. I have been watching a TV series called Phil Spencer, Secret Agent. This is a property programme and each week during the series Phil tries to help a family sell their house. In the programme I saw today he was in Harrogate, where he met Andrew and Jenna whose pleasant semi-detached house in a desirable area was not attracting the interest it should have.
So far so good: the premise of the programme is pretty much the same as the long running TV seriesHouse Doctor which was first screened in 1998. Like Ann Maurice, Phil tells the vendors bluntly how their property looks from a buyer's perspective, and then they get to work to transform it.
This process goes well, except that Phil believes the property is over-priced. However, not only do Andrew and Jenna ignore this advice, they go on to sack their estate agent and appoint a PR company to sell the house instead. The promise is that Twitter and Facebook will deliver where conventional marketing failed.
Phil is not convinced and by the end of the programme has only found one potential buyer to view the property - someone who had been identified earlier when the house was with an agent. I would like to know what the end result was: according to the Move With Us blog the social media route didn't do the business and the couple put the house back on the market with an estate agent.
Cutting out the agent is a process known as disintermediation. The principle is that electronic media can fill all the roles traditionally serviced by an agent: an example might be buying airline tickets or motor insurance direct from the service provider. Andrew and Jenna were persuaded that social media could do the job better than the agent, but it turned out not to be the case. Why?
I wondered the same thing last summer when I was about to put my house on the market. I figured out that as I understand online and am considered to be a social media expert, I could find all the prospective buyers I needed, and then use technology to get them hooked. In doing so I would save several thousand pounds in agents fees.
In the end, though, I went through a traditional estate agent. There were a lot of reasons for this: one was that I found that in Britain at least buyers prefer to deal with a third party, rather than negotiate directly with a seller. I also felt that a prospective buyer would have more respect for key details such as price when it had been set by an agent. But most importantly I found that 21st century real estate in the UK is dominated by two online platforms, RightMove and PrimeLocation. Both of these provide a superb range of services to buyers and have transformed the property market. Almost every property on the market in the UK is listed with these companies, but both will only take bookings from registered estate agents.
You can try and use Facebook and Twitter to create a buzz around your home, but if it isn't on RightMove or PrimeLocation it just isn't visible.
My estate agents agreed to use my photographs of the house: I spent a huge amount of time getting the angles, layouts, lighting and colour just right in each of them, and I made 40-50 examples available for their brochure and for uploading to Rightmove. Those that they didn't use I uploaded to Flickr and tried to tag them carefully to improve their visibility. From time to time I linked my Twitter feed to the pictures (I have more than 500 'followers' on the site). Similarly, I would comment about the house and the pictures on FaceBook - but only occasionally as social media users don't like being sold to.
The Flickr photos tried to make the place look nice, and to sell the lifestyle a buyer could enjoy. This helped to back up what the agents and Rightmove were doing, but Flickr, Twitter and Facebook didn't sell the house. The metrics provided by Flickr showed no more than half a dozen hits each week for each picture: our pages on Rightmove were getting hundreds of hits in the same time.
Wayside House in about 1930: selling the history
Social media are about telling stories. I tried to tell the story of the house - its history and its location. But there is only so much you can say, and in the end the people most interested in the place came because of its size, position, value-for-money and other practical factors. The agents did a superb job and found buyers for us after just four months (in a depressed market). But all of the interest came via RightMove.
For several years now Britain's music industry has been obsessed with the problem of illegal downloading. Last December the BPI, the trade body representing all the major record labels as well as many independents, produced an authoritative report, 'Digital Music Nation 2010'. Based on research by two respected market research companies, the report painted a picture of a burgeoning new, vibrant digital music sector in the UK. But the real story - made clear in BPI press releases - was about music piracy. In fact, variants on the word 'illegal' appear in the report more than 70 times.
