Here's a modest proposal for paying out royalties to artists for streaming music. This is THE problem confronting music today. Streaming services like Spotify, Pandora, Slacker, and now even Apple Music have become the easiest and best way for consumers to discover and play music, but they don't pay out much money to artists. And they don't pay out the right amounts to artists.
Jimmy Iovine is still worried about the future of music. As he should be. Apple Music does nothing at all to make the future of music any brighter. The key problem is how to get royalties from consumers of streaming services into the hands of artists.
The chart at right illustrates the problem. Well, yeah. So what would Jobs have done?
We don't know, but here's my proposal.
First consider the revenue side. Streaming services earn money from two sources, monthly fees and ads. The ads are mostly pay per impression. So every streaming service can easily compute the revenue they've earned from each subscriber.
Next, costs. The streaming services have operational cost, and they have to make money. Say they have a net margin of 50%.
And finally, the payout of royalties. Each streaming service already keeps track of how much time each user is listening to music (not ads, and not paused), and how much time they spend listening to music from each different artist. So here's the formula:
The Payout for each artist is the Sum of the Revenue from each subscriber times the Total time that the subscriber listened to this artist, divided by the Total time the subscriber spent listening to music. The M is the percent margin.
As an example, say I pay Slacker $10/month and 5% of the time I listen to Depeche Mode. Also suppose Slacker's margin is 50%. Then D.M. get $10 * 5% * 50% = 2½¢/month from me.
Some good things about this:
It's easy to compute and understand.
It's transparent. Everyone gets to know which artists are popular.
There is no incentive for music services to reduce listening. This is the worst part of the pay-per-track model.
There is no incentive for music services to focus subscribers on any artist. They can showcase new artists, no problem, and feature established artists too, no problem. And the payouts simply follow what people listen to.
The concept of "album" is not considered. It's outdated and irrelevant.
So it's easy, and it's fair. What do you say, Apple?
Yesterday afternoon we attended a nice send-off reception for incoming LMU students and their parents at California Yacht Club. The kids were embarrassed, and the parents were proud, and some nice speeches were given by LMU administrators. We are now, officially, LMU Lions, and once a Lion always a Lion. We are starting to accumulate LMU paraphernalia; mugs, shirts, etc.; I have already received a nice compliment on the "LMU Parent" sticker I mounted on the back window of my car :)
Alex is moving out this week ... sniff. Stand by for periodic Lion-related chest beating...
Another Monday, and now three weeks of vacation left ... what shall I do with them? Perhaps I shall ... blog ...
I had a most interesting product discussion this afternoon with some old friends and new ones who are starting a business; the early days of a new project are always so cool. Many great ideas, everyone respectful and contributing, a clean focus on what it will take to succeed. Of course there's a long road ahead for them ...
What I *love* about the Internet: A post on a blog about Bed and Breakfasts in the beautiful city of Grenada, Spain, mentions *me*, because I posted about riding the Alta de Monachil climb outside of Grenada when I was there in 2006 to see the Vuelta de Espana. Five years ago, one little post on my little blog, and yet he found it and linked me! I love it.
Above right is pictured the Alhambra, a magnificent Moorish fortress built in the 14th century, one of the many reasons to visit Grenada.
As electric cars become reality, the important question is: where will we plug in? The article thinks 'at home' is the right answer, but that's not where we get gas today... I think Better Place and their battery swapping idea might work.
Woke up this morning in Seattle, at the beautiful Alexis Hotel downtown, got up (yawn), worked out (gasp), ate breakfast (yum), and drove up to Bellingham to meet with a client (wow what a beautiful drive!):
this picture does not fully capture the green and blue, wow
After an equally beautiful drive back, a visit to the University of Washington, aka U-dub, with Alexis...
we are here
our guide explains; statue of George Washington, "red square", that is a library, not a cathedral
the UW campus is stunning; note Mt. Raineer beyond the fountain
"the quad" is the main road down campus, lined with greenery and buildings
Alex was pretty impressed - a great place to spend four years learning and playing
a sample of campus life :)
And then ... off again, back home; the whole trip seemed a bit of a dream...
Mt. Raineer towers over the landscape; it doesn't look real, does it?
In a couple of weeks I'm going to ride a relatively new event called Son of Death Ride, which has the motto "that which doesn't kill us, makes us stronger". Nice. This ride is also billed as the toughest one day ride in the U.S. So be it.
