A Vision for the Music Industry

ByFinbar O’Hanlon

Jan 2014

What is this documentAs a musician, technologist I have spent my life either surrounded by music or working in some capacity in the development of technologies that Empower the music industry.

I have had over 15 years experience in the Digital Music and Media marketplace globally and worked at all ends of the Digital content Eco system from being an Artist, Publisher, Producer to Editor, Technician, and Product Specialist

This document is a smaller less detailed version of a bigger deck that provides a vision of how I see the Music Industry in the Future. A thriving industry for those involved that create and add value to the core product (Music). I don’t pretend to understand every facet of the music business and am not armed with all the metrics to understand the details around all of the complexities that exist in this industry, however my experience has helped me see a solution to fundamentally solving many of the key challenges facing the music business. Challenges I believe when solved provide a strong foundation for a healthy and profitable industry once again.

What’s the problem

The Internet and Digital Communication has enhanced our lives in so many ways.It has made it easier for us to access information and services and has proven to be the cornerstone of value for industries and business that adapt to utilize this advancement for the value of their customers.

We can now book travel in a millisecond from our Lounge chair, connect with people from anywhere in the world, electronically mail people where the mail is delivered in seconds, take tests online, find the love of your life, shop with the ability of purchasing and viewing anything from a song to a commercial aircraft anywhere in the world.

In terms of the Music and Content Industries Content consumption is the highest it has ever been, but the acceleration of the digital communication in our world has produced massive downward impact on the revenues of the artists that create this content and the industry as a whole.

Today’s digitally connected world should be providing the opposite, greater opportunities and revenues for artists and the industry.

What’s the problem

So with the consumption of music being the highest it has ever been, why is the industry in a state where the creators of the product, and the industry that supports this productIn a state of decline?

Is it

Piracy?Shifting Consumer Behaviors?

Technology Platforms that sell content by the song?Content that lacks individuality?

To much competition?All the above?

Or something else?

What’s the Answer?Ask the Questions, that are so simple they are hard to answer.

For these questions often house the secrets that enable a solution to the problem.

Solutions that complexity and expertise cannot solve alone.

What is Music

Music is a universal language that provides many emotions to the Listener.

By listening to music, people often develop expectations about what will happen next in the music they are listening to - even if you have never heard it before. The idea is that emotion is produced when the music violates your expectations. This can cause surprise, frustration, amusement, wonder, excitement, sadness - a wide range of emotions.Memories are recorded and retrieved with music and music is core to our makeup as humans.

Since the birth of music man has attempted to engineer ways in which musical works and performances could be enjoyed by others.

Lets take a brief look at some of the attempts man has made to help others enjoy musical works.

Sheet Music 1457 AD approx.

Sheet music was conceived as a way to reproduce a musical work. It is a handwritten or printed form of music notation that uses musical symbols to represent the work of an Artist / Composer.Sheet music only represents the authored work and not the performance work and requires musical knowledge and skill to reproduce.The first known authored work in printed music was the Mainz Psalter in 1457.Prior to more modern methods Sheet Music was the main format used to share musical works.

Requirements: The reproduction of the Musical Works is only possible, providing the listener either had Musical Knowledge or access to people with Musical Knowledge who could decipher the symbols to reproduce the music.

The Promise: Access to an artists musical written works without having to have the artist present.

Radio Broadcast 1910

In 1907 Lee De Forest company advertisement said,

“It will soon be possible to distribute grand opera music from transmitters placed on the stage of the Metropolitan Opera House by a Radio Telephone station on the roof to almost any dwelling in Greater New York and vicinity... The same applies to large cities. Church music, lectures, etc., can be spread abroad by the Radio Telephone”

3 years later on January 13, 1910, the first public radio broadcast occurred.

Radio broadcast made it possible to share the works of artists with others in a way that sheet music could not. With Radio Broadcast the performance of the Artist could now be shared as well as the authored works. Radio was a true innovation for music, the listener and the artist.

Requirements: To enjoy the musical works and performances a listener had to have a radio set with a tuned receiving antenna. Without this tuned antenna access to the music via radio was not possible

The Promise: Hear and access the Artists performance without having the artist available

LP Record 1948

The Vinyl record was invented around 1902 however the LP (Long Play), or 33⅓ rpm microgroove vinyl record, was a format for phonograph (gramophone) records born around 1948. The LP was an analog sound storage medium that provided the capability for the listener to have access to the musical works or performances of an artist at any time they choose.

