The Music Industry: Aspen Report

Every year, Jim Lewi does a conference in Aspen about and for the music business. This year, they asked me to come out and speak with them.

The conference is off the record, but one attendee (Bob Lefsetz) put together a summary (at times a little salty, so don’t read if your ears are sensitive) and sent it to some press folks. Here it is, unedited:

We’re gonna start a business.

Lewi’s a business book fanatic. To tell you the truth, I don’t believe in them. Except maybe Clayton Christensen’s. And, of course, the classic “Tipping Point”. Usually they’re written by self-declared wannabes. Or people who think just because THEY were successful ONCE they know all the answers. Bullshit. So when Jim lobbied all of us to have Seth Godin speak at Aspen Live, we all said NO! But it’s Jim’s conference. He got Scott down to a reasonable price and overruled us.

I was wrong. This was the first time I’d heard a business speaker who GOT IT! Who I thought was on my wavelength. Who had something to impart other than his desire for a check.

Seth Godin said you’ve got to give it away for free. Since we refuse to charge.

Oh, Mr. Godin doesn’t think music should be free. It’s just that we should charge at the ISP level. Give MORE music for LESS money.

Shit, seems like EVERYBODY knows this other than the Big Four.

But, since the major labels are shooting themselves in the foot AND music is free, then you’ve got to sell a souvenir.

Wait a second. Music isn’t and shouldn’t be free!!!

If you believe that, you’re suing kids. Kids who know that the odds of a lawsuit reaching them are about as high as their parents getting videotape of them puking at the college mixer. FURTHERMORE, even if somehow the labels won, even locked down the hardware, there STILL would be no restriction on people giving music away who WANTED to. And people would STILL gravitate to this free music.

But since music is now free… You’ve got to sell something else.

Actually, at this point, to a great degree that something else IS the CD.

That’s what I think anyway, Mr. Godin wasn’t this sophisticated. I scratch my head and WONDER how we can still sell CDs to rippers and downloaders. Who seemingly only want the digital file. I’ve decided they’re TOTEMS! BADGES OF HONOR! A way to express your IDENTITY! AND, Seth DID say to do the math. That even if TEN MILLION PEOPLE got your stuff for free, if one tenth paid, you still were selling a MILLION COPIES! The majors have it all wrong. They’re suing Grokster to insure that their business remains small. No, the key is to BLOW THE BUSINESS UP! To have hit music on TENS OF MILLIONS of hard drives. But the majors can’t think that way. They’re like the hat business. All the businesses Mr. Godin had slides of. That went out of business. WHAT ABOUT THE STOCKHOLDERS someone chirped in from the peanut gallery? What about all those people who owned STOCK in the major labels? Well, the stagecoach company had stockholders too…

It’s all about permission marketing. Getting people to ALLOW you to sell to them. All the old wave marketing. On TV. It no longer works. Because of CLUTTER! Hell, I can see the same thing at MY HOUSE! I’m so INUNDATED with music that I listen to almost none of it. I need a REASON to listen. And it’s not traditional. Hell, even AIRPLAY doesn’t impress me. I’ve got to KNOW the person involved. Or else somebody NOT involved has to tell me it’s happening. And these people I trust. The relationship isn’t built in a day. And it’s based on honesty. Ongoing veracity. And you overhype me once, break my trust once, and you’re done.

Oh, Seth told a great story about CD Now. You remember CD Now. They ruled the online CD sales world. They sent a newsletter of new releases once a month and response was INCREDIBLE! They were bought out/merged and the new money men said to send e-mail to customers TWICE a month. Business went up. Then ONCE A WEEK! Business went up further! Then every three DAYS! And CD Now went out of business. Because now most of their audience was IGNORING the e-mails. CD Now blew it. They busted up the relationship.

But how are you supposed to reach the audience? How are you supposed to break the next diva?

You’re not. Sure, every once in a while there’s a Celine Dion, but most times the center, the mainstream, is a money pit. You spend a fortune to reach those mildly interested.

Yes, mildly interested.

You’ve got to work the fringes. Where the FANS are. Let THEM grab hold.

And then THEY’LL spread the idea. Seth calls this an “ideavirus”. And the people who spread the word “sneezers”. In reality, it’s just different language from Malcolm Gladwell. What we’re talking about here IS the tipping point. And connectors. But the key element is it’s SANS MARKETING! It’s not about beating people over the head, but getting your innovative idea out there. And hoping it catches fire.

And, you can’t short circuit the process anymore. Because the public has been street teamed to death. No, your only choice is to find something REAL! Something SO hot that people will want to sell it FOR YOU!!

