Ok – confession time:  I didn’t see the movie, I don’t plan to, and this isn’t a film review at all.  I am merely using the subject matter of the film as a device to further what, for me, is the more central and important lesson of this tale … and that is that ideas are cheap.

I will defer to the wise and eloquent Lawrence Lessig to provide a nugget of wisdom in a way that my mere mortal brain cannot.  The following is a quote from an article/review he published in the New Republic about the “Facebook Movie” – Its an amazing bit of insight:

But from the story as told, we certainly know enough to know that any legal system that would allow these kids to extort $65 million from the most successful business this century should be ashamed of itself. Did Zuckerberg breach his contract? Maybe, for which the damages are more like $650, not $65 million. Did he steal a trade secret? Absolutely not. Did he steal any other “property”? Absolutely not—the code for Facebook was his, and the “idea” of a social network is not a patent. It wasn’t justice that gave the twins $65 million; it was the fear of a random and inefficient system of law.

Whatever your ideas are about intellectual property, or whether or not you feel sorry for the “downtrodden” defendants in the film, execution is what matters, and real, successful execution isn’t just technical prowess – it requires a deep set of skills like vision, perseverance, and adaptability (for advice on how to acquire these illusive skills read Eric Ries – but, I digress).  When Zuckerberg launched  “Facemash”, the pre-cursor to Facebook, it was Oct 2003. I had been working on the internet and related fields,  at that time,  for nearly 6 years, and I can tell you — “social networking” on a large scale was going to happen –  it was already happening in many proto-FB  forms.  Also, I can’t think of a product where the Network Effect has more of an impact on success than for a social network, so the winner was always going to be the one with the most users, period.  Lets not also forget that Facebook improved and became bigger and better BECAUSE of its users (again… network effect) – - the product grew and adapted, not because Mark Zuckerberg gave glorious birth to every feature in advance of demand – -  but because he was smart enough not to.

So cheap, it can’t be good.

Here is a common cheap idea life-cyle that I’ve seen occur so many times within my own world of digital media:  The user AND company expect “A” which is appealing, if it works, but it doesn’t work, because the business model / the marketplace / the legal system / current technology don’t support “A” – the company proceeds anyway, because they still cling to the possibility of reaching the unrealistic, but appealing “A”,  even though there are significant barriers out of their control or lack of funding or whatever.

Truly good ideas, IMO, have depth … a path … a unique signature.  In a way, an idea is like a snowflake, and initially, only the owner of that idea has that version. To take this idea to the extreme, I could say that I have an idea to build a time machine.  Hell – from the demand side, that’s a smashing idea… just think of it! The fact that is violates the laws of physics (well, maybe not technically, but that’s for another discussion) makes it absurd, but even beyond that, if you were to press me on my thoughts on getting from A-Z (concept to launch), my only option would be to grin back at you and say .. “A Time Machine, Man! Just Think of it!” Its not a bad idea… its just an extremely cheap idea… so cheap as to be asymptotic to 0.  The point is that give me any one or two sentence ideas, and I have no doubt that there are probably hundreds, if not thousands of people who have thought of this “half-idea”, but it is the entrepreneur with the vision and insight to see a real path to execution that makes the idea into a good one.

Zuckerberg Jr.

Another internet magnate who has been much maligned for NOT having ideas, but rather, copying/stealing ideas is Mark Pincus of Zynga. Now, don’t get me wrong… there are some lawsuits out there that accuse Zynga of literally stealing code and doing things that violate contracts and break the law – I don’t condone this at all… if they are found guilty, they should suffer the rule of law, but I do think they get a bad rap for some of the “copying” charges. I found this anonymous gamer post on message a board pretty salient:

Zynga was pulled into court for making Mafia Wars, by the original makers of Mob Wars. Mob Wars is an inferior and much lesser-known game to Mafia Wars, even though Mob Wars came first (which is sad). Zynga just has an amazing dev team and knows how to market.

That being said, Zynga is a total copy cat…they just cross-promote the hell out of their games, which makes them so popular. At this point, they’re crapping gold…no matter what new game they make, it becomes an instant hit.

