I have been in the music business for about 20 years. I have seen it from MANY different perspectives. As an artist, a manager, a producer, working in A&R, street teamer, talent scout, intern, assistant…the list goes on. I am one of the lucky few who still work in the music industry and have been fortunate enough to be able to have lived though many incarnations of it. For the last 10 years or so, the business has been in a state of flux. Some people say it is dying. Others say it is in the process of being re-born. If you have read any of my previous blogs (if not, do yourself a favor and start reading) you will know I am a big believer that the future of the music business is NOT bleak. I feel that the future is actually extremely fruitful and will be a really vibrant time for artists and music entrepreneurs. Especially if you are a recording artist learning how to run your own business and using things like social media, digital distribution, and online streaming sites to reach your fans. I came across an article in CBS News’ Money Watch today that paints a vivid picture of how the music business must die as we currently know it, in order for it to actually survive.
There are 2 stories becoming prevalent in today’s music business. The first is the business’s most recent rise in overall global music sales since 1999. The other story is once again major corporate companies are on the attack, going after many internet users for illegal downloads and copyright infringement. I found this current predicament the business has found itself in to be rather interesting. It showcases both the current strengths and consistent weakness in the music industry. Both artists’ and music business execs are always asking themselves the question if there is actually going to be a future in the music business where people can make a living. I personally feel that there will be. How can there not? Musicians will ALWAYS be around. Expressing themselves via their art, by music. Fans will always be around. People since the dawn of time have loved being entertained. Music being the most prevalent and successful form of entertainment. But much like the article from cbsnews.com states, “first, the industry as it has existed will have to die.”
It’s not a secret that sales have consistently been bleak. Recently it was reported that there was a 0.3% upturn in sales. Some might feel this is a bit disconcerting, considering that we are in an economic recovery. But note that the recovery is not major, considering we are just starting to see some positive signs, after a landmark financial crash that stems from 2008. The industry received $16.5 Billion dollars in sales revenue in 2012, of which $5.6 Billion was from Digital sales. That is a 9% increase from the 2011 Digital sales figures. But 2011 was a rough year for music. The business saw a 8.4% decrease in sales revenue, compared to 2010 figures. Needless to say, anyone who has been in the music business since the 1990’s will note that the total sales figures today are down to less than half the overall amount seen in the 90’s. But I do NOT believe this is associated to lack of music consumers actually buying music. A major reason that the total sales revenue is down is due to the decrease in total ALBUMS SOLD. People still buy music, but they buy it in the form of singles. They do not buy it in the form of full albums as much as they used to. With digital sales at online stores such as iTunes and Amazon, consumers have the choice to buy only the song they want. They don’t need to buy the whole album just for one song. The recording industry used to sort of force consumers to buy full albums. This was accomplished by artificial bundling. This happens with things like cable television. My girlfriend was just discussing this with me. She was wondering why do we have to pay for channels we don’t actually want nor are ever going to watch. Why can’t we just pick and choose the channels we want? Like “a la carte” style! Music consumers up until the early 2000’s were unable to buy only the songs they wanted. Singles were released, but only for a select few songs that the labels “chose” to release. You would have to purchase the entire album in many cases if you wanted a song that wasn’t released as a single. Today you don’t. All the income was geared to support the enormous infrastructure of the music business, and executives large salaries. Sadly musicians would end up getting the smallest share of this revenue. It broke down basically like this, for every $1,000 in albums sold; the average musician would end up getting $23.40. If you were one of the fortunate few who were able to sell $1 million in one year (pending a standard contract and royalty rate), you’ll make just over $23,000. A very staggering figure, considering that the majority of the revenue made goes to keep the labels open and the managers and agents rich. The caveat is that as revenue drops and the sales numbers decrease, so does the money that can support the labels, execs, managers, and cash flow available to invest in new artists.