We have looked at the arguments about illegal downloading in earlier posts, noting that the industry can't always be trusted with the facts. But while one of the arguments was about piracy destroying jobs, the BPI also stressed the impact on investment. Looking at the word count again, variants on the word invest, investment, investor, etc. crop up 30 times in this report. The BPI identifies two main problems: firstly that outside investors will take their cash to sectors where this kind of theft is not endemic; and secondly that record companies themselves will be unable to continue to invest in supporting new musical talent.
This latter point was made by Andrew Lloyd Webber who told a House of Lords debate that music piracy in Britain was undermining the industry to such an extent that in ten years it would be unlikely that a band such as the Beatles would emerge (reported in the Daily Telegraph). More recently the Daily Mail's Business Editor described how before rampant piracy there was "cash to invest in new performers and to keep the creative juices flowing by paying good royalties to established singers, orchestras and musicians". Now, though, illegal downloading "has made it all but impossible to sustain heavy investment in new artists."
As has been noted earlier, EMI's new focus on business and profits when private equity group Terra Firma acquired the firm in 2007, was followed quickly by the departure of Radiohead, The Rolling Stones, Paul McCartney, Queen and Pink Floyd.
But what does "heavy investment in new artists" consist of?
When a record label 'discovers' a new act they will attempt to 'sign' them. Typically this involves offering a sum of money in exchange for the band signing a contract. What many bands don't realize is that this cash is an advance on future album, touring and single sales. The record label's costs in putting the band in the studio, in recording, editing, pressing, distributing, marketing... the list goes on... invariably go against the band's account on the debit side. Now they owe the record label for the original advance, plus a whole raft of costs (perhaps even the "flowers and fruit" lavished by EMI's management?) associated with getting them airplay.
The record label will argue - with some justification - that their investment is in the production values added to the recordings, in the marketing expertise that will get the new band airplay, in the strategic insights which will identify market segments that the band would never have been aware of. With luck sales will flood in and in time royalties will have finally overtaken costs, and the band will finally really start earning.
More likely, though, it will be time to make the second album - more costs, more expenses. It was no surprise that many of EMI's major acts walked - these lucky individuals were in credit and could afford to take their business elsewhere. The majority of musical acts have no choice: they are heavily in debt to their record company and are committed to putting out a new album every two years or so.
What other industry has this approach to 'investment' in new business assets? Almost all of the risk is borne by the artists, not the record label. It is like supermarket giant Tesco telling a farmer that he must bear the cost of supplying produce, packaging it, distributing it, paying all of Tesco's overheads - and that in time the farmer might start to get some revenue of his own. The only equivalent I can think of is the book publishing sector.
Both music and publishing seem to have a business model where elements of commercial risk are skewed towards the artist rather than the company. In the cases of both music and publishing there are now digital alternatives: artists no longer need the sort of support mechanisms that were offered in the 20th century.
A few musicians such as Paul McCartney and Radiohead have been able to break out of this cycle of debt as their products have had international success. Most, though, have little choice. In genres such as folk and jazz, musicians remain in debt to their record labels all their working lives.
EMI was founded 80 years ago and has grown into one of the 'big four' of the recorded music industry (with Universal, Sony and Warner). Now, though, it is in the hands of its bankers (Citigroup) and a buyer is sought. What went wrong?
Earlier this month Britain's Daily Mailhad no doubt. A picture slogan spells it out: "the future of recording giant EMI is being undermined by Google" (the Mail's argument is that because music pirates show up in Google searches, then Google is complicit in music piracy). In an extraordinary outburst the Mail rants that "digital piracy ... has made it all but impossible to sustain heavy investment in new artists".
Similar points were made in the NME recently, under the headline "EMI's Plight Proves It - Downloading Has Murdered the Music Business", and the BBC identified downloading as one of a range of problems undermining the company. The Daily Mail agrees about other factors - it also blames "the aftermath of the financial crisis", ignoring the fact that the reason Citigroup has acquired EMI is that the previous owners (private equity investorsTerra Firma) had been unable to keep up the payments. When Terra Firma bought EMI in August 2007 the financial crisis had yet to hit the headlines, and EMI was in desperate financial straights anyway.