I don’t know scientifically if this is the “general feeling” out there, but if you take it on the face of it, and lets just say “ok – he’s right” – well, Zynga is good at developing and good at marketing… 2 pretty darn important pieces of the puzzle, don’tcha think? I think the really sad thing is that the Mafia isn’t getting their cut… I mean, weren’t they what made these games possible in the first place? Maybe Coppola should have sued Scorcese for making Good Fellas. Being a “copy-cat” in the sense described above may be seem unethical or anti-innovation, but I disagree on both counts, and in an innovative economy, its absolutely necessary.  The internet and software is all about copying, iterating, and improving… the whole industry evolved this way – its Hayek’s  emergent order in its most virulent form.

So, I’ve given up on my time machine, but there are idea men out there who never stop…

I have to partially borrow the title of (my friend and former colleague) Eliot Van Buskirk’s article on Wired.com for this post:  Music: Too Expensive to Be Free, Too Free to Be Expensive.  I need to borrow it, because when it comes to the state of digital music business models, this phrase nails it more than any I’ve heard in a long time. I’ve worked on both the consumer and the “rights-holder” side of this business, and the institutional barriers in the music industry have always been, in my view, the biggest obstacle to progress — for all parties involved.

Advertising was supposed to be music’s magic bullet, enabling fans to get the free music they’re going to find anyway while contributing at least something to copyright holder coffers. That dream is fading fast. As legitimate sources for free on-demand music dry up, fans will likely head back to file sharing networks, which is bad news for everyone involved in music — except for, perhaps, hard drive manufacturers.

That paragraph elegantly sums up what I see as a summary of the core institutional issues of the music business. The revenue generation happens so far away from the consumer experience that the two don’t recognize each other anymore. This model worked for a long time while the entire creative, intellectual property, manufacturing, distribution, and retail channels were in the control of a few large entities, because, well, that’s how oligarchies are. The industry’s bent towards “rent seeking” models, however,  grew old and tired and then the internet came along and put them all out of their misery.  Understand that I lump labels, publishers, and performance rights agencies together into the word “industry”, and rightly so, because this disaggregation of rights is a big cause of their woes.  I’m going a bit beyond the scope of Eliot’s article in discussing the various rights owners and their motivations, but it applies when you are a consumer company who must consider the cost of entering a business involving music (and I ‘m not even talking about up front costs and guarantees).

In a recent MidemNetBlog post titled “A Delicate Balancing Act“, Ted Cohen is sympathetic to both sides of the   “music industry vs. tech start-up” predicament, and he alludes to the cultural differences between tech entrepreneurs and industry types:

Having been on the label side, I understand the desire AND need to extract value from assets. In my current ongoing work with start-ups, I appreciate their passionate desire to do something innovative with music. These two goals shouldn’t be at odds with each other, and yet they are. The ‘asks’ by the rightsholders are frequently substantial, the expectations from the start-ups are often unrealistic. Neither side is really listening to each other, they are each focused on their own immediate concerns. Understandable, but not very productive.

The expectations for start-ups are often are unrealistic, but innovation is like that, and ultimately, “explaining” the music industry to someone with a good idea and a grasp of the demand side of the equation doesn’t solve the problem. The cultures do need to understand each other better, but the institutional structure of the music industry and the high costs that it creates in comparison to the questionable (and perhaps, now, unknowable) demand is a really, really big problem.

There is a subject that comes up in the digital music world all of the time, and I’ve had many discussions with many different people about it. I recently found myself in a position where I able to argue my case… a case that I had previously been unable to argue for real – - that is, I was on the other side of the table from the digital retailer – - now I WAS the digital retailer, and I had the opportunity to make things “right”.  The “controversy” in question was whether or not to expose “Record Label” as a data node in a music e-commerce site. The data typical feeds coming from the labels, distributors, and content aggregators certainly contains the information, and the question that comes into play is whether or not it is worthwhile to display the data as part of the meta-data for albums and tracks, and also whether to index it for search and linkable to display all albums and artists within that label.  The contents herein are from an actual internal email where we were discussing this feature for the site we were building at the time.  Special thanks to Dick Huey who got me all riled up so that I would spend too much time writing this… well, at least I get to reuse it for a blog post.  I did redact some stuff that probably isn’t appropriate for a public post, but most of it is here – feel free to use my arguments should the necessity ever arise

Why Label?

