Technological Change, Formats, Distribution And How to Make a Living

For a long time vinyl was the preferred format for music. However, at some point the CD came along and became the dominating format. But, as is clear, the CD has always been a format based on compromises. It is a digital format, but with limited capability to take advantage of the potential of digital music. At the same time the CD also has the cover art and the liner notes, but smaller than on vinyl, and lacking the charm and sound we like so much about vinyl.

As often happens with things that are stuck in the middle they disappear as technology advances and new and more convenient options become available.

Music as digital files has gradually become the preferred option for many people and the way to make a living from it has been to charge on a file by file basis. However, there is a shift under way towards streaming music.

People will still want to download their music for a few more years, but eventually streaming will be the preferred option, and this will continue to accelerate as especially cell phone Internet connections become more available, speedy and cheaper. There are currently tons of services for streaming music, such as well know players like last.fm, Pandora and Rhapsody, which have deals with labels, and others like Mixwit and The Hype Machine, which do not.

Basically there are two ways of making money from legal streaming services. The first option is from advertising and the other is from subscription. For the services, which do not have deals with labels, and instead rely on streaming files available on the net, one could argue that the payment to the content owner is increased attention, which is an increasingly scarce resource.

Further, some of these services have associate deals with other players, like Amazon and eMusic, such that people will buy the music they like from these in the format they prefer. However, these services, to some extent, still remain controversial.

There is no doubt that the shift to digital music in general has made if more difficult to earn money directly from the music. One could make the argument that piracy is one of the reasons, with people downloading music for free instead of paying for it. However, on the other hand one could argue that the increased availability of music increases people's interest and that people would not have bought the music anyway.

In our opinion piracy is not the factor leading to reduced revenues, although playing a role as a change agent. The way we see it what is leading to lower revenues is the economics concerned with digital music.

When an artist can record a record, distribute it to a huge number of people and promote it almost for free, this will be reflected in the price one will be able to charge. Meaning that what can be earned from ad and subscription based services is less than it used to be, when buying a CD in a record store or on the Internet was the only option.

The consequence is that in order to make a living players in the music industry will in the future have to rely on alternative ways of making money. Some of these ways are playing more concerts, merchandise, commission based work, vinyl records, and probably many many more, which have not yet been thought of. In effect the role of digital music can, to some extent, be thought of as promotion for these alternative revenue streams.

The Democratization of the Music Industry

The shift to digital music files and streaming has over the last few years lead to a democratization of the music industry. Since it is no longer necessary for an artist to sign a deal with a major label to get his/her music out to a large audience the result is that we experience much more musical diversity. The consequence is that we will see much more variation in music taste.

What has up to this point been labeled as mainstream will gradually vanish and be replaced by a niche driven culture. There will be no next The Beatles or The Rolling Stones. Rather we will see a lot of local variation tied to geographical locations or within global networks of people sharing the same music taste. So it will really be all about the edges.

So Where does NYLVI fit In?

The underlying idea behind NYLVI is based on the two aspects described above: The impact of the technological development on format and distribution, the democratization of the music industry and the economics concerned with these two factors. When building a marketplace for buying and selling vinyl records structured after the world's music scenes in order to support independent artists, labels and record stores this is what we think about.

Vinyl Records

By focusing only on vinyl records we want to support one of the alternative revenue streams artists can make a living from. As we wrote in the last post we believe that vinyl records and digital music is perfectly compatible. Unlike the CD they are located on each end of the scale, and have a distinct set of qualities, which make them preferable.

While writing this post I have been listening to Fleet Foxes on The Hype Machine, where I discovered them, but since I like them a lot I have also bought their record on vinyl. The Hype Machine made it possible for me to discover them, recommend them to my friends and it's convenient to listen to them while typing on my computer.

However, I will also have a copy of the record on my shelf, be able to appreciate the cover art and look at the liner notes. When I later tonight have friends over we might want to listen to it on vinyl, because it's a different and more physical experience. Years ahead, although digital music will also be there, I will still be able to take the record out, think about it's history and maybe at some point pass it on to someone else. And all this has a lot of value to me, which I am more than willing to pay for.

And, I can easily be charged a certain price for it because of the limited availability and the costs involved in making and distributing it.

The World's Music Scenes

By structuring the marketplace after the world's music scenes, meaning both geographical scenes and scenes based on musical preferences, we want to take into consideration the trend towards a niche driven culture. We believe the geographical part of the scene structure is a great way to make small local variations available to a global audience.

On the other hand technology has made it a lot easier for people, who share the same taste to connect. We therefore hope that the part of the scene structure, which focuses on scenes based on musical preferences, will help people with the same music taste to connect and share, and make the musical innovation within these networks more available to a wider audience.

So that's what NYLVI is all about. Supporting local independent artist, labels and record stores by making musical innovation available to a global audience on vinyl.