Digitalization

Originally written 10/17/7

Digitalization seems to be the big buzzword in the industry these last few weeks. More and more we hear that this is the way the biz is heading. And that is in all likelihood will be true. But it seems to me, we’re jumping the gun on iTunes. Give iTunes credit; it is a pretty good interface. But it’s not perfect; it’s not the clearinghouse it should be. It’s not perfect yet. And with the big stories from Radiohead and NIN, I thought I would give my 2 cents. Because that’s about all I have left over from my Unemployment these days.

Radiohead is the first name band to go the digital route. The first big band on a major label to forgo the major and strike out on their own. Radiohead is a unique case. My opinion is Radiohead is far overblown. They get too much credit, too much respect, and personally I don’t get them. I liken them to Peter Gabriel when I was growing up. When I going through grade school and high school, all the music nerds loved Pete. There were no casual Gabriel fans, they all loved him. He was a God to these people. It was Peter Gabriel above breathing. He was the badge that the snooty fans wore to say how much better their musical tastes were than your pathetic tastes. I really think that is most of Radiohead’s appeal. They’ve sold fair numbers, but certainly nothing that would make the bean counters say “hey, these guys are a big deal.” EMI (their label, I’ll get to them a bit later on) always merched the hell out of them. I remember for one release they made these cardboard lockers for displays. Always extravagant display pieces, and EMI paid to get every album positioned in all the right places at the right accounts. So much so, I often wonder just how much money EMI & Radiohead actually made. I am sure EMI made a good amount. All those promotional pieces ultimately get billed back to the band. All those cardboard lockers? Every poster & flat the EMI field staff used? Positioning in Tower, etc? All that stuff gets billed right back to the band. It’s not unheard of that a label will make a ton of (unneeded) promotional pieces, just to bill the band to try to get some money back. Did making cardboard lockers sell any additional copies? More than likely not, but I am sure the band appreciated seeing these pieces being made.

I don’t think Radiohead was the right “first big band” to go the digital route. I think they have a limited appeal, and their best sales numbers are in the past (not that there’s anything wrong with that, most bands would kill to get the following Radiohead has, and you can be profitable). The early Net buzz was overwhelmingly favorable to Radiohead going digital on their own. Even non-Radiohead fans were hailing this as the way to go. Radiohead would release their new CD only via digital, and better yet, the fan could decide how much to pay for the album. This was hailed as revolutionary. Now Rhead was giving their fans what they want, and the fans can decide what it’s worth. You know many eyes in the Ivory Castle were watching this move. In fact, EMI even released their famous “digital or die’ email. (I’ll get to that as well)

As with all “groundbreaking” events, flaws were revealed. For instance, apparently the bit rate was far slower than the usual download rate. (Hey, I’m making the best of all this technobabble here.) So the quality was not great. Also, a few days after the release, a quote was attributed to their manager that basically said this was all PR for the physical CD release (surprise!) next year. Source it at http://www.mtv.com/news/articles/1571737/20071011/radiohead.jhtml And to top it all off, I am pretty sure I saw a report that said something like only a third of fans paid anything for it. (I’m trying to find that story now, but I know it’s bad journalism to rely on “stuff I thought I saw”. Sue me.) I’ve said it before, you may be the biggest fan of Band X in the world, but you are always a bigger fan of free. But that’s the risk Rhead assumed. So what would the logic be of a fan of a group to pretty much take their music right from them? It’s almost like you stole the CD right from their trunk. Maybe it’s because it can be free. I’ve had someone tell me that they didn’t pay for it because they will buy the disc when it comes out. I really believe he will, but, c’mon, who else really plans to follow through? I am sure now that word is out of a better sounding physical CD is coming out next year, just about everyone will take it for free.

Let’s look at the precedent this might set. Let’s go with the theory that this was a just a PR ploy for the CD next year. Radiohead has now put a bad taste in the mouths of their truest fans. Some reviews say they probably put a bad taste in their ears with the actual music, but that’s another story. Alienating you die-hard-est fan base is never, never, never a good thing, especially when it’s the band doing the alienating, and not your typical major label.

Secondly, does this sound like the DVD business to anyone? In most name DVD releases, there will be a release right after the theatrical release. Then a few months later, a directors cut will be released. Then a few months later is an uncut/unrated with new commentary, etc. You see what I’m getting at. Basically releasing the same thing over and over, with a few new bells and whistles, but soak the fan to buy it over again. Wise movie fans will just rent. Smart ones are aware that there will be a second, more complete edition a few months after the initial release. I am sure those of you in the stores can tell me that there is a cycle of buying a DVD, then reselling it back so the fan can buy the newer edition. Could that be what Rhead is doing here? Offering the fan one edition, but then releasing a new (physical) a few months later? And the physical edition will have a new song, etc? I’m not saying that’s what Rhead is doing, but they could do it if they want. And what a F you to the label; the best hype for a CD being releasing the download first, then following up with the actual CD. Brilliant.

