p2pnet view Music | P2P:- Is Tommy Silverman (right) the smartest man in the music business?

There are people who think so, and there’s proof he’s pretty smart.

• He’s convinced the RIAA that he’s worth a seat on their board, even though his own label isn’t a member.
• He’s convinced A2IM (that’s the organization for independent labels only, sort of an RIAA-Lite) that he’s worth a seat on their board even though he sits on the RIAA board at the same time.
• He’s even convinced the independents that he’s a good “independent” Director for SoundExchange, even though the RIAA put him there and has yet to demonstrate the slightest urge “independent” of the RIAA while he’s there.

Clearly, Tommy Silverman is a smart guy. So, when he says he’s got a brand new idea on saving the music business, people ought to listen. Lo and behold, he’s done just that in What’s Wrong With Music Biz, per Ultimate Insider in Wired.

Read it for yourself, just so you get an idea of what the smartest man in the music business is thinking. What follows are my own observations about his ideas. Suffice it to say at this point that Tommy Silverman has pretty much established he’s trying to save the music business for the next generation of Tommy Silvermans, and that it really has very little to do with music beyond it being the commodity he likes to sell.

As a case in point, early on, Tommy Silverman says this:

“But the premise of technology being the great democratizer and allowing more artists to break through than before — actually, we’ve seen the opposite effect. Fewer artists are breaking than ever before, and fewer artists who are doing it themselves are breaking through than ever before. Back in the early ’80s, when the cellphone was first invented, there were more artists breaking on their own, with no technology, than they are now, with technology. Why is that the case? And what can change to open the gates again, to allow artists to break through, whether on their own or with help?”

Mr. Silverman’s concept of “breakthrough,” is different from mine, and probably from yours, and let’s just ignore that nonsense about ” more artists breaking on their own in the early 80s.”

He explains his version of breakthrough next:

“There were only 225 rookie artists in 2008, and less last year, that broke 10,000 albums for the first time — not that that’s the only arbiter of success, but it’s one of them. That year, there were only 10 new artists that broke through by doing it themselves. If you can’t sell 10,000 albums in digital and physical combined, you’re still relatively obscure.”

Breaking through, for Mr. Silverman, means selling 10,000 physical CDs.

He admits that’s “not the only arbiter for success,” but he simply fails to mention, let alone consider, any other. Put together a profitable tour? Not a success by Silverman standards. Build a fan base that buys your songs on iTunes? Not a success for Tommy Boy. But this was his interview and he gets to define reality. I wish Eliot Buskirk had pursued that thread with him, because it means he got to define everything that followed based on that one premise.

“Relatively obscure” is clearly a kiss of death for Mr. Silverman. And yes, relative to his given examples; Susan Boyle, Lady Gaga and the Black Eyed Peas, those smaller acts are “relatively obscure.” But many of them are making a living at what they do, even if they aren’t selling physical CDs.

The folks who have always made money from the sale of physical copies of recordings are the Tommy Silvermans of the world. Mr. Silverman’s direct offspring will never get rich off of “relatively obscure” musicians who are getting by on their own, and to him, that’s clearly the greatest tragedy of our modern age.

By any truly objective measure, an artist “breaks through” when he or she or them makes enough money from music to pursue it as a career, with or without the help of a Tommy Silverman. That’s good for the artist, but it isn’t good for the Tommy Silverman who could have shared in the glory and the income.

Showing that, at the least, he’s the smartest man in a room full of CDs, Silverman goes on. Buskirk asked him:

“Well, part of the “long tail” theory is about more bands selling smaller numbers. What if you go under that 10,000 number?”

Silverman replied:

“All those together don’t make up for the drop. For example, in 2008 there were 17,000 releases that sold one copy. Last year, there were 18,000, and something like 79,000 releases that sold under 100 copies. Under 100 copies is not a real release — it’s noise, an aberration. In any kind of scientific study, it would be filtered out. It’s like a rounding error. That 79,000 number represents almost 80 percent of all the records released that year.”

Any 12 year old kid with an iPod will tell you what’s wrong with that reasoning; Silverman’s counting CDs. The fundamental error here is that Tommy Silverman sees fragmentation but he’s not looking at where it actually occurs. In fact, he’s looking through the wrong end of the microscope.

