com Keith Handy

    I run my drinking water through a Brita filter… but, I leave the filter in LOOOOOOOONNNG past the "good until" date, and don't get around to changing it until I start to see little black grains in the water.

  • http://www.keithhandy.com Keith Handy

    Question: what is the value of music? And can you respond with something more substantial than "I like it"?

    I don't think music is as much of a luxury or non-essential part of our lives as most people seem to think. I think it's tied to our psychological well-being, for one… but I won't elaborate on that, because I'd like to hear what other people say first.

  • http://www.stretta.com Matthew Davidson

    People don't buy bottled water. They buy convenience.

    How difficult is it to take a bottle, pour some home-filtered water in it, and put it in a bag with an ice pack so it stays cool? Difficult enough, it seems. Some lack the foresight, some don't want to carry around extra baggage, some are just plain lazy.

    Anyway, the issue isn't the value of water, it is the value of being presented with the opportunity to enjoy a cold drink in a portable container when you happen to be thirsty. There is a difference.

    You may think that Coke sells sugar water. You're wrong. They're a distribution network. This network ensures that their products are everywhere you happen to be thirsty. Coke is big trucks stopping at convenience stores and filling vending machines. People tend to think of a product as what is inside the bottle. In the case of coke, the product is almost irrelevant. It is everything that happens after you put the product inside the bottle that you're paying for.

    The same is true of the record industry. They're responsible for everything that comes after the product is made, and this is all irrelevant in today's world. All that is left is the product, and once you remove the costs of promotion and distribution, I still feel there is something left worth paying for.

    As I've said before, this is how you gauge the value of 'something that’s ephemeral' Ask yourself how you'd feel if it vanishes? All the music on your iPod is erased. Would you miss it?

    There is the value.

  • http://www.createdigitalmusic.com Peter Kirn

    Well said, Matthew.

    I was going to say, I have to buy a bottle of water in a few hours at the airport, but I think I'll bring a container instead and refill past security. ;)

    It's funny, after this discussion I spent last evening listening to Horace Silver's Song for My Father. I know every note of every solo on that album. Now, I wouldn't build that kind of relationship with subscription music … maybe I would with a download, provided I could take it anywhere (like these DRM-free MP3s).

  • http://www.myspace.com/wilsontherocker Evan

    Judging by some of the comments left at the bottom of the article, people seem to really hate DRM in any form. But in my mind, buying a digital music player that comes with a lifetime high-quality subscription service sounds like a pretty good deal, even with the DRM. Like Peter mentioned above, you'd just pay a fee for the non-DRM version.

    In fact if that service and player offered a vast catalogue with plenty of independent music, downloads in multiple formats, and played files obtained from other sources, I think that would probably be an item I would snatch up in a heartbeat.

    No telling if that'll actually happen, though.

  • Damon

    ETHICAL PHILOSOPHY QUAGMIRES REGARDING INTELLECTUAL PROPERTY ISSUES

    (IP Issues For Short)

    Forceps – I apologize for my horrendous grammar and spelling issues. Most punctuation marks look the same to me, so I can't tell the difference.

    _____I thought I would share how I personally manage the intellectual music property thing. When I was a kid, about 2 years ago (:P), and cassette tapes had just come out, I would share the albums I had actually purchased with 1 or 2 or 3 friends, and they would do the same. By which I mean, record them (I have never actually recorded any friends). And one might suppose this would have put a bit of a dent in artist and record company people profits, but this is not what happened. I have heard, but I cannot verify with amazing accuracy, that with the advent of recordable audio cassettes, record company and recording artists people profits actually ROSE about 10%. I am not exactly sure how, or I am just too lazy to fill in the blanks, but "pirating" at that juncture in technological history was "a good thing" if you were in the music record people business.

    _____Move ahead 20 or so years, and we get Napster. A clever network of sleeping people too unconscious to remember they were actually stealing something that belonged to someone else. And here then came the nail in the proverbial coffin of music people tape copy exchange. The record business people took a loss of approximately 10%! in Napster specific record music people profit stuff merchandizing benefits.

