After 11 painful years, Terry McBride is feeling optimistic about the music industry.
He sees the industry growing in the coming years, as people access music in new ways.
McBride is the CEO and co-founder of the Nettwerk Music Group, which has been the label and management for Sarah McLachlan, Avril Lavigne, Barenaked Ladies and others, and he recently gave the keynote address at the fourth annual Vancouver Island Music Business Conference (VIMBC) in Courtenay.
“I think as everybody knows, the last 11 years, the music business has been in a recession,” he said. “That recession will end this year, and music, for the first time in 11 years, will actually grow this year. I know that sounds strange, but watch it happen. And that’s just going to be the beginning because you’re going to see over the next decade this business grow anywhere between three to 15 per cent a year for the next decade.
“If you’re just getting into the music business now, you’ve hit it at its low, which is great because it means it can only go up so that the trough at the bottom that was started by Napster and sort of the breaking of the monopoly is now at its end.
“The reason I say this is because of the consumption patterns of how music’s going to be consumed and the shift from the desire to own really to the desire to access.”
Managers, promoters, producers and musicians were in the Valley to share their knowledge about the industry, and this year’s conference shone a spotlight on embracing new technologies.
It could be argued that in the digital world, the value of music is zero, explained McBride.
“Within the digital space, music is a bunch of zeroes and ones — the last 11 years, a lot more zeroes than it has been ones,” he said. “But essentially, anything that is put on the Internet is free; if it can be digitized, it’s free. So, the value of the music from a monetary point of view, of your intellectual property, has been zero. But the context that you attach to that is very, very valuable.
“We’ve seen the live music business remain healthy, and that’s because the context of the access of intellectual property has been through a live medium and interaction between the band and the audience, with the band being the scarcity because the band cannot play in 3,650 venues a night — they only play in one. The bottom line is that scarcity, and scarcity’s valuable.”
McBride feels the reason why music is going to grow has nothing to do with the content suddenly getting better.
“What’s going to happen is that you won’t be buying music,” he said. “You will be accessing it. You will pay some sort of fee … to access that. You ask yourself, ‘I access music for free now; why would I want to pay for it?’ It’s a simple reason — it’s how it’s delivered to you.”
In 2006-07, McBride wrote a paper about digital valets, applications for a mobile device that will grab the music you want to hear for you, which you can then instantly stream.
There is a digital valet called Spotify in Europe, which creates more income than iTunes and which McBride expects to launch in the U.S. in the coming weeks, and McBride believes it is through new revenue sources like this that the music business will grow.
“I think in Canada, in the first five months of this year, business is up about three to four per cent without these revenue sources,” he said. “So basically CD sales have come down so low they can’t go much lower, so there’s only up. So I’m actually quite optimistic about it.”
In October, Apple is going to introduce the iCloud system, which stores your music, photos, apps and more and wirelessly pushes it to all your devices automatically — and cloud-based systems like this will change how people access music, according to McBride.
“What’s happening is in about five years, downloads will be viewed as something the older generation did,” he said. “All this music will be up in the clouds, and the clouds are simply big huge servers based all over the world that will have tens of millions of songs. The ability to access those and have them instantly streamed is becoming more and more realized.”
The first step is to take the music you already own — what McBride calls your digital locker — and for $25 a year, you will be able to put it up in the cloud and instantly push that to any device you have.
“The next step forward is you get access to all 25 million or 35 million songs,” said McBride. “When that happens, the reason to pirate music completely goes away. Why do we keep downloads when you have instant access to anything you basically want? It’s a shift in consumerism; it’s a shift in behaviour, and it’s very easy to monetize that.”
McBride believes people will still buy CDs, mainly as souvenirs of a live show.
“If people come to a show and they are emotionally affected and they fall in love with you, they’re going to want to have a piece of you and so will buy a CD, especially if you are actually signing them and talking to them because it’s that whole scarcity,” he said. “That has huge, huge value. CDs I now view as merchandise. There are many artists I know now who sell way more CDs live than they ever will through physical retail.”