Ok… so I’ve put it out there that I have a strong opinion about this, and I don’t want to spend a lot of time stating my case, but I do think it’s useful for folks to understand where I’m coming from.  This is a philosophical AND a technical/ User Experience position, but suffice it to say, my time in the industry has led me to see this issue quite clearly.

Introducing the concept of “label” is, IMO, the cheapest, simplest, and most effective filter for everything “south” of major labels.  It is also the most glaring omission from iTunes, Amazon, and others.

My philosophical bent on digital music retail goes well beyond just this label issue… I believe that online music stores, for the most part, don’t even come close to taking advantage of the data and technology available, and they could be so much more to the consumer… they could increase the average amount of music purchased by the average user, but they don’t, because they are content to feature the same over-saturated crap and rehash the same merchandising and discovery approach as every site before them.

Long Tail, Blah, Blah…

Say what you want about the “Long Tail” – frankly, I don’t think it’s a relevant discussion anymore, as there is no agreement as to what constitutes long or what constitutes a digital phenomenon or just noise – doesn’t matter and here’s why.  The reality and the numbers show that there is a lot of music being sold in the thick part of the tail that is below the biggest major label acts – - no one can dispute this, but those who haven’t been exposed to this sector of the market in an intimate way don’t understand it.  Catalog (i.e. older stuff) sells… Classical Sells… Jazz sells … World Music sells… Regional Music sells…  The interesting truth here is that a lot of the music that people want to buy in some of these less “omnipresesnt” sectors isn’t even available (or at least easily or handily available) on P2P networks – a lot of it can only be found on legitimate services!

Sell, Sell, Sell

Make no mistake – - I understand our mission, and that is to sell lots of music to lots of people. I have heard it said “let’s just have something better than iTunes + our unique twist on the business model”.  Well, having record label displayed, browsable, searchable, etc is one damned easy way to have at least one useful thing iTunes doesn’t.  We aren’t going to match their editorial staff or probably even their recommendation technology (Genius took a ton of development, I’m sure), but we can be nimble and smart – - zig where they zag.

We cannot be all things to all people, but we also can’t just rely on users coming to our site to buy the latest Beyoncé single – we need to leverage the entire marketplace and create a lifetime customer value that exceeds iTunes.

My Argument

Again, not trying to spend too much time on this, but here is a quick list of reasons why to include “label” in our data model in a meaningful way.

■        Labels are incredibly important brands in the “indie” world and even major too (Def Jam, Blue Note, Motown, etc.)

■        it is a cheap, easy, and effective recommendation engine, because all of the albums (and subsequently artists) associated with labels are categorically tied together, regardless of AMG data linkages

• AMG data does not even come close to keeping up with the flow of releases from content partners, but new and catalog releases coming from content partners flow in with complete meta-data, including label, all day long

• If we get a new release from an aggregator, you have only a fleeting chance that AMG already has the data, and only a small chance they’ve already put in the editorial work to assign similar artists, etc.  But, we  HAVE label as a common data node to tie the new release to all other artists and releases within that label – that means we can immediately surface a meaningful filter that associates the artist and album

■        Catalog sells – a lot.  We’ve all seen the stories in the past couple of years about the success of Classical, Jazz, and World music online – - I’ve seen it firsthand at IODA.  Our “cool, popular, hip” sales paled in comparison to the evergreen titles coming from our classical and catalog labels.  Most of the labels representing these catalogs have a history and a common thread that ties all of the music together.

■        Classical labels, for example, have reputations based on era, recording quality, genre, etc.  BIS was one of our biggest selling classical labels, and many afficionatos will only buy from “reputable” labels.

■        There are many labels who represent large evergreen catalogs, and without their guidance as a filter, it would be impossible to make recommendations

■        The Industry will be disappointed if we don’t point to label, but they will be happy if we do – simple as that.  Including label will open up not only good PR from our partners but also merchandising opportunities and the ability to coordinate merchandising with our partners better – this does lead to higher sales when done well – I’ve seen the results.

■        When we get down to merchandising and the editorial work that we will do, having label as one of our data points gives us many more options and creative ways to drive sales.

■        eMusic does this well.