First you’ve got to get eyeballs.

We listened to Seth on Thursday. And asked questions thereafter. Then on

Friday, we attempted to come up with an outline of our business.

There were some who cringed when they heard the word “Internet”. ENOUGH ALREADY! We’re selling CDS!!!

But the Net is where the AUDIENCE is. The SNEEZERS!

Shit, just go to a house where teenagers live. PRE-TEENS! Right after school. FOR HOURS kids all over America sit in front of their computers and IM!!! MULTIPLE PEOPLE AT ONCE!! WHAT DO YOU THINK THEY’RE TALKING ABOUT???

And it’s not only kids now. Even adults are starting to IM. And certainly e-mail has infiltrated the marketplace. We’ve seen a paradigm shift. GET OVER IT!

But then there were people who said that music couldn’t be given away for FREE! It DEVALUED IT!!! Sent the wrong MESSAGE!!

THIS was a head-scratcher. The MAJOR LABELS made it free. By REFUSING TO LICENSE!!!

Music IS free. ENOUGH with the re-education programs. What, do we live in a third world country? Where the government tries to repress a suddenly informed populace? People know the truth. That you can download just about anything. And you can’t really stop it. It’s only the MAJOR LABELS who disagree.

Yup, I’ve got to single out one Cliff O’Sullivan. Who stopped the proceedings to tell us that the lawsuits were WORKING! That majors were selling a PLETHORA of CDs. That they weren’t going to go out of business. That there WERE pricing issues, but they’d been SOLVED!!

Shit, sounds like someone who works for Zach Horowitz.

I don’t know Mr. O’Sullivan personally. Maybe he’s a nice guy. Then again, he IS quite intense. But STATISTICS tell us he’s wrong. The number of files being traded has GONE UP!!! Public perception is that music is overpriced. And, the CD IS a souvenir. But it won’t be in the future. THIS is the kind of thinking that will drive the majors RIGHT OFF THE CLIFF!

Then again, Peter Tempkins had great insight on the lift the next day. Those leading the charge, those in front of the room facilitating the creation of our business were all ENTREPRENEURS! All people who could come to a decision and instantly EFFECTUATE IT! And almost ALL the naysayers worked for the man, the corporation. They couldn’t just say YES! There were higher-ups, policy, A WAY OF DOING BUSINESS! You just couldn’t throw the rule book OUT!

But that’s what Shawn Fanning did. That’s what most kids have done. It’s reality. GET OVER IT!

The key is to aggregate a TON of eyeballs. And gain their trust. And THEN to figure out how to sell them.

Yup, we’ve got that luxury. We’re not borrowing money from the public via Wall Street. We’ve all got regular jobs. We’re ALREADY selling things ourselves. But, we can SELL MORE if we can create a place where the AUDIENCE comes. An audience that TRUSTS US!

Hell, build it and they will truly come. Not only Internet advertisers, but the record companies THEMSELVES! As I told the Board the next day, if we aggregate music fans labels will PAY US to GIVE AWAY MP3s on our site. Yup, they’ll argue about music being free up front, but once we’ve BUILT IT they’ll be DYING to play. Because it’s JUST LIKE RADIO! But BETTER! Because our constituency will TRUST US! And we won’t sell space to EVERYBODY! And if it comes directly from the major label, we’ll call it WEASEL HYPE OF THE WEEK! Because that’s what it is. But, we’ll allow the major label to sell it as hard as they want. With all the bio and historical info they’ve got. Although now it will have to be written WELL, be INTERESTING, since this isn’t newspaper reporters who don’t care, but TRUE FANS, who don’t want to be LIED TO! Who are HUNGRY FOR INFO, as long as it’s real, and it’s INTERESTING! Gain their trust, and they’ll be looking for YOUR COMPANY’S giveaways. And WE won’t abuse their trust by giving away A TON of your shitty music. We’ll only give away one track at a time. Not abusing OUR relationship with OUR fans/customers. Oh, we’ll give away stuff they WANT!!! We just won’t be HYPING THEM ALL THE TIME!!!

We finally got it together in Saturday’s meeting.

I’m not going to give away most of our ideas, because you could rip them off. WOULD rip them off. Since you never had an original idea in your life. To think out of the box is ANATHEMA to those entrenched.

But the audience is yanking you from your perch.

The key is to throw in with the audience. FOLLOW THEM!

That’s the goal of our site. It’s not about beating THEM over the head, SELLING THEM. No, our site will be GIVEN OVER to the public. It’s THEIRS!!!! We’re just creating the framework. Which we will adjust based on their feedback. But they’ve got a hunger. For what we provide. And we’re gonna provide it.