Here's the ride profile, it is out and back, for a total of 138 miles and - gasp! - 17,352 feet:
That first climb is from 3,500' to 9,000' in 16 miles, which works out to about 7%. Ouch. At that summit you'll be 16 miles into the ride, with 122 miles left, and already toast. I'm looking forward to it already.
Tonight we celebrated Alex' 16th birthday (which isn't really 'till Tuesday), had all the girls home, and it was great fun, much laughing and telling of stories. Yes I must show off:
Nicole, Megan, Alexis, Jordan, Shirley
Earlier I was able to get some work done and for the first time in a while did my "usual" ride around the lake and through Hidden Valley. All set, ready for another tough week!
But first, a little blogging...
Rich Lowry: They think we're stupid. "The Obama team is saddled with a foundering health-care strategy. But it has a fallback plan - relying on the sheer dimwitted gullibility of the American public. How stupid do they think we are?" Actually the public are pretty stupid, amplified by a stupid media. But still, this is not going to fly.
I actually don't think the Obama team think we're stupid though, I think they think they're right, and that we'll see they are given time. Unfortunately they're wrong, and we're all going to see it together. History is not on their side.
Ann Althouse: "Basically, Obama has a big problem. He got lots of people to trust him, chiefly by speaking in vague generalities. It only works from a distance." And for a short time...
Today our family acquired a new member; introducing Smokey:
Smokey is a baby Guinea pig, and the picture above is pretty close to actual size. To say he is cute would be an understatement; he might be the cutest object there is; a physical embodiment of the word "fuzzball". Especially endearing, when he is comfortable (like in this picture) he makes little low burbling noises. In case you're wondering, Guinea pigs are not pigs, and do not come from Guinea; they are rodents, and come from the Andes. They are however adorable little pets, and we are delighted to have Smokey join us. Stay tuned for more :)
Friends, colleagues, blog visitors, lend me your eyes...
Tonight I had a weird and moving experience which I wanted to share. Here’s the message: life is short, and you should enjoy each day as if it were your last, because you never know what will happen.
As you may know I live in Westlake Village, CA, about 140 miles northwest of my office in Vista, CA, and hence I have a rather long commute. I’ve been driving down to Vista at least once a week for nearly five years now, and it really isn’t bad; I enjoy the drive time as a quiet time for reflection and planning. In those five years I’ve seen my share of accidents but fortunately I’ve avoided any myself and have had only a few annoying near misses (knocking on wood). However, tonight as I was traveling home from the office I had the experience of seeing three entirely separate horrible fatal accidents. I didn’t see any of them happen, but in each case I was close enough that emergency vehicles were still arriving as I sat in traffic behind them.
The first was a big truck which jackknifed across the center divider just South of the border control station in Camp Pendleton, smashing at least two other cars in the process. The second was a three car accident where the 73 joins the 405, seemingly caused by a car ramming the end of a guardrail and subsequently bursting into flame. The third was a car which ran into the center divider of the 405 in the Sepulveda Pass (north of L.A.), and then bounced across five lanes of traffic before ramming a hillside and flipping, spinning and smashing at least three other cars as it did so. Each accident was worse than the previous, and seeing all three in sequence was a spooky and sobering experience.
It occurred to me that ordinary people like you and me died in these accidents, within minutes of the time I passed them. They got up that morning living their day per usual, going about their business, with no idea at all that this day was going to be their last. If they had known, maybe they would have kissed their kids a little longer, or hugged their dogs, or been nicer to their colleagues in email. Maybe they would have made a donation to a charity, or spent time in their backyard enjoying the sun. Or coded an amazing piece of software :)
I don’t want to be too sappy about this, but for me this really was an “inflection point”. The memory of that drive is going to stay with me, and I’m going to try to live each day as if it were my last, because you just never know.
I had a random thought last night which I thought I'd share. There is a visceral human reaction to losing something. People never ever want to give up something they feel they already have. This is not a cold logical calculation, even if you give people something which is way more valuable than the thing you're taking away, they hesitate. (This is why FREE is the most powerful word in marketing :)
The idea of accumulating "stuff" must have hit early on in the evolution of humans. Anthropologists tell us we were herders, and [probably] harem-based, and both of these imply possession. Intelligence may have evolved so we could evaluate trades. Anyway however it happened, it is now true; we are materialistic. Any human society which has attempted to deny this has failed, and the human society which is most successful is the United States, which celebrates materialism and features it as a core value. One of the first things that must happen to transform a failed state is some sort of rule of law, including some rights to personal possession.