    _____So, to cut ahead to the chase of this statistical observation, buying an actual album, on actual physical material media, and loaning it to a few friends, without the benefit of instant and immediate file transfer gratification pleasure, for copy, is:

    GOOD! for the record people business profit makers.

    _____And, as one may or might have thusly deduced, buying a physical album, made of actually stuff you can get dust and scratches on, and piping it out to 200 hundred thousand sleeping people, is:

    BAD! for the record people profit maker artist persons.

    _____And as I really can't deduce these deductions with any more conveniently obtainable accuracy than the above, I operate by what I refer to as The Speed Limit Grace Pace, SLGP, for short.

    _____I live in California. Most the freeways in CA are 55 or 65 miles an hour, but you can safely drive 60 plus a nudge or 70 with a dash, respectively divulging, and the officers of lawfulness will not confuse you with people currently breaking the law, at the time you were currently not doing that. Therefore, as the crow flies…?

    _____Buying 1 actual physical music wad on actual touchable media material, and loaning it to several friends to be recorded (though, I have never actually recorded friends, minus the notorious John Denver session that never happened), is like driving 60 in a 55 or 70 in a 65. Fast but not very dangerous, as speed limits are set lower than necessary, so that a being 5 or so over the limit is driving the ACTUAL safe speed limit. If the actually safe speed limit was 90, they would set it an approximate 85, but you get the gist.

    _____And it goes without saying, that I have to say that posting just 1! album online for 668586757684 sleepers to share in the name of LUV, is like driving a whole lot faster than the posted speed limit, or exceeding your specific SLGP, else-wise known as The Speed Limit Grace Pace. One might assume or even presume that as recordable cassette tapes bumped music profits up 10%, and the Napster Conspiracy tore 10% profits from the bloated under and/or over belly of record people music places, people trafficking music exchanged or swapped over internet connections shall soon be pulled over for doing 70 in a 55, by which I mean they will argue that theft is alright as long as it is not YOUR stuff being stolen. You might notice that the former point detoured rather absurdly. You did not see that happen. If you say you saw that happen, I will deny it…

    _____So, this is how i personally manage or justify my philosophy on music sharing of songs invented by people who all too frequently don't share anything with anyone for even good reasons. If a friend or family member loans me a CD on actual retail purchased material product stuffs, I will copy it with only a hint of moral terror, arguing I am within the boundaries of my SLGP, which incidentally can be purchased pre owned on eBay for a reasonable price. But I will not rip off mp3 files. I only rip off the mp3 files I actually pay for and download from iTunes, which I might add is an Apple Industry juggernaught foisted by Apple Technology Professionals, who were probably loaded up on hallucinogenics* during the coding process, but I digest.

    Brief Decorum – I clearly misspelled "juggernaught" while harshing this highly invested commentary, and the mac/apple spell checker caught it with the speed of cheese, and swiftly corrected it. Turns out juggernaught is actually misspelled "juggxrnaught." You unlearn something new every day. It should also be noted that the apple/mac spell checker is unfamiliar with the word "hallucinogenics." But in defense of apple, plurals can be confusing, this is why I only use words that cannot be pluralized, that way my mac operates according to specified diagnosis.

    _____BUT WAIT! Duplicating albums or CD''s "old school cassette" is still in fact, stealing! Plus, the ability to duplicate albums onto recordable cassettes was the horrifying beginning of what we now refer to as the illegal and immoral apprehending and/or obtaining of preowned intellectual property! Intellectual properly being a rather comical if not as well ironic term when you consider the quality of much of what is currently defined as hep tunage, but I dispossess. And if I may may elaborate just a more tad bit? But I don't really feel like it, so I will toss in this question for consideration, study, or way sheik departure, depending on your politics.

