You will have to excuse the substantial amount of quoting in this article but it is needed in order to demonstrate that some of the elite thinkers of this world have thought about and printed the very economic concepts that are usurping the music industry. So it begins.

All quotes are from Eric D. Beinhocker’s The Origin of Wealth (2006).

To start you must understand a concept of the S-Curve from Richard Foster’s book; Innovation: The Attacker’s Advantage. The S-Curve graphs:

The level of effort invested in improving a technology versus its performance

Got a grip on that? Good, now Beinhocker referencing Clayton Christensen’s book; The Innovator’s Dilemma.

Christensen claimed that whether a technology [Internet/YouTube/P2P] is disruptive depends less on how radical a technological advance it is, and more on its specific effect on the S-curve. If a technology pushes performance up an existing S-curve, even very rapidly, then the technology tends to preserve the power of existing players.

The music industry moved through record, tape, to CD while maintaining their centralized power. No disruptions to the players controlling the economic model and a higher quality product was delivered to the end user. (Life in the 80’s and 90’s).

However, when a technology requires a new S-curve, particularly when it starts at a worse price point-performance point then the current technology [online media is free which is hard to beat], the newer technology tends to be disruptive and to change the industry structure.

Cue Napster, Kazaa, iTunes, Pirate Bay, Google, YouTube or Metacafe which are all a result of the ability to be connected via the internet.

This is because any executive in a successful incumbent company [RIAA, Warner Music Group, Viacom, Etc] would have a difficult time justifying investing resources in a technology that offers, at least initially, worse price performance.

Welcome to an age in which anything that can be digitized will need to first consider the Internet as a critical resource for distribution.

The Evolution of the Business

Evolutionary theorists refer to Orgel’s Second Rule (named after biochemist Leslie Orgel), which says, “Evolution is cleverer than you are.” Even a highly rational, intelligent, benevolent Big Man [Big Corps] would not be able to beat an evolutionary algorithm in finding the peaks in the economic fitness landscape [highest value, to keep it simple]. Markets win over command and control, because of their effectiveness at innovation in disequilibrium.

Markets win over command and control because they percolate value to the top and value is the life blood of markets.

Cheers

Corey posted the video after contacting Moosebutter and creatively meshed together four shots played simultaneously to get an instant viral reaction.  The success was spurred as the video was featured on YouTube Canada and then quickly moved to a worldwide feature.  The attention didn’t stop there either as the clip was voted second in the User Generated Content category for the CBS Peoples Choice Awards.

Warner Music Group had the video pulled by submitting a Digital Millennium Copyright Act claim when the video was approaching 4 070 000 views and had received over 15 000 comments.   

This isn’t the first time WMG has pulled one of Corey’s videos either.  4 Minutes is a demonstration of Corey’s dance skills and it bares a strict warning to WMG to stay away from an already disputed case.  The video remains one of the few “4 minutes” related clips as the licensing squabbles have even resulted in Madonna’s channel being reduced to dust. 

Of course contacting Warner Music Group is futile.  They have an army of secretaries equally skilled at putting you on hold until you hang up or they tell you they will call you back.  This is too familiar of a situation for Corey as he waits for his “call back”.  That being the case WMG has yet to offer an explanation of the grounds for its copyright infringement claim. 

There is sheer hate radiating from the YouTube community towards WMG.  Just type into the YouTube search engine “F@$% you Warner Music Group” and see how many results come up.  If Warner applies the brakes to Corey one of his fans clever enough to have used keepvid.com before the video was pulled can simply upload it again in defiance.

In the earlier AV post Mash Ups Help Test the Line Between Media Giants, Prosumers and Innovation Viacom’s head lawyer on copyright discussed his intentions on when they would look to take action.  As mash ups continue to hit the Internet if Warner Music Group doesn’t find a solution to cope with the times they will be given (if not already) the black spot by the online “pirate” community.

Most users commenting on the CNET article have strong words against WMG however, Len Bullard offers a fresh look from a different perspective.  He comes from the music producer side and is well versed in digital media landscape.  He points to the many issues that need to be addressed to sort of the gray area of mash ups and the use of copywrite material.  He fails to realize one fundamental about how the music ecosystem has and is being shaken up.  This is because his formula for the interplay of business, culture and technology is out of order in this case. 

Business changes when technology changes and the culture changes because the business changes – Len Bullard 

YouTube (new technology) provides new means to bring music (a pillar for cultural development) to an audience that is now reshaping business models due to the ease of production and sharing.  The old style of music production and distribution was difficult and therefore created the opportunity for huge centralized music companies to exist.  Now the business isn’t driving this change of music consumption, the consumers are, and that is a powerful cultural shift as a result of technology. 

In the mean time there will be no stopping Corey.  He’s already released his next video Flight of the Concords “Friends” and plans to continue using his creative flare and the gift of music to make waves online. 

Cheers        

Listening to the radio recently you will have no doubt noticed M.I.A. has reached the top spots on popular count downs with her single Paper Planes. The catchy beat, gangster style, and provocative lyrics appeal to a large audience as the song has climbed to number 18 on the American Top 40 (September 25th, 2008). But why did Paper Planes get popular now? M.I.A. released the song in 2007 on the album Kala, but it’s only reaching number one on local stations today? Last year she played Virgin Fest in Toronto, Canada, worked with Timbaland, and had her music in the season four finale of Entourage. She’s out there, her music is out there so why the gap and what happened in the summer of 2008?

The only plausible factor to M.I.A.’s success had to be the release of Pineapple Express by Apatow and company. The song was dubbed over the trailer which saw national and international play during the release. This was the big leap M.I.A. needed as 14 million YouTube views came between August 7th and August 30th. Coincidentaly the same three weeks Pineapple Express trailers were in full circulation. Idolator.com reports 434 000 digital copies of Paper Planes had been sold as of the end of August, one 10th of those in just a week. Looking at those numbers it seems M.I.A. hit the jackpot as the trailer seemed to launch the song to new heights and is the reason why your hearing it on the top 40 chart today.

Music as you might know is the most popular category on YouTube. Recently the ever reigning Evolution of Dance was beat out as the all time most watched video on YouTube by the Canadian singer Avril Lavign. Avril became the first person in history with a video to crack 100 million views with her song Girlfriend.

100 million, That’s insane!! It redefines the classic idea of fame being based on record sales. Fame in the music business is no longer tracked by the number of albums on the shelf anymore. We started looking at the YouTube.com indicators for Paper Planes around the beginning of August and have been amazed at the results since.

The movie itself didn’t do so bad either. At last check box office receipts totalled $93 million. Some could argue that Paper Planes was a big part of that success. Maybe Apatow should be sending M.I.A. the thank you card?

This type of marketing relationship is not easy to identify. What is certain however, is that in 2007 and early 2008 Paper Planes wasn’t on the popularity map, but it is now. For a stakeholder in either M.I.A’s music career or the Apatow house they were probably not looking at YouTube videos as an indication of success, but watching their fame blow up on YouTube like it did in August could arguably be considered a legitimate rating tool.

In the next few years as the rules of the Web 2.0 game continue to evolve and turn the entertainment industry on its head, marketers are no doubt evolving as well. This revolution is opening an opportunity for some to jump in and associate their brand with popular music. The agency that can harness that power and see the same rise in viral success for one of their big brand clients will set the bar for all others to follow.

In the mean time, keep watching Paper Planes… we’ll be interested to see how high it flys because its not done yet.