Business

SFMusicTech Summit: Musicians and Geeks search for sustainable business models

Being a musician can be fun but it's a tough way to pay rent. Can technology devise a sustainable business model?

Written by Tom Foremski, Contributor Feb. 20, 2013 at 5:45 p.m. PT

This video (above), provides a recap of the day's events, panels, and discussions.

The SFMusicTech Summit earlier this week drew a great turnout at the Hotel Kabuki in San Francisco.

There were a lot of artists mixing with a lot of geeks from a wide variety of startups, all trying to figure out the new business models for music in an age where few people pay (much) for music because of its ubiquity in free online sources such as Youtube, Grooveshark, or monthly subscription services such as Spotify and Rdio.

I spoke with some of the attendees and there seemed to be a fair amount of optimism that there were ways musicians could start to make modest amounts of money from their work. There are some nascent new revenue streams opening up and also opportunities to better promote music and tap into loyal fan communities.

However, it will require a lot more work from musicians in terms of interacting with fans, and constantly promoting their gigs and themselves. Musicians are already having to do tremendous amounts of self-promotion, performances, and merchandising on top of their already grueling tasks of touring, recording, and creating new music.

A genie that doesn't grant wishes...

Everyone knows that, "the genie is out of the bottle and the music business will never go back to what it was," as one music industry lawyer said at the event.

And there were plenty of jaded and cynical musicians, or as one pointed out, "We used to sell an album to every kid at college, now we sell one album to one kid and everyone at the college gets a copy from that kid."

Some of the startups pointed to the need for greater involvement by artists with their fans. But this happens already. I've gone to gigs with my daughter when she was younger and it's extraordinary how much work the musicians do after the gig: talking with fans, posing for photos, and selling merchandise. When I was a youth and going to gigs, bands disappeared after their shows and tried to avoid fans.

Musicians now have to mix with fans offline and online and do it all the time. It's tough to do the marketing and customer support, and the performing, not to mention the travel and then to find time for personal stuff like eating, sleeping, and family.

There's a certain nostalgia for the bad old music labels which would manage a lot of those things -- but that was back then when there was money to be made.

There were a lot of musicians among the attendees and some seemed to be a little more hopefull than others about future opportunities to make just a little bit of money, to turn back a little, the relentless and endless decline in music sales. Brian Zisk, (below) the organizer of the Summit received a lot of praise from people at the summit for building the leading music-tech conference from a small gathering 6 years ago.

Josh Constine, a reporter for TechCrunch, helped moderate panels and he also made a passionate speech about startups that don't improve things by much, if at all. He urged startups to work on big ideas because the small stuff is not worth wasting your life trying to build. You can see Josh's speech in the top video at around the 19.56 minute mark.

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Foremski's Take:

The music business is an excellent example of the disruption that happens to an industry that has been "digitized." It's so easy to copy and distribute music, and so difficult to plug the leaks, that there's very little money to be made. It's a problem compounded immensely by the massive supply of free, or nearly free product.

And there's no way to turn it off without risking a serious loss of visibility.

Most musicians know they aren't likely to make millions from their work, but many would be happy if they could just make modest amounts that would cover their rent and other living expenses but even that's very hard to do.

They face the same problem that all digital works creators face: authors, journalists, photographers, etc -- the devaluation from the online companies that exploit their work through aggregation and compilation.

There is a music business model but it requires scale. It's best demonstrated by companies such as Spotify, Pandora, Youtube, etc, and requires huge catalogs of music with audiences of tens of millions. This business model relies on the aggregation of huge quantities of music, which means there's very little value in small amounts of music, such as a band's album.

Culture tax...

Even when playing live gigs musicians are exploited. Ticketmaster will take as much as the full entrance fee for the mundane service of issuing online tickets and collecting payment. This tax on culture prevents bands from reaching larger audiences and it alienates loyal fans.

What's the answer? There isn't one, not at the moment, and not in the future. And the same will be true in other industries being disrupted by their transition to digital platforms.

Do what you love because at the very least you'll make one person happy. It won't be your landlord -- it'll be you.