Gerd Leonhard Interview @ Los Angeles Music Blog (some good snippets)

Rollo & Grady Interview // Gerd Leonhard - Los Angeles Music Blog - Good read. Here are some of the best snippets:

R&G: Can the labels regain the trust of “people formerly known as consumers?” Gerd: They may not be able to, and this is the Number One problem. I think it’s a very tough road. The only chance they have – and that goes for everyone, not just the majors, but also the indies – is to drastically open up, put their cards on the table and start doing business like everybody else. This means being transparent, sharing, putting deals on the table and making them public. They need to create real value rather than pretend to do so.

R&G: You’ve talked about how the record industry should adopt Twitter. Can you elaborate? Gerd: Twitter is a mechanism of micro communication, like RSS feeds. Therefore, it becomes something that is completely owned by the people who are doing it, rather than by the people who are making or receiving it. It’s a completely viable mechanism that is cost-neutral, at least to us. It becomes a very powerful mechanism for peer response and viral connections. That is the principle of what music is all about. It’s word of mouth, connecting, forwarding and sharing. A musical version of Twitter would be a goldmine. It already exists to some degree in blip.fm, but the music industry should use that mechanism to broadcast directly to fans. They’re starting to do that, but the problem is that many music companies perceive their primary mission as gatekeeper for the artists rather than getting the music out. That is a big problem today, when you’re in an economy where everybody wants a snack before buying a sandwich.

R&G: What other technologies do you think are necessary for the do-it-yourself artists and managers of the new music world?  Gerd: Widgets and syndication have made YouTube the world’s leader in video. 60% of videos are not played on YouTube.com but on blogs and other people’s sites. Music has completely overlooked that very powerful tool. That is this whole idea of syndication – getting people to transmit music to each other and then reaping the attention on the other end.

R&G: Are you saying they need to recognize any revenue stream they can generate from their content? Sell CDs, subscriptions, etc.? Gerd: The flat rate is the next CD. Its simple mathematics. If you charge or indirectly earn one dollar from each user of a network, that dollar can be ad-supported. It can be supported by bundling, so the user won’t feel it, so to speak. If you look at the total number of people who are active on digital networks, which is somewhere in the neighborhood of 3 ½ billion people, they’re not all going to pay a dollar because they’re in different countries. But the money that comes in from such a flat rate is humongous.

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Comments

[Jon Smirl]

While reading this article a new quasi-flat rate model occurred to me that I don't believe I've seen proposed before. It's also a trade off of lower prices and increased market coverage.

Take the 'comes with music' concept and lower the price to $1 for the OEM. $1 is in the range of a patent royalty and OEMs can live with it. Lean on every device manufacturer to pay the $1 - cell phones, PCs, CD players, mp3 players, radios, etc. Brand it and provide end user stickers like 'intel inside' -- maybe 'legal music'. Turn the legal dogs lose on the OEMs that won't participate under accusations of contributory infringement. Make their legal costs exceed the price of the stickers.

In parallel provide high quality, well organized databases of music to web sites. License these on a sliding scale depending revenues. Don't be greedy, the idea is to license all web sites providing music - not maximize revenue from one or two sites. The sites are also providing you with free exposure.

Drop all per-stream royalties, end-user fees for copies, etc. Allow the users to freely download from the licensed web sites or stream as they choose. Use the legal dogs to chase the web sites that won't license.

Pass the money out to bands based on statistical sampling. Hire an independent firm to do the sampling.

This model should create a modest, steady base stream of payments to the RIAA. Larger profits can come by including real-time data on the locations of live performances, marketing events, etc in the database feed. The licensed websites would incorporate this data and effectively drive people to your ticketed events. Merge the RIAA with LiveNation and the loop is closed.

The RIAA would become the primary advertising conduit for music --- like a musical Google. I suspect the RIAA will discover that driving crowds to ticketed events is way more profitable than selling digital copies. Think of the value of having a RIAA controlled 'buy' button for live performances on every band's page.

[Gerd Leonhard]

Great comment, Jon - thanks!!