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A long weekend is traditional time for gentlemen to retire to the garden shed. Even if you're not planning to do so yourself, please do spare half an hour to read what I think might be the best analysis of the music business I've read this year - or, I think, any year. It's a quite magnificent, panoramic view of the landscape with a very provocative conclusion.

It's from a talk by David Lowery, formerly of Camper Van Beethoven and Cracker, a musician, songwriter, producer and a man who knows quants, programming and is a veteran radio ham. Lowery sued two of the three major record companies he signed to in his music career; this is a guy who has been around the block a few times. As he says, he pioneered "freemium" models (encouraging fans to distribute tapes) and social media in the 1990s - way before New Media Gurus stumbled upon such ideas.

His talk brings several interesting perspectives to the table that very rarely get an airing. One is that the digital music landscape is now fairly settled. We're used to thinking that the music economy is in a constant state of flux: but the gatekeepers are now well-established, he argues, and we need to address this.

"The genius of Steve Jobs was that he was not afraid to be greedy," he notes. But if profit is a reward for risk, he asks, what exactly is Apple risking to justify its 30 per cent cut on digital music, nine years on from the "risky" launch of iTunes?

Another good observation is that much hatred directed against the music economy on the web comes from failed musicians.

"I can only surmise that part of their anger seems tied to the hatred of the record companies that rejected them," he says. "Successful even marginally successful musicians are often viewed as some kind of traitors. A special kind of hatred is reserved for these apostates. The file-sharing cyber-locker industry has figured this out and purposely stokes stokes them with a faux populism. I would say it’s juvenile but it’s really more medieval."

Another good point is that the promise of disintermediating gatekeepers simply didn't work out. In the 1990s many artists hired webmasters, drawing an audience of fans, and potential revenue. But then came Facebook - and the traffic to artists' own websites disappeared. And there's not much we can do: "The internet has a tendency to monopoly because we are fucking lazy fat slobs."

And far from making the playing field fairer, benefits of digital economy simply have accrued to giant brands like Madonna and Radiohead, who built up their fans with record companies and can now cream off the profits.

The most radical proposition of all is that the much-criticised major record company model - of investing in many acts of whom only a few recoup any cash - was actually a benevolent form of wealth distribution. It required acts who did recoup handsomely subsidising bands like Lowery's own, who didn't fully recoup, but were still given a decent income.

He writes:

I know this is probably really confusing to you civilians. Am I really saying it’s better to be un-recouped as an artist? Yes it is. Quantitative finance geeks will see this as selling a series of juicy “covered calls”. Being un-recouped means you took in more money than you were due by contract. You took in more money than your sales warranted. And there was a sweet spot, being un-recouped but not too un-recouped. For instance I estimate that over my 15 year career at Virgin/EMi we took in advances and royalties equivalent to about 40% of our gross sales. In other words we had an effective royalty rate of 40%, despite the fact that by contract our rate was much lower).

Agree or not, you'll be a lot better informed after some working through his arguments. I can't commend it enough.

Related Link

'Meet The New Boss, Worse Than The Old Boss?' by David Lowery at The Trichordist

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