Dave Kusek, Future of Music

Hi, I’m Dave Kusek; I’m Vice President at Berklee College of Music. I’m also the co-author of the book The Future of Music with my buddy Gerd Leonard, and I’d like to talk a little bit about the future of music, the future of the industry from our point of view, and maybe show you some stuff on the web; how we are trying to create the future of music here at Berklee.
We wrote the book The Future of Music to really help to educate the industry and also to encourage a dialogue on what’s happening in the music business. People are a little confused it seems about what’s happening in the music industry. There is a lot of gloom and doom in the press over the last several years about how terrible the record business is and the Internet is killing the music industry and for the most part that’s just not true. The record companies would like you to believe that, but the reality is that the music business is in pretty much the best shape it has ever been in, from our point of view. There are more records being made, there are more songs being written, there’s more music being recorded, the touring business is quite healthy, there are more opportunities to perform music, there are more opportunities to get your music on various forms of media, television, cable, interactive media, the Web. Publishing revenues are at an all time high. So when you look at an overall scope of the music industry, it’s actually very healthy. Here we are in the summer of 2005, late summer unfortunately, but the business is really thriving as a result of digital technology.
The Internet software for recording, editing, mixing and distributing music has really revolutionized the music making business, and in a certain degree it has revolutionized the music distribution and marketing business. If you take a look at programs like Pro Tools, Reason, Live, all the types of MIDI and digital software that is available for the PC, the power of those little laptop computers that we have today, to be able to do a 24 multi-track audio recording in your own home, really all you need is the computer, the software, a couple of good microphones and then musicians. But you can do a lot of what you were able to do in very high-end recording studios, now, literally at home, and many people are doing it. What does that mean for the quality of the music being recorded? Well it really comes down to talent and writing a good song. If you have got that, then you are able to go a lot farther, a lot faster these days than in the past. You also don’t have to spend as much money to make those records as you did in the past because you have these tools and very, very quick recording and editing and mixing tools to get your ideas from your head through your fingers on to some form of media where you can begin playing with it and listening to it and seeing what you got. So as a creative enterprise, music making today is more accessible and powerful and available to people than ever before. So thus, we have tons and tons of records being made and songs being recorded. We have a glut of music available.
If you look at music distribution, record companies for the last four or five years have been hurting. Their sales have been declining, they just don’t seem to be making the kind of money that they have been making. They are primarily blaming the Internet and file sharing as the reason they are having these issues. This is a blog that we put together for the Future of Music book and one of the topics, this is actually an excerpt from the book, “Is File Sharing Really Killing the Industry” and we argue that, no, it’s not true, and that there are numerous reasons why CD sales are down. CDs came out in the late 80’s and were a huge re-issue opportunity for the record companies so they re-issued basically their whole catalogue from vinyl through cassette through eight-track onto CD and it drove sales because you had this perfect digital copy on a CD of basically, the vault and they were able to sell these things for $18.00 or $19.00. Even if you already bought the tape, you probably bought the CD, so that drove enormous sales of CDs, It was a very, very phenomenally successful format for the record companies and generated tons of cash, but you know, like a lot of businesses, when it’s going really good you tend not to pay attention to what’s the next thing, where should you be going next? And to a large degree the record companies missed the Internet, the digital transformation of the music industry for a variety of reasons. It’s only today that you see computers and email and Blackberries in the hands of record company executives. Not too long ago, and I’m talking years, not too many years ago, there were no computers in the offices, they weren’t connected to the Internet, they weren’t hip to what was happening online generally speaking. That’s not the case at the moment, but that I think made them a little blind as to what was happening. The videogames came along, were extremely interactive, very interesting to the youth market, they were available for 40 or 50 bucks, the kids absolutely loved them, they started kids buying video games, took money away from kids buying CDs. You also have DVDs coming out, the movie and kind of film entertainment business continued to thrive that also took away, and all those DVD sales took away sales of CDs. A CD at 18 bucks became less competitive with other forms of entertainment. So what happened? People started to spend their money in other places rather than buying as many CDs as they once did. So you have two forces happening there; everybody already replaced their library with CDs so how many more copies of that one record are you gonna buy? And you had other things to spend your money on. You’re buying video games, you’re buying DVDs, you’re buying DVD players, you’re buying home theaters, you’re buying personal computers, so it started to take available money away from the record companies.
