Vivisecting Media

The Monetization of Podcasting

One of the running themes in the world of podcasting is the Democratization of Broadcasting. By allowing anyone easy means to produce their own content, the public will then be able to choose what they want to listen to and therefore define the media format/content produced.

It’s a beautiful concept and I whole heartily support it. Honestly, this is one of the reasons we started podcasting and keeps us podcasting but this is not what I want to talk about right now. What I want to get into is the amazing amount of business interest we are starting to see in the podcasting community. Not only are there a lot of podcasters trying to find ways to make this their full time job, we are seeing a lot of outside interest in how companies can tap into this new media format.

Josh and I both headed down to the first North American Podcast Expo in Ontario, California a few weeks ago. The idea was to check out the expo, meet new podcasters and finally get to meet some friends face to face that we had made through podcasting over the last 9 months. What both Josh and I found interesting was that the Expo had a feeling of old media trying to break into new media.

The show floor was full of iPod accessory companies, a smattering of tech companies, my good friends Libsyn and a lot of ad companies offering quick cash for podcasters, or at least that is what we felt they were saying to us. The session list seemed to focus mainly on the business end of podcasting, how to make money at it, etc.

I am not really surprised or shocked by any of this, and really this makes sense for the first Expo, but because the Expo had such a commercial feel a lot of really amazing podcasters decided to pass on the whole thing. The podcasters that skipped out were not just a few minor players. These are well established podcasters and are some of the people that helped guide our show from the very beginning.

I am sorry that Tracks Up The Tree or Caribbean Free Radio couldn’t/wouldn’t make it but I totally understand. It’s expensive to travel and a lot of what got us into podcasting was lost at the Expo. This is a grassroots movement to a lot of podcasters, and this movement allowed the unheard voices to be heard and for people to showcase unknown music, thoughts and ideas to a larger base of people then ever before.

What we ended up seeing at the Expo was a lot of podcast “celebrities” doing photo shoots, interviews and schmoozing. I met a few people that were genuinely there to learn about podcasting and how they can get into it but over all there was this sense of “you too can make money” or a bunch of ass kissing to help cross promote shows and build a bigger following. This all ties back into some the community issues that I have (I will delve into this some other time) and how the podcast community at the moment is pretty insular. We, as a community, tend to only talk to podcasters and promote to podcasters. I also have this feeling that we just pass around the same listeners and we aren’t breaking out as fast as I think the community feels it is.

Unfortunately I don’t have hard proof of this yet, but my experience talking to people outside of the community is that there a lot of unknowns about what podcasting is and what it isn’t. What this means is that we have a movement trying to convert a very new and insular media format and monetize it to a profitable endeavor. I feel there are some potential entry points that have possible revenue streams (hosting, advertising, etc.) but one of the challenges is proving and then establishing this format a profitable market that will continue to grow.

Another challenge that we will face as podcasting matures and becomes a money making business is the attention of the media and the legitimization of the medium. This may not seem like a challenge but with money comes legalities. Many shows currently fly under the radar and are not licensed or licensing their media/content as more mature formats have to (think radio or even webcasting). As boards like the RIAA get involved, and trust me they will sooner then later, this is going to drastically change the landscape.

I am excited about the maturing of Podcasting, I am thrilled to see some of the new ideas coming out of it and I hope that my friends and colleagues get to a point where they can make money doing something they love. But with this growth, there will be many challenges both known and unknown that we will all have to face as we begin to monetize this media.

Squeezing Turnips

The Recording Industry Association of America (RIAA) is looking to raise the royalty rates on the new Sirius and XM radio mp3 recorders. This at first seems unusual because in your typical broadcast situation the broadcaster would usually pay BMI/ASCAP/SESAC for performance rights, but with the new MP3 satellite recorders XM and Sirius are providing a device that allows customers to record the content. To allow this XM and Sirius had to work out a royalty deal with the RIAA, but starting next year these negotiated terms are expiring.

As reported in Forbes Market Scan, the RIAA is “posturing for larger payments”. What this ends up meaning is that if the RIAA raises the royalty rate, to continue to sell these devices XM and Sirius will need to pay more royalties per device. The concern that XM and Sirius have is that if the royalty is to high then the profitability of the service for them will drop and if they lose too much money then XM and Sirius may have to kill the service. Other possible outcomes are that the RIAA will require other services/features to be added (specialized DRM, limited recording ability, etc.) to the devices for the contract to be agreed to which could possibly limit sales and profitability.

Once again the RIAA is going after new technologies and attempting to get more blood from the turnip. I understand that the RIAA job is to protect their company’s rights but the sheer aggressiveness they take is always astonishing to me. They complain about losing money and dropping revenue so instead of looking for better ways of treating their customer base they use strong-arm tactics to force money out of them and wonder why they are losing more customers and having public backlash.

It’s a tough balance, you need to protect your investments and you need to grow your company, at the same time you need to keep your customers happy because you want them to continue to use your service. Balancing these two, often opposing, viewpoints is a delicate act, but what we are seeing is more and more large companies taking a ‘forgot the old customer, we need new customers’ attitude and focusing on profit. This works in the short term but what happens when you start reaching the market cap? Also, we forgot how powerful word of mouth and happy customers help further sales, but we also need to focus on our quarterly report to the shareholders… hmm, who wins that argument?

