An interesting post on Andrew Sullivan’s blog about creative destruction in the music industry and ….Why Music Matters 

Why Music Matters

by Richard Florida

Universal Music Group, the world’s largest recorded music company, is once again trying to adapt to the new world of digital music. It’s created a new venture named Vevo in partnership with Google, according to the Wall Street Journal. Vevo aims to generate increased advertising revenue from streaming music videos.

But the enormity of the creative destruction sweeping the industry goes far beyond the iPod killing off the CD. The Gang of Four’s Dave Allen argues that we are seeing the “end of the album” - a construct initially created by the limitation of vinyl technology in 1930 - as the organizing principle of musical production. He sees this as potentially liberating for musicians - or those musicians that can adapt. Industry veteran Bob Lefsetz predicts a return to the pre-LP era, when artists constantly pumped out singles and toured. He even draws a comparison to the way that Toyota has succeeded by building a reputation for reliability gradually through word of mouth.

Technology is also changing the way we experience music. Strange as it may seem to vinyl purists out there, many of the net generation increasingly prefer the “sizzle” of compressed MP3s to the sound of higher-quality files. Some musicians now check their final mixdowns on cell phones.

But not all the results are positive. Mark Fisher counters that the ubiquity of digital recording is again changing the way we experience music. As more and more people produce their own music, and with more music to consume online and elsewhere, we have less time to actually experience music. We now take our music in small bits, seldom listen to anything “whole,” and have precious little time left over for live events. Like a digital-age Walter Benjamin, Fisher argues that such instantaneous exposure deprives cultures of the time and space they need to germinate and grow.

Technology and music have long interacted as economist Peter Tschmuck has shown. On the one hand, new technologies like the long play (LP) record, the synthesizer, and now the iPod have changed the music industry and led to the rise of whole new music genres. But, on the other hand, music has also powerfully affected the rise and dissemination of new technology. Without music and some ingenious entrepreneurs in the music industry, the phonograph would still be used as Edison intended: to dictate letters and store phone calls. Radio was seen as a “wireless telegraph” until one of Thomas Edison’s researchers broadcast himself playing O Holy Night on the violin on Christmas Eve 1906. And we’re all familiar with the way the MP3 popularized peer-to-peer file-sharing and broadband internet connections. But, It’s about more than just technology, actually.

The way I see it, that music is a “fruit-fly industry” - one that can tell us a lot about the nature of technology, new business models, and the economy in general. Music is a highly competitive business - a hyper-competitive market in miniature, where competition for sonic, technological, and talent advantage spurs rapid evolution and change. New recording and network technology means that barriers to entry are lower than ever. Music is often the first sector to experience the full force of disruptive technology. It was the first industry to face the file-sharing crisis, and other industries like film and publishing are now learning from its experience. Musicians are quintessential examples of free-agent workers, mixing income and seeking out affordable, creative places to do their work. And the concentration of musical talent and firms into clusters and scenes - in an industry which requires little in the way of capital infrastructure and fixed costs - can help us better understand geographic clustering across a wide variety of fields.

We’ve always thought digital and traditional media work best in sync with each other.  Traditional media will never really go pouf and disappear, it will always have a role. What’s happening now is that digital seems to be surging to the head of the line.

In 2005  Joseph Jaffe proclaimed how the 30 sec TV spot was on its way out.  How Pepsi had just announced the relaunch of Pepsi One without TV ads.  See Jaffe’s book here.

 ”People who think the 30-second spot is still alive might want to reconsider their statement in view of the announcement to relaunch Pepsi One without TV ads,” Jaffe said.

Fast forward to the 2009 Super Bowl and Hulu, an online video outfit supported by NBC Universal, FOX and ABC Disney.  By placing two TV spots in the Super Bowl Hulu increased visits to its website by 49%, and the growth has been sustained.  See the 3 minute Ad Age interview with Hulu CEO here.

No doubt, media habits are evolving with the internet. Yet this is a good example of old and new working in sync, the TV spot may not die after all.  Better chance that it will  be reincarnated as…….not making any proclamations on that.

So imagination may be the way out after all.  The Financial Times has a piece on…

“What A Feeling: How emotions may yet save the economy.”

A key paragraph details how Obama has changed the public perception towards the positive, one of the toughest things to do.

According to a recent ABC/Washington Post poll, Americans’ belief that their country is heading in the right direction has soared from 19 per cent, just before Mr Obama’s inauguration, to 50 per cent, the highest in six years. In what could be a textbook example of behavioural economics, the stock market has followed the same curve, recovering from what rightwing commentators were calling “the Obama bear market” at the beginning of the year to a healthy rally.

Still, on the way down to the great depression the stock market experienced 8 large declines and 8 large rallies. See chart here.

Oh what a feeling…

No one seems to know what’s going to happen next on things economic.   Predictions, assumptions and guesstimates have all fallen flat.  And the nation’s financial infrastructure is still a mess.  The only sure thing is that we don’t know what’s going to happen next.   This made me think of Einstein’s quote on imagination and knowledge —

“Imagination is more important than knowledge.”

Indeed, at this point there may be no other option but discard what used to be and imagine a new way out of this mess.  This means innovating  our way out of it, instead of waiting for the economy to sort itself out…someday.  In the meantime some links to help weather the economic perfect storm here and here.

And a debate on Squidoo inspired by this Einstein quote here.

Imagine…