Record companies would point the finger and say well that’s not the reason that we had any trouble; its people stealing our music online. Napster or Kazaa or Limewire, all of the other file sharing sites that sprung up in the last five or six years are the reason that the record sales are down. Well, we argue in the book and we’ve seen lots of supporting stats that that’s just not true. That file sharing has been shown to actually encourage people to explore and discover new music and to ultimately lead them to go and buy CDs or go to shows or talk to their friends about the bands they discovered online. Is it completely black and white? No. You know, has file sharing impacted CD sales somewhat? It’s very, very difficult to say whether that’s been a positive or a negative. It appears to be relatively neutral. It’s a great way to market music, it’s a great way for people to discover music to find things that they always liked, to kind of cherry pick the collection and assemble music that you’re really into, that’s sort of bad for the music companies, but on the other hand, you’re out finding things, finding new music, you’re trying things, sort of like singles, that the record company, like singles used to run the business in the seventies and eighties and the nineties singles kind of went away as they shifted more emphasis to the CD format. Well, the online files are now kind of the new single. So you go out you sample music, you find the new bands, you test things to see if you like it, it generally leads people to going to the stores and buying CDs, go online and buy tickets for shows, buy merchandise, read and discover more about these artists that they found online, talk more, buzz more about artists online through instant messaging and chats and other tools that are available on a lot of these file sharing networks. When you weigh the balance: fire sharing- good, bad? We figure it’s pretty neutral and it kind of weighs toward the positive side that if the marketing folks at a record company decide that they want to use file sharing to break an act or to pre-release a record before the CD hit’s the stores. There’s numerous examples that that works incredibly well. Radiohead, 50 Cent, are two examples right now where the tracks were leaked ahead of time, they got onto the file sharing networks and the records sold absolutely huge. Norah Jones, same thing. Tracks were leaked; her first record just sold millions and millions of copies.
So, The Future of Music, we talk about how do you embrace the web, how do you embrace digital technologies as a key component of your marketing strategies of selling records and promoting bands. We look at different ways that you can market online, we look at different ways that you can distribute online, and we also start talking about kind of, what does the future music company look like? If you take a look at all of the ways an artist can make money you have, in theory, selling records, and the royalties that you would make off those records, the ugly truth of the music industry is, most records never recoup their advances, maybe one in twenty, one in fifteen records actually recoup their advances. So if you’re an artist and you get a nice check for fifty grand, maybe a hundred grand, if you’re incredibly lucky and have a great attorney negotiating for you, that’s probably all the money you are ever going to see for that record. And you know, you split that with your manager, you split that with the other people in the band, and before you know it, that money is gone. So what do you gotta do? You gotta hit the road, and play. And you can make money, if you are willing to get out there and play and work really, really hard. You can make a lot of money. So the records kind of are promotions for your shows where you’re really going to make the coin. You can sell merchandise, t-shirts, hats, whatever. Whatever you can think of. A lot of that money goes into your pocket. Again, if you’re smart, you’ve got a good manager; you’ve got a good attorney. Publishing- if you wrote the songs, you are going to make money from record one off mechanical royalties. But you can also go and license those songs, you can put them in commercials, you can get them used on cable, you can get them used in interactive media, that’s very lucrative and very future-oriented because a lot of uses for music in the future are going to be publishing related. You are going to be syncing up to visual images, you are going to be syncing up to the web. When you think of 500 channels on your cable television, where’s all that music going to come from? And that’s all publishing money. So, records, touring, merchandise, publishing, those are four main ways that artists can make money.
