Which have eyes, and see not: Musings about the music industry and The Because Effect

which have eyes, and see not; which have ears, and hear not:

Jeremiah 5:21, KJV 

Madonna is reported to be leaving Warner Music and moving to Live Nation.

This, at a time when, as the AP report states:

Regulatory filings show that Ticketmaster’s revenues jumped 14 percent to $1.1 billion in 2006 and generated almost a 25 percent operating profit margin for the nation’s largest seller of tickets

This, in a week when Radiohead released their latest album In Rainbows as a digital download, with the price of the download left up to the buyer. As Wikipedia puts it:

While the discbox, which includes the MP3 download, is priced at £40 (about $80 U.S.), the price of download by itself is left up to the buyer. Upon purchase, the buyer is prompted to type their desired price, plus a credit card transaction fee of 45 pence if purchased for more than £0.00. [15]

The unique nature of the album’s availability has put doubt on whether the album will be eligible for inclusion in the UK album charts.[16] According to Gigwise the album has ‘sold’ 1.2 million copies from the website, as of 12th October 2007, with the average price people paid expected to be £4.[17]

This, in a month when a Led Zeppelin reunion concert attracts 20 million fans in a mad scramble for tickets, and crashes the internet service provider used to run the concert ticket lottery:

A spokesperson for the gig told Guardian Unlimited Music that mid-way through yesterday’s press conference to announce the one-off gig at London’s 02 Arena in November, at the precise point where promoter Harvey Goldsmith confirmed details of the show, ISP Pipex reported to organisers that their network had collapsed.

This, in a period when Prince gave away his latest album for free, as a newspaper insert, before the actual release of the album:

On June 28, 2007, the UK national newspaper The Mail on Sunday revealed that it had made a deal to give Prince’s new album, Planet Earth, away for free with an “imminent” edition of the paper, making it the first place in the world to get the album. The date chosen was July 15, 2007. This move has sparked controversy among music distributors and has also led the UK arm of Prince’s distributor, Sony BMG, to withdraw from distributing the album in UK stores. [27] The UK’s largest high street music retailer, HMV decided to stock the paper on release day due to the giveaway.

Okay, he got paid by the newspaper for giving the album away. But that’s not the point.

The point is that he sold out all his concert tickets. For 21 concerts. In a single tour. In record time:

On June, 13 2007 Prince announced a further six nights at The O2 arena, Europe’s ultimate entertainment destination that opens on 24th June. Prince is now performing ALL 21 dates at The O2, after his last 15 concerts SOLD OUT in a matter of hours. The shows eclipse all previous arena attendance records and will see Prince perform his greatest hits for the last time ever.

David Campbell, President & CEO of AEG Europe, commented: “Prince’s 21 nights at The O2 are a testament to London’s eagerly awaited new entertainment destination. We’re thrilled that a world-class artist like Prince is part of our opening season, and that he’ll be breaking a world record in our arena.”

Promoter Rob Hallett of AEG Live said, “It is extraordinary that any artiste can sell out so many nights in London, the previous record was 14, but to sell this quickly and in August is quite remarkable! However with Prince we are talking about a phenomenal artiste who has spent his whole career raising the bar so we shouldn’t be too surprised. I can see this record outliving the century!”

Madonna. Radiohead. Led Zeppelin. Prince. They understand the intrinsic abundance of digital music and the intrinsic scarcity of live performances. They understand what’s broken and what needs fixing. They understand The Because Effect as originally expounded by Doc Searls.

Looks like Live Nation understand this as well:

Live Nation Chief Executive Michael Rapino has made no secret of his desire to use the company’s relationships with artists to get into related businesses. He has talked about selling T-shirts, parking passes, VIP party passes, secondary tickets and DVDs as well as broadcasting shows live. And gaining direct access to fans through ticket sales is seen as a crucial building block to collecting other profit related to the event.

Rapino said Live Nation owes its window of opportunity to the rise of the live show as a profit driver — instead of the records and CD sales as in previous years. “Thankfully for our business, the center of that pie has really become the live show now,” he said in September at a Goldman Sachs conference.

What can I say?

……Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

 Bob Dylan, The Times They Are A-Changin’

8 thoughts on “Which have eyes, and see not: Musings about the music industry and The Because Effect”

  1. The because effect certainly works for Prince, Radiohead, U2 and Rolling Stones (who are probably the biggest “because of” of all given they sell few of their recent albums and make all their money from touring)

    But it doesn’t work as well for Kate Bush, Robert Wyatt and Scott Walker who don’t tour are unlikely to make a killing from licensing their music for adverts and won’t make much money from selling Robert Wyatt branded wheelchairs.

    There will of course be multiple revenue models. The “Because Effect” is one but the “Radiohead Model” is a likely other. DRM is in any case screaming the last scream of the dying elephant (and therefore still poses a danger) so as long as most people stay honest and pay we have no problems only opportunities.

  2. Paul Simon discusses the music industry in a Yahoo! Finance interview. More on scarcity and abundancy.

    Here’s a quick excerpt:

    “Q: I assume that the Internet is the most important avenue to promote music today?”

    A: Of course it’s important in order to get word-of-mouth going. But the most significant way to promote recorded music today is actually to perform it live. By far.

  3. Interesting. Particularly the last answer. I would have said something different. “The most siginificant way to promote LIVE music today is actually to make RECORDED music abundant and freely available. By far.”

    But then I’m not a musician, so what do I know?

  4. JP, whatever I may have said about your understanding of music-as-practice in the past, I agree with you on this one and wonder if Simon has become more of an “industry player” and, as a consequence, less of a musician. Stravinsky said it best: Musicians (whatever the performing and composing styles may be) want their audiences to be GOOD LISTENERS in the setting of live performances.


    Being a good listener, like being a good anything-else, takes a certain amount of practice. It is virtually impossible to be a good listener the first time you hear anything, whether live or recorded. You need to build up a “familiarity base;” and doing that by listening to a recording is as good a way as any. I have always seen this as the logic behind Prince’s strategy, and I am now glad to see others buying into that logic.


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