Leadership Music Digital Summit – an attendee’s impressions

A fews weeks ago, we posted some information about the 3rd annual Leadership Music Digital Summit, held in Nashville on April 24. Our friend Archie Warnock, who attended the summit, agreed to share his impressions of the event with our readers. He makes no claim of objectivity: “I don’t pretend that the notes are unbiased or even fair – just that they’re my reactions and impressions with interesting factoids along the way.”

Archie’s background and expertise are in data management (network-based client/server information services), and is the owner of A/WWW Enterprises. He has been a strong proponent of music labels and promotional services providers moving to new ways of approaching music distribution in the digital age, and is an active participant in the IBMA. His LMDS report follows…

Archie WarnockThis year’s Leadership Music Digital Summit was both interesting and not – some new stuff, some of the same old stuff – but it’s a worthwhile day pretty much every year. I’m glad the Leadership Music organization sponsors something like this for the general public.

The crowd was noticeably larger than it was when I last attended two years ago. That’s encouraging, as is the number of attendees from the upper levels of management of various big-name Nashville music businesses (like, a row of execs from Sony Nashville sitting in the row in front of me, making big frownie faces during Terry McBride’s keynote).

What I’ve put together are some unabashedly subjective thoughts and short notes that I jotted down during the various presentations. Details about the presentations themselves are still available at the Digital Summit web site.

Opening remarks by Mayor Purcell – Interesting point about “Music Row” vs. “Music City”

  • Those complaining about IBMA moving the convention to Nashville as selling out the music are confusing the two… We hold the convention in Music City, not on Music Row.

Keynote Address: Terry McBride, Founder & CEO of Nettwerk Music Group

  • CD sales down in the 1st quarter of ’07 from a year ago by 9%-30+%, depending on genre. Sales of country CDs are down 32%!
  • If the industry is to grow, the music owners must be willing to give up control of the product. The public controls how they use music now – not artists, labels, publishers, etc.
  • Litigation can’t change behavior
  • Bands are building huge street teams (the band Brand New has 100,000 members of its street team) which provide a built-in base for concert attendance and automatic word-of-mouth publicity.
  • The band Format has 10,000 fans on their street team. They sold 18,000 copies of their new recording off their web site at $7.99 – also sold on iTunes, eMusic and any other online retailer they could find to carry the tracks. It’s not about controlling where consumers are allowed to buy the product, it’s about consumer choice.Litigation is about fear, not changing behavior
  • The effort to push P2P underground (or pushing former P2P users to other distribution mechanisms for sharing music like IM) means we lose the ability to collect data about the consumers. And the data about our customers is as valuable to us as the music they buy.

Bare Naked Ladies

  • Collapsed copyright to band ownership, so they own all publishing, performance and other rights, meaning consumers can secure all rights in one place. They own all of their content.
  • They sold 700,000 albums on their own label, pocketed $5M. They would have had to sell $3M copies to realize that income on a major label
  • Made multiple masters (like 200 different mixes of 20+ songs) giving them a large number of distinct SKUs to sell, used no DRM on anything
  • Path of Least Resistance + Peer-to-peer Recognition = Golden Egg (of advertising)
  • You can compete with free: “Free isn’t free. It costs time, and time is money.”
  • Look for the tipping point price of $0.25-$0.49 per track as the price where it can be easier to buy than steal.
  • Look for one-click purchase from a P2P friend who recommends a track. Buy it from your friend when you hear it, not later from iTunes.

Deal or No Deal Panel

Moderator: Ted Cohen – Managing Partner, TAG Strategic

Panelists: John Beiter, Of Counsel, Loeb & Loeb, LLP
Vincent Candilora, Vice President and Director of Licensing, ASCAP
Rick Carnes, Songwriter, President, Songwriters Guild of America
David Israelite, President/CEO, NMPA
Steven M. Marks, Executive Vice President and General Counsel RIAA
Michael Petricone, VP of Technology Policy, Consumer Electronics Association (CEA)
Jon Potter, Executive Director, DiMA
John Simson, Executive Director, Sound Exchange

  • All (except Petricone) still showing a very pre-Napster mindset, nothing new, no evidence of lessons learned.
  • I noticed that nothing in the discussion over the various rights and licensing schemes addresses the needs and wants of those who supply the money they’re fighting over – the consumers. Not addressing how to monetize what the consumers want to do. It’s all about who gets the biggest piece of the pie. Consumers don’t care about different licenses and copyrights and stuff
  • nor should they have to be concerned with it.
  • Look at Intent MediaWorks (you can download this track if you watch this commercial…)
  • No money obtained by RIAA in infringement lawsuits has gone back to the rights holders or performers. Sounds a lot like how some labels have done cost recovery from artists in the past (ask the Kingsmen how well that worked for them with “Louie, Louie”).