Aside from the low overall sales numbers, the music industry is once again turning its back on the population that supports it. The music consumers…more specifically, the fans! Much like the music business did in 1999 and 2000, the recording industry is attacking file sharing sites. In 1999 the recording industry made a grave and almost fatal mistake by trying to eliminate all file sharing sites. Most notably Napster, which was the pioneer in online music file sharing and downloading. They perceived Napster and other sites as a potential revenue threat, and ended up attempting to solve this issue by suing individuals who shared music online. The music and video industries are planning a new campaign as of 2013 to eliminate sharing of music and music videos. According to cbsnews.com, “But unlike the lawsuits from the mid-2000s — which swept up everyone from young kids to the elderly with sometimes ruinous financial penalties and court costs — the latest effort is aimed at educating casual Internet pirates and convincing them to stop. There are multiple chances to make amends and no immediate legal consequences under the program if they don’t.” This is being described as “a new campaign.” According to chicoER.com, “Internet users who illegally share music, movies or TV shows online may soon get warning notices from their service providers that they are violating copyright law. Ignore the notices, and violators could face an Internet slow-down for 48 hours. Those who claim they’re innocent can protest – for a fee.”
For a full report on the “new campaign”, go here.
The music industry will basically be engaging in a process of monitoring file sharing sites, which will allow them to look for indications of file sharing. Once someone is caught file sharing, the music biz will work with Internet service providers to send to the individuals who are file sharing a notice that copyright infringement via their internet/computer has been detected.
No doubt that this is a risky strategy, and it could back fire much like the lawsuits did 10 years ago. But this time around the music industry hopes it will have an “educational effect.” They hope it will convince people to stop file sharing. Not scare them away from it, which their first approach was supposed to cause. The first approach in 1999 ended up creating a tremendous amount of resentment toward major labels from music fans instead. Remember how many jokes were around about Metallica and their drummer Lars Ulrich?? In case you forgot, Metallica was one of highest profile figures to go after individuals who were file sharing. Lars Ulrich was actually seen in court testifying. Consumers ended up wanting to obtain music for free mostly because they perceived the business as being a group of greedy individuals trying to keep their lavish lifestyles and large salaries. Unfortunately this “new approach” will not be accomplished as easily as many hope. With new sites always popping up, secret file swapping sites, personal email exchange, Internet messaging, and other private forms of communication where people can share music for free, the result of this process might lead to further activity going underground and eventually creating more resentment and distaste for the music industry from its fans.
Change in any business is evident. It cannot be avoided. It is usually a good thing. Majority of the time change is preceded by advancements in technology. Every industry reaches a point where their existing business model essentially becomes obsolete. Unfortunately the music industry is one of the few (if not only) businesses that have resisted the natural evolution of commerce and technology. The trend is continuing to move in the direction of digital sales going up, and physical sales going down. People will continue to pay less for music and the music biz as a whole will continue to generate less revenue. You cannot turn back the hands of time. That means labels will have to create new ways of doing business that don’t require the large infrastructures which take such a large share of the money. They will also have to discover new ways to generate revenue, and FINALLY come to terms with file sharing. File sharing can be leveraged as a good thing, if handled properly. But I don’t think it ever has been truly accepted or implemented into the music business as a whole. Look, I am one of the few who actually still prefers to buy physical copeis of music. Ya I know, I am an anomaly today. I love having the booklet and an actual CD or vinyl record. But exposing your music to a population of people who probably wouldn’t buy it anyway is not a bad thing! If you can get more people to hear your music and become your fan, fantastic! It should be viewed as a way of promotion. It is a great way to have people hear your music. Just think, maybe they would never have heard it anyways. Not everyone buys music. Maybe giving it to some for free is your best way to get your music heard by someone. Maybe it’s the best way to create some new fans who will come to your shows and support you in other ways. Realize that there are MANY other ways to create revenue without alienating a population of music consumers. Today, a major label and a huge marketing budget isn’t needed to launch a career in the music industry. Look at artists like Macklemore & Ryan Lewis, or Amanda Palmer. Look at Psy, or countless rappers that become enormously successful dropping mixtapes. Thousands of artists launched and sustained a successful career without a major label throwing endless amounts of money toward them. They recorded high quality music for a low price, utilized digital distribution, and social media to create and monetize a fan base. What they did that helped them succeed was taking their music direct to the fans. They learned the business, and became entrepreneurs. The silver lining in all of this that excites me most is that YOU the artist have the opportunity to make more money from each sale. Even if you are one of the few artists who claim they are “not in it for the money,” you still deserve to claim the largest share of the profits being generated from your music. Why? Because you made the music. It’s your baby. Not anyone else’s.