Introduced by Columbia Records in 1948, it was soon adopted as a new standard by the entire record industry. Apart from relatively minor refinements and the important later addition of stereophonic sound capability, it has remained the standard format for vinyl albums.

Requirements: The reproduction of the Musical Works or Performances was only possible, providing the user had a player which would decode the grooves into vinyl to produce the artist work and performance.

The Promise: Access to the musical works at any time you desire.

CD Compact Disc 1979

The Compact Disc was a format designed to provide a more portable and higher quality Digital representation of the Artists works and performances in a more durable optical structure.

Requirements: The reproduction of the Musical Works or Performances was only possible, providing the user had a player which would decode the digital data written to the disc. Data that once decoded would reproduce the artist work and performance in a digital manner

The Promise: Access to the musical works at any time you desire in a superior quality.

iTunes Store 2003

The iTunes Store, originally the iTunes Music Store, was originally conceived to provide access to music content in a format that suited Apple’s iPod Device. The iTunes Store and subsequent iterations is a software-based online digital media store operated by Apple Inc. It opened on April 28, 2003, and has become the biggest distributor of musical works and performances in the world.

Requirements: The reproduction of the Musical Works or Performances is only possible, providing the user has an apple device that can decode the content delivered by the store. Non apple specific playback devices cannot play the artist works or performances without Apple iTunes software. Library access available through an Apple iCloud account

The Promise: Access to the musical works at any time you desire in a portable manner and superior quality. In recent years the promise has been to have your entire musical Library protected against loss or damage.

Summary

Since the birth of music, the desire for the ability to hear Musical Works and performances has resulted in man developing technologies and systems to meet this demand. As listeners demand this music anywhere at anytime different mediums and Devices have been developed to meet this demand.

CD’s, LP’s Cassettes and Music Files like MP3’s, M4A files are mediums that are used to hold the Artists works and Intellectual Property. These mediums have no value without having the device, player or keys to decode the information on them to playback these works or performances as sound.

The value is the purely in the ability to access the Artists Works and Performances. Which in the case of a LP is etched on a piece of Vinyl.Listeners Purchase the ability to access these works on these mediums not the medium itself. Without the works the medium is worthless.

Mediums that hold the Artists works and Intellectual Property within the medium.(The intellectual property of the works travels with the medium)

The Medium

In summary the Medium is a technology or material that the Artist works is attached to via a process or a Performance process whereby the Artists works are accessible ( e.g. Radio ). Once the Artist works are attached to medium the combination of artist works and medium is often described as a Physical or Digital Unit.A Physical or Digital unit contains the Artists Intellectual Property, property which is transferred to a user at purchase time.

Medium Property Artist Works ( IP)CD Plastic Optical Disc Included / EmbeddedLP Black Vinyl Plastic Included / Embedded MP3 Data Structure Included / Embedded M4A Data Structure Included / Embedded

Radio (Digital) Data Stream Included / Embedded

The MediumIn the Early days of Radio, the Broadcast was a distribution of an Artists Works or Performance through a transmission of signals. Listeners had access to these Artists Works and performances as long as they had a tuner that could intercept and transform these signals to become sound.

In this model of Radio the Intellectual Property of the Artist was controlled from a single source ( Broadcaster) and the listener did not have access to the IP contained within the Signals.

Once the listener demanded the ability to to access the performances anytime they desired the medium changed from Broadcast to a unit with physical properties that contained the embedded Artist works and performances (i.e. LP, CD MP3,) Once the Artists works were embedded in the medium control of the Artists Works and IP started to be compromised as the copyrighted material was outside a method of control and in the hands of the consumer.

The MediumAs the world moved to a digital world, The Medium changed.One piece of plastic was exchanged for another (LP to CD) As the world continued to evolve new mediums were born Mediums not made of plastic but made of Data. These new mediums like their older counterparts carried the artists works and performances inside them, but being Digital the works and performances were represented by numbers. Numbers that with the right player could be decoded to represent the works and performances in sound digitally.