Sources: Forbes Market Scan, Billboard Radio Monitor

The Great Electronic Divide

Over the last nine years as a DJ one thing that I have found fascinating is the large separation between the music and the audience. With most forms of musical entertainment the audience is there to see the actual producers of the music. For example, when you go to a Broken Social Scene concert you are there to hear their music. With DJs you may be there to see a specific DJ but overall the audience members are not aware of the producers behind the music being played. The audience of a DJ is there to dance and they usually prefer a style of music that the DJ plays.

At first this doesn’t seem to cause a divide because usually the audience going to a club is there to dance, drink, hang out with their friends, instead of seeing a specific musical act. The divide becomes painfully obvious when someone at the club hears a track that blows their mind and they want to have a copy of it for themselves. Let’s take a look at what this divide is and how it was created.

To start this off let’s create a scenario. Let’s say you are at a club with a DJ spinning breaks and we should also assume that you don’t know much about the dance music culture (record stores, distribution and such). You hear a track that is just amazing and you want to find out more about it. First, you need to like it enough to actually pursue the DJ and find out where he or she is. If you are at a bigger club they are often in a secure or hidden booth, or on stage. If this is the case then you are out of luck because this makes it almost impossible to talk to them and find out what the song is (unless you happen to know them or have some kind of access to them).

Okay, let’s say that this is a smaller club or a bar with a DJ where you can actually go up and talk to the DJ. This is where you run up against your next obstacle. Many people don’t realize that trainspotting (or the act of trying to find out what the DJ is playing) is considered a faux paux in DJ culture. Many DJs pride themselves in hiding their collection so that they are the only one that will play those killer tracks.

Personally, I think this is crap and most of the DJs I play with feel the same way. Let’s pretend that you get one of the nice DJs that will actually hand you the record sleeve when you ask what they are playing (I always try to do this). Now you have a sleeve, let’s hope that it’s not a white label with no information on it or some crazy information-less sleeve (which are out there).

You now have the name of the producer, and if you are wise you get the label’s name. What now, you ask? Well, if you go to Best Buy or some other major chain you probably won’t find the track or even the artist because most electronic music is only distributed by small indie labels in very limited runs (less then 1000 copies). This means you need to go to a special boutique record store that focuses on this kind of music. Hopefully you know one like BPM in San Francisco.

You go to BPM and you look for the vinyl (because this is probably the only way you are going to get it) and there is a really good chance they will be sold out. Most record stores only buy a handful of copies and unless the DJ just bought it that day and the store happened to have more then one copy and other DJs haven’t already grabbed all the copies, then you can get it.

As you can imagine most people give up at just talking to the DJ, but even if you go that far you have to know all the tips and tricks of the DJ culture to get it. The other option is that some DJ puts out a mix CD that has the track on it or some label puts out a comp with the track included. In most cases this is a dead end and the listener doesn’t get a copy of it.

So here we stand at this divide. I love the music but don’t know were to get it. Interestingly enough this fact is why a lot of DJs get there start. They start as active clubbers/ravers/scenesters that get so into the music they actually go out join the DJ world.

Overall, this divide is really frustrating, not only to the audience but to a lot of producers too. We want to get the music out there, that’s why we started producing in the first place, but due to distribution challenges, cost of vinyl pressings, mastering, etc. getting it out there can be really challenging. We are seeing a trend away from pure vinyl djing with more live acts and laptop MP3 DJs. This will help limit the divide but at the same time the separation of the audience and the producer still exists.

If you haven’t seen the movie “24 Hour Party People” go Netflix or rent it. It’s a great story about the Manchester scene and the eventual rise of the DJ as the focus of clubs and parties, that and it’s a great mockumentary too.

Another Introduction

Originally, I was just going to start off with a regular post and skip the formal introductions. The more I thought about it, I soon realized I should probably do a little framing of the site before I jump into the fray.

A few of you may have read my old blog “The Life and Times of a Backyard Producer”. This blog focused on the development of the Cedub studio (a.k.a The Audio Lab) and ended up more of a documentation of my experiences creating music. The issue that I have had with this format was in the last 8 or so months I have had very little time to work on music production and I haven’t had that many topics that are in the scope of the blog to chat about.

With the founding of Fake Science, the launch of the podcast and now our music store I have been coming across a lot of topics that I wanted to write about but until now I didn’t really have a forum to post to. I really wanted to keep “The Life and Times” on point and with everything going on at the time I didn’t get around to starting a new blog. The goal of “Vivisecting Media” is to broaden the topics I write about and allow me some freedom to just think about media in any form, from film to games to podcasting.

At the moment I feel we are standing on the brink of a massive sea change in media industry. In all actuality it has already begun with the new forms of distribution, media generation, independent movements, lower technology cost, etc. I am currently in awe of what is going on and I felt (with some serious pushing by my friends, thanks Josh and Danah) that this was a good way to start documenting these times and also to throw out my own thoughts into the mix.

I will attempt to post three or more times a week, both random finds and on a semi-regular basis a longer narrative on topics that either I find interesting or based on conversations I have had with friends and colleagues. Hopefully you will find this all interesting, informative, and entertaining. Well, enough about the blog… on with the show!