Camper Van Beethoven’s 2013 Net Profit Was $645 Million Dollars Higher Than Twitter.

Technologists in Silicon Valley love to tell artists we need to update our business model.

This is hilarious since each of my businesses have been profitable for decades. Stunning when you look at just how unprofitable these Silicon Valley Companies actually are.  Twitter for instance lost $645 million dollars last year.   Jaw dropping when you consider that their total revenues were $646 million dollars.   They spent 2 dollars for every 1 dollar of revenue.  And if you look at their losses they are accelerating.

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Now consider the fact that the City of San Francisco also gave them approximately $56 million in tax beaks.  This is while the city has been pushing to slash benefits to city workers. 

Yes maybe Camper Van Beethoven needs to update our business model to include tax breaks and political cronyism.


Internet Consultants Are Wrong : Confused About Musicians, The Internet and Piracy

My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89

Ending Decade Old Arguments : How the Promise of the Internet has Failed Artists and Musicians…

As Jaron Lanier tells it, Ted Nelson envisioned his version of the internet (Xanadu) as a single walled garden where everyone could be both a consumer and a producer. Ideas and art could be exchanged in a frictionless environment where a truly free market would emerge. People could make their wares available for free, or charge for them. However, once a price was set, the market would then determine the demand for that information be it a song, poem, movie or software. This truly free and open market would have empowered creators of all kinds access to a marketplace the likes of which we’ve never seen. Ted’s vision would have truly empowered creators and democratized distribution. Unfortunately, Ted’s vision has not come to be.

Much has been written about the record industry in particular failing to “adapt and evolve” to the new online digital economy. Whereas this may have been a valid argument in 2002 it holds little water a decade later in 2012. In the past decade we’ve seen many new offerings to consumers for legal and licensed music services tailored to many different consumer lifestyles. The tip of the iceberg includes such well known offerings as Itunes, Spotify, Pandora, Rhapsody and literally hundreds of others. And yet despite there being over 500 legal music services neither sales nor revenue have begun any significant rebound. The one thing these services still require, that piracy does not, is payment.

Let’s take a look back. In 1999 in the USA there were probably ten thousand retail points of sale for physical music, Tower, Sam Goody, Target, Walmart, etc. At the time they were selling $20 dollar physical discs – much of the overhead due to physical packaging, manufacturing, shipping, stocking fees and the overhead of real human beings being employed in record stores who need to eat, have shelter, etc.

These physical retail locations also had all the problems of supply side inventory management – a band would be on tour, and no stock would be in that market, a song would be played on the radio and the album would quickly be out of stock, etc. An artist could get placed on a TV show or featured in a commercial and suddenly there is demand, but no availability. These supply side inventory issues combined with limited points of sale were a massive problem for the artists and the record industry.

Digital distribution has none of these problems. Today someone can walk from their living room to their computer (or it may be on their lap) to purchase the latest hot song, featured in Gossip Girl. Or not even, they can buy the song/album on their iphone while watching the TV show or in a movie theater or at a club or concert.

So today in 2012 there are an estimated 500 million retail points of sale for prerecorded music via itunes alone. Just stop and think about this for a second. We went from ten thousand points of sale to five hundred million points of sale in less than a decade and removed all of the supply side inventory issues… wow. The promise, size and scale of the internet should have seen sales of pre-recorded music increase, massively.

There is frequent argument made that if music cost less, it would sell more… well, we now have 99 cent songs and $9.99 albums and sales have dropped by half in a decade…

So the recording industry adapted by:
1) removing inventory problems
2) making music instantly available
3) allowing for songs to be sold individually at a price never before possible and…
4) dropped the price of the album by half of the retail list price of a decade ago

All of this should be a net positive, not a net negative except for one very big thing, payment is now optional to everyone, and there are no consequences for not paying… So let’s be clear about what the problem is when talking about potential solutions.

The problem is not a lack of viable new business models, the problem is the proliferation of illegally distributed recordings being monetized by advertising on infringing websites. There is money in the distribution of recordings on the internet, the problem is the majority of that money is being made illegally and not paying the artists a penny.