Heard It On The Airwaves

Before dropping in the MusicIP rabbit-hole, I had the chance to help an amazing institution called The American Museum of Radio and Electricity.  Squirreled away in my favorite town, this place has the finest collection of electron-moving historical artifacts and documents next to (they’d debate it) the Smithsonian.  Two private co-founders are responsible–amazing. (A small group of us did some modest strategic planning, trying to help the Museum plot a course of action that would get it to self-sustaining. Donors welcome.)

Visiting recently and wandering through actual -things-, not just text and pictures, put a different slant on the startups of the past.  Radio sets, radio broadcasting–startups left & right.  Fax via radio in 1924–“hot sector” that didn’t pan out.  It’s difficult to look at a 150-lb oak cabinet and envision the guys who built it as cutting-edge technology innovators, but of course they were.

(Fun Historical Sidebar:  why do you have AM -and- FM on your car radio?)

What that little tour dramatized most was the recurrent pattern of overestimate-bubble -underestimate-change.  A lot of businesses these days -look- like Internet Bubble plans dusted off–but none of us bubbleheads anticipated the force of social media. So with telephones (skyrocketed, dropped off during the Depression, roared back), radio (“what’s the business model??”), and more.

While all of that felt familiar, the presence of so many real things made one differing aspect of our more recent innovation-waves painfully obvious.  A lot of amazing stuff that gets done now has little to no physical expression.  An Internet Bubble museum would have…what…archived web pages?  Source code of the first ecommerce server? Where are the THINGS?

Kids can wander and touch those antique radios–and they get an immediate sensory “wow that’s different” way of understanding the past. I’m not sure the source code printout would have the same effect.

If I were going to try to get across “the early days” to my kids, I think i’d hook up (or fake) a 300-baud modem and have ’em watch the text print. That sweet, weird warble of the handshake gives some of us the nostalgia that train whistles and radio static did for their pioneers.

Hard to know whether the intangibility of innovation as it stands now is just my inability to see the artifacts.  Perhaps I see the radio as the artifact, and an informed radio guy knows just how much ‘software’ i’m missing. What are the artifacts in your company–what snapshots of progress have you kept?  We’ve gone through 3-4 complete web site designs and I can barely remember the one we turfed last week.  Wow.

(If you want a taste of the American Museum of Radio and Electricity, grab their old-time radio stream)

MusicIP–The VC Process From The Other Side

MusicIP is a venture capital-backed company. “Venture capital is capital typically provided by outside investors for financing of new, growing or struggling businesses.” saith the Wikipedia.

It’s more typical than not for venture-backed companies to get one investment, then another, then sometimes another. These are called “rounds”, and they’re referred to by alphabetic sequence. The generic nomenclature (for your amusement):

• FF Round Friends and Family Round. If your uncle Fredo thinks your bagel-slicing machine is a million dollar invention, and he puts up the money for you to patent it, get it manufactured, and try selling it….that’s an FF round. (Sometimes snidely called “Friends, Family & Fools.”)
• Angel Round “An angel investor (business angel in Europe, or simply angel) is an affluent individual who provides capital for a business start-up, usually in exchange for ownership equity.” (Wikipedia again.)
• A-Round: First venture investment.
• B-Round: Second venture investment. You know the letters that follow from here.

OK, so what the heck does this have to do with music? MusicIP is in the process of raising B-round capital. That means that company management (= primarily me) is on a “road show” (= lots of plane trips at unexpected moments) to “talk with prospective investors”. That last phrase covers the following:

1. Sweating bullets to write a business plan. Not easy, but vital.
2. Wracking lots of brains to construct financial models that put the company’s business (present and proposed) into the true language of business–numbers.
3. Taking the mass of details from #1 & #2, and putting it into an “Executive Summary”, aka Exec Summ
4. Taking the punchy bits from the Exec Summ, and Compelling Figures from Authoritative Sources, and cramming into the best possible substitute for meaningful dialogue: Powerpoint.

We’ve done all that. Not blog-worthy, except that there’s something a little unusual afoot. After a LOT of discussion, Rick Segal, the partner at our venture capital firm (JLA Ventures of Toronto), has decided to put some of the play-by-play of our “raise” on his blog. He’s going to be posting more detailed documents than you’d usually see. My aim is to accompany that with a bit of my perspective on the process. Hopefully you’ll get a bit of the VC’s perspective from Rick, and a bit of the entrepeneur’s perspective from me. His posts are going to be funnier.

The doc that Rick posted first is our Exec Summ, with a relatively small amount of editing to eliminate things that–frankly–we just don’t want exposed. It’s a fact of business–some cards you need to keep in your hand.

• My two cents on the exec summ: it came out pretty well–better than I expected. In 5 pages, it lays out our vision, where we are today, the opportunity and market, our strategy to do what we’re going to do, and–critically–the basic financial proposition. I’m not exaggerating when I say that at least 10 people have put time into this document–yes, it’s that important. If your exec summ stinks, the investor you want to talk to isn’t going to make time.

