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Ian Faith's Music BLOG: Aug 2007 - Will High Definition Lead To The Death of DVD?

For decades now the entertainment world has been entwined in technology wars that have led to two frontrunners battling it out, with the winner taking it all. VHS and Betamax was a battle royal with the lesser quality format, VHS, winning the day and reaping the enormous reward. I could mention many others.

DVD, the most successful entertainment media ever, still has a great-perceived value with the consumer. There was a day when music CDs had a positive perceived value, but those days disappeared with the music business and the explosion of bandwidth on the internet and iTunes twisting the dagger. Street teams used to stand outside the House of Blues giving out free CDs to promote bands, but they invariably ended up on the floor paces away from their reception or in the nearest trash bin on the way to the parking lot. So far, the same cannot be said for DVD.

With the introduction of big screen TVs, High Definition programming was born to make the picture look much better on the massive viewing area. This content requires the processing of very large files. With the standard DVD being only able to hold 2 hours of Standard Definition Video (4.7GB), a larger capacity disc was needed with a laser that could read the information precisely. High Definition DVD is the logical next step. Discs need to be able to hold 2 hours of HD content or more, so the battle begins between two camps, Toshiba's HD DVD (15GB can hold 30GB Dual discs) and Sony's Blu Ray (25GB with the potential for more when the lasers can read layered discs).

This is an industry war that the general public could care less about, but these two camps are fighting it as if the losing party must be destroyed. A logical solution would be a dual player, but it would be way too expensive.

So let's take this from the perspective of the consumer, not the industry, for it is the consumer who is the ultimate arbiter. The consumer is familiar with quality DVD players for under $100, I have many that still work fine for $29. They buy a big screen 1080 TV (They have no idea what that means other than High Def potential). They buy DVDs for $5 - $30 on average and they look great on their screen. The Digital cable world then introduces them to High Definition viewing, and then all of a sudden the regular channel picture looks very average, (not close to un-watchable). Their DVD signal looks somewhere between Regular channel and High Def, very pleasant to the eye. They ask themselves, "why doesn't their standard def channels look as good as their Standard Def DVD picture?" The answer is; There is nearly no interference and distortion with the DVD signal. Consumers then buy a new $50 DVD player with HDMI and an Up-encoding feature that makes their DVD feed look even better. They ask themselves, "How much better can High Def DVD look and how much am I willing to spend to find out?"

Remember these consumers have been through format changes very recently from CD to online digital music. They chose lesser quality sound files, as long as they could find the titles they wanted, which were no longer easily found at Brick & Mortar music stores, when they wanted them, at a price that worked - 99c per song.

So the entertainment business has this chance to drive the most successful media ever to incredible new heights with HD, but here is where I think the battle will kill DVD.

Each camp appears to be putting out misinformation to degrade the other, I have heard from salespeople for both HD DVD and Blu Ray, at stores including Best Buy, that the other format won't play your old DVDs! Not true, both are backward compatible.

They are pushing that the quality is so much better on either format. Though it might be in technical terms, but to the average consumer, they won't be able to tell the difference without extreme inspection, at that point who cares anyway? And if they "bad mouth" Standard Def DVD too much, they will kill the perceived value of DVD and make consumers think of it as an inferior format? They are making industry partners choose one camp and dis the other; Blockbuster, Target and others chose Blu Ray. There is also a lack of titles and who is going to invest in a new format with very few titles available? Studios will be slow to make HD titles until they know which format to follow. So far, very few replicators are invested in HD. Apple are on the company board at Blu Ray yet their DVD Studio Pro software only works with HD DVD? Confusion?

There are many titles that really don't need High Def at all; they are just fine as standard def titles. Take two very successful brands, the "Shadow Dancers" visuals line from VJWorld, which would benefit little visually from being in HD, but a nature show like "Planet Earth," from the BBC, looks phenomenal in HD and does benefit. Landscapes and big spaces are where HD shows its best. There is a ton of programming that has no place on HD, not to denigrate, as the visual quality is great in Standard Def, but it would be just a waste of everyone's investment.