Making the Digital Galaxy Safe: In Search Of Solutions
Moderator: David Ross, Publisher/President, Music Row Publishing

Panelists: Scott Hughes, Co-Founder & Sr. VP of Strategic Marketing, PassAlong Networks
Heather McBee, Senior Director, Digital Business/New Media, Sony/BMG Nashville
Bobby Rosenbloum Esq., Shareholder, Greenberg Traurig LLP
Joe Fleischer, VP Sales and Marketing, Big Champagne

[Rosenbloum] Current licensing is broken. Publishers are lagging behind the labels in making legitimate uses available/legal.
[Fleischer] Labels are trying to build scarcity because that is what provides the balance in supply-and-demand. Infinite supply implies a market breakdown. Hint: we have an infinite supply of music available to consumers.
[Ross] It’s not scarcity which drives demand, it’s convenience.
[Ross] Mary Beth Peterson (LC) has testified before Congress proposing a blanket “Music Composition” license for all digital forms. It would save anticipating what comes next.
[Fleischer] In Capitalism, there is no such thing as “competing with free.”
There are 20 “illegal” downloads for every paid download
[Fleischer] DRM tried to create scarcity, but created inconvenience instead
[Ross] Do we really believe in free enterprise?

Look for intermediate products instead of all-or-nothing, like MP3s which can be shared a limited number of times, or played a fixed number of times. The benefit is that this will still provide crucial information about the consumers (unlike, for example, cash purchases of CDs).

Keynote 2 – Property Rights in a Digital Age: Passe?: Mitch Bainwol, Chairman & CEO, RIAA

  • blah, blah, blah – we’re such great guys
  • once again, no mention of selling what consumers want

Through The Windshield, Not The Rearview Mirror: How the Shifting Digital Landscape Affects What Happens In the Studio
Moderator: J. Fred Knobloch, Member, J. Fred Knobloch Music

Panelists: Jason Lehning, Producer
George Massenburg, President/Owner, GML, LLC
Gary Paczosa, Vice President of A&R, Sugar Hill Records

  • Budgets for recording are shrinking. Lower budgets inspire creativity and spontaneity.
  • Is recording different for listeners who use earbuds? Should it be? Do consumers care about the differences?

Gadgets: All My Vices Are Devices Ted Cohen and Dave Ulmer

  • Bluetooth telephone handset shaped like an old-style telephone handset
  • Bluetooth telephone handset in a glove (you, too, can be Bob Newhart)
  • Joost: remote control of your TIVO via the Internet
  • VW Van toy that plays an LP by driving around in circles on the platter

Extreme Makeover: Mobile Edition
Moderator: Dave Ulmer – Sr. Director of Entertainment Products, Motorola

Panelists: Julie Lee, VP of Sales/Licensing for Universal Music Mobile
Adam Mirabella, SVP & GM, U.S. Digital Sales, Sony BMG Entertainment
Mark Nagel, Director of Entertainment Services, Cingular
Richard Winn, Manager of Artist Development, Zune, Microsoft Corp.

  • $600M in ringtone sales in the US last year, $2B worldwide (compare with 1B total iTunes downloads @ $0.99)
  • Streaming video is the major growth area for mobile phone providers
  • 1/3 of new devices are expected to be 3G-capable
  • Mobile-to-mobile file/music sharing as a workaround to DRM downloading limits

Social Networking…The Real Deal
Moderator: Jay Frank, Head of Programming & Label Relations, Yahoo! Music

Panelists: Pinky Gonzales, Managing Partner Echomusic
Brian Peterson, Associate Director of Interactive Marketing for Provident
Music Group / Sony BMG
Cassie Petrey, New Media, Warner Bros. Nashville
also joined by two Belmont students

  • Think of MySpace as an online MS Outlook, ie, a tool for managing communications
  • Appearance & impressions still count; kids will actually look at a profile to see if a potential new contact or band seem interesting
  • Not effective for bands/musicians to ask to be online friends – just be there and they can come to you
  • Students seem to use them more for local music than for national touring acts
  • Use MySpace for music more than FaceBook
  • What’s next, when MySpace gets too homogenized?

Editor’s note: We encourage anyone else who was in attendance to share their feedback via our Comments. Likewise, anyone who might wish to take exception to Archie’s impression is invited to comment.