His favorite business model, the one that made him look like the smartest man in the room, is fragmented, but it is fragmented because the audience is fragmented first, and it isn’t something he can control.

We aren’t limited anymore to listening to a half dozen terrestrial radio stations, or buying the output of a half dozen companies with the resources to produce, manufacture, distribute and promote physical copies of musical recordings. We can pretty much hear what we want to, whatever we want to, whenever we want, wherever we want, with or without Tommy Silverman having much to do with it.

I’m going to sit here listening to something a friend sent me that he heard on a Facebook page (more about that later). The kid next door is listening to something he and three friends cooked up in his bedroom over the weekend. Neither of us is listening to Lady Gaga, and Tommy Silverman is clearly troubled enough by that to decide it needs to be changed so that we get to hear precisely what he thinks we ought to be hearing. And he’s going to do it by restructuring the business, even though the audience foundation his idea is based on has turned to sand.

In Tommy Silverman’s other capacities, he’s following another path to success, one that he manages to completely ignore in explaining his dreams to Wired. It’s a far more brutal, and far less artist and audience friendly than his joint-venture dreams, but, frankly, it’s got a better chance of giving the next generation of Tommy Silvermans a chance at drawing a comfortable salary by controlling what we get to hear and how we get to hear it. The idea at work here is to reverse the fragmentatio of the audience by reducing the number of independent ways we get to hear music.

And, heaven knows, Tommy Silverman’s in all the right places to try to force that change. The Wired article calls him the “Ultimate Insider,” and it’s pretty clear they’ve got that right.

• He’s a board member at the RIAA, and we know what they think about people who share music they like in ways the RIAA doesn’t control.
• He’s a board member at A2IM, and we know they support reducing the options of what we can hear online and terrestrial radio to only those outlets who can afford high royalty rates even though that result will hurt their artists and labels more than anyone else.
• He’s a board member at SoundExchange, and the difference between the way they feel about labels and the way they feel about artists is already painfully obvious, to the tune of almost a quarter-BILLION dollars in undistributed artist royalties.

Tommy Silverman gets to steer all three organizations. The neatest thing for Tommy Silverman about that is that if those groups are successful in castrating internet radio, file sharing and social networking as a music source, the music business will need a Tommy Silverman to show them how to make money the old-fashioned way.

If they aren’t successful at crushing the alternatives, they won’t need him. If you’re an artist trying to make it on your own, you will have to decide for yourself which way is the best thing for your future. And, as far as he’s concerned, the future of the business needs to continue to sell physical copies of recordings. That’s the way Silverman believes the business is supposed to work, so it needs to be fixed. He says:

“In January, right before the LA New Music Seminar, I talked to Chris Muratore from Nielsen/SoundScan, and I asked how many releases there were in 2009. He said labels and distributors had projected about 132,000. Later, SoundScan said 97,000 had actually sold. So it’s possible that around 35,000 releases didn’t even sell one copy last year.”

We find a couple keys to Silverman’s self-serving myopia about the business of music right here. He’s talking to SoundScan about the sale of CDs. Every musician who’s sold a CD out of the trunk of his car after a gig can tell Silverman just how much of the picture he’s missing (both the gig and the CD sale), but it’s pretty doubtful he’s going to be listening. After all, he’s the smartest man in the room.

But he’s not done. He immediately says:

“That means not even the artist or their mother bought a copy, and all those artists are out there gigging, they’re all on social networks, they’re all doing stuff to clutter the marketplace.”

“Clutter the marketplace.” Wow. You heard it here first, directly from the smartest man on the planet.

It took Western Civilization 528 years to get from the first movable type to the first issue of “Rolling Stone,” which, for good or ill, has promoted a hell of a lot of music since it came out. MySpace has been around seven years, or about 1.3% as long as movable type. It’s a bit premature to write social networking off as a potential resource for promoting music, especially when you, like Mr. Silverman, seem to be boosting a return to pre-Internet physical distribution.

