The following three items are core elements that would make a music service “ultimate” for me:

1) The service’s music collection would have every album or single ever released in digital format

2) The service would let you stream online every track in it’s collection at high quality and full length

3) The service would let you download every track in it’s collection to your computer at high quality, full length and DRM-free digital format

Ok, now with a little explanation.

1) The service’s music collection would have every album or single ever released in digital format

This is a must. Massive amounts of content is the reason I put up with Netflix’s imperfections and have a monthly subscription.

2) The service would let you stream online every track in it’s collection at high quality and full length

This is the primary way I listen to music nowadays. I stream music on websites like Imeem. And music blogs, like Tuftsmania (even though they’d rather I “right click, save as”).

I find streaming to be much more convenient than downloading since it requires less clicking, transferring and storing.

3) The service would let you download every track in it’s collection to your computer at high quality, full length and DRM-free digital format

When I’m not streaming music online I like to listen to music on my iPod and on the CD player in my car. The only way I can do either of these things is by having tracks in digital format on my computer’s hard drive and than moving them to iPod or CD. (Note: Nowadays most of my CDs are burned, not bought.)

This is also a key item since you can’t get the Internet everywhere. The batteries in your iPod and the electricity that powers your CD player both take you farther into the woods than Internet goes.

If you’re wondering, “Why would a music service let you download every track they have?”

Why not? It’s not like I’m going to set-up a business reselling the DRM-free tracks. And, if I did start selling them and my business got even somewhat popular I would be immediately shutdown, sued or asked to pay up.

The music industry is moving to DRM-free tracks and that combined with an era of p2p means that music will be passed around regardless. So, might as well provide unlimited downloading and make money doing it. (Note: Downloading is less convenient for me than streaming, so if I have a service that provides both unlimited streaming and downloading I probably wouldn’t even bother downloading 99% of the music I listened to).

Ok, so what would I pay for the ultimate music service?

1) Nothing for unlimited streaming and downloading because it would be completely ad-supported

This seems like an easy business model to throw out their since we have so many ad-supported web services today. And, it’s an obvious choice for me since I like free.

I understand that a completely ad-supported music service might be hard to do. But, if someone could figure out and do so in a highly profitable way that would be ideal.

2) Monthly subscription for unlimited, ad-free streaming and downloading

I have a monthly subscription to Netflix and their service offers far less than what my ideal music service would offer. I could definitely see myself paying for a monthly subscription if it included all three of my “ultimate” elements.

However, that depends on what the monthly price would be. If it’s just an unnoticeable blip in my budget I’m game.

Just to give you an idea of what I might pay for massive amounts of content with a distribution system that I can put up with: I’m paying $13.99 for Netflix’s “2 at-a-time Unlimited” plan. And, I think that Netflix’s distribution system sucks.

3) Nothing for ad-supported, unlimited streaming but monthly subscription for unlimited downloading

This would have to be less than #2 since the unlimited streaming is ad-supported.

4) All other payment models don’t work for me

This is because I don’t pay to download individual albums or tracks from mp3 stores like iTunes.

If you made it this far you’ll probably find both these posts from venture capitalist/blogger Fred Wilson highly interesting: “The Free Music Business” and “Something Important Is On The Horizon In The Music Business“.

Hello. I’m 23 and I really like music. I listen to a lot of music.

And, I’m ****ing up the music industry.

Music label executives are popping Ambiens at night because of me. Their relationship with their spouse and children is strained because of me. The water in their traditional distribution pipes is drying up fast because of me.

Why?

I haven’t bought a CD in over 1.5 years.

I’ve only purchased a handful of albums and singles off iTunes over the years and only because family and friends gifted me iTunes gift cards.

I stream and download pre-release material on music blogs and than never pay money for the material when it is released.

And, you know what’s going to give music label executives an even bigger headache?

I’m losing passion and zest for the digital download.

More than ever, I actually prefer streaming my music online than “owning” a track in digital form on my hard drive.

Why are music label execs getting hemorrhoids right now?