    _____In California, where I am presently acquainted about in maps, it is illegal to put big, small, or even medium sized change into someone else's parking meter. The point being that the city makes way big bucks via illegal parking. How does this fun fact relate to, coincide with, approximate, divest regarding, or intrude upon the point and/or statistical (note – the word "statistical" is funny) or/and fact, that pirating your next door neighbors copy of "Mental Health" by Quiet Riot did in fact boost record company people profits an approximate 10% of moral silly? I choose to burden you with this profound if not absurd moral dilemma, cause I am presently tired of writing this even shortly.

    Blessings,

    Damon

    Ps.

    It should also be noted that nothing I have said here may in fact be true. But I only suggest that for legal purposes.

  • http://www.musicmediadesign.com Dave Davis

    I think Fintain's perspective is very bigoted, and hopefully not widely shared There are many examples of assembled media products (albums, films, tv shows) that are unique experiences unto themselves, separate and apart from any live show.

    For instance, while I loved the Talking Heads "Stop Making Sense" tour and movie, I find the album many of the songs were featured on, "Speaking in Tongues" more compelling (I've listened to the album dozens of times, but only saw the Heads twice on the tour, and the movie a couple times). Many truly classic albums, like Sgt Peppers or Never Mind The Bullocks or It Takes a Nation of Millions to Hold Us Back, are definitive documents in their own right, that weren't surpassed on a stage by the original performers. The Beatles conceived it as an alternative to the drag their show had been reduced to by the venues and gear of the day.

    Go back in time 200 years, and try to name the greatest performers of post-Colonial America. Hell, name ANY performer from that era… most have been long forgotten. Yet we remember great composers hundreds of years earlier than that. Performances only stand the test of time through recording. Reviews and written scores can be no closer to the "truth" of any performance than journalism is to dancing. The experience can only be described, but not recovered. Albums (and maybe bootleg recordings for jam bands) will define the artists for future fans, not their most legendary performances.

    Anyway until live performances replicate and propagate the experience of great albums, this question remains open. For me, most times I'll pass on the show and take a great record, thanks!

    Now, as to the basic premise of the post… I entirely agree!

    Amazon's DRM-free 256K files are a great alternative to iTunes for iPod owners and everyone else. It could be better: give us lossless files, and I'll pay as much as I do for the CD. But that's just me…

    The basic idea is this: Attractive digital products sell, like anything else (including water!). We can definitely learn some from the water guys, but we need to pay attention to all the current models that are already making money, and figure out not just how to position the product, but how to make it in some way better. Quality is an easy/obvious answer, but they needn't stop there… look around!

    Great post!

    -d-

  • http://www.daveahl.com dave ahl

    i agree with matthew davidson — bottled water is all about convenience.

    and music should also be about convenience!

    imagine that no matter where you are (in the car, at the office, walking around, on any computer, at a TV/media center) you could instantly access your entire digital music collection… whatever song or album you want.

    that would be convenience! people would pay for that.

    now, it's whatever you have on your ipod (which is still a huge step forward from CDs) but you still have a general problem of syncing media up between various devices, storing and retrieving media, accessing music from remote locations.

    the music industry needs to get it together and offer consumers a brilliant solution to accomplish this basic problem. or, more likely, it will be apple that will do it because the music industry doesn't seem to be able to be proactive about technology.

  • http://www.digitalfreedom.org Jake Ward

    The inability of the record industry to see the forest through the trees on this boggles the mind. The intersection of art and technology cannot be stopped and its value should not be denied by labels, lawmakers, or even the artist themselves. The Digital Freedom Campaign is an organization dedicated to preserving the rights of consumers, artists, and innovators in the digital age where some people and some companies are holding onto a tired old business model like grim death while the rest of the world evolves around them. As we fight this fight, we will be keeping an eye on them, and you should keep an eye on us.. .www.digitalfreedom.org.

    drink more water!

  • Kikio Jones

    Boy, is that water analogy a bad one. Also, all those plastic bottles? Harmful for the environment.