Back then, Terrra Firma's Guy Hands identified a host of problems at EMI, but illegal downloading didn't appear to be one of them. An article in GQ reported how an audit found that London staff had spend £700,000 on taxis in a year, and that some executive salaries were as much as double the market rate. The Guardian reported that expenses were running at the rate of £100 million, including what Hands euphemistically referred to as "flowers and fruit".
The new owners were realistic enough to recognise that the music business was changing: to survive and prosper (like many of the newer independent labels) it would need to bring its costs base down in proportion to the size of the business. The new CEO Guy Hands believed that he could add value to EMI by working its assets harder. But as Neil McCormick in the Daily Telegraph pointed out, these assets were the musicians, and they didn't take kindly to being treated as balance sheet items. "Radiohead, The Rolling Stones and ex-Beatle Sir Paul McCartney were amongst the most high profile of EMI’s artists to take themselves elsewhere in a huff." Later they were joined by Queen and Pink Floyd (who had a separate legal dispute over royalties). Veteran EMI insider and producer George Martin voice their frustration "I understood Paul McCartney's frustration when he quit EMI... The old production teams had broken up; recordings seemed to be manipulated by a faceless committee. One-on-one contact no longer seemed to be applied."
Even Hands' allies saw the difficulties (without highlighting music piracy among these): the new chairman of EMI's holding company, former Director-General of the BBC Lord Birt told the House of Lords that EMI "has been slower than most to reinvent itself and to take advantage of new opportunities for discovering talent and better serving businesses and consumers" (Daily Telegraph)
EMI is a long-established company in a market that has been subject to disruptive changes. It has failed to adapt to the digital era, and in recent times has been focused on business to the detriment of its artists and audiences. The Daily Mail is wide of the mark talking about piracy making it impossible to sustain heavy investment in artists: EMI wasn't even able to hold on to the major artists it had. Music piracy has clearly affected EMI, but as I noted in an earlier posting, illegal copying of music has been endemic since the 1970s - EMI's heydey.
Besides, there is some evidence that persistent illegal downloaders are also often the biggest purchasers of recorded music. How do we know this? It's all in the Daily Mail. I wish they would make their minds up.
In a recent posting on the topic of music filesharing I blithely avoided the ethics of illegal downloading by saying "It's complicated". I went on to show how many people distrust the music business when it bangs on about its lost revenues: not only has it been doing this for more than 30 years, its figures are often questionable and there is certainly some contradictory evidence.
Another strong argument it has been using in recent years is that piracy is destroying jobs in the music industry. Under the headline "1.2 billion songs downloaded illegally", Britain's Independent newspaper reported "The creative industries employ two million people in the UK... Urgent action is needed to protect those jobs and allow Britain to achieve its potential in the global digital market." This is quoted directly from a report produced by the BPI, the trade body that represents Britain's record labels. It is a credit to the BPI's public relations team that the same quote found its way into many other national and regional newspapers in Britain, and was cited in numerous other blogs and online news pages.
Making the connection between illegal downloading and the threat to two million jobs is a clever piece of reporting, as most readers leave with the impression that if piracy is allowed to continue there are going to be vast numbers of people thrown out of work. That is why "urgent action" is needed now.
There is nothing much wrong with the data, and the figure of 2 million jobs makes for good headlines. Indeed, urgent action was being called for in December 2010 because although the UK's Digital Economy Act had come into force just a few months earlier, it was looking increasingly clear that the legislation was being implemented too slowly for the industry's liking. Earlier this year it became clear - following legal challenges by some internet service providers (ISPs) - that the law might not be enforceable.
The Digital Economy Act was one of the last pieces of legislation put through by Britain's Labour government, which rushed the law through parliament just before losing office in May 2010. The Act put the onus on ISPs to warn users who had been identified by the music industry as illegal downloaders, and to terminate their internet service after three 'offences'. It was widely referred to in the press as the "three-strikes rule", which is similar to legislation operating in France.
