Curated by: Luigi Canali De Rossi

Thursday, February 14, 2008

The Music Business As Seen From The Inside: Ty Roberts, Gracenote CTO Interviewed

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A few days ago I had the opportunity to meet briefly with Ty Roberts, CTO of Gracenote, a company which you may have not heard of, but which has already helped you thousands of times play and identify your music collection titles and artists on your computer and personal digital media device.

Ty Roberts CTO of Gracenote - Photo credit: Robin Good

Ty has been working on the music industry side for the last several years, and, from how he spoke, it is easy to tell how much he has absorbed and made his the big labels mentality and views on the music business.

As many other in his business, Ty too has realized that the restrictive and punishing approach the the recording industry has taken ever since the rise of Napster has not worked well for them. Music consumption is at an all-time high, while recorded CDs keep selling less and less. This is what he reports himself in this video interview we recorded last weekend at the St.Regis Hotel here in Rome.

I am publishing this interview with a specific goal in mind: helping you understand better where the music industry is at today. Are they being reborn, or are they still thinking where to go next?

I know Ty Roberts is not the spokesman of the whole recording music industry, but since he has worked in it for quite a long time and didn't know the goal of my interview at the time of recording, I feel this stands as a quite genuine example of where at least some of this music industry management is at.

Unfortunately, though I do leave the final judgment to you, this music business seems to have lost contact with consumer reality and with how fair business should be conducted. What I heard in Ty's voice, is certainly a positive desire to change somehow direction, but without fully understanding, acknowledging or opening to true rethinking of their business model.

What stroke me the most, among the several interesting things Ty had to share in this video interview, is the fact that the music industry, or at least some people in it, still expect consumers to come forward and re-evaluate the recording labels attitude and past actions in a new light.

That it is good to forgive and to be constructive I do agree, as much as I agree that CEOs of the major labels should not be hanged or imprisoned. In the end... they only minded their own business. But what I can't agree with, is the idea that somehow, by forgetting the past mistakes individuals and record companies can marry again and live forever happy.

I feel sorry for this, but to be honest, I do not think I will ever marry again commercial record labels as I know them now. They have sold me protected and DRM-full CDs at unreasonable prices, they have threatened, harassed and fined friends around the world for having freely downloaded and shared music, they have made it next to impossible but for a selected few artists to ever make it on the music scene, they have sold their soul not to the greatest and most innovative music talent but to the untuned sound of their own wallets. Why should I forgive them?

Someone still thinking that without the major record labels you would have no more good music coming your way?

Read this morning news and think again and start communicating with the major labels more, via your silent wallet. It's the only language they know.

Here is to Ty Roberts, and his own take on all this as a music industry executive. See whether it is just me that sees things this way, or if you feel too the same flies in your stomach when you hear where these guys are at.

Ty maybe a great, talented guy, sure. But to ride the wave, at some point you need to climb on the board and decide which one wave you really wanna ride. Or not?

At any rate, especially if you are a musician or an independent artist, there is a lot to learn from this interview and from some of the genuine advice that Ty shares during it.

Here the video clips and the full text transcript from it. Thanks Ty!



Video Interview with Ty Roberts, CTO of Gracenote


Ty Roberts: I'm Ty Roberts, I'm the inventor of music and multimedia software.

I did CD-ROMS with David Bowie. I did video games, and now I run a large database for all the music players in the world.

The company name is Gracenote. You may not have heard of it because we're kind of inside the different music products.

Probably the best way to know of it is - if you have ripped a CD, you have used Gracenote, because the names of the songs are not on the CD. The names of the songs come from our database.

When you put the CD into the computer, it downloads the names of the songs. You push the button, it rips the tracks into your computer, and it gives our names. Without us, you would have no names for your songs.

You need to have a name for the file, and there's no name on the CD. It's printed on the CD, but to actually have a file you want to have a written text name saying such and such an artist and this year it was made and what type of music it is so you can find it later. Once you rip 50 CDs you'll have 500 to 600 different files.