Because if one of their platinum-selling artists is dropping an album this month they sure as hell better figure out a way to make money while streaming full-length songs on the platinum-selling artists’ Imeem page because I won’t be driving to record store to buy the CD and I won’t be buying the album on iTunes.

See my video question for readers in the comments.

There were zero typos in my post title. You read it correctly.

A show by the name of Super Girl, which is similar to the Pop/American Idol concept with auditions, voting etc, was able to attract 420 million Chinese viewers during its 2006 season finale and than was promptly shut down by the Chinese government.

According to Wikipedia, the show ran from 2004 to 2006 on Hunan Satellite Television and was sponsored by a Chinese yogurt company named Mengniu Yoghurt. TV viewers could vote by phone, text messaging and online.

There are so many things that pop into my mind when I read/watched this story on VBS.TV: First, the show attracted 420 million viewers during its 2006 season finale and I never heard a thing about it. We are talking the biggest television show ever. This tells a lot about our media coverage/access to China. Second, it appears to be one of the biggest displays of democracy in China (via the voting). Third, I bet US media companies are salivating about the possibilities of getting into China. But, we all know that won’t happen anytime soon.

You can see the whole string of videos that VBS.TV is doing on the Super Girl phenomenon over on their site (or in the embedded video below). I definitely suggest watching the videos since VBS.TV was able to get a crew over to China and interview 2006 Super Girl finalist Yang Lei.

(Video might not be viewable in RSS reader)

Its fascinating to reflect on how my music taste has changed over the years. Bands and artists I’ve liked. And, singles I’ve played over and over. Some stuff I’ve continued to like since I was little kid, like #1 below, and some artists I’ve discontinued to listen to, like the artist in #7 below.

Even more fascinating, is how I discovered new music in different stages of my life. Yesterday, I was tracing the evolution of my personal music discovery. It’s pretty interesting evolution. I’ll start from the beginning and work to the present.

When I was really little, I remember my dad playing a lot of Beatles, Beach Boys, Doo-wop, gospel and Motown in our house. My sister and I would sing along and dance in our pajamas.

My mom would infrequently play radio in the car. The only music she really introduced me to was “multiplication table rap” on cassette. My dad mostly listened to AM radio in the car so lots of sports talk and news.

Elementary years. I remember listening to radio & CDs in my friends’ parents cars. Nothing special, but I thought it was cool that their parents listened to radio (smooth jazz, rock, oldies, easy listening) in the car.

4th grade. I got an alarm/clock radio in like 4th and I started listening to local radio stations. Only received a few stations clearly since my alarm/clock radio was so cheap.

6th grade. Got a Sony Discman and immediately went to a music store in the mall and bought my first CDs: The Fugees and Dave Matthews. I don’t remember why I bought those two CDs, but I did. Must have heard them spinning on the radio or something.

7th grade. Got a stereo for Christmas. Recorded songs off the radio to cassettes (Always missed the first few seconds of songs). Also, I bought more CDs based on good songs I heard on radio.

8th grade. Bought more CDs based on seeing cool music videos on MTV, radio and what my friends were spinning on their Discmans.

Limp Bizkit and other aggressive, rap-rock hybrid bands were popular during this time on mainstream media. Unfortunately, I was very impressionable by what was playing on mainstream media and partook.

9th/10th grade. Most people didn’t use this method: My friend and I started going around to people in my small high school and borrowing their CD collections for one night and burning all their interesting CDs to CD-Rs.

This really worked out well as some of my fellow students had really good CD collections. They also had a lot of crap. I quickly built up a massive collection of CD-Rs which were all recently thrown away.

Ah, good times.

In high school, Napster and p2p sites were taking off. Shawn Fanning was my hero. I spent countless nights downloading music at 128k or so.

Due to Napster and p2p, I found that I wasn’t restricted by my one CD purchase per month budget or by my fellow students CD collections anymore. I starting doing more proactive music discovery.

I mostly used Amazon.com’s product recommendation technology to find band’s that were similar to band’s I already liked. I would rely on a few 30-second clips by a particular artist to decide if I wanted to stay up all night downloading their album off Napster.

