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Source link: http://archive.mises.org/9780/cwf-rtb/

CwF + RtB = $$$

April 12, 2009 by

This is an extraordinary presentation by Michael Masnick on the pheneomenon on Trent Reznor and the Nine Inch Nails, and how to make money in music without calling upon the state. It is an amazing presentation that is all about marketing and innovation, breaking old models and experimenting with new ones. You might say that the story is about entrepreneurship, which copyright has discouraged in the music business for 100 or so years with deleterious consequences for the entire industry.

Now, anyone who knows me would know that I’m probably the least likely person to listen to a single note of this band; not my thing at all. However, the general lesson here of innovation applies regardless of the genre in question. Whether the music is rock, country, baroque, Mahler (yes, a category all its own), or medieval or Gregorian chant, there is no escaping the need for innovation and marketing.

{ 20 comments }

Uriah April 12, 2009 at 11:15 pm

This was an excellent presentation. It really highlights business strategy and Austrian logic.

I’ve just finished an MBA and throughout my Strategy, Leadership and similar courses, I have always maintained that it is necessary for good business men to understand Austrian economics. If they don’t they are more likely to take the Metallica approach to business as opposed to the NIN approach to business. It’s this understanding of action and market forces which allows organizations to generate a sustainable competitive advantage.

Neo-Cicero April 13, 2009 at 3:58 am

Jeff thanks for the YouTube presentation.

Btw the name of the band is Nine Inch Nails. Not The Nine Inch Nails. :-)

Matthew Dawson April 13, 2009 at 4:10 am

Excellent post. Digg’s interview with Trent Reznor is also very good, and he goes into more detail in how his business models work: http://digg.com/dialogg/Trent_Reznor

Deefburger April 13, 2009 at 10:10 am

I’m not a fan of NIN. But I did download the Slip and It’s interesting. I have yet to buy a NIN album, but I can see that happening sometime in the future. My point is that I would not have this outlook at all, had I not been able to listen to his work.

Brilliant. I am a BIG fan of Trent Reznor and his Business Accumen! I think the man is a genius and is paving the way for other artists of all kinds to make money in this brave new world of digital replication. Trent take a bow!

I think the most interesting point is that Amazon sees NIN at the top of their download sales. This small fact must be giving the RIAA, BMG and the other record companies kittens. How can you justify your contracts, and the damage awards when the most successful sales are with someone who gives the music away? Your justification for any of those things, you contracts and damage awards, are based on your ability to protect the product and insure profit potential. What NIN is proving is that those protections are unnecessary and even counter productive.

I want to know, who is Michael Masnik and who was he presenting to?

Bob Kaercher April 13, 2009 at 10:18 am

BTW, speaking of Nine Inch Nails and statism, they put out an album a couple of years ago called “The Year Zero” that is really quite interesting. It’s a concept album in which the songs describe a future American totalitarian state that sounds like a neoconservative’s sickest and most twisted fantasy come to life.

Of course, the style of the music may not be to the tastes of many Mises.org readers, just as it isn’t Jeffrey’s kind of dish. But if it is, and you prefer your hardcore, post-punk, industrial grunge combined with a healthy dosage of anti-authoritarianism, then you may want to check it out.

Deefburger April 13, 2009 at 11:51 am

@Bob Kaercher

I agree. The man is an “Austrian” in thought, even if he isn’t Mozart in music!

There is an old saying that all of us have heard over and over again. It is sometimes called the law of Karma. “What goes around, comes around.” What Reznor has done is what every true Capitalist must do, that is have faith and trust in the market. There really is no room for greed in this model. Trent gives away his base product, and then relies on the good will he gives, to return value to him later. Why? Because what he gives is a sample of the greater value available in his other products. What he gives away is the one thing he has that he can not loose. His trust, and his IP. What comes back is sales to those who recognize the value in the IP, and trust in the value of the other products made available. The good will, which had very little actual cost to Trent, comes back in the form of value exchange for product and currency, and a mutual gain between Trent and the market.

Trent Reznor is the quintessential Capitalist. He recognizes the actual value of good will. Greedy “Capitalists” do not, and are not true capitalists because of this fact alone. We see before us in the economy of NIN the realization of Human Action. The true nature of Free Market Capitalism.

(8?» April 13, 2009 at 2:18 pm

I’m here to say that this website is not devoid of followers of Trent Reznor and his efforts known and Nine Inch Nails. I consider him to be far and away the most accomplished musician of my time. (his music is some of the most complicated, multiple time-signature layered music that exists these days, Mozart nothwithstanding)

He has yet to understand why it is better for music to be free, but he does understand the reality that it is now free, and there is nothing he can do about it, other than embrace it.