So when the CD is first put into the computer, you use a software application like iTunes. Apple iTunes then knows the CD is there, and it gets a little code off the CD then sends that code to our database.

Our database has those codes compared to all the names of the songs and all the information, then it sends that information down to iTunes which then displays it, and it all happens in a second - you don't even realize it's happening.

You can't get the names from our song database while you're on the airplane, you have to do it while you're on the internet.

Automobiles are not yet on the internet, they probably will be on the internet soon, but right now they're not. We've embedded our CD database, the entire database, inside the automobiles. It's not really the complete CD database because our database is really huge, but it's the database that fits well for the country where the car was sold, so there are a few hundred thousand CDs in there.

The Music Industry vs. Pirates

The recording industry tried the wrong approach to get consumers to not copy music across the internet.

They knew that if people were just giving music away to each other for free that their business wouldn't grow very far. SDMI was the first attempt at trying to come up with some kind of strategy to control copying of music.

Ultimately the recording industry never found a strategy that worked, so today music is flowing around the internet all over the place.

We, my company, haven't been directly involved in P2P. We don't do that, but I guess what I really want to say is that industry efforts were not successful.

Maybe with the high tech they have today, they could have been more intelligent with how they approached it - but the recording industry was initially a little too underhanded, a little too controlling, and that continued for years and years.

The consumers took control, and now the recording industry is going without any kind of protection of the files. There's no more protected music files being produced, probably about a year from now there will be no more at all.

I feel the consumers forced flexibility. I think the recording industry made a mistake not to pick a standard single vendor digital rights management system way back 4 or 5 years ago.

They didn't want to do that because they were afraid of empowering one company to control their whole business. So instead they empowered no companies to control their business, they had a big fight, Apple won, and now Apple controls their business more than they do.

It was just a bunch of mistakes, I think, made by people who are reasonably intelligent about these things, but in the perspective of the time, they made the wrong decisions.

CD Ripping is Not Pirating

We work both sides of the aisle, basically. On the consumer side, the consumers submit the song names. So the song names in our database, all or a lot of them come from the end user submitting them to the database.

CD ripping is not pirating files. It's easier for people to burn files by going to the internet and downloading the files themselves - starting with a CD is not something the people really do to pirate files in a huge way.

Usually people are taking the CD collection they bought, and the first thing they do when they get a digital music player is take all the CDs they bought and burn them. So that's really our business.

I think the record business looked at any conversion of music CDs to files to be dangerous, but now they realize this is just part of normal life, and this is not the dangerous part.

The dangerous part for them is when people take giant hard drives full of files, then go meet their friends and exchange the entire hard drive in ten minutes. If it was happening on a very small scale it wouldn't be so bad, but that problem is happening on a large scale.

Pretty much every college student is exchanging any music they have with every other college student, and before they leave college they have 50,000 songs.

For The Love of Music

This doesn't mean they don't love music. They wouldn't be doing this if they didn't love music. We see, through what Gracenote sees, the usage continues to go up. Consumption of music is going up, up, up.

There's more use of music in everything. You can use music in your slide shows on your computer, listen while you're jogging, put it on your stereo system.

So music consumption is going up, the problem is the sales of the recorded music are not going up, they're going down.

I think what needs to happen for the recording business is they have to reinvent themselves, and they have to create a new product that is more relevant to the consumer today

That is probably more related to a music product which contains music but also the contains the kinds of things a music fan likes - access to tickets or information about the artist or photos or videos or other music related community kinds of things. That's a package for music today, rather than the music itself.

The music itself by itself a single track of music has less value today, but the overall pack of, I think, the assets of the artist has more value. The record music companies need to broaden what they do, refine which angle to do, and the consumption will recover relatively rapidly.

Future Solutions for Monetizing Music

Music can become like a utility in a certain way. You pay your power bill, for your electrical power, based upon how many kw you use, but you don't really think about where it comes from.