I also subscribed to magazine’s like Rolling Stone, Spin and New Music Monthly. At the time, I thought those magazines had the best taste ever and I would always download artists they gave four stars to or who they said was an up and coming artist to watch.

Freshman year at college. We had a campus intranet and most people shared music they had on their hard drives with everyone on the intranet.

During my freshman year, I went crazy filling up my computer’s hard drive with all kinds of stuff I didn’t really need or could possibly listen to.

This is also about the time I got my first iPod. So, I would download music from my school’s intranet and than transfer music I liked to my iPod (I’ve never really bought songs off iTunes unless someone gives me a gift certificate).

Sophomore year at college. I stopped using p2p sites and my college’s intranet and started reading music blogs and Pitchfork.

This is about the time Hype Machine and Elbo.ws were created. I’ve never really used them to discover new music, I only use them to search and find mp3s I already know I want to download. Isn’t that how most people use them?

I also messed around with Pandora a little bit.

Junior & senior year at college. The Internet became my only source for finding new music.

I stopped subscribing to music magazines. I stopped listening to the radio and I stopped watching music on television.

I started using music blogs. Tons of them. It’s easy: Read blurb, stream song from blog and than “right-click, save as” if you like it.

Also, looking up bands and artists on their MySpace pages lets you find new artists they are friends with.

Post-college. I’ve tapered down my music blog consumption and now I’m waiting for something to come along that helps me evolve my music discovery to the next level.

Yes, social music sites are starting to pop up all over the place like Imeem and Last.fm but they aren’t taking me to the next level yet.

Do you know about something I don’t? Holler.

This list complements something I posted earlier today and is inspired by Kevin Kelly’s excellent article titled “1000 True Fans”.

1) Dave Eggers

Dave Eggers stuff on Amazon and his quick biography on McSweeney’s Internet Tendency.

2) TV on the Radio

TV on the Radio stuff on Amazon, their website and their MySpace.

3) Spike Jonze

Spike Jonze stuff on Amazon and his IMDB page.

Update: Spike Jonze’s moustache provided by the fine folks at Moustache Me.

The music industry is failing because it’s built around the top 20% “hits”.

I just got done reading Kevin Kelly’s blog post titled “1000 True Fans” and it got me thinking about all kinds of things, especially my above statement.

In the article he delivers a fascinating concept that solo artists only need “1000 True Fans” to make a living. He defines a “True Fan” as…

“… Someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.”

He bases his “1000 True Fans” concept around the fact that The Long Tail (Wikipedia definition) doesn’t provide much benefit to artists.

The Long Tail is the idea behind Amazon.com and the Internet. It’s the idea that the bottom 80% “non-hits” can be more profitable than the top 20% “hits”. It can be easily explained by comparing Best Buy to Amazon in regards to their selection of music CDs.

Illustration: Kevin Kelly

When you go to Best Buy you will only find artists that have reached a certain recent popularity or who have a lot of demand for their back albums (the top 20% “hits”). The reason is that Best Buy only has so much space in their stores and wants to maximize their sales per foot. This is why you don’t find too many CDs in Best Buy from independent labels, obscure artists or that new hipster band that’s been getting plenty of blog buzz this week but hasn’t been spun on MTV yet.

When you go to Amazon you will find both the top 20% “hits” plus the bottom 80% “non-hits”. You will find artists from independent labels, obscure artists and that new hipster, blog buzz band (most of the time, unless they too hipster or independent for Amazon).

Amazon can provide the bottom 80% “non-hits” because they developed an innovative inventory and distribution model that lets them sell a lot of hard-to-find items in small volumes.

Note: Most of Amazon’s revenues come from the fees they earn for providing referrals to small businesses who do their own inventory and distribution without Amazon even touching the book, CD or whatever they sell.

Back to the concept of “1000 True Fans” and what it got me thinking about.

I would say that the music industry is built around the top 20% “hits”. Record labels, MTV, radio and retail stores are all built around the top 20% “hits”. The top 20% “hits” are all they can handle.