Does that mean it’s a “puff piece”? Not at all. In the 5 meetings I’ve had to date with VCs, 4 of 5 had read it. They walked in with a bit of orientation–they knew broadly what we were proposing and thought it was worth an hour of their time to hear more. I respect that. (One thing Steve Ballmer at Microsoft was (and probably still is) legendary for is preparation–he reads & informs himself so that the live meeting focuses on action, not information.)

My perspective on the writing/editing process of the exec summ:

1. You better believe it. If you don’t, it’ll be obvious. That means writing not about “what you do”, but “what the business aspires to do.” (If you don’t believe in what the business aspires to do, why are you going through all of this?)
2. Don’t, Don’t, Don’t write it yourself, edit it yourself, pat your back, and ship it out. Go look up your 8th grade English teacher and have her read it. Pay a college student in lattes to read it. And make sure your team reads it.
3. Design matters. That doesn’t mean “formatting is a great substitute for crap content”, but i have to say…the difference between Word-template-doc, and a design that’s about THIS company, is night & day. It came alive when our ace print designer sprinkled her designer-dust on it.
4. Informational visuals are vital…but…they should be the -most-, not -least-, informative parts of the doc. (If you haven’t read Edward Tufte’s works on visual design and information…well, my personal opinion is that you’re missing one of the unique intellectual encounters of the last decade or two. ) The one visual in ours has at least 10 hours of sweat investment.

As Rick posts, I’ll keep up.

Last bit–candidly. I’m starting to appreciate “the other side of the table” (the investor’s side) a lot more. I’m not saying that every VC you meet is going to be polite, thorough, and all of that. (All of ’em I’ve met thus far have been precisely that, but maybe that’s because I’m in Canada at the moment.) But they’re in the business of weeding through hundreds and hundreds of “opportunities”, to find a small handful that pass muster. I think meeting the professional standards of what are (after all) professional business-plan-evaluators is just a smart investment of your time.

Lawsuits Against File-Sharing

The IFPI launched 8,000 cases against alleged file-sharers in 17 countries. This article from Reuters has the basic facts.

Thought-exercise: let’s say lawyers run about $150/hr. Let’s say a case takes–what–80 hours for each side. That’s $150 * 80 * 2 * 8000 = $192 million dollars.

Wow. That’s pretty expensive marketing.

I assume that the point to this is propagandistic more than punitive–the very existence of the press releases and simultaneous filings make that pretty clear. That’s not to say that I’m condoning file sharing–nope. More on that in another post. Just posing kind of a logical question: is that the best marketing bang-for-the-buck for $192 million?

I’ve been annoyed by the new motion-picture-industry pseudo-commercial tacked on DVDs. It comes at the front–can’t be skipped, can’t be forwarded–and it’s a rock-vid style you-wouldn’t-steal-a-purse thing. I look at my sons absorbing it and wonder if it’s having any impact.

Call this a controversial position–my view, not the company’s. Seems to me the lawsuit thing is hurting, not helping. The people most likely to steal by file-sharing (youth) are least likely to think a lawsuit might affect them. Heck, they have the least to lose in a lawsuit–money is money, but reputation, professional hit, time lost–much bigger the older you get.

The lawsuit-as-marketing impact on the rest of the world is a paralyzing carefullness that’s impeding digital music. I’ve had grown, sane adults tell me they didn’t use Napster because they didn’t want to be sued. (That’s today’s Napster.) And they weren’t sure about all of the music on Yahoo.

Apple played this one perfectly. They created a walled garden that even grandmothers know is safe and legal.

Can $192 million be spent in a better way to change the changeable behaviors?

Oh, darn. You’re right. I forgot the punchline. If the suits are successful, it’s the violaters that are paying. Now that’s a way to crank up your marketing budget! I wonder–we’re a startup, cash is precious–we could sue a few of our customers for IP violations. You think any of the others would notice, or that it would affect our reputation?

The non-digital-native consumers—most of the people over @25–are waiting in the wings with their CDs and stereos. They haven’t gone to digital music in mass numbers.  They will–when it seems fair, sensible and above all pleasant.

Asking ’em to jump in right now is like expecting people to rush into your restaurant while the cops are still leaving with the partiers in handcuffs.

Natural Soundstage

Warning–total hack, I’m just posting because it’s kind of a delightful hack.

Run 2 music players at once–the MusicIP Mixer for music, and some lesser platform in the background.

In your secondary player, put a nature soundtrack behind the music. They’ve been floating around for years in CD form–thunderstorms, rainshowers, surf, and so on. (Handy tip for eMusic subscribers…when you just have 1 download left in your monthly allotment, troll for nature soundtracks, which tend to run nearly an hour!)

The acoustic effect is–at least to me–quite startling. It changes the music. I -think- we’re probably wired to expect natural sound-cues, and the spatial depth (this bird is close, that bird is further away) that come built-in to that soundstage. Recording studios are quite artificial and flat in that sense.

