Attack of the Birthers!!!!

When I heard there was a "birther movement," I thought they were talking about the Labour Party. Then I began coming up with slogans for the Birthers: "We're gonna out-boom the Baby Boomers!" or "The Birthers: We Aren't Afraid of Using Contractions!"

Then I learned that the Birthers were not, in fact, a group of people who wanted to induce mass amounts of labor at the same time. I was disappointed. That would've been a scene!

Then I learned what they really are about. And then my jaw went slack at the irrationality of it all.

Single Health Payer, with the emphasis on the PAYER

This past year, I switched from employer-offered health insurance to a single payer private health insurance. What an eye opening experience that was. For anyone who is on the fence about the healthcare debate, or thinks that universal healthcare is Satan incarnate and that the future is single payer, guess again.

My private single payer health insurance wouldn’t cover a routine physical. They claimed that because the primary diagnosis (acid reflux) was “pre-existing,” they were under no obligation to cover this doctor visit or any prescriptions that coincide with this condition for the next 12 months.

I was diagnosed with acid reflux when I was 16, and the doctor who coded the claim was a new doctor of mine; but that doesn’t matter. See, the nasty little secret of single payer insurance policies, is that they want me to pay the premiums, but not receive the coverage. I paid over $900 in premiums up to that point. The office visit, including labs, cost them over $700. They would’ve only made a $200 profit.

To add lunacy to lunacy, my insurance company covered the labs, stating that they were not due to a pre-existing condition (the standard blood and urine analysis), but that the actual doctor’s office visit was due to said condition. So I have to pay an addition $100 (which is the standard emergency room charge) to my $30 co-pay.

$130 on top of paying $110 a month for my single payer health insurance.

I started to worry that if they could deny any future claims I sent them. So I did a little research and found out that yes they can!.

The best quote is the second paragraph of that article:

“The legal basis for rescission is that when you sign an insurance application, you are warranting that the information on the application is true; if it turns out not to be true, the insurer can get out of your insurance contract. It’s particularly nasty in practice because the insurer does not immediately investigate your application to determine if it is accurate before selling you the policy (that would be impractically expensive); instead, the insurer waits – years, in many cases – until you actually need expensive health care, and then does the investigation, which at that point is worth it because of the payments the insurer could potentially avoid. Also, you can lose your coverage for innocent mistakes, which are easy to make since the application form asks you if you have ever seen a doctor for any one of a long list of medical conditions that you are certain not to recognize or understand. (In a Congressional hearing, the CEO of a health insurer admitted that he did not know what several of the conditions listed on his company’s application were.)”

Having worked in medical billing for almost 3 years, I can tell you that insurance companies, whether they are auto or health, will look for any reason not to pay a claim. From little loop holes built into their contracts to the font being “illegible” on the government issued document (not kidding on that one).

The current healthcare system of this country is not working for the benefit of the American citizen: it is solely benefiting giant medical corporations, insurance, hospital or otherwise. And before you start espousing that America has the best healthcare system in the world, we were ranked 37th in healthcare quality by the World Health Organization.

But we ranked 1st in cost per person. So yes, we are number one…the number one sucker.

A Hit Song?

Y'all like this stuff? Really? Okie dokie.

So in honor of "Birthday Sex" being in the top 10, I'm going to write the song I'm Gonna Put My What In Your Where. The second song, I Meant To Pull Out, will be released in September and by next February, the third single Valentine's Day Baby (Taking My Kid To The Prom) will hit the airwaves. Watch out, world! I'm writing hits from now on!

Random Thought Of The Day

A politician pontificating on morality is a lot like a prostitute expounding abstinence. Funny how so many times, politicians and prostitutes overlap... on each other's laps.

The Latest Twit

Ha! "Finding Marijuana" is the top trending twitter topic right now? You know you're in a recession when college kids can't find weed...

Responses to Responses of Part I

Wow, I posted this article on another website and I received a slew of responses, mostly from musicians. One of whom took me to task for taking a broad, macro point of view on record companies. The main reason is because I really don't believe the future of the industry relies solely on the selling of recorded music. In my next planned post, I wanted to take a detailed, micro view of the music industry as a whole and see if we can find the answer there.

As it stands, the good debater in me must respond and here are my responses along with the musicians' points:

Dissent: "In short, file sharing on the internet is only possible b/c someone paid for the recording time and a format to distribute in."