Why are they built this way?

MTV, radio and retail store are all trying to maximize their “sales per foot”. MTV can only fit so many music videos or reality shows into its network of stations per day, radio can only fit so many songs into its airwaves per day and retail stores like Best Buy can only fit so many CDs into their stores.

The big record labels are brick-and-mortar businesses that have huge buildings, employ thousands of people and spend millions on promoting and marketing their stable of bands. This means that they have huge overhead for the relatively small amount of artists in their stable.

They can’t afford to cultivate bands for years and years. They can’t help them grow their fan bases one member at a time.

They need the artists in their stable to pump out the hits. They need their albums to go gold and platinum. They need to sell high volumes of the albums they have in their stable.

Why?

Because if they don’t they won’t be able to cover their huge overhead and won’t turn a profit.

This is why record labels love to work with other people in the music industry that are built around the top 20 “hits” model (i.e. MTV, radio, retail stores, Rolling Stone Magazine).

This is also why the music industry is failing. It’s built around the top 20% “hits” model and it has failed to adapt and move to the Internet and its bottom 80% “non-hits” model.

The Internet with it’s innovative inventory, distribution and viral capabilities is way more suited for music artists and their niche fan bases. Trent Reznor seems to get this.

That’s why he personally is uploading his newest album to BitTorrent sites. He understands that he has a large number of “true fans” and that they will come to his site and buy his $5, $10, $75 and $300 album packages even though they already have his free BitTorrent upload. (I just blogged about Trent’s new album and business model here).

I think Kevin Kelly is spot on with his “1000 True Fans” concept.

All go as far as to say that his concept is the future of the music industry. I think that music artists are going to start connecting more directly with their fans on the Internet like Trent is doing with his most recent album Ghosts I-IV. Artists will have their 500, 1000, or 2000 “true fans” that will buy $300 super deluxe album packages with original art (i.e. Trent Reznor).

The rest of the music industry will be built around anything beyond the 500, 1000 or 2000 “true fans” that the artist wants to do. Or they will provide platforms and services to help artists feed their “true fans”.

Update: It looks like NIN just sold out of their 2500 limited edition $300 Ghosts I-IV packages in under two days. This means that Trent Reznor made about $750,000 which exceeds the typical net from a massive-selling traditional CD release (see Techmeme for more).

Looks like Trent Reznor has decided to embrace the idea of free music downloads as a business model with his newest release Ghosts I-IV. He tried it once before with his collaboration with Saul Williams Niggy Tardust.

Trent was “disheartened” the first time around when only one in five downloaders paid $5 when provided with an option between $0 and $5 for the Niggy Tardust download (see his interview with CNET).

If you go to the NIN site click on the “order” tab and you will be provided with the following options:

1) DRM-free download of Ghosts I at 320kbps. $0.
2) DRM-free download of Ghosts I-IV in a variety of digital formats. $5.
3) 2xCD set of Ghosts I-IV. $10.
4) 2xCD set, 1 data DVD with all tracks in multi-track format, and a Blu-Ray disc with all tracks in hi-def 96/24 stereo and accompanying slideshow. $75.
5) Everything from #4, plus four-LP 180 gram vinyl set and two limited edition Giclee prints. $300.

I think Trent Reznor has refined the free music download business model with the Ghosts I-IV release (I provided my thoughts on new music business models here).

He has decided to throw the gimmicky option of choosing to pay for the free music download out the window. It wasn’t a smart decision from the start and it really confused me as a rationale, music-loving fan (it made me feel guilty for being rationale and paying $0 for the lower-quality version).

Instead he separates the free music download from the higher-quality, non-download versions that cost money. This is a really smart move because it doesn’t make rationale music fans like me feel guilty for paying $0. Plus, it allows fans of Ghosts I-IV to buy the album in higher-quality formats with better artwork once they know the love the album (Because music fans will pay for albums they like).

Note: The free download comes at 320kbps, which is classified as “high-quality” as far as digital downloads are concerned.