Play with the sound levels, try different backgrounds. YMMV. Cheers

Dance Intellectual Property

For all i know there’s a thriving community out there debating this topic. Just occurred in conversation this morning. To wit: is there IP in dance, as an art form?

Music has 2 rights-streams–emblematically, the composer gets paid and the singer gets paid.

I don’t think the same thing happens in dance. The dancer gets paid–at least a bit–and the choreographer, in the form of work-for-hire. But when Ballanchine’s choreography for fill-in-the-blanks is restaged, does his estate get paid?

The real topic here is the importance of notation in intellectual property. There is notation for dance but it’s not universal. If you choreograph a piece, do you file copyright? Would anyone care and/or respect it? Would you know if they stole it or would you happy they did?

In relation to music, the point is this: at least 1 of the 2 rights-streams in music are built on the fact of a reasonably-widely-accepted universal notation.

How does the existence–or lack–of such a thing hamper other fields of creative production?

The ‘Songosphere’

Strolling through a McMall a month ago I heard a young buskar singing his heart out. His repertoire was mostly rock & roll classics–Springsteen, Beatles, Dylan. Good way to fill the hat. It’s unlikely that he filed for an ASCAP license to make sure that the composers got paid. They’re probably not planning suits any time soon–they were probably there once themselves.

That vignette from the street raises a point that strikes me about music and the net. As it’s becoming easier and easier to hear music from around the world, it’s likewise easier to play it back. A good musician–and there are many of them, thankfully–can transcribe a song darn near as fast as you can copy a blog post. The first meeting between Mozart and Salieri in Amadeus, where young Wolfie plays back–and improves on–Salieri’s little piece jumps to mind.

There’s a music ‘blogosphere’ already–has been for centuries. Music is and has a language, and there’s considerable dialogue in both. So what happens as that dialogue gets the turbo-boost from the net that it’s afforded to others?

A lot of interesting points there, but the first one to pick up is that of our young ASCAP violater. He didn’t break any mechanical-licensing laws in using his ears to transcribe Dylan. But Bob Dylan (and/or various publishers, arrangers, and even lyricists) are entitled to some payment for his use of their creativity.

My point here isn’t a legal debate, but rather a structural observation. The more widely music is disseminated, the more readily and more often the buskars–worldwide–will transcribe and play. One buskar in Salt Lake doesn’t break Dylan–or ASCAP. What about a million of them, scattered all over the world? Will the legal, business, cultural and other structures (for better or worse) in place for the last century adapt to this worldwide musical dialogue?

Mind you, I don’t have any answers. Just posing the questions as they occur.

Comments appreciated.

Popkomm 06, Berlin

Popkomm in Berlin

First non-US music/technology conf for me. Much to mull there.

• “Down with ‘world music'”. The strangeness of this genre-label was even more evident against the backdrop of national-scale music export offices. I’d say fully @40% of the hall space was devoted to the booths of many nations. Is that an artifact of the hits business, or billboard on the long tail highway?
• Blah blah the universal language. On the one hand, seeing music and groups from all over Europe was very cool. However. If you asked a visitor from Mars (or, say, California) which music vid came from which country, I doubt that they’d guess. Still a great deal of MTV-WANNAB looks and sounds. Rock & Roll, another pervasive cultural export.
• Major label booths. Big. EMPTY. This may sound snarky, but a review of the security videotapes would vet my point quantitatively. Universal had a huge plywood-frame globe (pic below)…and the Munich-region just-some-chairs booth had probably 5X the traffic.

• Rewrite. There was a strange undercurrent to conversations–sort of “we know this whole digital thing is happening AND we’re going to be part of it BUT does anyone have the slightest clue what the rules are?”
• Apple. Man…single topic of conversation, as big as the d*** banner. Every digital distrib company flogged their clout with iTunes. Device guys–oh, wait, there weren’t any there…hmmm. Well, when you -DO- meet a device guy, sooner or later he talks about Apple. Musicians didn’t seem to have a love or hate thing, it’s just a fact with them. (And, note, never once did anyone equate Apple to the US.)
• Music is a MAJOR export. One of the first speakers–Feargal Sharkey, former rock star turned gov’t expert, rattled off stats about the value of music and creativity in the UK economy. Brazil had a booth that was worthy of CES–and music is a huge export. Finland–big booth. Sweden–big booth. Lithuania–love ’em, not a big booth but they had a booth! I even talked to the hip young guy from Hungary–yep, they had a booth.

So if you want a neat punch-line conclusion, it’s this. The globalization of music is just at its bare beginnings–but there are some entrepeneurial nations that recognize the opportunity. The govt-support-for-the-arts roots of some of the EU countries may have an unexpected payoff as this moves forward.

Oh, yeah, and “world music” really is a stupid label. As opposed to what…Martian drum corps tunes? Sheesh!