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Media Research Exec Says Music Industry Is On Its Last Legs
Ponca City, We Love You writes "For years, the major record labels have fought a pitched battle against the MP3 format. Although major labels like EMI and the Universal Music Group have embraced MP3s in recent months, a story from the Mercury News says early returns from those moves indicate they've had little impact on the industry's fortunes — for better or for worse. 'These are ailing businesses on their last legs,' said Eric Garland, chief executive of BigChampagne, a market research company focused on digital media. The question of copy protection on song downloads 'matters a whole lot less to them than it once did.' The industry has a bigger problem. Consumers used to buy CDs for $10 or $15 a pop. Increasingly, they're buying songs at about $1 apiece instead. So, even if transactions continue to increase, the industry is seeing far less money each time consumers buy and it's having a difficult time making up the difference."
Seems to me TFA predicts the end of the album as we know it, not necessarily the music industry. Could we be entering the golden age of the one hit wonder?
If the music industry of today goes the way of the dinosaur, it is inevitably their own fault. Rather than adapt and work with technology, they chose to fight it and eventually fought their own customers. Companies that had nothing to do with the music industry (Apple, Amazon, etc.) found an untapped and unexplored way to sell music to people at competitive price using the relative ease afforded by the Internet. The music industry now says that they don't make enough money because they find themselves to be the middleman instead of the people with the product.
You built a wall around yourself and ignored the real problem. Your own costs are too high, you rely more on the popularity of an artist/band rather than the true talent he/she/they possess, and you chose to ignore new technology in how it could bring you new opportunities. Think fast or die slow.
The music industry isn't going anywhere. Remember that they're "on their last" $200B leg.... Lots of change is coming, change that should have come long ago. That's the nature of business. The industry isn't going anywhere.
You know, I thought about it, and it hit me: What would happen if the music industry (at least the Big Guys) collapsed? Well, aside from Best Buy having a lot more floor space, not a whole lot. Big artists would be forced to adopt more modern means of distributing their music, without a giant, bloodsucking middleman. Recording studios would be hit rather hard, but I think that's coming anyway, with the increasing influx of commercial-level products and software that can be bought for next to nothing (comparatively speaking) and produce professional results. The CD would find continuing life in sales at local shows, but would die as a retail product. Touring bands (again, adapting to the modern age) would need to hire their own publicity people to get butts in the seats at local venues, instead of letting the record company do it for them, but would probably be able to afford it, as the record companies normally take the majority of a tour's gross anyway.
There would be some implosions in the current model that would on the surface appear to negatively impact the artist and consumer. While the artist would spend more promoting on their own, distributing on their own, recording on their own, they would likely be letting go of a static percentage similar or likely less than they do now to industry giants.
The state of DRM would change, as there would be no more litigation funded by record companies (leaving the MPAA to twist in the wind without a partner in crime) and less funding toward P2P obfuscating and software rootkit technologies. The online download would become the primary medium of the industry, and while I agree there is a need for some copy protection, to prevent widespread distribution, without a monolithic industry behind it, less invasive alternatives may finally see the light of day.
Personally, I wouldn't say I've been actively boycotting Big Music, but I guess you could say I have been, subconsciously. I haven't bought a CD in probably 10 years. I do support larger artists through iTunes and Amazon's DRM-free initiative. I also spend WAY more time and money on local/touring artists on a face-to-face level. Local artists, I buy tickets to shows, help promote (street team style), buy merchandise when it moves me, and basically just stay active in the scene, cross genre whenever possible. Touring artists, I will buy a ticket to a show, avoiding Ticketmaster at all costs, buying their CDs and merch in person, where they generally get a larger cut of the sales.
I'm all for the collapse of the industry. It appears to be the only means of innovation, and it will right a lot of wrongs currently out there. Unfortunately, the best way to do this still seems to be choking their sales as much as possible, usually by illegal downloads and bootlegs. I hate to see the artists suffer, but it is definitely causing a positive effect, as more and more artists are breaking away from Big Music to go it alone. Sometimes the best way to change a law is to break it. We shall see.