These new mediums are typically called Digital assets. MPEG Audio files, MP3 files, and any other music file on your computer is one of these files.Most people are unaware these digital music files are a medium that contains the artist works and performances as data inside the digital file.Think of these files as little databases, where the file is the database ( the structure) and the data within the database is the artists works and performances.

This digital medium made it possible for the valuable data to be easily extracted and copied without loss of quality meaning loss of control of a Artists Works, and IP and fueled piracy

The Medium Problem

Including an Artists work/s, performances and IP on a medium has made sense for a long time.

Digital Music Files provide the world with the ability to replicate an Artists works in a manner that suffers little on no degradation from the original recording on the purchased Digital medium with little or no cost or consequence to the user of the content.

In todays digitally connected world Networking technology ( the internet ) provides consumers with the ability to distribute anything easily with little cost. Consumers can access content for free on a multitude of platforms, legally anytime they want.

The Digital method of distribution has had a profound impact of the entire music business as the copyrighted music via the medium was placed directly in the hands of the user of that content and the ability to access music anywhere anytime has meant the value of the ability to access has been greatly reduced.

The Transaction

Ok now we understand the medium lets look at a typical music transaction.The typical transaction on a piece of music content revolves around a license.

The typical license provides the ability to playback the works and performance (access the content) on the medium ( MP3, CD) or device/s the license is attached to (i.e. An iPhone, Platform service).

The typical purchase of a Musical Work or performance does not include the transfer of ownership of the artist works and does not allow for the works to be duplicated, or played back on a device or medium other than the medium it was delivered on.

So if the transaction of music is a License that allows the access of an artists works. The value of the License and therefore content is determined by the ability to provide the access.It makes sense. The value is not the medium (file, CD, LP etc.) its being able to access the artists works within the medium RIGHT?

The Industry

The combination of Artist Works and Mediums are described as either Physical or Digital Units. Units that the Music industry has used to distribute the artists works and to Measure the value attributed to a particular artist and industry as a whole.

The Financial Workflow of Artist Works and the subsequent value of the Music Business as a whole is underpinned by the measurement of number of transactional metrics. Most notably the transactional Volume of Physical Electronic and interactive Units / Streams.

The Music Business recognizes the popularity of Artists based on these transactional metrics. For a long time awards such as Gold and Platinum records have been based on these transactional metrics.

These units either Physical or Electronic all include the artist works / IP.

We’re nearly there

I Promise

The Value (Artist )

Artists who create works rely on the income generated from Royalties Royalties are generated from the usage of these works and cover different revenue streams. As consumers acquire content in multiple revenue streams it is increasingly difficult for artists and performers to be always aware of what they are owed and what use of their music they should be earning royalties from.

New consumption and business models and an evolution in music distribution has meant more so than ever the importance of reporting all of the facts correctly.

If misleading and incorrect numbers are presented as facts or without validation of their accuracy, content creators lose faith in the systems put in place to guarantee an accurate place in the digital earnings loop.

The Value (Artist )

Hang on

Maybe I’m missing something.How can any Body, Organisation, or person provide accurate measurement on the value ( Access ) of Music when the artists works and IP reside within

the medium that resides with the consumer.

If access is where the value lies every play of content should be measured.How can every play ( access ) be measured when there is no method to

REPORT EVERY PLAY

IF A CUSTOMER PURCHASES A LICENSE TO ACCESS AND ROYALTY MEASUREMENT WAS CALCULATED ON THIS ACCESS, THE INDUSTRY AND ESPECIALLY THE ARTISTS IN THE INDUSTRY WOULD BE MUCH HEALTHIER

OKSo let me get this right

When I purchase content I purchase a license to access that content on specific devices or mediums.

AndThe Medium ( Music File) houses an artists works, and IP inside itselfWorks that can easily be extracted, shared or used outside the terms

of the license.And

Unauthorized sharing of content greatly impacts the value of the whole music industry and the product the artists create.

And Measuring the value of an artist, works and industry means measuring access.