This coming 4th quarter, both HD DVD and Blu Ray will try to sell as many players as they can to establish their position in the marketplace. Will consumers be willing to invest around $300 on an entry level HD DVD player or $500 on an entry level Blu Ray Player? Will retailers tell consumers the truth about the war that could leave them within 12 months with an obsolete player that has very few titles in HD available for them? A player that they end up using as a very expensive Standard Def DVD Player? I don't think so.

Like with the end of the Music Business, pushing HD DVD Audio and 5.1, while the battle over future formats ensues a third shadowy contender will enter the fray and win the prize. Ultimately DVD will die in the process taking out HD discs as well. The entertainment business better not sit back and arrogantly think it controls the situation because this shadowy contender has won virtually every other digital war without ever being invited to fight, The Internet and Digital Downloads On Demand.

If the entertainment business as a whole, Manufacturers, retailers, distributors, etc, can't find out how to give consumers what they want on DVD, easily available and accessible at a price that works, mark my words, consumers will chose a lesser product on the internet, and DVD will begin its march to a cold death. If you want proof, look at how people will spend time watching horribly pixilated videos on Youtube. And when all is said and done, who suffers? We all do, The entire entertainment industry!

Ian Faith's Music BLOG: Feb 2007 - The rise of popular negativity and the fall of music sales.

I didn't watch the Grammy's last night, and over the years I rarely have, even though I have worked for over 25 years in the music industry. I don't like awards shows for art. I love art for its passion when it touches me, not for its perceived value.

The general public's ability to be negatively opinionated and affect others buying choices of music has grown with the Internet age. TV shows like American Idol where the lead, "Simon" is the most negative person on the show, also don't help. In the age of Blogs, forums and product reviews on sites, the filtering process, usually handled by an editor has virtually disappeared and anyone without vetting can be a published critic.

So why is music reviewed?
If you look up the word "review" in a dictionary it is defined as "an evaluation", an evaluation is defined as "to affix a value or worth of" this purports something quantifiable. If anyone wants to post a review saying that a "Dishwasher" is really hard to use, that is an opinion, but it also can be somewhat quantified. The influence these reviews can have on other prospective buyers is not to be underestimated. The reviewer may have no real expertise in the field they are criticizing but because of the reviews being displayed together their opinion in context carries virtually as much weight as another reviewer with expertise.

Music, like all art is not something that is quantifiable, its evaluation is purely personal opinion. For instance, I detest the Dixie Chicks, but they have sold more records than most artists I do like. So why should a negative review of them, from me, be permitted to color other people in a personal assessment of their music. We the buying public have more ability to assess music with free downloads, 30 second clips and different media exposure than we ever have before. So why do we now need the personal opinion of someone who we don't know?

Go onto amazon.com or iTunes and read some of the mostly negative reviews, "I hate this!" or "This sucks!" is published, then "Yeah, I agree they do blow" is added, piling on the negativity, the reviewers may never have even heard the music, let alone purchase it. This tells us next to nothing other than someone's personal opinion; so why should that remain as a published public review? It serves no purpose! I would say similar about many other artists, but who cares? The trouble is that negative reviews spurn more negative reviews, people love to pile on and for the industry that leads to less overall music sales.

To me it is no surprise that when the public at large finally came around to digital downloading of music, leaving their negative reviews in their wake that music sales started to fall, why would you want to buy something that everyone else pans? And the greater trouble is that it is becoming pervasive of music overall. It is a human trait that it is far easier to be negative than be positive. Negativity is also something that spreads like a disease; it hits a tipping point and floods the environment.

If you look at early season American Idol shows they basks in the negative cutting people down in public. Those are some of the most watched shows. The Grammy's and other awards shows don't help music shake the public critics as they reinforce that music can be somewhat quantified or else how could there be winners and losers?

