Creating a Merit-Based Music Economy: Compulsory or Blanket Licensing for Interactive Subscription Services
Summary | Contents | Previous | Next

C4. Why Other Alternatives Don't Help Grass Roots

There are other ways that musicians make money in the music business, and some people suggest that recorded music should be purely free, with these other methods generating the revenue that sustains a career. These include live performing, advertising, patronage, and voluntary donations. I don't think any of these alternatives actually work, because they don't break down both of the Power Pillars of the star system.

Live Performing: As noted in the grass roots section above, it's hard for most artists to make much money with live performances. There are relatively few venues that are large enough, and relatively few artists with enough local audience draw to fill them, anyway. Most artists would only generate partial to break-even levels of revenue typical of today's grass roots market.

Part of the difficulty in bringing an audience to a live performance is the double constraint of time and location. Unlike a CD, which can be played at any time (and with portable players, in any place), a live performance is stuck in one place at one time -- the audience must either come then and there, or not attend at all. Only a small cross-section of an artist's audience would be available on these terms, and so live performing is actually a rather weak method for reaching the full audience.

Also, venues have other constraints (such as stage space, seating space, etc.) that limit the variety of acts appropriate to perform there. Some artists' recordings may be all but impossible to perform live without unrealistic expense, or in only a select few venues. Even with a very large audience, such acts would generally not be able to reach their full audience with live performance.

The total revenue available in the live performance market (for original acts, not including sideman work-for-hire that the musicians' union covers -- parties, receptions, musical theater, and the like) doesn't compare at all to the total revenues from retail sales of recordings. If this were the most important way for musicians to make money, only fairly big stars would be able to make a decent profit, by playing at the few large venues where that is possible, and the star system would still dominate the market.

Advertising/Sponsorship: When artists appear in TV commercials or magazine display ads, they are selling their celebrity to associate with the brand of some other product. To be attractive to the advertiser, the artist must already have a celebrity brand that has value, as well as being a good match for the product brand. That celebrity brand has to be known widely enough to make a difference in the advertiser's market, which is to say, they must be stars. So artists will only be able to make this work if they are stars in the mass media, and have already gotten through all the bottlenecks in that system.

Patronage: Patronage is basically a private form of sponsorship, where the sponsor is not a corporation or other organization, but rather a private individual. Usually this is someone spending a lot to enhance a personal reputation by attaching it to an attractive celebrity. It relies on the star dynamic the same as advertising, not to mention the few number of available patrons, and their unpredictable personal quirks.

Voluntary Donations: Many people have been looking to the "online tip jar" to replace sales revenue lost through free distribution of music files. They point to examples of donations and other voluntary contributions across society, such as restaurant waiters and cab drivers, public broadcasting, and other charitable gifts.

However they fail to acknowledge that most tipping is on top of base salaries and other non-discretionary consumer charges, and that many charitable contributions are encouraged through tax deductibility for strictly approved non-profit organizations.

They sometimes argue that society could develop new social norms where people recognize the value of the music, and a duty to support musicians whose work makes a difference to them. However, such social norms usually arise from the structure of the marketplace, not by being imposed from outside the market. There is no precedent to suggest that this will result in anywhere near the revenue needed to break out of the star system. So even if the promotional bottleneck is broken, there won't be enough revenue to make a difference.

Breaking down a flawed market is one thing, but building something better in its place is something else yet again. The better market won't magically appear in the wake of the flawed one without explicit planning, architecture, and implementation. If the commercial market for recorded music is undermined for major labels, it will also be undermined for grass roots artists, making that dance a little bit harder all over again.

Other Online Options: There have been other suggestions for a complete system to be built purely using distributed architecture (extending the Peer-to-Peer concept to streaming, metadata, and allocated payments of some sort, perhaps bundled in with other Internet or wireless service providers).

These ideas have not been fully fleshed out at this time, and may or may not provide a viable alternative to the centralized subscription business model. (Note: See the section "2003 Update, Distributed Systems" for further ideas about how this might work.)

If they do, though, they would have to include the two key features of the centralized service:
  1. Full access for all artists to get into the catalog, along with fair revenue per play
  2. Full-catalog personalization for individual users of the system
The criteria for determining whether any proposed solution will work are still the Power Pillars. If both bottlenecks (promotion and distribution/revenue) are not broken simultaneously, nothing really changes about the star system pole vault or the grass roots step stool, and the stepladder does not get built.

Summary | Contents | Previous | Next