What if you take a fresh look at the view of the music industry and say “Well, historically it has been driven by record sales, and then artists can make money playing and writing songs and selling hats and t-shirts,” but the driving force was that the record company came in, put down the money to make the record, to market the record, they distributed it, they “make you famous” and then you can sort of fend for yourself to make some money. What if you took a different approach and said well, at the very center of the equation is the artist. Whether you’re a writer, or an artist, or both, you’re at the heart of the deal. You and your manager form a partnership and your job is to promote yourself and make as much money as you can everyway you can think of. So if you create a picture of manager and artist in the middle and records, touring, merchandise, publishing, writing books, teaching, appearances for other reasons, other than performing and you start creating a universe of opportunity around yourself that we think is one of the structures of the music company of the future. Where you put management and the artist at the center, and you put all the different ways of making money around it, and you can structure it in a bunch of different ways, you can put one company, it can be a bunch of related companies, but if you start thinking about the opportunities for artists and songwriters from that point of view, you begin to look at that recording a little bit differently. Does the recording have to be the way that you are going to make the money, recoup the money that you invest to get the artist well known or, is the recording perhaps a way to drive awareness for the artist so that they can perform more. So that they can sell more merchandise, so that they can get their songs published and picked up in different places, so that they can create this little business empire around themselves. And if you look at the recording in that context and you look at file sharing you think, well, maybe if we give a bunch of records away and we give a bunch of songs away in order to create awareness to get people to come to our shows, to get people to buy some merchandise, to get them to buy some CDs, to get them to buy our DVDs, to get them to buy our books, whatever, you start to look at file sharing as less of an evil concept, and this we think is the future direction of the music industry. We’re not going to write off the ability to make money off of recordings, but if you look at sort of a tiered system, where some stuff is free and some stuff you pay a little bit for, and some stuff you pay a lot for, it changes the dynamics of the industry, and makes it much more focused on the artist and the opportunities for the artist to have a reasonable career without waiting for that next record deal to come along. Because that’s the vicious cycle that you don’t want to be in, if you can help it.
Music Business (12 minutes)

I’d like to talk a little bit about different ways to think about business and music in particular. I’ve been through a couple of different waves of transformation in the music industry for twenty five years. In the 1970’s, I know I don’t look that old but, I was alive then, I was lucky enough to get involved in some of the early synthesizer companies. I worked for a company called Electronic Music Labs in Connecticut. And it was Arp, Moog, and Electronic Music Labs. and Bob Moog just passed away a couple of weeks ago, good buddy of mine, and those three companies created sort of, the electronic music business, or at least the seed of it that we are experiencing a huge explosion of today. We created electronic instruments that didn’t exist. You know Arp and Moog were really into keyboards and electronic music labs, we made keyboards, and we tried to make an electric guitar.
These instruments transformed the way music was made and opened up the market for people to experiment with different kinds of sounds. From electronic music labs I went with two of my friends, and we started a company called Synare, and we made electric drums. And this was a synthesizer technology applied to drumming and we did that because well you had Arp and Moog making keyboards and we didn’t want to compete with them. We tried the electric guitar to make an electronic synthesized guitar, very, very difficult problem; no one’s actually done it yet. All of the instruments that are available today in 2005 are kind of compromises. But drumming, that was easy to do. So you could create drums, you could change the knobs, you can make any kind of sound you wanted. We gave a bunch of instruments, they looked like flying saucers and we gave a bunch of instruments to Donna Summer, and a couple of other people that were sort of at the very beginning of the disco explosion. And you heard those instruments on hundreds of records. That, you know, you can argue whether disco is good or bad, but it was incredibly popular, it was a whole new genre of music that was largely created because of the new sounds that they were incorporating in their music and the style of writing, the sounds that were created, the new instruments that they had available to them, the dance, kind of early beat, that was really developed through disco, had a lot to do with the technology of the times.
So we’ve seen over a period of years electronic music becoming more a part of the main stream music and you’ve gone through sort of that era where the instruments got more and more sophisticated you got a lot more sound processing and signal processing stuff happening in the recording studio you have now, I’m talking mid eighties, late eighties, racks of gear in the recording studio that could do harmonization and equalization and time shifting and all kinds of stuff that people tried in wacky boxes and software that people wrote that made music sound different and sound more interesting. When you think about what are you going after when you’re writing a song, well, one of the great things to do is to do something new. Do something unique and different; establish your own identity from a sonic point of view. These technologies allowed lots and lots of people to do this. You know, bands like Devo, flocked to the synthesizer, Emerson, Lake and Palmer flocked to the synthesizer and created all new blends of music that didn’t exist before. You have computers in the early eighties coming about, The Apple 2 computer, the