C-61 and Rockonomics

You wouldn’t know it from proponents of Canada’s proposed Bill C-61, but the music industry is thriving. The main reason is that musicians can control live performances, and make good money doing it. “Pirated” distribution can create an audience willing to play $40 (ranging up to $200) to see a live show.

As Alan Kreuger points out in Rockonomics, most musicians make most of their money playing live. According to Kreuger (table 1.1), in 2002 the top 35 touring bands made an average of US$17.4 million each, of which $12.7 came from performing live and only $1.7 million from selling recordings (another $1.3 M came from “publishing”). The Rolling Stones’ music is almost everywhere, it can be widely “pirated”, and yet they tour (at their ages, to boot) and made $40 million touring that year out of a total of $44 million.

Those pressing for stricter copyright protection in C-61 need to make the case that harm is being done. Creators and artists are opposed to the bill. The real issue is about protecting the revenue streams of an handful of massive corporations, four of whom control 70% of the market. Canadians should be asking the federal government why they are working so hard to protect vested interests who are already getting rich without any copyright reform.

Giving a look at the new business model in practice, Patterson Hood of the Drive-By Truckers is quoted in this New York Times article:

Yes, the traditional music industry is in the tank — record sales are off another 10 percent this year and the Virgin Megastore in Times Square is closing, according to a Reuters report, joining a host of other record stores. That would seem to be bad news all around for music fans — 70,000 of whom showed up in this remote place [Bonnaroo] to watch 158 bands play — and for Mr. Hood and his band.

Not so, he says.

“The collapse of the record business has been good for us, if anything. It’s leveled the playing field in a way where we can keep slugging it out and finding our fans,” he said while toweling himself off after the set.

With their epic Southern rock sounds whose influences range from William Faulkner to Lynyrd Skynyrd and the kind of musicians who don’t live for a photo shoot, the Drive-By Truckers were never going to be record industry darlings. As it is, they have found a sustainable, blue-collar business model of rock stardom in which selling concert tickets and T-shirts have replaced selling CDs.

“Thank God they can’t download those,” said Mr. Hood, the son of the famed Muscle Shoals Sound Studio bassist David Hood. “They follow us from city to city, see the shows, get drunk and buy shirts.”

After investing early and continuously in the Web, the Drive-By Truckers have a MySpace page with 37,000 friends, offering four songs from “Brighter Than Creation’s Dark” with almost 800,000 downloads alongside a touring schedule that would put James Brown in his prime to shame. This week, they will be in five cities and two countries (Canada, remember?).

Before file sharing tipped over the music business, bands used to tour in support of a record. Now they tour to get the dough to make a record. Cheap recording technology, along with all manner of electronic distribution, means that bands don’t need to sign with a giant recording label to get their music out there.

… For some bands, like the jam band Umphrey’s McGee, some music sales are a direct offshoot of the shows. The band reserves five tickets at every show for people who want to tape it and also records every set with room mikes and the sound board. Three-disc sets are burned on the spot and sold for $20. (Other bands have taken to popping the evening’s performance onto a thumb drive and selling that to departing fans.)

“If we can break even on a recording, then the rest of the business will take care of itself,” said Joel Cummins, the keyboard player in the band. “I think that the Internet gives us a way of getting connected with our fans. We get to make the kind of music we like — it’s definitely a little more complicated than just three chords and the truth — and use a long-tail business model to find and play for people who want to see what we can do live.”

PS. Some of my commentary has been recycled from this post.