Also, my favorite law professor Larry Lessig is excited over on his blog that Ghosts I-IV is being distributed under a Creative Commons license (he is the founder of Creative Commons). You can read my recent post on Lessig to see why he’s my favorite law professor.

This Creative Commons license Trent Reznor has released Ghosts I-IV under allows fans to copy, share and remix all the tracks given they attribute the work to NIN, they don’t use it for commercial purposes and they distribute/share the music under the same or similar license.

Illustration: Wired

Let’s get this out of the way immediately: Record labels having been using free “downloads” to promote and sell music for ages.

Here’s a quick list of how they have used free “downloads” in the past:

1. Radio

Record labels have been supplying exclusive/pre-release/promotional cuts to radio stations big and small since the dawn of time. With the sole purpose of the free “download” being to sell higher-quality formats later (i.e. records, 4-tracks, 8-tracks, cassettes, CDs, mp3s etc) plus whatever else they can sell.

2. Print (i.e. Rolling Stone magazine etc)

Record labels have been giving music critics exclusive listening sessions and pre-release cuts forever. With the rationale being that providing alpha music tastemakers with free “downloads” will lead to more sales of higher-quality formats plus whatever else they can sell.

3. Television

Record labels have been trying to get their acts booked on television shows like SNL, Jay Leno and Conan O’Brien for years and years. These free “download” TV performances allow the artists to reach new audiences, refresh old fans and, hopefully, increase their sales of higher-quality formats, concerts etc.

Why have the big record labels embraced these free “download” models but not free downloads online?

Simply because radio, print and television is much easier to figure out than the Internet.

They have been around for decades and centuries giving the music industry plenty of time to figure them out and see that free “downloads” lead to new fans, wider audiences and more sales.

Also, each of those mediums (radio, print and television) lend more to music industry’s amazing gatekeeper power. The Internet has been seen as a threat to the music industry since the days of Napster because it ruins their gatekeeper power and opens the music world up to the democratizing powers of the Internet. They just don’t want to give up their gatekeeper style and embrace the true Internet economy of free.

The Internet gives actual music fans the power to make music artist’s music ubiqitious and massively popular almost over night without the gatekeeper influence from record labels. This is why music labels and the RIAA have fought so hard against the Internet’s free economy.

How do music artist’s harness the power of the Internet and make money from free online downloads?

Here is a list of new business models built around the free music downloads:

Note: Each of these will obviously take some entrepreneurial effort from the music artist, which I think they should be able to handle since they are so hearty from driving around in crappy vans all day. :)

Double note: These are not new business models, but rather fresh perspectives on old ones. Plenty of smart people like Chris Anderson, Fred Wilson and Umair Haque have been talking about this stuff for years. This post is is greatly influenced by their thoughts and writings.

Model #1 – For DIY Artists: Offer free music downloads directly from your site, blog or widget with a bit rate of your choice (just don’t offend your fans with low quality downloads).

Users should be able to download the music in only a few clicks without having to sign-up or fill out anything (friction-filled sign-ups is probably why so many people used bit torrents to download Radiohead’s newest release In Rainbows instead of directly from their site).

How to make money: A) Give your music fans the choice to buy higher quality bit rates downloads, B) Tickets sales at live shows and concerts, and C) Let your fans buy art, t-shirts, posters, buttons etc for you online or at your live shows.

Model #2 – For Still-in-the-Garage Artists: Offer free music downloads plus free live shows.

You are trying to build an audience, so you should try to spread your music as far as it can go with zero friction (i.e. charging money). You need to actively spread it across every platform including social networks, blogs, coffee shops, local venues etc.

How to make money: A) Keep your day job and B) Sell those cool handmade t-shirts and hand-painted limited edition EPs like hot cakes.

Model #3 – For Hybrid Artists: Offer free downloads from own site, blog or widget like in the DIY model above and let professional services you use or have contracts with also promote your free downloads.

Hybrid artists embrace the DIY model and use professional services (i.e. record labels, concert promoters, agents for TV/movie/ad gigs).

