This Music Industry and RBT Thing, It Ain’t As Simple As You Think

The past few days, I have seen (well, among other issues filling my timeline) more or less two camps voicing their opinions on the current RBT fiasco.

One camp would be the music labels, the content providers, and such who have a stake in the business and stand to lose customers due to the “system reboot” initiated by the telcos as instructed by the government.

The other camp would be the people who hate the major label domination of music, who hate RBT as a music product, and are generally happy about the state of things, saying that RBT was the harbinger of bad music to Indonesia and it’s better off dead.

Well, I am subjective, as I have worked in the music industry before, but it doesn’t mean I have my own thoughts and opinions on how the music industry should work these days. I have written frequently on this blog about the music industry, which you can search here.

So to balance things out, allow me to ask tough questions for both camps.

the pro #SaveRBT crowd:

1. how many customers can we honestly say are ‘real’ customers, who actually typed out the activation code and sent the request, and how many were inadvertently subscribed through “press * to activate”, free 7 day trials with autorenewal, or as a free 7 day trial combined with an SMS quiz? We will know this answer soon enough, when people start reregistering their RBTs (or not).
2. Are royalties actually being paid to the artistes and composers? Because this seems to be a common complaint from artistes and composers. (Disclosure: I know for a fact that my previous company pays out royalties regularly, and based on the mutually-agreed contract.)
3. Why do the telcos get the largest share? – well, I know the answer to this one. Telcos have always had the upper hand in negotiations with labels, with their millions of customers. It’s either ‘take it or leave it’. It’s not a primary business for them. The labels, on the other hand, needed a new influx of money to recover lost sales from declining physical product sales.
4. Do you think that the ‘quality’ of music has taken a back seat for the sake of more RBT sales?

For the anti-major-label crowd:

1. If music evolved from full 30-minute orchestras to 5-minute songs, why can’t it be dismantled into 30-second segments?
2. Did RBT bring on the so-called ‘decline of the music quality of Indonesia’, or did it just uncover something not heard previously in the headlines – the kind of music that many people want to hear? Quality and skill aside, the universal nature of music makes it accessible to any fan, for their own tastes.
3. The CD has become a niche product. The cassette is dead. Let’s forget about the labels for a minute – if we don’t find other ways for musicians to make money, we will lose out on some great music down the road. If RBT is not good enough, then what is? MP3? Nobody in Indonesia pays for MP3. The point is , there has to be many alternatives for a musician to make music. What happens to the composer who can’t sing properly? What happens to a musician who can’t go around and do a concert tour?

I think I have a unique perspective on both fronts – I worked for a major label company for 5 years, but also was a member of an indie band for about 4 out of those 5 years. I have an interest in challenging the status quo of major label oligopoly, because it should be about going back to the music and going back to the fans, instead of quarterly results, growth percentages and revenue shares. It should be about creating more customer value and value for the musician as well, not just numbers in an Excel file. It should be about providing the best music possible – good or bad, depending on your taste – to a wide array of music fans, instead of corporate politics. That’s why I left, because it wasn’t about the music anymore.

To be balanced, my previous company, at least the office in Indonesia, had a unique way of doing business with local artistes: master licensing. The recording master is recorded by the artist with their own money and belongs to the artist, of which the label would license it for a certain period, to manage the release, advertising and promotions, distribution to sales channels and collecting the revenue. The label’s share of revenue essentially goes back to paying for advertising & promotion, overhead, and so on. The contract is mutually agreed, and the project is treated as a business case – feasible or not, for both the label and the artist. Payments to composers are made through the corresponding publishers, transparently and following the contract terms. Why am I sure of this? Because international companies are bound by the Sarbanes-Oxley corporate governance law, complete with independent audits, and the shares are publicly traded, forcing transparency. So in this special case, the label has transformed from a recording company that signs artists, to a music company that becomes a business enabler for artists that own their master recordings. But alas, the bad thing about international companies, is that they can only control their country branches through numbers, because numbers don’t lie. And shareholders, always want more value.

There is no single solution to make sure the music industry is thriving with multiple alternate ways to make money, and we need to make sure that these are in place to encourage future musicians to make music and take it out of the home computer or bedroom practice session.  Multiple methods of music experience must be available for multiple types of music fans to interact – and we must be courageous enough to let the music evolve with the consumer (and the technology) as well. So at that point, the labels must evolve as well and rethink more consumer-friendly music interaction points. RBT may yet live on, with less customers, but moving on to a better business – albeit long overdue – is a good idea.