State of the Music Union: Transparency

A funny thing happened at the Digital Music Forum's State of the Union panel.

In my opening, I spoke about how the music industry has lost its cool and that it needs to rehab its image with audiences and customers to gain trust. How?

For starters:

1) Apologize.
2) Give fans what they want and will pay for.
3) Be transparent.

On my left was Ted Mico, head of digital at Interscope/Geffen/A&M. Defensively, Ted offered that the artists are the brand and that the average fan doesn't have any idea of what the "music industry" is. Of course, on this Ted and I disagree. While fans may not know Interscope as a brand, they absolutely know the music industry, just as they know the auto industry. Interscope can try to operate behind its artists' brands while it attempts to transition from a product business to a service business, but it can't hide from its place among the other RIAA members and the actions of the RIAA over these last few years. The transference of faith from the artist brand to the label as a trustworthy service company will not happen by osmosis. If a label wants trust, it actually has to earn it.

On my right was Tim Quirk, VP at Rhapsody. Tim, who was once signed to Warner Bros. as a member of Too Much Joy, commented that there needs to be trust among partners as well. Tim also spoke about his royalty statements from Warner Bros. He can see for himself what plays are reported on his former band from Rhapsody to Warner. And yet, statement after statement, Warner tells him he has earned no royalties.

Even with direct access to verifiable information that should be used to calculate his royalties, Tim Quirk cannot get paid by his former label. So how can other artists trust that they will get paid? If Tim cannot trust them to follow legally binding agreements, then why should other artists expect any different?

Why would any artist sign a 360 degree deal where the label participates in other income like tours and merchandising if the label can't be trusted to account for the income generated from recordings?

An interesting side note: I met a representative of a service provider that helps improve the accuracy of royalty reporting. In essence, one of his label clients told him that they didn't want to know the accurate numbers because then they would have to do something about it.

The old habits of deception, cheating and lying are hard to break, especially at a well-entrenched, institutional level. While the incumbents wrestle with them, new players could gain traction by taking a less well-traveled, but remarkably cleaner path in the music business: Transparency.