But then, I’m not as smart as Mr. Silverman, so maybe he’s got a new plan that’s simply over my head, and, of course, I’m not the one trying to revive a business based on dead economics, so I don’t feel the same urgency he does. Actually, it’s my guess that enough artists will figure out a way to get enough exposure through social networks to be able to pursue their dreams as professional musicians. I think there’s evidence it’s happening already. I follow a bunch of bands on Facebook. I pay for downloads and buy CDs from them directly, so I guess they don’t count in Silverman’s world.

Is the next Lady Gaga going to come from Facebook? Eventually, but, unlike Mr. Silverman, I’m not going to blame Facebook for not delivering her this week.

So how is Tommy Silverman going to make the Brave New World of Music safe for the new Tommy Silvermans following in his path?

Get this:

“The model that looks most promising is to set up an LLC, just like a movie company — they set up an LLC for each movie . . . ”

For creative artists, it may be the scariest five words ever written in English about a proposed business model:

“Just like a movie company.”

Let that sink in for a moment or two. I can understand the attraction of “Hollywood accounting” for music business veterans. Their brothers in the movie biz have shown amazing creativity in finding ways to divert millions of dollars at the single stroke of a pen, while, in the record business, you have to be content shaving a couple pennies off of every copy sold. I understand Silverman’s envy.

He doesn’t stop there:

“The good thing about it is, the artist and label-slash-investor are on the same side of the table. As long as they want to maximize profitability, nobody makes money unless everybody makes money. In that respect, you can’t fuck an artist, because you fuck yourself.”

This is pure fantasy, and the movie business Silverman wants to emulate proves it. If the “label-slash-investor” gets to suck out money as bogus and inflated “expenses” before you get to “maximizing profitability,” it doesn’t matter which side of the “table” you’re on. The reality is that, as always, the artist is the one on the table, spreadeagled.

And if you think I’ve misunderstood, there’s this gem later on:

“With this new deal, we can start flowing cash to the artist, once they’re profitable, on a monthly basis or semi-annually, when we account.”

“Once they’re profitable”

“When we account.”

A double whammy for the artists.

Silverman talks about this as a 50-50 deal, but it isn’t. It’s business as usual. In a real-world joint venture, both parties should participate in the revenue from day one. The investor contributes cash, and the artist contributes the creative product. Both are given equal value, and both should share equally.

Not in Silverman’s dream.

In his perfect future, the investor puts up the cash, the artist puts up his creation, and the artist doesn’t get ANYTHING until he’s “profitable.” That’s not a partnership, that’s not a joint venture, that’s the same old indentured servitude as the old long term record contracts, dressed up to look “fairer.” The investor gets his money out first, so, clearly, Silverman’s model is based on the premise that the money is more important than the music in the business. That’s not good for artists, no matter how smart Silverman is.

And the scariest three words in the English language for artists is “when we account.” If “we” are running the books, “you” have a snowball’s chance in hell of getting a fair count. These are record business people we’re talking about here. Is there an artist alive who should trust them counting the money? You can talk the talk about “transparency,” and there’s a lot of that going around, but it’s pretty much time that artists can demand to see someone walk the walk BEFORE getting into bed with them. I don’t know if the Tommy Silvermans of the current day are up to the task.

So what it comes down to is the best idea the smartest man in the music business can come up is one that perpetuates the artist existing primarily to serve the needs of the smartest men in the music business.

Those guys can talk all they want about searching for what is “cool,” but the reality is nothing short of stone “cold.” Artists are going to be as badly screwed by their LLC buddies as they were by the bad old labels.

Tommy Silverman doesn’t have to be the smartest man in the music business for his model to succeed. He just has to be smarter than enough artists to build the next level of his career on, now that the old model he championed has collapsed.

He’ll find them, too.

Meet the new “partner,” same as the old boss.

Fred Wilhelms – p2pnet
[If the corporate music industry had any ethics, Wilhelms would be its 'ethicist-in-chief,' wrote CounterPunch's Dave Marsh. Wilhelms is an entertainment attorney based in Nashville, Tennessee. You can contact him at fred.wilhelms @ gmail dot com. ]

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This entry was posted on Wednesday, July 14th, 2010 at 9:13 am and is filed under Music, P2P. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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