And More content is being consumed than ever before but the industry is in decline

WHY NOTRemove the Data that represents the Artist Works from the Medium

( Music File)i.e. extract the data from the databaseIF THAT HAPPENNED

The Medium ( Music File ) would become an Access Token much like a ticket the medium would allow the connection to the Artist Data

AndWould be able to be measured at every Play

Reporting bodies would now be accurate and value would start flowingAnd

Consumers could have a medium that played on virtually any playback device without taking any storage space on the device

And Valuable Artists works and IP could be sent in a format that could only be

decrypted by the Medium sent to the consumer every time play is requested

With one fundamentalChange

Access is UniversalAccess is Controlled

Access is MeasurableAccess is Valuable once again

The Solution

Build it.

Build It How do you build it?Here’s a hint

Replace the word Music with the Word Data Below. Try it on any document you have relating to the music business especially relating to the distribution, monetization and security of Digital Music and see how you look at the problem then especially if you understand data.

“Since music was first created man has looked for ways to provide access access to this music so people around the world could benefit from the work of the artists that created it.But Music files are large in size and wont work on most devices without changing the music files into a format that the device can understand. Music files contain the valuable artist works and IP inside them. These music files allow the music hidden inside the file to be extracted and copied without loss of quality which has greatly diminished the value of being able to access the music within the file. It has also meant that being able to record the access of the music for royalties has been all but impossible on all services except subscription services.When an artist creates music it is copied every time there is a purchase because of this millions of copies can exist making it impossible to control

The Answer

1)Understand the Product and Value2) Recognize the Problem3) Learn from success in other industries selling the same value ( Access) in this digital age

Ticketmaster

Ticketmaster provides a business that commercializes access via tickets.A Ticket is by definition a key or a license.Millions can be distributed without the IP or Works, Show etc. being compromisedA key that allows the access to something else ( win a prize, travel, entry to events.A ticket is typically a one time key that is attached and recorded to a consumerA ticket is Lightweight, easy to handle and can be measured.If lost, access can be provided by validating the purchase record

A credit card is a piece of plastic that is a key that unlocks access to financial capability a credit card does not have the money embedded on the card.

If we look at a CD, a CD is in fact a piece of plastic i.e. key. The CD cannot be played or inspected unless there is a reader that will read the plastic disk, the difference is the CD contains the embedded value the key unlocks.

A digital music file is also a key, the digital music file requires a player that understands the file to play it back but like the CD, the digital music file contains the embedded value the key unlocks.

The AnswerCredit Card Companies

Credit Card Companies provide access to Financial products via a plastic card.A credit card is a piece of plastic that is a key that unlocks access to financial capability a credit card does not have the money embedded on the card.

If we look at a CD, a CD is in fact a piece of plastic i.e. key. The CD cannot be played or inspected unless there is a reader that will read the plastic disk, the difference is the CD contains the embedded value the key unlocks.

A digital music file is also a key, the digital music file requires a player that understands the file to play it back but like the CD, the digital music file contains the embedded value the key unlocks.

The Learning's

Lets look at other models around keys.

A car is a block of metal and technology that performs tasks only when paired with the correct keys and driver.Without the Keys and Driver the Car is a block of metal and technology.A block of metal and technology without the keys that has little value.Yet with the keys its value is assessed on the way it performs its tasks to the person operating it.

If we used this value on a Music file it would go something like this

A digital Music File is a block of data. A block of data like a database that contains bits. The bits represent the artists Recorded works.The Digital Music file performs its task of delivering the bits to a player to make sound. Without the Bits the Digital music file is a data shell

What would happen if ?

The copyrighted music was not included in the medium (music file)?

The medium provided Universal Access to everyone instantly?

The Artists works were delivered from one Authority?

The License was validated every single time a work is played?

Content could be controlled from a single source

Any possible model of monetization was possible from own for life to price per play

Every single play is recorded for transparent performance reports

Customers did not have to have huge libraries filling their device up

Everything became very simple in the management , protection, control and reporting of content.

The Answer

If the results on the previous page look good I have better news such a system is a reality. It’s called Linius. What’s better news a system like this provides the underpinnings of a workflow for content that will not only simplify the entire content ecosystem, provide the greatest level of accessibility, control and protection of Music Intellectual Property it provides the foundations in which to provide the world’s first ecosystem which provides.

“Officially Licensed Content”

To Learn more about the SystemContact me

finbar@linius.com