The BPI had lobbied vigourously for the Digital Economy Act as a way of combating internet piracy, but by the end of 2010 it looked as if its efforts might have been in vain. Not only was implementation being slowed, but one of first decisions made the new Conservative-Liberal coalition government in Britain was to abolish the Strategic Advisory Board for Intellectual Property Policy (SABIP), the body which had been instrumental in setting up the Digital Economy Act in the first place.
In order to regain the PR initiative the BPI commissioned new research showing that illegal downloading was still endemic in Britain, and played the jobs card. This was another shrewd lobbying tactic: Britain's new government was struggling with a economy in recession and unemployment rising to levels not seen for more than a decade.
There was nothing dishonest about the BPI research: it had been produced by respected market research companies Harris Interactive and UKOM/Nielsen. And the figure of 2 million employed came from the government's own figures. What is questionable is suggesting that illegal downloading is putting 2 million jobs at risk. The two million figure relates to the creative industries as a whole, and the Department for Culture, Media and Sport which came up with the number was at pains to admit that these are "experimental statistics" and a "first attempt" to measure the sector.
Looking more closely at the data we find that the music industry element is subsumed under the heading 'Music & Visual and Performing Arts': the largest employer is 'Software and Electronic Publishing' with more than twice the number represented by Music. Looking more closely at the DCMS classifications, the Music category included anyone employed in the performing arts, supporting the performing arts and working in casting. There are additional categories counted here including operating arts facilities, "artistic creation" and employment agencies in the arts.
So just how many of the reported 306,000 people in the "Music & Visual and Performing Arts" sector are connected to the music business? Once we strip out all backstage staff at theatres and arts complexes? When we take out the entire acting profession? In truth nobody knows. But we can get an indication, perhaps, from applications for courses in higher education in Britain: according to UCAS figures for 2010, more than twice the number of young people applied for courses in drama and dance (64,000) than chose music (28,000).
This sort of ratio might mean that less than 100,000 people are employed in the music 'business'. But you are going to get better headlines quoting 2 million jobs under threat from illegal downloading. This is an example of the practice regularly highlighted by author and columnist Ben Goldacre, called 'cherry picking' statistics to suit your argument.
In any case, it is practically impossible to measure the number of people employed in the music business. Hardly any musicians make a living from their art (in the sense that it is their only or main source of income). Mostly musicians supplement meagre earnings from gigs, merchandise and recordings with more regular, paying jobs in areas such as teaching and the service sector.
It is not so much these jobs that are 'under threat' from music piracy, but instead those in the record labels represented by the BPI. But technology is changing the whole creative landscape, and there is a strong argument that musicians don't really need the traditional record labels any more.
Yesterday was the birthday of William Shakespeare. The day is also celebrated in England as St George's Day - St George has been England's patron since 1422. Here in the words of Shakespeare, is King Henry V urging his troops into battle with the French: here
I see you stand like greyhounds in the slips,
Straining upon the start. The game's afoot:
Follow your spirit; and, upon this charge .
Cry God for Harry, England and St George!
(Henry V, Act 3 Scene 1)
Shakespeare was a master story-teller, of course, but the legend of St George is nothing more than that - legend. How is it that a mythical figure from the distant past in the middle east could come to stand for Englishness, the national 'brand'? The answer to this question is more complex than you would think, and is given here in a paper I will be presenting next month at the CHARM conference in New York City.
What has all this to do with social media and other aspects of technology that are normally covered in the blog? Curiously, quite a lot. St George vanquished more deserving English saints to become national patron by having a more interesting story (good and evil, maidens and dragons, that sort of thing). In just the same way marketing people are discovering that in order to succeed in social media you need to be telling a persuasive story.