IBM PC, and I started another business called Passport Designs, in California in 1980 with a couple friends of mine, and we developed MIDI sequencers, MIDI interfaces so that you could connect a MIDI; stands for musical instrument digital interface, it’s pretty ubiquitous today, but it was very revolutionary when it was created, that you could take a keyboard instrument and plug it into a computer and record what you played. You couldn’t do that before unless you did it on tape. You could record a piano or a harpsichord or something or a B3, take it to analog tape, but MIDI lets you take it to a computer and gave you the ability to now play with that music in digital form. You could take it, you could slow it down, you could speed it up, you could change the key, you could play it backwards, you could copy and paste, and that technology along with the instruments that were created MIDI keyboards, MIDI drums MIDI guitars, you name it. Yamaha, Roland, Casio, Korg, many, many companies created instruments like that, that opened up music making to literally millions of people that didn’t have the ability to get an acoustic band together, but could take their little keyboard and their Apple 2 computer and goof around at home and do multi-track recordings and play with the music on the screen enough until it started to sound pretty good. That revolutionized music making and opened it up for many, many people who would not have been able to do it otherwise and lead us to where we are today with kind of desktop music productions. That created opportunities for companies to get into the music industry that didn’t exist before. Lots and lots of software companies like Passport Cakewalk, you know, jumped into that market Emagic, very successful company out of Germany, created a program called Logic. Eventually, Emagic was acquired not too long ago by Apple and now you see GarageBand and Logic from Apple, Soundtrack Pro from Apple, it made Apple a music-making company. And now you look at the strategy for Apple with iPods and iTunes, and Logic and GarageBand, and lots of other stuff that they’re no doubt working on. You look at the transformation of the music industry over the last, let’s say twenty years, many companies that were making instruments like Fender, and Gibson and Yamaha and Zildjian, you know they’re still making instruments and their business is growing and very healthy, but you also have a lot of new companies, software companies, hardware companies, computer companies that have entered the music industry because of technology and the way it has changed things around. You take that to the extreme and you look at Kazaa and Napster and Rhapsody, and again, Apple, with their iTunes program and Music Match and Yahoo, now you have some very, very huge players entering the music industry as a result of technology. The point I’m going to make is, you can’t stand still in a business, if you’re in a business in a fast moving technologically impacted market like music, you cannot stand still, you cannot take your eye off the ball as many record companies did. You have to keep going. You have to invest in technology, you have to invest in new uses of that technology or you are going to get completely blindsided by other very smart people who are looking at these opportunities and saying “oh man, I want to get some of that”. So, the best thing you can do is to pay attention to what’s happening with technology because the music business is going to be quite different ten years from today, than it is today and that difference is going to be primarily because of the new technologies that are being created. New ways of distributing and marketing music in particular, things like music recommendation software, ways of creating communities of people, that bands and their managers can tap into so that you can create direct relationships between the artist manager on one hand, and the fan on the other hand, you can create direct relationships where you start marketing directly to customers, rather than you know, running ads or you know, trying to get your music placed on the OC so a bunch of kids will hear it. You start direct marketing. The technology it’s going to is already enabling that kind of thing.

Berklee Online (10 minutes)

So, technology is going to change whatever industry that you are in. I’ll give you an example. Sort of, putting your money where your mouth is here. Berklee College of Music, we’re the largest independent music college in the world. We have about four thousand students on campus. We teach a very contemporary music curriculum, performance on all instruments including turntables, song writing, composition, music business, music therapy, production, engineering, synthesis, song design, film scoring. Berklee is a very progressive place. We were the first to teach electric guitar, we were the first to teach synthesizer, and we decided that we have to pay attention to technology not only internally at the college, but externally. Because if we didn’t, we’re going to miss huge opportunities that perhaps get, see some competition where we didn’t want to see it.
So, we’ve been very careful to use technology on campus, we’re a completely wired campus, wireless network everywhere, we encourage, not quite require but, we encourage every student to have a laptop computer. Nearly 100% of them have laptops; we use Macs here at Berklee. We load those computers up with a common software so that every student and every faculty member in every classroom has the same set of software and common hardware all networked together so that people can communicate and kind of have an idea of what the platform is that you are using to make music. We, a couple of years ago, about five years ago decided well, we better get ourselves hip to teaching music online because the internet is exploding, people are expecting you to have offerings online, but we also had some interesting challenges here that we have 4000 students on campus but we live in the Back Bay of Boston, it’s extremely expensive, it’s crowded, we are crowded is the best word I can use. We are packed into the classrooms we are packed into the dorms. It’s very difficult for us to grow the school on campus because we don’t have anymore space. We bought all the buildings we could around here. So we thought, let’s go and explore creating an online school and this is Berklee Music, which is our online school.
