ONE THING IS CLEAR about the so-called Internet music revolution: Nobody knows what the hell's going on. Not only that, but a swelling mass of curious souls wants the inside dope on the supposedly stratospheric shifts coming in the way the public listens to, thinks about, and—most importantly—buys music.
More than a thousand technology and record industry players filed into the Marriott Marquis Grand Ballroom in New York's Times Square last week, looking as determined and alert as Norwegian elkhounds, ready to gnaw on subjects from digital downloading to online retail to artist-label relationships. This historic gathering, though, produced no concrete results or clear visions, just more contradictions and smoke screens than a presidential campaign speech.
The avowed message of the fourth annual, and by far largest, Plug.In conference—that it represented "The Future of Music"—clashed with the findings of research firm Jupiter Communications, the two-day event's genial sponsor. By 2003, Jupiter says, the combination of digital downloading and online retail will account for only 14 percent of sales in the $18.4 billion US market. Beyond that, the analysts say, it's anybody's guess: Music might become free, or it might become cheaper; we might access it through our televisions, or—as keynote speaker and former major-label president Danny Goldberg hypothesized—we may drink down songs with our glasses of morning orange juice.
I'm all for planning ahead (and for nutritious breakfasts), but we all may be cowering in basements and rationing canned beans by 2003. Or we may all be rich enough to fly the Beastie Boys in to our resort homes to play private parties rather than settle for some measly digital download that the Boys had to sneak past their corporate record company onto a Web site. But can we have a little rational thought, please?
It's all about the databases
Predictably, MP3.com's initial public offering last Wednesday, the day after the close of Plug.In, debuted a stock that surged from its opening price of $33 per share to $61. That meant that the online music site, which offers free downloads of songs by mostly unknown and unsigned artists, was worth $4 billion by day's end. The company's sales last year? Approximately $666,000, according to Bloomberg News.
In one of Plug.In's many ironies, MP3.com founder and digital distribution gadfly Michael Robertson couldn't speak up about the supposed revolution he's helped catalyze. He had to cancel due to the SEC-imposed silent period before an IPO.
What might Robertson have said? Probably what others of his ilk at Plug.In kept hammering home: Namely, that all these folks fretting that Internet start-ups are dangerously overvalued don't know what the hell they're talking about. They're idiots, really, because the smart players aren't investing in the music, or the downloads, or the technology, but the databases.
The real visionaries of our era shouldn't concern themselves with profits, panelist after panelist hinted, but with how to "leverage" the consumer data that comes their way each time a nameless user (with a credit card) enters his or her email address and other personal information while registering for a RealPlayer, buying a CD from Amazon, or downloading a track from MP3.com. Amazon czar Jeff Bezos' personalized emails, directed at customers based on their purchases and meant to induce more purchases, were cited again and again as a stellar example of how to leverage accumulated consumer data. Bravo, Jeff! (Another irony: The praise for Amazon.com came almost concomitantly with the announcement last week of lower-than-expected earnings, which caused its stock to plummet.)
One way or another
Other Plug.In panelists and speakers opined eloquently about the challenges facing the music industry as the Internet evolves. The opening keynote speaker, the slickly named Strauss Zelnick, president and CEO of BMG Entertainment North America, took a down-to-earth stance. Some companies will figure out a workable business model and thrive, he said, but most will falter. "My view is, if you build it, they still may not come," he cautioned.
Zelnick's shrewd pas de deux between encouragement and wariness prefaced 48 hours of contradiction. One of the more hilarious and oft-repeated themes throughout the conference was the suits' straight-faced insistence that (choose one of the following): the Internet returns the focus to the artists; the Web allows artists to interact directly with fans; and artists will regain control of their music. (In another contradiction, the Artist Formerly Known as Prince appeared at the Yahoo! Internet Awards after the first day of Plug.In and advised fans that while it's OK to use a computer, "Don't let the computer use you.")
Yet while Plug.In was held in association with the nearly week-long Digital Music Festival, few actual artists appeared under the gaudy chandeliers in the Marriott Marquis Grand Ballroom to address the sectarian tech crowd. Not one artist appeared on any of the ten panels, including "Balance of Power: Assessing the Artist-Label Relationship." Chuck D, the Public Enemy MC who's chiseled out a side career as an Internet promoter, provided an impassioned and audience-pleasing speech in which he drew an analogy between artists' new freedom in the digital age and blacks' emancipation from slavery. And Mike D of the Beastie Boys fielded softball questions from a dozen starstruck journalists during a press luncheon for ARTISTDirect, a booking agency that also builds and maintains e-commerce sites selling records and merchandise for such major players as Marilyn Manson, Beck, the Backstreet Boys, and Kenny G. (Despite the all-important artist Mike D's well-known veganism, chicken was served.) The sites, as company CEO Marc Geiger was fond of repeating, bring the artist and the fans closer together—ostensibly because the e-commerce angle is leveraged by chat rooms.
How ARTISTDirect and the Beastie Boys will make money from the venture without provoking lawsuits from Capitol Records was one of the many questions that went unanswered during the luncheon. It also represented the major question left hanging over Plug.In: What will happen when the growing number of labels dabbling in online retail start cutting into the profits of traditional and online stores, in essence biting the hand that feeds them? We'll have to wait to find out.