Response: ***But the record labels and the publishers aren't making any money off of it.***

That's my main point. And when the record companies finally go out of business, who will pay for the recording and file format? You already said it: the artists. And most of them are paying for it right now.

Dissent: "I think the music and recording industry is going to essentially turn into a form of cable tv eventually. The majority will be paid for by advertising, and the rest will go to subscription services with a sort of pay per view/download/etc. for special releases and such."

Response: You essentially prove me right by saying that music will go to subscription services. Already, you're talking about a different business model, one that does not operate on tracking album sales and paying unit royalties. In this scenario, music, like most of cable TV, is a passive medium, which the current business model does not account for.

Dissent: ""As long as bands need a way to record music to spread it, the recording industry will survive."

Response: But record labels won't. The one thing that record labels provided bands was the financial capital to record, promote, and tour. And it still doesn't address the problem that the majority of consumers refuse to purchase recordings at a price and at a rate that would provide an overall profit that is sustainable for the long run.

Recordings are money losing ventures, with the exceptions of the people who facilitate the recording i.e. the producers and the studios. But they alone cannot make a record industry. If the recordings fail to turn a profit for a company (either a record label or an artist), then what financial incentive do they have to keep investing?

Dissent: ""We are living in a time of some pretty awesome music and as Brian said there will always need to be someone there to distribute it."

Only if the distribution of said music makes the distributer money. And even still, if the distributor wasn't the one who put up the capital for the recording, then the producer of the good is still not receiving the distribution profit. The fringe people of the industry, (the producers, the engineers, the duplication companies, the distribution companies) offer a service, not a product. The producers offer to record, the engineers offer to mix, the duplication people offer to make copies, etc, etc, but they are not in business to make sure that record makes money. Not in the macro sense. The majority of these people get paid regardless of how the record performs, (unless they've signed a shitty deal based upon royalties). The record companies are the ones who are concerned with the recorded music's performance. They alone are responsible for getting a return on their invested capital that is used, by the way, to pay for the services of the producer, the engineer, the duplication, and the distribution.

Dissent: "The other thing that is becoming even more important than ever which is creating more jobs in the industry is licensing and placement of music. This is the industry that I am attempting to get into. Video games have blown the world of Music Supervision wide open especially with games like Rock Band and Guitar Hero, some bands will actually sell more tracks as Guitar Hero downloads than they will at online stores like iTunes and Amazon. These sources of revenue have become extremely important as artists become less dependent on revenue from record sales. Also think about the licensing that goes into shows like American Idol and Nashville Star, those artists whose songs appear on those and other similar reality shows make a lot of money of the licensing and essentially get free advertising by having their songs appear in prime time spots."

Response: Agreed. Music supervision is a great thing, however, it's a flooded market. Because every one and their brother are trying to get their song on Grey's Anatomy or its other television equivalent, do you think that the television and movie studios are going to raise their price or drop it? I'd expect the latter, because every one is desperate to find a way to get these recordings to make money. And if you don't take their price, someone else will.

Also, in response to American Idol and Nashville Star, the publishers do make a return on the licensing of their songs, but the record companies aren't making that big a return. They get to sign the winners to contracts after the show's season has ended. So they're not making money during the show's season: the TV producers and advertisers are.

As American Idol has proven, out of all the top 6 of the past 8 or so seasons, only 3 artists have made any significant return in record sales. There have been 8 seasons of American Idol. The top 6 are signed to record contracts. So 48 artists are signed, only 3 have made returns. 3 out of 48 is 6.25%. But they're all not on the same label. For the sake of argument, let's say all 3 were on differently owned labels. That's roughly 2% per label. It's not significant enough return to cover the costs the labels have had to produce, market, duplicate, and distribute their product (which is the recorded piece of music).

Another issue I didn't address but eluded to is price standard: with all of these variations of how music is sold and consumed, the labels and the publishers can't set a price standard. One online company sells downloads for 99 cents, another has the first 5 free, then charges 5 cents for the next, 10 cents for the next and so on, others offer free streaming, another offers streaming for a fee.

And the record companies and the publishers, because they didn't get on the technological bandwagon back in the early 90's like they should have, don't have a say in these technological companies nor do they have any bargaining power. Once Apple came up with iTunes, Apple was the one who set the price standard of 99 cents, not the record labels.