We now have sixty courses up and running online and they mirror the curriculum of the college. Songwriting, Music Business, Music Ed, Producing, Engineering, Arranging, Performing, Guitar. Let me give you an idea of some of the business courses. We have a course on the Future of Music, Inside the Music Industry, Publishing, Legal Aspects of the Music Business, Music Business 101, Self Promoting Musician, How to Get a Job in the Music Industry, Creating Pro-Mo Kits, Web Design. This is just the beginning of our attempt to kind of mirror Berklee online to create a full on, very serious, very professional music school that reaches out to people all over the world who want to experience contemporary music, want to learn about it, but perhaps don’t have the opportunity to come to the U.S. So, this online school reaches out to people in about, I think eighty different countries at the moment. We’ve got over a thousand students online, four thousand on campus, one thousand online. The online thing is growing, very, very quickly and we are beginning to explore ways of teaching online that again, mirror what we are doing at the college. A lot of these courses have software that it is either downloaded or shipped to the student so that there’s recording digital audio editing music notation software, available for each student so that you’re working in an environment online that very closely maps the environment that we have with this laptop program I talked about. I’m just going to play a really quick little movie, just talks about the online school.
Video:
“The college of music that has started it all has started it all again, online. Berkleemusic.com taps into all the same experience that makes Berklee, Berklee. Same renowned faculty, same student body, but with a whole new way for you to join the experience, whatever or wherever you make it, or mix it, or manage it. Berklee music brings a smart, powerful new way to learn. Your life, on your terms.”

So for example, if you were interested in music production,
Video:
“Welcome to Berklee Music, my name is Michael Beirylo and I’m an associate professor of music synthesis at Berklee College of Music. I have been teaching Production at Berklee for eight years so I have had the opportunity to see many Berklee students develop talents and skills and apply them in very practical ways to music careers all over the world. Practicality is in fact one of the philosophies that shapes the environment here at Berklee. Still, while the focus of music production is practical, all Berklee Music courses guide students in developing an informed musical vision. So, you’re probably wondering what Production classes at Berklee are all about. We currently offer a number of six to twelve week courses focusing on various areas of production. I’m going to guess that one of your next questions would be how do you learn production online? Or what kind of equipment do I need to take this class? To give you a better idea, of what a Berklee Music course is like, click the guided tour button below.
Video:
Getting to class is easy, once you’re enrolled in a class at Berklee Music, you will receive an email with a link to view your personal homepage, a link to your course will appear on your homepage, before the course begins. We begin each course with introductions, meeting your classmates, and your instructor will give you an opportunity to discover and share common interests and begin a network of relationships within the Berklee Music community. This is a good time to familiarize yourself with the website, and the details of the course. Take some time to navigate the course area and read through the course syllabus.
A new lesson is available each week. You’ll work with innovative, interactive tools to help guide you through the learning process. You’ll complete your lessons on your own schedule throughout the week. Begin and end as you need to, at a pace that’s right for you.”

So I’m going to stop there. There are two points that I want to make here, one from the Berklee perspective, we felt that we had to do this in order to keep current with technology and what is happening out in the real world. Music is a global phenomenon so to be able to have a method of reaching out, around the world, to connect with people that are interested in music making. This gives us a platform for doing this. This also is a terrific way for Berklee to partner with other schools which we have begun to do. UCLA in particular is offering a bunch of the Berklee online courses to its student body and we are cooperating with them and we are creating relationships with other institutions around in this case the country, but ultimately around the world so that we can offer a little bit of Berklee to different places and I hope at some point that we are going to be able to offer other perspectives and other courses that are created by other entities to the Berklee community. So it’s a way of networking and partnering and it’s a way of going global using the technology that if we don’t use it, somebody else is going to use it. So that’s one point.
The second point is if you’re in music. If you’re in the publishing business, if you’re in the record business, if you’re in management, if you’re in touring, if you’re in merchandise, whatever you’re doing in music, if you don’t leverage the technology that’s available, if you don’t get out ahead of it, if you’re a big company if you don’t invest in it, and explore what this technology can do for your businesses, you’re going to have your lunch eaten by other people that are going to do that and that’s the lesson of the day from the perspective of these waves of technology that have kind of flown through the music industry and other industries, but music is what I know. You have to pay attention to it, you have to change and transform you always have to keep learning, you have to develop new skills, you have to make hard decisions about maybe the way you do business ought to be changed because the technology makes it cheaper, better, faster, easier, whatever. If you don’t make those changes, you’re going to have a hard time. Witness the record companies today. Didn’t make the changes, having a hard time, pointing fingers, perhaps in the wrong places. That’s the lesson of the day; you have to keep current with technology in music. It is utterly transforming and has transformed the music industry and it’s going to continue to do it for as far out into the future as we can see.