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Monthly Archives: December 2009

When one business closes, opportunities open up

The internet is successfully ravaging almost every industry from music to real estate. Technology has, throughout history, caused the end of many industries, removing millions of jobs from the economy. What looks scary in the short term ends up being a long-term boon, with technology often replacing those jobs with better jobs, larger markets, and more efficient allocation of resources.

This weekend, Thomas Friedman wrote about the “Do-It-Yourself” economy where, even in this Great Recession, companies with fewer dollars and less manpower are finding ways to do more. He highlights marketing firm Greer & Associates whose budget has been cut 20 percent. Using online collaborative tools, cheap stock photography, and crowd sourced voiceover work, they have been able to produce far more than they could with a full budget.

Greer paid far less for these services. Voice talent that once cost up to $500 was 10 percent its original cost. Thousands of dollars of stock photography could be had for a few dollars.

Friedman sadly doesn’t go far enough highlighting how amazing this ultra-efficiency is. While people will pay less for stock photography, more people can afford it now. It’s feasible for someone making a birthday card or personal website to spend a few dollars for really professional photography. The market is far larger – elastic pricing at work.

But what about the poor photographer you say? Focus only true scarce goods. Stock photography, especially in the age of cheap digital cameras and photo editing software, is a glutted market pushing the price down to zero. That’s competition and it’s a good thing. All this stock photography makes commissioned photography, long the bread and butter of any photographer, more valuable, especially when they can show samples of their work in active use.

With more efficiency and less costs, Greer can put more resources into creativity and making actual marketing products. It’s so cheap and easy to distribute music, musicians can save those resources to engage with fans and sell scarce goods (like time, concert tickets, etc.) to those fans. Greer’s clients and a musicians fans save money they once spent on high-priced voice-overs or CDs can put that money to other areas of the economy, creating other jobs.

Look at 15-20 years ago how many jobs didn’t exist before the internet and computers become ubiquitous. There are search engines, SEO specialists, social media sites, online gaming, life streaming, GPS, cell phone data plans, and more. All of these provide more jobs even if they replace others. It’s like the automobile industry replacing horses and buggies or phones replacing the telegraph. Agriculture is my favorite example, as the majority of the U.S.’s jobs used to be in agriculture, replaced by manufacturing because agriculture became so efficient. Now manufacturing is more efficient, those jobs are disappearing. They will be replaced by new jobs, whether online or in other areas not yet discovered.

Companies need to stop fearing the changing marketplace and embrace the new opportunities, even if it means radically changing your business model. The market makes the decisions and companies just come along for the ride.

Music labels infringing musician’s copyrights, provide convenient list

Music labels (and copyright maximists) often claim they need copyright to benefit the musicians, but their actions more often contradict that. Unlike the U.S., Canada replaced its compulsory license system (where anyone can pay a set amount to use a song) with a permissions based system meaning the copyright holder has to give permission for each use of their music.  Record labels have reportedly been releasing musicians’ music, such as on compilation discs, without permission nor paying any royalties tracing back to the late 1980s.  The labels have even kept a “pending list” of all the musicians they have not paid.  The list includes more than 300,000 songs from major names like Bruce Springsteen and Beyonce.  Jazz musician Chet Baker is leading a lawsuit against the labels claiming at least $50 million is owed to him.

The labels could face liability of $6 billion using the same infringement fines the label seeks from file-sharers ($20,000 per infringement multiplied by 300,000 songs).

David Basskin, the President and CEO of the Canadian Musical Reproduction Rights Agency Ltd., said in an affidavit that “the record labels have devoted insufficient resources to identifying and paying the owners of musical works on the Pending Lists” adding it would be “an unproductive use of their time.”

There are several other examples of record labels and collection agencies collecting money that never makes it to musicians from creative book-keeping, multiplatinum albums make no money, violating contracts to release music without permission, or just holding onto money because they can.

The reason record labels are so desperate to save CD sales is because that’s their main source of income – and the revenue only works when record labels have full control over distribution. When they have full control, they can charge whatever they want, like $20 for 12 songs,  and treat musicians as they always have – badly. Technology has dropped the cost of making and distribution music so cheap that musicians can control their own destinies – they don’t need labels anymore. Labels served a valuable purpose when there was no alternative. They provided the expensive recording, distribution, and marketing required to make a band successful.

With a computer and a website, almost anyone can make a go at being a musician. This means more music – more people making money from their music (whether through merchandise, live performances, or other inventive business models) and more music to listen to and enjoy.  The labels have lost control over the marketplace and this is a good thing as it will allow the marketplace to grow. Don’t believe me? Look at the U.K.

Holiday and working blogging blues

Yup, I’ve been slacking on my blogging over these past few weeks. Between holiday traveling and some tough weeks at work (even the auction business gets into the holiday spirit), I’ve been finding it tough to keep to a schedule. I’m still working on a big release for my employer, Leslie Hindman Auctioneers (no relation at all to Prodigeek), as their IT and Social Media Manager, so things might be erratic for the next few weeks.  Hopefully, I’ll be able to find a new rhythm soon. Thanks as always for reading and have a happy holiday.