Trolls, Pirates, and the Grateful Dead

The Great Wave off Kanagawa -- Katsushika Hokusai -- http://en.wikipedia.org/wiki/The_Great_Wave_off_Kanagawa

The Great Wave off Kanagawa -- Katsushika Hokusai -- http://en.wikipedia.org/wiki/The_Great_Wave_off_Kanagawa

Digital technology has disrupted every market as it changed the course of modern history.  When the digital tidal wave struck audio, product engineering simply surfed it.  Electronic design produces boxes of chips with supporting circuits whether they run on waves or bits.  In audio, product development hasn’t felt the music quake like music sales has.

Hardware and software development evolve under executive directives.  When all goes well, the top-level leaders perceive and translate their market’s needs and wants accurately then align design effort and sales process with business insights.  If a predacious mood dis-integrates that, business vision degrades to simple profiteering and then things get difficult.

A lack of integral guiding vision might explain why we now have great new digital-sourced audio systems but not enough empowering (yet legal) access to appropriately priced Hi-Fi quality music.  Check out access to music you like online.  You’ll find lots of overpriced music files and economical, radio-style Low-Fi streaming.  Excellent quality  on-demand selection is not very well supported.  Typical affordable and convenient streaming audio quality tops out at 320 Kbps on most sites that even offer some marginal, lossy and compressed format.

We're suffering from music drought.  Avid listeners are all dressed up with not enough affordable places to go.  Musical Philistines don’t really care how music sounds, or what they listen to, yet they enjoy competition for their attention and cash while audio lovers’ ears starve or they subsist on a little expensive music in the wake of the flood.  Audio hardware and software are doing fine but with music pricing so inflated, slow sales make most of the audio market generally sluggish.  Resulting market stagnation has become the elephant in the audio industry’s living room as digital rights holders clutch their master file pearls ever tighter.

This shape of things in audio is not what serious music lovers want.  How could any industry ever thrive by profiteering while its most avid customers “can’t get no satisfaction?”  When audio-loving customers become generally satisfied, various audio market segments will prosper together.  Music rights owners need to play nice with others and stop pretending digital music distribution is “just like” selling physical recordings was.  That’s so geezer these days.

Intellectual property lawyers get their fees regardless of sales results.  Present business practices enable creative rights legal trolls who drive up prices to fatten their percentage-based fees.  Shark-mode business is a petty, profit-lusting distraction from an astute big picture.  It's like being in a nasty divorce and paying your soon-to-be-ex's legal fees while lawyers get all the money.

Repeatedly encountering sharky troll-barriers creates more bad will than music sales. Treating customers like prey is the opposite of a friendly, business posture.

Repeatedly encountering sharky troll-barriers creates more bad will than music sales. Treating customers like prey is the opposite of a friendly, business posture.

Overly aggressive creative rights protection doesn’t sell more music, it chills sales.  Everyone in the music sales equation has to win, putting customers first, if we want sustained market upturn.  Music files are meant to be heard, not sequestered. Less music availability means less interest in listening and depressed audio system sales follow.

Streaming holds the future of Hi-Fi audio.  There’s no longer even any technical need for listeners to own much music if they have fast Internet and on-demand streaming access.  Maybe now and then something special should be added to the dusty file collection.  Otherwise, we’re better off not owning media or files except what we have already collected, or music we we want to hear that’s unavailable for rent from the Cloud.

A well-implemented streaming website could give us audio lovers more of what we want than could ever achieved through media ownership.  In the previous post, I spelled out what serious listeners want.  It’s a simple and obvious list and worth repeating here.  In sum, we want the richest, most rewarding and convenient experience of music we love that we can afford to indulge in.  This musical experience includes variety, choice, convenience, immediacy, quality, and low cost –

  • Variety – access to all musical genres in a plump database with great discovery tools
  • Choice – self-curated selection of music on-demand, not just genre streaming or randomly pushed selections, with an option for site-curated radio modes 
  • Convenience – fast, simple music selection and playback through an attractive, intuitive display
  • Immediacy – a here-and-now streaming music experience, not always waiting for downloads
  • Low Cost – Something like $10 per month satisfies the masses yet enables gigantic profits when a cloud based system implements delivery at scale.  Avid listeners will tolerate much higher fees for the right quality and stream controls.
  • Quality in both music and delivery –
    • Selectable file densities up to and including master file quality encrypted saving 
    • Choice of genre-based streaming when selected
    • Ability to dial down or eliminate pushed tracks
    • Continuous streaming without annoying gaps, noise, dropouts, etc.
    • Music accessible through a well-designed, intuitive interface

Consider what music distribution numbers look like when customers get what they really want.  At $10 per month, each 100,000 paid subscribers generate over seven figures of income per year.  Successful streaming websites already enjoy several hundreds of thousands of paid subscribers.  That scales to tens of millions in yearly gross for not much more than a chunky Cloud database with robust front-end apps and tons of appealing content.  The earning potential of streaming audio is truly enormous even with adequate rights protection built-in.

