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Ditto Blog

Lee Parsons, Interview with Hypebot Part 2

Taken from an interview with www.hypebot.com August 2010.

Original Article available to read here

"It Isn’t A Great Reset, Just An Evolution," Says Lee Parsons, CEO of Ditto Music; Interview Part 2 

 

 

image from musformation.com 

 

Last week I posted part one of my interview with Lee Parsons, the CEO of Ditto Music. In the second half of this segment Parsons talks about the different types of artists, the economic reset in the record industry, and how the laptop generation is changing digital music.

 

Why must artists embrace 'as much chaos as they can stand' with new technology and let it transform their role as cultural creators?

Lee Parsons : There are three types of artists. The ones who are great musicians, they will reach point B and perhaps get picked up. There are terrible musicians, they will also reach point B and perhaps get picked up on hype. And then there are the artists who are great musicians AND great businessmen, technologically savvy. These artists put themselves into category C.

 

"These are the artists who will ultimately have long-term success."

 

Every new media outlet whether it is YouTube, Spotify, or LastFM has a success story, someone who caught the wave early on and accelerated their career. Artists that are constantly ahead of new trends WILL make noise. They just need the music to create a long term foundation. The ideology that musicians can make a demo, send it out and become signed has almost disappeared.

This is bad news for the few who would have become bedroom millionaires but great news for artists just looking to make and sell music easily. And any artist who clings to the notion that they are an “artist” and not a business person will be left in the dust.

 

How will new ways of working and living drive post-crash prosperity, and provide a foundation for growth and recovery, wherein, a brighter future can be forged for the record industry?

Lee Parsons : I feel that to recover properly major labels need to have large amount of stock assets to ride out the current financial down turn.

The record industry has one thing in its back pocket that it has so far been relying on, which is back catalogue.

EMI have Pink Floyd, Zeppelin - consistent sellers over the last 50 years. These copyrights though are coming to an end.

New artists coming through need the record industry, but the record industry is not signing them. Established artists are only signing because of large advances and many of these artists are now either looking into corporate investors, self-releasing or brand sponsorship.

As these new models are ironed out there will evolve some consistency and the companies with revenue, i.e. iTunes, digital companies will start to reinvest into the music industry and look at it with a new purpose based on making their own new revenue streams.

Streaming has been invading the industry for several years now. The record labels still do not have their own streaming service; they may do this, who knows.

At some point though the PRS will catch up with what is happening. ISP’s, businesses and commercial streaming users will bear the brunt of a rise is Performing Rights money and artists will slowly start to make decent revenue through streaming. At the moment it’s clear that ad revenue is a good start, but not the answer. The money has to come from somewhere else.

 

Is the record industry going through a 'Great Reset' of its own?

Lee Parsons : It’s easy to say the music industry has either entered or is about to enter a great reset but I think in this context it has just entered a transitional vortex with no guarantee that it will ever re group to where it was.

 

"The music industry as a whole shows no signs of coming out of its current turmoil and a more likely outcome is that technology companies will continue to flourish on the back of the music industries descent."

 

Coming from a business person with a model that did not exist 5 years ago I can only say that when I looked into this from a business perspective, it was clear that although I was not working IN the music industry but working around it.

So it isn’t a great reset, just an evolution. It has shifted to favoring the consumers. There are a lot more consumers that record industry execs but the power up until now has been held by a small few. The music industry HAS to listen to their consumers in order to understand them and profit from them.

In 1997 a CD album was £16. You can now 13 years later buy one for just £3. And the consumer has the choice of paying £3 of downloading it for free, or listening for free on a streaming site. The music industry has evolved in favor of the consumer; the labels now have to pander to this and offer them a reason for purchasing legally, or find a new source of revenue.

 

These days all it takes to create change is a kid with a laptop—what's your take of this?

Lee Parsons : Being someone who started a business from a laptop with no money or industry know how the only thing that I had in my favor was lack of fear and lack of experience. I had no idea if it was a bad or good idea; I just wanted to release my own music. I had no designs on being an entrepreneur.

I even asked a local label to release my music if I paid them. They refused and are now out of business.

The current music industry will continue to chase its tail until it does not exist. Digital companies are prevalently young people finding new ways of expressing their interest. These are the companies that are employing people and making money.

 

"As we speak hundreds of new digital companies are forming in the shadows of the industry and there seems to be a digital gold rush with investors rushing to get on to the next big thing."

 

90% of these are fuelled out of investors looking at get rich quick ideas and won’t last. The ones that will last are the ideas built out of the passion for solving their own problem.

Record labels have to look at these problems from a business perspective which in turn hold’s itself back from having real freedom to create a new vibrant business model

Whilst they are doing that, kids all over the world will be evolving the industry from their laptops until what we used to know has completely disappeared.