For those who don’t think NIN has anything to offer them, go download the free album “Ghosts I.” Then you may find yourself spending $5 (total) for Ghosts II, III, and IV.

Michael S Costello April 13, 2009 at 4:55 pm

Another NIN fan here. Registering my appreciation of the model, and the link. Year Zero is a profoundly anti-statist album.

Bill April 13, 2009 at 5:48 pm

I want to see Trent Reznor and NIN vs. Lars Ulrich and Metallica in a steel cage death match over copyright infringement.

Wilhelm April 13, 2009 at 7:07 pm

Maybe the sound isnt for everyone but do yourself a favor and look up the lyrics for the “Year Zero” tracks. I have little doubt they will strike a cord with many of this sites readers.

I bought that album after I heard it played start to finish on the radio.

Bob Kaercher April 13, 2009 at 7:44 pm

Happily I find that there are more NIN fans who frequent this site than I thought. (8?>>, I totally agree. Reznor is a master of the form. I’ve also downloaded “The Slip” from the NIN site…for free, of course. Haven’t checked out the “Ghost” recordings yet, though.

DNA April 14, 2009 at 8:44 am

I’m a big NIN fan, but it should be pointed out that Year Zero is anti-right wing, not an anti-statist as such. In other words, Reznor is just another left-liberal who has plenty of blind spots. Not that he can’t make valid points, but let’s not exaggerate his intellectual honesty.

Michael S Costello April 14, 2009 at 9:27 am

DNA is probably right regarding the Anti-Statist vs Anti-Right-Wing distinction.

Bob Kaercher April 14, 2009 at 10:35 am

DNA and Michael: True. There’s some fleeting genuflecting to anthropogenic global warming on that album, as I recall. And I have to wonder if he’ll make a similar artistic effort in the Obama years.

Mike Masnick April 15, 2009 at 7:44 pm

Deefburger:

I’m Mike Masnick. :)

And, the audience was recording industry execs, along with tech/internet company execs.

Xavier Méra April 15, 2009 at 8:25 pm

Thanks for this Mr. Tucker.

Another interesting viewpoint: In 1983, the “problem” was home taping. Frank Zappa had some ideas too about an alternative business model: http://www.techdirt.com/articles/20090405/1806484395.shtml
http://www.brendastardom.com/arch.asp?ArchID=719

Mike Masnick April 15, 2009 at 9:10 pm

Deefburger:

I’m Mike Masnick. :)

And, the audience was recording industry execs, along with tech/internet company execs.

Conza88 April 20, 2009 at 9:26 pm

That was amazing.

Deefburger April 28, 2009 at 8:37 am

@Mike Masnick

Thanks Mike. Excellent presentation. I really enjoyed it. I’m glad to see that the Recording Industry Execs didn’t tar and feather you, and nail you to the cross for blasphemy!

WagerWitch May 6, 2009 at 10:05 pm

Dang you talk fast.

OK – I finally allowed my ADHD mind to go free enough to sit through the whole thing Mike.

You looked a bit nervous and tired, but you went through the whole show.

OK – yes. The business model works.

Of course it does. When did big label executives decide that it wouldn’t?

When the people of the world got tired of WHO they could listen to based on BIG LABELS?

I think that corporate America FORGOT who they were playing to.

Not only in the music industry, but in almost every industry.

Top Dollar, Top money wrenched and wrung out of every sale is the only thing they cared about.

And in turn the fans stopped buying, and started finding ways they could get it for free.

Or get what they WANTED for free.

It’s like putting a group of starving people in a room with ONE plate of food. But only if they had a million dollars.

None of them have a million of dollars, not even collectively.

But they are hungry.

And they want that food.

They WILL find a way to eat that food.

And music, and creativity is just that.

Food.

Food for the mind and the soul.

And when you put a price tag on it – you have lost the worth and value of it.

It’s great that some people might get wealthy… but You know what? I really don’t think the people who are making the creative stuff are the ones who are getting the gross profit.

And somewhere along the way, we’re all tired of the boy bands, the created by-the -book shows that are the same old, same old…

What Reznor is doing is what should have been done a long time ago. He cut out the middleman – and is selling what he wants, the way he wants.

And because his fans like him, they purchase what is important to them.

Smart move – and one that record labels should listen to. One that makes much more sense than the middle man grabbing the most of the money.

We artists (indie or otherwise) don’t need the label companies any more. The internet is free – and it’s now easy to get yourself promoted for free or nearly free.

Promotion and Marketing are easier – now.

Learn and survive – or lose out to intelligence that Reznor represents.

Excellent information. Thanks for the Production.

WagerWitch

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