Radiohead was on EMI. Longtime readers know I don’t think much of EMI. I think their field staff sucks. Tell me, when’s the last time you’ve seen them in your stores? Especially now that there’s less reps out there to compete for your boards. On the whole, I think their label sucks. It was good having them around when I was working, because I could always make fun of them for having the one release schedule that was worse than WEA’s. In America, what names have they broke? Corrine Bailey Rae? But they spent a ton of money pushing her, I bet they didn’t come close to recouping. KT Tunstall? Maybe. Norah Jones is the only artist I’m recalling that they legitimately broke.

So it’s kind of ironic they release a “go digital or die” email. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/07/cnemi107.xml

I’ll give EMI a bit of a pass here. They’ve been bought, and the new owner is looking at bringing in non-biz guys to run it. It will be interesting to see how that works out; it might just give them the clues they so desperately need. And EMI was the first major to go DRM free on iTunes. Of course, you had to pay like 30 cents extra, not so bad. I don’t know to call it irony that EMI, by and large here in the states, is catalog driven. And a brief search through iTunes shows glaring omissions of Radiohead, Bob Seger and Beatles. But to be fair I believe Rhead and the Beatles are on Amazon’s new store.

I think Nine Inch Nails has a much better shot to be the first big band to do digital right. First off, it’s a one man show-Trent Reznor. (OK, you can make the argument that Thom Yorke runs the show in ’head and you’re probably not too far off. The point being, NIN is clearly a one man gig and he can affect change quicker than a band.) I believe NIN is much more on the radio scene than Radiohead is. NIN ran a great advance campaign for the new CD that was original. I think NIN is much more in the mainstream. If you walk around a mall, you will see far more NIN shirts than Radiohead. I think Trent’s Net savvy enough to really make some headway in downloading.

My beloved WEA is making much ballyhoo about Led Zep’s catalog hitting iTunes. I think this move will benefit new, young fans just getting into Zep. For starters, all the greyhairs already have their Zeppelin albums. They bought them on vinyl, 8-track, cassette and disc. They’ve already figured out how to load them onto their iPod. It will be the kids who will take a chance and spend 99 cents for a few songs to hear Zep. But it will be a blow to the physical side. Zeppelin was what WEA calls a restricted artist. For years, WEA wanted them to drop the price of their catalog to something like $13-14. The logic being that the lower price will bring new fans in and ultimately sell more copies. But LZ management resisted, instead insisting that the catalog still stays in the $18.98 range. (Lifers will remember the hubbub Plant/Page’s No Quarter lead to with the high retail price.) They only saw the big number. They’re not the only band to hold to the $18.98 mark; in WEA there was Madonna, Eagles, Chili Peppers, Metallica. You hardly ever see these titles on sale. Ironically enough Madge just left WB for a $120 million deal with Live Nation, and the Eagles next double CD is coming out exclusively through Wal-Mart & iTunes. But that’s another story for another post. My typing fingers get sore from too much ranting. Zap going digital will hurt the physical side. Why pay $19 for a CD you will ultimately put into your iPod, when you can get it for $10 and have it right in your library? FYE’s with burning stations have told me stories about how someone will pick up the Hotel California CD for $19, but saunter over to the burning station where it’s just $10. You do the math.

We’re just entering the digital age. We’re not there yet, and the numbers from the charts back that up. Check about any top 10 album, and you will see they average about 85% physical CDs vs. 15 % digital. So labels are wasting staffs in the sectors the overwhelming majority of sales are still coming from. The labels see it as preparing for the future, and they just might be right. It’s a hassle to get a CD to a Borders or Circuit City. There’s the process of making and packaging the physical CD, then the shipping costs of getting it to stores. Then labels pay for positioning in said stores. At the end of the cycle, the label has to accept defective goods, broken goods and just straight returns. And just about every step generates paperwork. With iTunes you give them the digital master, any bell or whistle (extra song, video, digital booklet, etc) and you’re done. It’s all a one time deal, and it’s over. You can see why the labels are pushing digital.

WEA had a digital guru named Adam. He practically built the whole thing for WEA. He was pretty sharp, and you guys know I don’t call a lot of the higher ups ‘sharp’, but he had his shit together, and got WEA on the map and did a good job of educating the field staff. And like a lot of good talent, he left WEA. The unfounded rumor was that he wanted more money and WEA didn’t give it to him. So he ended up splitting for SonyBMG and I am sure he is kicking ass over there.

iTunes does have some cool stuff. Their Just For You stuff on the front page is eerily similar to stuff I like. And it’s hard to beat sound clips of every song. Who wants to leave the house to go to a record store that might not even have the bizarre title I am looking for, when I can just check iTunes? And that’s one of my biggest complaints about iTunes. It should be a clearinghouse of hard to find and out of print albums. That’s what sets indy stores apart from iTunes. iTunes doesn’t have the new Blue Rodeo I am looking for, but I bet my indie might. It’s hard to argue that one day iTunes will be the monster it can be, clearly, it’s not there yet, and won’t be there any time soon.