How to make money: Through your own site or through the professional service you use or have a contract with A) Give your music fans the choice to buy higher quality bit rates downloads, B) Tickets sales at live shows and concerts, C) Let your fans buy art, t-shirts, posters, buttons etc, and D) make money from TV and movie gigs, product promotion (i.e. Beyonce and Pepsi) and other ventures like clothing lines (the next step after selling handmade shirts at barbecue gigs) etc.

Wired has a great how-to wiki on making money around free content. You should check it out.

Over the weekend, Techmeme (the site I visit daily to see what’s buzzing in the tech blogosphere) brought to my attention a study that was completed in Canada that goes hand in hand with my last post.

The study called The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada found that there is a positive correlation between peer-to-peer downloading and CD purchasing.

The study surveyed over 2,000 Canadians on their music downloading and purchasing habits. And, according to Michael Geist’s excellent blog post the study had two key findings:

1) When assessing the P2P downloading population, there was “a strong positive relationship between P2P file sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file sharing increases CD purchases.” The study estimates that one additional P2P download per month increases music purchasing by 0.44 CDs per year.

2) When viewed in the aggreggate (ie. the entire Canadian population), there is no direct relationship between P2P file sharing and CD purchases in Canada. According to the study authors, “the analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased. That is, we find no direct evidence to suggest that the net effect of P2P file sharing on CD purchasing is either positive or negative for Canada as a whole.”

I’m still trying to figure out how giving away free low bitrate digital downloads (like Radiohead did) and p2p file-sharing will turn into an actual business model for the music industry.

It still seems like the big money is to be had by allowing the major labels to promote and distribute music through the old channels (like cross-promotion with teen-reality shows on MTV and special exclusives with retailers like Wal-Mart).

Personally, I think it would be better if artists and music fans used a more direct distribution channel like the Internet to connect. I think it would be better because it reduces the gatekeeper/tastemaker role of major labels and puts it into the hands of actual music fans (and music buyers).

However, let it be said that we will always need major business players to distribute and promote music since most music artists don’t have these skills.

Photo: Saul Williams & Trent Reznor

I just want to say that I’m enjoying the new music distribution models that some of the larger music artists like Radiohead and Trent Reznor are trying.

Both Radiohead and Trent Reznor have come to the end of big contracts with large record labels. They are trying new music distribution models like releasing music directly from their own websites (sometimes for free to gain support and fans for future $$$ purchases).

It’s about ****ing time. I have been using this model for a long time.

I always like to listen to albums before I shell over money for them. It is a philosophy that I have carried for a long time. It stems from when I started buying albums in sixth grade and would get home and be disappointed because the single I heard on the radio or MTV was the only good thing on them.

This is what led me and a friend to gather CD collections from other kids at school and take them home and burn them onto CD-Rs. For years, this is how me and my friend would preview music. I was also an avid user of Napster and the subsequent P2P sites that sprung up afterwards like Kazaa.

At the start of my freshman year in college, I stopped using P2P sites and started trading music with friends again. At first, I would just trade CDs physically. But, then I started using our college’s network to trade music straight from shared music folders. I also used IM services like AIM to trade music back and forth.

Later in college, I started getting my music straight from music blogs and mp3 aggregator sites like Hype Machine and elbo.ws.

I still get most of my new music from music blogs (here are some music blogs that I read). Whenever I hear one or more solid singles from an artist, I look them up. I read about their touring, future album releases etc. I also try to find more music that they have made and download it.

I have no problem with my process because when I do find an artist or an album that blows my mind, I buy their album and usually see them in concert. For instance, one such artist was Justice. They were tearing up the blogs for months and months. My man over at TUFTSMANIA has been raving about them for years.

I downloaded every track from Justice’s new LP before the CD even came out. And guess what?? I bought the CD. Twice. One for me and one for a friend’s birthday.

Again… I’m really looking forward to what some of the big artist’s are trying with new music distribution models.

In fact, I just pre-ordered Saul William’s new Trent Reznor-produced album, which he is offering as a free download from his site (or you can pay him $5, your choice).