You realize that the power in your walls is coming from the river, some is coming from the nuclear power plant, some is coming from whatever - you don't think about the complexities of how the system gets you power. It just gets you power, it works

So what he [Gerd Leonhard is saying is music will become part of the service of the internet essentially.

Now, every month you pay a certain amount of money to get high speed internet connection in your home, so music, movies, and I think he says other things, will become part of that billing structure while enabling you to consume as much as you can consume.

So a flat rate or a compulsory license for those rights I think is going to be something that will probably happen in the future. Consumers, as I said, aren't consuming less, they're just not paying for it.

Music Bands Today

The number of large artists that are rich wealthy rap star guys driving all the cars is much smaller. They individually have less money too, because the top selling albums, if you look at the charts, the platinum album that used to stay on the radio for five months, and every single would be another song, that just doesn't happen very often. It almost happens never now

A successful album now sells millions of copies. It could be a very successful album where it sells millions of copies, not tens of millions. The total sales for the albums are off by like 50%, something like that.

Big artists are selling less, still selling a lot, still not struggling, but still not selling any more like they used to ten years ago. New tier artists are selling just a few hundred thousand. What that means is the amount money they receive from their record contracts isn't enough for them to actually live off.

If you are 50 Cent, you can live off your music and make millions of dollars and live off your music. If you're somebody that's more like in a gold record kind of deal (a gold record used to be like "hey I'm successful"), that means you can have a band you can be successful, but really your livelihood is touring

What's happened now is in the US, now especially, and in Europe, there's a lot of festivals now. There's a lot of bands at these festivals, there's small bands.

There are bands with four guys that go in a van and they tour around. Their income and their lifestyle, their lifestyle is probably interesting, but their income is probably much more in line with someone with a normal job. And there are many more of those bands now than there ever were before.

A part of that is the consumer tastes have fragmented. So these bands address different niches and styles of music, which before everyone was like "okay I have to listen to Pink Floyd" or whatever big band of the day was. Now instead kids are interested in small bands, lots of small bands.

I think it's very good. I think that there is no problem right now with the talent pool. There is more bands touring around more places than ever before.

What's great about that is getting to play. What makes a musician good is actually playing. Nothing gets you to be better at your art than being forced to play your music every night, six nights a week, on the road with four friends who are out there doing it because they love doing it.

It's totally different than maybe ten years ago where the idea was you get a hit record and turn to this rich guy who occasionally records music does big stadium tours, there's just so few of those artists now around. And they're not making as many new ones of those kind of artists now as they were at one time.

Advice to Music Record Companies

My advice to record companies would be innovate, develop a new product, make something that is more interesting consumers, and more relevant to today's consumer.

Look at broadcast media where the record company and the artist vision is given to the consumer, and the consumer had to accept it or not. That's how it has worked for the last several hundred years.

Now there is the internet, and it really doesn't work that way anymore.

You send something to the consumer, the consumer reflects his vision of it back at you, comments on it, tells you what they think, maybe even responds to you within a piece of art or does something in response to that. And that's a two way communication channel, which is really what the internet is about.

I think the recording industry needs to develop a two way music relationship and product, not a one-way product. That's one.

On the consumer side, while I know it's really great to get free anything, it would be great when there was a new product such as this two way communication product, if consumers were to reevaluate their concept of actually paying money for something so they can support a system of people to do that.

Yes there are artists who make too much money and there are artists with no money, but there are people in the middle who actually try to run the business.

It is actually a challenge right now. A lot of my friends are the people having a hard time in the business, and they are good people. There were bad people in the recording music business, but a lot of them have left because it's not as much fun as it used to be.

So what I am saying is if consumers could reevaluate that and forgive a little bit of the evils of the past, if the recording music business changes its ways, and I think they will, then I hope consumers will meet them in the middle and there will be a happy musical life somewhere in the future.

Interview end.


Originally recorded and written by Robin Good for Master New Media and first published on January 14th 2008 as "Music Business: Ty Roberts interviewed by Robin Good"

Robin Good -
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posted by Robin Good on Thursday, February 14 2008, updated on Tuesday, May 5 2015

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