■        Labels define grouping of artists and albums that are unique and cannot be achieved any other way.  Labels represent musical movements defined by geography, artistic collaboration, time period, sound, cultural ties, etc. Labels are based on people in their element, and so are musical movements.  Before grunge broke, Sub-Pop represented “that thing”. Every college DJ knows that IRS was THE alternative label of the 80’s, focused, originally, around the jangle-pop of REM.  Those of you who’ve seen 24 Hour Party People know the history of Factory records and how it almost single handedly made Manchester, England ground zero for a time.

■        the iTunes staff laments the lack of label (don’t quote me on this)

■        AMG will not always keep pace with the content flow – in fact, it rarely can… but you can tie new releases to a label and thus to other artists simply by label association without having any new editorial data from AMG

■        Many independent labels are artist run and represent the musical taste and proclivity of a single artist of note.  There are many, many example of this (Riteous Babe, Quannum, SST, Merge, etc.)

■        Labels will often have one or two bigger artists, and AMG will show other artists of similar popularity, but the other artists on that label will have very close affinity, and the label association might be the only way that users will discover those other, completely relevant artists.

■        Genres like world music – the label IS the binding factor – its one group of people going to Africa and finding these artists all from one region and musical style

Implementation

■        I don’t think we need a “browse” functionality right out of the gate, but ultimately we’ll want core nav for all labels…

■        I do think we should surface labels in search results if there is a match

■        I think label should be displayed as a link associated with albums whenever possible

■        I think that we should be using label to recommend similar artists and albums – we can create a “more albums from this label”, which is easy, or we could combine with the AMG similar data  – - as I said, many times, we won’t have anything from AMG

■        Yes, there will need to be some level of editorial intervention, and our tools can leverage the label data to help us along

Geez, for a guy who likes to talk about himself a lot, I am downright sheepish when it comes to blogging.  I really thought that given my leisurely lifestyle these days, I would be posting more, but alas, somehow I am always just a little bit too busy, uninspired, or utterly apathetic.  No matter – here I am, and I’m blogging like the wind.  My last (ok, only) blog post did garner a fair bit of attention, so in order to safely make my way back into the good graces of my many thousands of readers, I will follow a similar theme.

So, first – some bad news.  I will not be attending SXSW this year, interactive, music or otherwise.  It is the first time in a while, and I have to say I’m pretty glad because my doctor said that every year I don’t go to SXSW I live another 5 years… I should make it to 45 no problem now.  Anyway, for the rest of you, some more bad news… my absence will create a void that no amount of queso or Shiner will be able to fill (believe me, queso can normally fill the hell out of a void – - and holes in dry-wall in a pinch).  SXSW should probably just cancel itself and spare itself the embarrassment of my absence, but if you must still attend, then let me warn you – - ok, here’s the 10:

1.       When I check into the Omni, they always try and get me to sign the “No Partying” waiver, and I immediately reach for my bullhorn and verbally slay them with an emotional, yet eloquent tirade about the violation of my rights as a citizen and an Asian American.  This always causes them to suspend the “No Partying” rule, even though most people don’t know this to be true or that I was the impetus.  Sorry – all you suckers staying in the Omni this year – no partying for you.

2.             The quality of the performances will go down – - why?  I generally attend a lot of shows while there, and almost every one I attend, I perform the following service for the artists and audience.  I position myself in clear site of the band and proceed to cross my arms and make the “my god, this may be the worst music I have ever heard” face.  Some may feel that this is cruel, rude, or negative, but by creating a situation whereby the artist is then compelled  to try and please me, I raise their game.  After that, everyone wins.

3.             All of those private parties that offer free booze will have a surplus of drinks, as they probably factored in my attendance in advance.  This will throw off their game, and through a downward spiraling series of events, the party will end up sucking. I have proven this mathematically, but its really advanced non-Euclidean stuff that’s way over the head of the average blog reader.

4.             The absence of my warm and generous personality will drop the temperature at least 10 degrees.  Bring some gloves.

5.             My loud booming voice is a great asset at this cacophonous event, and the lack of my vocal powers will mean that many people will have their heads down with their Twitters and texts and missing all the real action. Perhaps if one of you brings a bull-horn, you may be able to replace me in this regard.

Well – that’s it.  I know many of you will go ahead and go anyway, but you’ve been warned.