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Music industry torn on evolving business models

Music fans face a tough choice, Quincy Jones III said at the recent Digital Media Summit in Hollywood, Calif., either continue putting money into the “evil, corporate middle man” that are the record labels or get your music fix by some other means.
Jones, who’s spent his entire life in the music business and most recently founded QD3 Entertainment, says if consumers had the perception that more of their money was going to the artist, they would support it, but until then the decline in music sales will only get steeper.
New business models are still emerging in the face of music sharing, but how can companies compete with a growing number of consumers refusing to pay for the music they enjoy? Jones said new opportunities ultimately lie in fostering people’s relationships with the artist-enable that “intimacy” that artists and consumers want to share with each other. Give artists more control over their creativity, marketing and distribution, he said.
“What we’re trying to do is strike a balance,” said Christopher Amenita, senior vice president of ASCAP Enterprises Group. “For any up and coming artist . there’s a balance that comes with it.”
ASCAP and others are trying to balance the need for creators to get exposure for their content while making sure their popularity is reflected in their bank accounts. While many artists make much of their income on touring and merchandise, there are just as many artists who don’t perform live who rely entirely on royalties for their livelihood, he said.
“Most of the business models up on the net . are not making a lot of money,” Amenita said. “The business models are finally becoming ready.”
Despite the corporate culture that record labels live in, their online counterparts are an even worse source of revenue for ASCAP’s members, Amenita said. “The labels are more reasonable because they put some money in artist’s hands,” he added, implying that artists are routinely offered no share in the profits online music companies gain from their creative expression. The online companies who are re-packaging and re-distributing the content should be held responsible, he said.
“You need some rules in place in order for commerce to flow,” Amenita said. “What you’re seeing really is a transition of this entire business-how it’s created, how it’s distributed.”

New school, old school differences
Nobody disagrees with that, but there’s a growing divide over how it should be addressed. At times, some in the audience rose up to offer their reactionary commentary for the room, while others grew noticeably angry amid the banter of new school and old school methods.
“These new media platforms are like the wild west,” Lakeshore Entertainment executive Brian McNelis said. “I think the struggle is how do you compete with free?” He concurred that the greatest benefit his company has seen from all of this is widespread cross-promotion that’s helped drive consumers interest in the full product, but that it doesn’t provide much beyond that. The quality of music certainly hasn’t improved since the decline in music sales began, he noted.
“I don’t think we’re looking for the next Led Zeppelin as a result of MySpace,” McNelis said. “More canvases and more paints don’t make more Picasos.”

One in 10
He doesn’t agree with the notion that record labels operate as robber barons.
“Record labels have been demonized for a long time,” he said. “The business is a one in ten model, so you’ve got one winner for every nine losers.”
Still, Streamcast Networks CEO Michael Weiss said it’s the music industry titans who should be coming up with solutions, not lawsuits.
“Rather than trying to change consumers’ behavior, because that really is an uphill battle, you need to monetize consumer’s behavior,” he said. “It has given a lot of exposure to a lot of artists.” Peer-to-peer could be a huge boon for the industry if it learned how to embrace, he said.
“The Internet was built to resist control and that’s the problem,” Weiss said. “Unfortunately change never comes from within.”
Yet the elephants in the room were the mobile devices sitting in each of the attendees’ pockets or purses. Shawn Ambwani, executive at Intertrust, pointed out while Apple Inc. has sold 100 million iPods, cellphone sales reached 1 billion units last year alone.
“There’s no comparison,” he said.

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