An imperfect example – the website Qobuz.com (in France) is one of the oldest and most evolved streaming audio sites.  They navigate the world of 16-bit streaming and local file-saving well enough to prove it’s feasible.  However, their catalog holdings are skewed by French nationalism, and license restrictions limit access far too stringently.  Yet Qobuz.com has demonstrated avid audio lovers are willing to pay up to $40 per month for even partial on-demand access to 16-bit music plus ability to save coded files locally.  They sell file downloads right along with streaming in case a user feels compelled to own their selection.

It’s past time to do on-demand streaming audio in real Hi-Fi resolutions at a large scale.  MOG.com works pretty well except it lacks file saving in 16-bit resolutions and beyond.  Sadly, now it’s scheduled for the scrap yard as Beats Music guts it to salvage the music rights for yet another backward-facing radio-style streaming service.  Spotify has the killer matching algorithm going on but serious listeners don’t have enough control of their streams or HD formats.  Seems some kind of hybrid will become the winning action.  Read this as – opportunity knocks.

The Grateful Dead was a brand-driven business that engendered astounding loyalty among fans.

The Grateful Dead was a brand-driven business that engendered astounding loyalty among fans.

Looking to another example, we learn so much from the most successful music act in history.  It’s an old rock band that profited from understanding that owning creative rights does not compel you to exercise them punitively.  I don’t especially care for The Grateful Dead’s music but I admire their epic business style.

The Grateful Dead was a brand-driven business that engendered unparalleled loyalty among fans.  They never resisted unlicensed, non-commercial distribution of their music. Their attorney, Hal Kant, made them the first band of their era to retain music masters and publishing rights but they aided and abetted anyone who wanted to record and distribute (without profit) what they played.

Many fans (their “tapers”) openly recorded at their concerts. Some were privileged to connect directly to the soundboard to capture excellent quality recordings. The Dead got it that so-called “piracy” only helped them grow.  In fact, their logos are pirate-friendly with all those skulls and bones.

The Dead understood what listeners really want.  They prospered when they delivered it, selling more than 35 million albums worldwide.  They knew pirate tapes only advertise the real experience.  Pirate versions just whet fans’ appetites for the real thing.

When you implement well, you out-pirate the music Pirates.  Music piracy will die when listeners get what they really want and it’s far easier and cheaper to rent desired music than to buy it stolen.  When you distribute music astutely, at scale, you will bury the Music Pirates, who will never have means to compete in your game.  You’ll stop fearing loss of intellectual property.  Your business becomes more about serving customers and less about servicing legal fees.  If anyone big enough to compete illegally with you does try, you just confront them with your digital rights and take them down.  This is the right way to use rights.

Call it the Grateful Dead Effect – secure your rights and keep them ready but forget about them unless forced assert them.  Focus on taking good care of your listeners.  Don’t use creative rights to punish folks for loving you or for the sins of the wicked.

“In their book Marketing Lessons from the Grateful Dead: What Every Business Can Learn From the Most Iconic Band in History, David Meerman Scott and Brian Halligan identify the taper section [at concerts] as a crucial idea in increasing the Grateful Dead's fan base.”

-- http://en.wikipedia.org/wiki/Grateful_Dead

Here’s a formula for new life in the audio industry.  Streaming music delivery almost works now. Partially successful streaming music delivery systems have been operating.  Qobuz, MOG, and Spotify are fairly decent but imperfect on-demand implementations.  Take the best of existing designs, leave their limitations behind, melt them together, and enhance as necessary to deeply satisfy diverse listener categories with all they want.  You’ll create a raving audio success everywhere broadband Internet access reaches.

Even with slow Internet access, the well-tempered system would be usable and desirable through local file saving.  An affordable monthly fee can give listeners access to all the music on a website’s Cloud database including stream-able lesser 320 KB lossy formats (for slower connections) plus ability to real-time stream or background-save encrypted CD-quality selections to play offline.  24-bit file saving could be a premium service level.

It’s time to set music and avid listeners free.  Let even master quality music come down to subscribers’ local hard drives with encryption and be decrypted for playback.  This is a winning solution that satisfies customers and is difficult enough to abuse that it’s copy-proof.  Yet it doesn’t overachieve and put listeners off with special hardware requirements like Neil Young’s Pono proposition does.  Commodity hardware will satisfy.

What audio lover would not be delighted to have millions of titles available in HD formats so easily and conveniently as in streaming mode?  On their own, audio enthusiasts could never achieve such deep and broad access to Hi-Fi music genres.  Bliss and prosperity will reign in the audio market when music sales strategy finally catches up to hardware and web technologies with the right kind of streaming audio.

Dawn of a new streaming music era.  Bliss and prosperity will appear again in the audio market when music sales strategy finally catches up to hardware and web technologies.

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