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  • BILL WERDE: My name is Bill Werde.

  • I'm the Editorial Director for Billboard, Billboard Magazine,

  • billboard.com, billboard.biz.

  • And if I'm supposed to know anything, I'm supposed to know

  • a little bit about what goes on in the music business and

  • what goes on with music.

  • And so I thought today that since there was a cross

  • section of different cultural commerce leaders here in the

  • audience, that I'd put forth the theory that music--

  • the music industry-- is a little bit of the canary in

  • the coal mine, by virtue of file size, by virtue of the

  • ubiquitousness of music.

  • When the digital revolution happened, the music industry

  • was the first one to shit the bed.

  • [LAUGHTER]

  • In order to properly contextualize the conversation

  • that we're about to have, I promised I would try not to

  • swear too much.

  • That's one.

  • You guys can keep score.

  • In order to properly understand the conversations

  • that we're going to have here today over the next hour, I

  • want to take just three or four minutes and kind of take

  • you through the music business, where it's been,

  • where it is now, and where it's likely going.

  • This is a gratuitous slide in which I subtly remind you to

  • follow me on Twitter.

  • So starting shortly after World War II, people listened

  • to music on vinyl albums.

  • It was shortly after World War II, because after World War

  • II, Americans had the resources.

  • They had money, and they had the materials again.

  • And vinyl records started becoming very popular because

  • of this new craze called rock-and-roll music.

  • We fast forward.

  • We get to cassette albums, and suddenly

  • music is more portable.

  • It still sounds like crap, but it's more portable.

  • And you can see with each curve you get

  • a little bit higher.

  • Now this is the CD.

  • And you can see we're progressing through time.

  • And this period right here, this big giant spiral, that's

  • what the music business-- the recorded music

  • business, mind you--

  • likes to refer to as "awesome awesomeness." This is where

  • people are going out and repurchasing all the music

  • they already own at $17 a pop.

  • This is, at the peak of this moment, right-- that very,

  • very tip-top peak--

  • that's the teen pop explosion.

  • That's at the Backstreet Boys, Britney Spears, 'N Sync--

  • very good, an 'N Sync fan in the audience.

  • [LAUGHTER]

  • BILL WERDE: You can't be any happier at this moment in time

  • if you work in the recorded-music business,

  • because you've got these dying, passionate fans for

  • these boy bands, and Britney, and Christina.

  • And all they can do is go to a record store-- you remember

  • record stores--

  • and spend $18 to buy the album.

  • And then you know what happens right at that peak moment?

  • Napster happens.

  • And so here we are.

  • This is the sale of CDs, and you can kind of see the effect

  • that the digital revolution had on the sale of CDs.

  • It wasn't pretty.

  • I think, staying true to my role as the canary in the coal

  • mine, I'll tell you that there's a couple of things

  • that we all learned from the recorded-music business during

  • this period of time.

  • And the most important one, since we only have a little

  • bit of time here today, is that you

  • cannot fight the current.

  • One thing you may notice about all three of these cycles is

  • that once you hit your peak moment and you start going

  • down, you never start going back up again.

  • So you can either adapt and figure out awesome things you

  • can do with that current, or you can shit

  • the bed, number two.

  • That was ironic.

  • [LAUGHTER]

  • I got here late, and they told me that people laughed at Eric

  • Schmidt's jokes.

  • And that made me feel really good.

  • Because Eric Schmidt is a brilliant man, but he is not

  • Steve Martin.

  • So here we have digital album sales.

  • And we can see there's still a pretty big gulf.

  • And we can see that digital album sales didn't quite take

  • off the way some of these other formats took off.

  • The curve isn't as quick.

  • People are a little slow on the uptake.

  • But this is why I think the music business is actually

  • positioned to be a canary in the coal mine and not just a

  • bunch of people buried at the bottom.

  • Because when we add in track-equivalency sales--

  • so we take 10 tracks, and we consider that the

  • volume of an album.

  • Now suddenly, in 2010 and today, in fact, we've hit the

  • break-even point.

  • Now granted, it's a break-even point that's much lower than

  • where we were, where the music business was 10-12 years ago.

  • But it's a floor.

  • It's something you can build on.

  • Now that break-even point doesn't take into

  • consideration all the new ways people are making money since

  • the digital revolution began.

  • So you've got live music.

  • In the same 10-12 years that the recorded-music industry

  • has been in a free fall, live music has actually grown, and

  • grown pretty steadily with a couple of dips here or there.

  • People are making more money from touring.

  • People are making more money from merch.

  • And I think probably the biggest shift that has gone on

  • is that, once upon a time, people put out an album and

  • toured to support it.

  • And now, people put out music to support their tour.

  • Spotify--

  • services like Spotify, MOG, Vivo, YouTube.

  • What's interesting is that just a few years ago, iTunes

  • was basically responsible for 70%, 80%, 90% of a record

  • label's digital revenue.

  • And today, if you talk to someone at a record label,

  • what you'll find out is that digital revenue has become

  • roughly 40% to 50% of a typical label's revenue in

  • recorded music.

  • And of that 40% to 50%, as much as 40% or 50% is now not

  • coming from iTunes.

  • And that diversification is really important news-- really

  • good news--

  • for the health of the recorded-music business, and

  • for the health of everyone.

  • Competition is a good thing.

  • But if you want to talk about the power of YouTube and the

  • power of these platforms, I want to use a little example.

  • How many people, by a quick show of hands, know the song

  • "Gangnam Style?" So most of you.

  • I'm shocked, by the way, that so many of you haven't heard

  • the song, "Gangnam Style." But I will not publicly ridicule

  • you at this moment.

  • How many people here know the song "Whistle," by Flo Rida?

  • So decidedly fewer.

  • So what's interesting about this to me are these numbers.

  • "Whistle," by Flo Rida, was the number one song on FM

  • radio in all formats last week.

  • It was played almost 20,000 times.

  • That's 3,000 times a day in the United States.

  • That's amazing.

  • That's like a great, great song.

  • Psy's "Gangnam Style," in the last two months has been

  • played 220 million times, or 3.4 million times a day.

  • That is the opportunity that is created by the

  • democratizing platform such as YouTube.

  • You make a better product.

  • You make a better video.

  • You make something amazing.

  • People share it.

  • People see it.

  • Brand deals have gone up.

  • Pepsi, Coke, Chevrolet, Heineken--

  • all these labels that are spending all

  • this money on music.

  • Film and TV syncs have gone up--

  • Mad Men, Breaking Bad, X Factor, all these

  • shows that use music.

  • This is what's happened since recorded

  • music took its nosedive.

  • Kickstarter--

  • you're going to hear from Julia Nunes in just a moment,

  • but she put some great videos, some great songs, on YouTube.

  • Wound up with millions of people

  • checking out those videos.

  • Put up a Kickstarter campaign.

  • Wanted to raise $15,000.

  • Raised $75,000.

  • Pandora.

  • And at the center of all these is the artist with a different

  • kind of leverage point than the artist had before recorded

  • music hit the skids.

  • Because in the recorded music, in the old model, if you were

  • a really, really superstar artist, you might generate 20%

  • of the revenue that was created from

  • selling your albums.

  • And today, in a lot of these opportunities, the artist is

  • much more the partner.

BILL WERDE: My name is Bill Werde.

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Bill Werde on Trends in Music

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    Why Why posted on 2013/03/25
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