Losing something doesn't only mean losing an object, it can also mean losing a right, such as freedom. And losing rights provokes even more of a reaction than losing objects. Tell someone they can't do something, especially something they could do yesterday, and you are going to get strong resistance.
The implications of this for businesses are significant, especially those targeting consumers. Any product or service which trades one thing for another is going to have tough sledding compared to a product or service which gives you something for nothing.
Media companies are finding this out the hard way. Consumers do not want products with strings attached. They are used to buying something, and owning it, and having complete freedom to do with it what they want. Any kind of restriction is taking that freedom away, and is going to piss people off. It isn't just that they won't buy the product or service - although they won't - it's that they're actually going to be insulted and angry. Look at the way consumers have reacted to DRM. ("You mean I buy it, but then I can't do what I want with it?")
Consumers don't do a logical calculation and say, okay, I get it, I pay you $X and get Y product with Z strings attached. No. They say, no way, if I give you $X for Y product I expect zero strings attached. Don't take my freedom! I hate losing something!
From Sailing Anarchy, a great blog (which unfortunately does not have permalinks):
Is this the largest fleet for a World Championship? 175 505's are registered for the CSC 2005 505 World Championship in Warnemunde, Germany! And yes, they will all be racing on the same course, at the same time. Team USA is 10 boats strong, and I think it's noteworthy that Howie Hamlin and Cam Lewis are sailing together again, with a combined age of about 100! On the other side of the spectrum, California high school sailing phenom, Parker Shim, has bought a boat and will also be competing.
Can you even imagine 175 505s on one start line? Good thing they use a rabbit start. I would not bet against Howard and Cam, man, what an all-star team!
A 505 start
The boat on port tack is "the rabbit", everyone else starts on starboard and must duck the rabbit.
Typically the rabbit is the boat which finished 10th in the previous race.
I sailed in the 505 worlds at Kingston, Ontario, back in 1990. "Only" about 100 boats. We sailed our asses off and finished about 40th. I really think boat-for-boat the 505 fleet is the strongest in the world. If you win the 505 worlds, you're my hero.
I'm back! Spent a week mountain bikin' in Utah. Pictures to follow. In the meantime...
During the past week I blogged over dial-up. Not terrible but I certainly missed my cable modem. Not to mention the 'phone bill was steeper than the summit at Brian Head. Whew.
The results of my "Do you use an RSS reader?" survey are [mostly] in. Yes = 59%, No = 30%, and Uh, what's RSS = 9%. That's about what I expected. I bet in another year - heck, in another six months - the 'No's will decline significantly. Of course this is taken from an atypical sample, the people who read my blog. (Actually a subsample, the people who read my blog and respond to surveys :) When my mom and your mom are reading RSS, just like today they're reading email, then we'll be at critical mass.
Bigwig wonders, once the California recall election is over, what's to stop a liberal from recalling the conservative who wins. But this ignores the fundamentals of the situation; although recalls have been technically possible for over 50 years, this is the first time voters have been dissatisfied enough with their governor to do something about it.
Man, does this ever raise my blood pressure: A textbook case of bad science. "Defenders of evolutionary theory in Texas say creation scientists are getting sneakier -- and more successful -- in getting their views into public school educational materials." Yeah, and the flat-Earth society is demanding equal time, too, to argue against the "theory" of a round Earth. Man, some people just refuse to accept facts, you know?
I saw this a few days ago, but couldn't view it properly on dial-up; Paul Thurrott has published screenshots of Longhorn, which is Microsoft's next version of Windows. There are lots of Microsofties claiming these aren't real, but whether they are or not they're certainly interesting. Check 'em out.
PVRBlog thinks about Tivo's Apple problem. I don't know if Tivo really has an "Apple problem"; they're a market leader in a new space, and there will be price-cutting and new competitors as the market matures. Apple was never the market leader, despite being the innovator...
Motorola has released the first Linux-based cell phone. "Announced last February, the A760 uses Linux as a core operating system, on top of which Java provides a multimedia application framework. Software that ships with the device includes a PDA-style personal information management suite, a video player, music player, an instant messaging tool and more." This could be the future of cell phones - imagine a bunch of open-source applications...
Panasonic's new "home theater in a box" includes a DVD recorder. I bet nobody reading this is surprised or even amazed. DVD recorders will take over, as surely as cassettes pushed out eight-tracks...
The new Matrix Revolutions trailer is out! Yippee. Mark your calendars - November 5, 2003, is the release date. It looks excellent. I predict this movie will demonstrate whether good movies can still be box office blockbusters...