So, I implore all music sales and download sites especially the bright spots like Amazon.com and iTunes, (the saviors of the music business - that put a 24/7 music store in every home) to do away with reviews or hire full time editors to really get a grip on this epidemic. Itunes saw a sharp decline last year in downloads, I am sure it coincided with a sharp rise in the amount of negative reviews. Let the public choose what music they buy with their ears and emotions, not influenced by the personal opinions of malcontents. The infection of negativity is growing and the choking music business is being throttled even faster by the noose of negativity.

Jan 2006: More Blogs are coming soon, we are working on Podcasting our Blogs in audio & video form so keep checking back.

Ian Faith's Music BLOG: Sep 8th, 2005. The Disconnect between Artists and Labels: Many artists wonder why record labels and industry executives are not courting them, they put it down to not having the right influential lawyer, manager or knowing the right person. "It's who you know!" I keep hearing this from unsigned acts but it really should be "Who knows you and what do they know you for?"

"We have great songs" - to paraphrase (and twist a little) Chris Rock "You are supposed to have great songs". Why would you be in a band if you didn't have what you thought were great songs? You are also supposed to have a fan base and some semblance of an image that will attract fans.

Artists treat getting signed by labels like getting accepted into the school hip society, they make it way too emotional when they should look at the relationship for what it is - a B2B or Business To Business relationship. These relationships require you to ask 2 simple questions, 1. What do we want from them? and 2. What do they want from us? The answer to question 1 has been addressed about 1 million times each week at band meetings across the globe but I bet question 2 has rarely if ever come up. Question 2. What do they want from us? This is the key to making deals in this and every industry. If you provide another company with what they need to make them money, then they are going to want to make a deal with you.

For those looking a little puzzled right now here are a few things a label will want from you. Volume of shows in different markets, touring, can you put bums on seats and sell to these people. Show a commitment to touring, don't expect to stay at the Sheraton, for the first few tours sleep in the van or under the stars, you are going to end up smelling a bit, this commitment is what it takes. Sales - how many records/downloads can you prove you have sold? Buzz - are radio stations, retailers, promoters, or press - who is talking about you?

If you are still reading - you have a shot cus maybe you get it. If you start thinking this way and expand from here you will see them gravitate to you. Remember What do they want from us?

Ian Faith's Music BLOG: Aug 30th, 2005. RE-CONCEPTUALIZING THE MUSIC INDUSTRY Music business is no longer about records... the music business is now about entertaining, brand building, brand relationships and new forms of distribution. What's going on... currently the music business is experiencing unprecedented changes. Retailers are going out of business under pressure from file sharing and mass merchants like Best Buy. The major labels are being sold or merged together, as the media industry conglomerates (Time-Warner, Sony, Vivendi-Universal) exit the music business, they are cutting their staffs and rosters. While many bemoan the current state of the music business, this chaos can be an opportunity for an independent label.

Market volume in the USA is still at 1998 levels, $13 billion, over a third of the current global marketplace. The overall global market for music is currently $36 billion. The USA market in 2003 shrunk by only 3% other territories had 7% rises (Australia) and others 10% falls (United Kingdom) the industry is in transition and as each territory has different business models we see a varying number. As markets grow around the world, Pop/Rock music, which is native of the western world will be consumed by Asian, South American, Eastern European and African new markets. With digital distribution being more and more a global normative form there are more streams of revenue emerging all the time.

Use and consumption of music is at an all time high reported the RIAA in 2003 but the industry is experiencing losses due to piracy. As legal online music download services continue to grow, the illegal side of online piracy is falling. The industry failed to grasp the technological changes happening and was over run by pirated music. Apple's iTunes Music Store had 40 million paid downloads in its first 6 months. iTunes has provided a template for successful sales of music online which is now being emulated by Naspster, Rhapsody, and other online music stores.