Had they been smart, the labels and publishers would've worked with Apple, funded some of their development, and taken a percentage of every iPod and iTunes software sale under the guise of a performance royalty like those charged of restaurants and clubs. Imagine what their profits would've been.

As it stands, record labels and publishers are at the mercy of technology companies such as Apple, Sprint, and Verizon. Apple's not making the majority of their money off the download sales. Their true profit is in the sales of the iPods, iPhones, and the actual iTunes software. Sprint and Verizon view music as an added bonus application. Music is secondary. Think you can raise your price when these companies view the one product you have to sell as a secondary function? Most likely, you'll have to keep lowering your price.

Which doesn't solve the main problem of the current record industry: how does an individual recorded piece of music make money? It's obviously not making enough, otherwise the industry would not be in the turmoil it is today.

To All The Musicians Out There Part I: Backstory and The Record Industry

I decided to go back to school last fall for one specific reason: because the music business education I got was obsolete and biased, I needed to know how other industries developed, operated, and turned a profit. I have almost completed the first year of my studies. What I intend to do with this masters education is apply (hopefully) these concepts to the entertainment industry and help reshape, reform, and revitalize it.

Many music business articles have been written about why the music industry is in a state of collapse. The same word keeps coming up over and over again: downloading.

That's an oversimplification of the issue. In economic terms, when there was one way to obtain a record (by purchasing a LP, cassette, or CD), demand for music was inelastic. In order to purchase the record, you could only get it at one location: a record store. So demand for record store sales was also inelastic.

A brief definition of terms here: inelastic means that the demand for a good or service is unresponsive to change in price. Basically, you can charge whatever you want, and the demand will not be impacted significantly.

Elastic is the opposite--very responsive to change in price.

Back in the glory days of the record industry, record labels could charge sellers whatever they wanted for the price of the record and the sellers, in turn, charged whatever they wanted to consumers. There simply wasn't another substitute for a CD or cassette back then. One of the basics of economics is that the less number of substitute, the greater the inelasticity.

Then came the internet, which will eventually get rid of the record stores, and wireless technology, which will eventually get rid of the record industry altogether. Because now that there are multiple substitutes for a CD and multiple substitutes for a way to obtain a record or a single. The demand for music is now elastic. One could say, almost perfectly elastic, which means the consumer gets to set the price (mostly free), not the seller or the producer.

The record labels failed to realize this shift in economics as well as the record stores. Technology will almost always shift the price and demand elasticities, and those who ignore it are doomed to failure. Anyone been to a Sam Goody's lately?

Okay that's basic, especially for anyone who's a business person. So what does this mean for the future of the industry? First of all, I think there needs to be a clear distinction between the record industry and the music industry. To me, those are two separate entities.

The record industry is finished. Wave it goodbye. It will go the way of GM, probably quicker because they won't get a government bailout. I predict that two generations from now, the very concept of an Album will be obsolete. And not just the existence of albums. The way that the record industry made money (sold a record, collected royalties, sold a single, collected royalties) will be completely non-existent as well. Which means, bon voyage, song publishing industry. Get lost, A&R men and women.

So to anyone who is a Music Business Major...good luck! And congratulations! You'll be unemployed by the time you're close to retirement age. Because there is no way to save the record industry. There are too many variables to work with and/or change. The only way to save it is to adapt to the elastic demand (which we still haven't done) or find a way to lower the number of substitutes. In this case, the substitutes are offered by internet and wireless technology. Just like Ted Haggard, you cannot put technology back in the closet, so lowering the number of substitutes for a record is impossible. The RIAA wasted valuable time and money suing college kids for using Napster. As if that would stop anyone with a rudimentary education from locating or starting another Napster-equivalent.

This is why the record industry is doomed.

Now before all my musician friends commit suicide, my next post will be about the music industry and it will be a lot more hopeful.

Mission Statement

Many of you may have been following another "Co-Blog" I had with friends of mine Bicoastal And Questioning. We started it as an experiment and, well, busy schedules have kept all of us from contributing equally to it. I've left it up for now, for posterity's sake, but decided to branch off with my own blog.

An explanation of the title: Ironically, I don't consider myself southern at all, but on a frivolous facebook quiz (roll eyes here) that dictated what Designing Women character you were based upon your answers, I was Julia Sugarbaker, a "sharp tongued steel magnolia." It might have been the wine I was drinking at the time, but I thought that fit.