A good narrative will not only engage with your audience, but they will share it with their friends and family. A good story gets people's attention, and is infinitely adaptable. Successive generations of rulers in England managed the St George narrative to emphasize different aspects at distinct periods of history. For example in the period of imperial expansion in the 19th century, it was St George the conquering soldier-hero. After the first world war people wondered what 9 million men had died for: St George the soldier-martyr was then immortalized in memorials all over England.
Word-of-mouth marketing has been practiced as long a people have been able to use speech to communicate, and word-of-mouth relies on persuasive and memorable stories. Social media marketing relies, not on the slick production values of 20th century advertising, but on simple, credible, powerful stories that people will listen to and spread. It is these stories that people will share on Facebook and will re-tweet on Twitter. St George has long been a 'social brand', standing for a certain set of values and behavioural norms. Now consumer brands are having to rediscover the art of storytelling.
It is common for people to think that technology is moving so fast that we are in danger of being passed by. In yesterday's post I reported how Feargal Sharkey had talked of the effect of 3-4 disruptive technologies happening during his musical career. These included music going digital, the advent of the CD and download technologies like iTunes.
This feeling is nothing new, and for two hundred years or more people have felt the same way. You might be tempted to think that this would not apply to the music business, but it is as true for music as for any other aspect of life. A good way of illustrating this is to look at the life of George Gershwin.
Gershwin was born into a Russian Jewish immigrant family in New York in 1898. There were no obvious musical influences in the family, but George seemed to show an aptitude for the piano at an early age. He went on to become a prolific composer of songs, musicals and orchestral works, and was probably the first composer in history to get rich from music.
George Gershwin quit school at the age of 15 to join the music business. At that time the money was in sheet music, and George was employed as a music 'plugger' (a kind of salesman) in Tin Pan Alley. His job was to promote songs owned by publisher Remicks to would-be buyers from Broadway and music halls. A catchy number associated with a hit show would sell hundreds of thousands of copies of the sheet music.
At the same time Gershwin was starting to produce recordings of Remick's numbers, and some of his own compositions, on a new development for the music business, the automatic piano. These devices were the forerunners of programmable computers - virtuoso pianists would themselves create original 'recordings' on paper rolls which in turn would be fed into the ultimate in-home entertainment system.
George Gerswhin's big break came with one of his own numbers, writing the music in 1920 for Swanee which was a huge hit for singer Al Jolson and librettist Irving Berlin. Recorded? Yes. Jolson's success with with an emerging technology, the phonograph. This went on to change everything - effectively wiping out most of the sheet music business.
George Gershwin, though, was hot property in the older musical economy, and went on to write hundreds of individual songs, mostly in Broadway shows and other musical offerings. Some of these shows went on to become massive hits (and, like Oh Kay, are still performed today), others died quietly. Gershwin's greatest songs have been recorded by countless musicians.
Gershwin was one of the first musicians to realize the promotional potential of radio, the hottest medium of the early 1920s. At the beginning of 1922 there were just 28 radio stations in the US: by the end of the year there were 570. The new 'broadcasters' were struggling to fill the schedules, and here the music industry was able to help out and music 'pluggers' like the young Gershwin were sent out to plug the gaps.
If this technological explosion sounds familiar, then listen to this complaint from the time when networked radio was becoming a reality: "Anyone who thinks he can carry a tune... nowadays takes a 'shot' at music making" (Gershwin himself in 1926, when his burgeoning career as a national broadcaster, with a syndicated coast-to-coast radio show and a massive audience to match.
Gerswhin, of course, turned his hand to orchestral works (the most famous being Rhapsody in Blue) and opera (he wrote the music to the perennial Porgy and Bess). The next technology he embraced was the movies, moving to Hollywood in 1934 and writing the score for two Goldwyn blockbusters, including Shall We Dance which featured Fred Astaire and Ginger Rogers.
George Gershwin died tragically early, on July 11 1935. During his short career the music business he earned a living from evolved from making its money from sheet music and piano rolls, the stage and then into radio, gramophone and the movies. Gershwin was just 39, and in his short life had ridden the wave of a succession disruptive technologies. Feargal Sharkey is 52.