While legitimate online distribution is beginning to take hold, traditional music retailers are struggling and going bankrupt. For example: Wharehouse Music, Tower Records, Sam Goody. Retailers have been in transition for over 15 years from vinyl to CD to DVD and now a diverse array of games and visual arts to take up shelf space. The retailers have driven the industry to find a solution to the high cost of traditional distribution and are now seeing that they were providing products the industry wanted the public to have rather than providing products the public really want. The iTunes Charts are very different to the Billboard Top 200. Brick and Mortar Retailers wonÕt disappear for a long, long time, they too are part of this transition and they need to tweak their businesses to provide the public with physical product and burnable music from online catalogs. Stores like Amoeba Music are thriving providing the choice the public is looking for.

The changes in distribution and stagnant sales of the music industry have soured many companies on the business. Pending the completion of existing deals, no major label will be wholly owned by a major media conglomerate. The new majors will not have the cross promotional power they used to. BMG and Sony have agreed to merge their companies, resulting in Sony Music no longer being controlled by the International Sony conglomerate. Vivendi sold Universal Pictures and its owned assets to NBC with the exception of Universal Music.

But, not everyone sees the record business as a bad investment. Warner Music was sold for $2.6 billion to a group of investors headed by former Seagram Chairman Edgar Bronfman and an investor group, which includes Boston-based private equity firms Thomas H. Lee Partners, Bain Capital and Providence Equity Partners Inc.

The major labels are trying to adjust to the new industry climate by shrinking their size 15% across the board, cutting staff and reducing their artist rosters. The labels are reacting to the problems in the distribution sector by relinquishing a segment of their market share in the quest for profitability. Well-positioned indie labels will fill this void. The changes in the major labels provide an opportunity for independent labels to grow, as the majors attempt to adjust their massive businesses to the new economics of the music industry.

Independent distribution has increased its market share, while the majors have seen their market share fall. Indies over the last 10 years have had continual growth while the majors have seen their business shrink. Independent distribution is about 20% of the marketplace only behind the Universal Music group of companies. These are good times for independent labels with the indie sector getting stronger and growing.
Another bright spot for music is the new generation of cell phones. People ARE downloading and paying to hear music from their phones, Nokia, Vodaphone, are leading the way with this technology and presence. This is an income stream that was non-existent two years ago. The ringtone business was $2 billion in 2003 following up from the $1 billion in 2002. As the American cell phone system upgrades and catches up with the rest of the world this business will continue to grow. Ringtones provide a growing source of licensing revenue for content and copyright owners.

Ian Faith's Music BLOG: Aug 11th, 2005. With everything that is transpiring in the music business at present it would be fair to say that "confused" would best describe most folk in and around the business. Everyone is trying to figure out where they fit in. As physical product declines and brick and mortar stores find less and less reason including margins to carry physical CDs it is time for us all to adjust to the world post physical product. The ripple effect is tremendous already, retailers who have been propped up by the majors money in coop etc for years have to adjust, the coop money is declining, the rent is rising, this being all interlinked will effect every aspect. Go with the flow don't try and fight the change, understand that consumers who drive the business side of the market are speaking loud and clear, they are comfortable with downloads (iTunes 1.5mil/day) and new media supported with a great website by artists and labels, everybody should be happy. Manufacturing a small amount of discs for sales in show situations is still a necessity, but with new technology just around the corner for music on phones, shortly you will be selling directly from the stage as you play and the money will be heading straight for you bank account. If you have doubts about this, I have heard from a reliable source that the head of Universal Music Group is planning on being full digital within 3 years. For Indie musicians and bands who are willing to tour to support their music and are on iTunes and the other download sites, as long as you have something quality to offer both as a music product and an entertaining show, you are on the edge of the new paradigm, podcast, website, great songs, download, entertain live...You win...without those you thought you needed, it's not brain surgery...Do it!