Raging in an online forum won't do anything for the world around you. To see change, you must take action.
Don't be so sure. When a band can distribute its albums by posting a zip file on a web site, there's a lot less incentive to turn to labels. The industry exists right now because it exists - not because it's necessary. As people start to see how the economics of giant media labels work against them, the tide can turn.
Entire industries (as we think of them) don't disappear overnight, but they do sometimes disappear, or change into something so different you couldn't really call it the same industry with a straight face. That's where we are. They're a dying breed, whether they know it or not.
Yes and No. I guess I should qualify that the larger studios would be hit hard. The ones near you are built to cater to exactly the clients you describe. But whereas they are charging ~$100 an hour, the high profile studios charge much more than that. Of course, these are also the kinds of places that the record industry actually pays the studio time for while the artists write the album in the studio!. What a complete waste of money. Also, larger (usually label funded) projects spend MUCH more time in the studio perfecting an album. Most indie projects aim for maybe 40 hours of studio time for an album. Mid level projects maybe 2 or 3 times that much. A-List artists can spend months in the studio, logging thousands of billable hours.
The point I'm driving at is that the high-end studios that attract all the (current) A-list clients also drive the technological innovation for studio equipment. Mics. Mixers. Sound isolation. Software. Media (as in DAT, etc.). While that innovation wouldn't go away, it wouldn't see the same level of development that these studios enable through Creating A Need, and early adoption of new technologies (because they can afford the latest and greatest).
Raging in an online forum won't do anything for the world around you. To see change, you must take action.
Kind of missing the point, no?
Think about a music industry where artists don't need labels to get "beer, coke and groupies." Imagine an industry where new channels make it easier for unknown artists to get noticed. It's hard to get noticed right now because you almost can't do it at all without going through labels. Right now, labels are necessary because the system has been architected such that you can't go it without them. That is what stands to change.
So far as online delivery goes, I think you're flat-out wrong. iTunes accounts for more than 2% of music sales on its own, and in an increasingly "green-friendly" world the concept of digital distribution, which requires no printing presses, no petroleum-based products, etc., is the way forward. That's why I laugh a little every time I think about the BD vs HD-DVD argument. In a few years when DOCSIS 3 is ubiquitous, and fiber is available to many homes, the idea of having to go buy a little round piece of plastic looks increasingly stupid.
The industry isn't going anywhere, it's just changing. Most people don't understand that the labels are basically venture capital for musicians. A VC invests in a start-up and gets stock in return. A label invests in artists and gets (historically) CD sales in return. Large companies can throw their weight around because they had enough starting capital to create good products, make the right partnerships, and grow. Large artists like Radiohead can do a "name your price" promotion because they had enough marking, promotion, and distribution to gain a sizable following. VCs invest in a portfolio of companies because they know 1 in 12 will succeed, and that 1 has to pay for the 11 failures. Labels invest in a portfolio of artists for the same reason.
Small start-ups can self fund, but the largest companies continue to have significant VC backing because it takes a lot of resources to make products and grow. Companies sign with VCs because they want that upfront investment. Unsigned artists can promote/distribute, but the biggest artists continue to have major label backing. Most serious artists continue to want label deals because they want the upfront payment and marketing/distribution muscle that allows them to focus on their artistry and not how they're going to feed themselves tomorrow. As proof, notice that even the big YouTube/MySpace artists are signing label deals.
So what's changing is that the labels will have to provide more services for artists and get things other than CD sales in return. But the need for "venture capital for artists" isn't going anywhere, so long as there are people who want to make music for a living.
We techies may well be open to online delivery, but the other 98% of the world is not. That's why Wal-Mart still makes gobs of money and will continue to do so for many years to come. People just aren't psychologically and emotionally ready to grow out of the brick-and-mortar system yet.
Right... because iPod and iTunes sales are only to techies. While I agree that not everybody is ready to give up on CDs, iTunes and P2P have made significant inroads into the way that people get their music. Downloading music is definitely not just for techies.
3. To act as a filter. Few people have the time to sift out which acts are good and which are not. It is this case where the industry has failed most miserably.