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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."
So long Music Industry, and thanks for all the Phish!
They need to do a better job of recruitment. On any given night I can find better bands playing at local clubs then I hear on the radio. How about they all chip in to recreate a free classic MTVesque station to market directly?
"God fights on the side with the best artillery." - Napoleon, Marshal of France - speaking truth to power
There is a war going on for your mind.
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?
Frankly I won't mourn the deat of the album. There are very few out there that work as a whole. even the best artists pad them out with filler. Especially since the advent of the CD meant they had 80 mins to play with.
I have excellent Karma and I am not afraid to Troll it.
of a recording of the world's smallest man playing on the world's smallest violin plays the world's saddest song...
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What a clever way to show how propietary content and artificial constraints on access can spell doom! I bet more than half the comments in this thread will be about the idiocy of putting a registration-required article in the summary.
As for the actual topic at hand, if the music industry goes away, who will provide music? Once the vacuum is created, it will be filled by someone else. Music isn't like buggy whips. Maybe it's like bottled water, though. You used to get it in those plastic gallon bottles, but nowadays you mostly get it either from large 5 gallon jugs or 500ml bottles. Content stays the same, packaging and marketing changes.
What's the bottom line? The evolution of the music industry will lead to dumber and more expensive product of something that is essentially free otherwise.
Does that mean that if the record companies want to keep making money, they need to produce albums with a bunch of good songs instead of a $16 album with one good song? Oh, the humanity!
Proud member of the Weirdo-American community.
I really think this is BS. I have a friend who has worked at Atlantic for the past year or two and he currently has 5 gold records hanging on his wall and one platinum is on the way. If these bands are selling so well, why is the industry doing so poorly. Also, these bands are not totally mainstream. I bet 90% of /. hasn't even heard of them.
My understanding is that, for a $1 iTunes download, the breakdown looks something like this:
$.75 - Label
$.20 - Apple
$.05 - Artist
If the middleman (who provides neither the content nor the bandwidth, and takes 3/4 of the money) can't make a profit here then I think perhaps they're doing something wrong.
Let's not stir that bag of worms...
The bit that this "analysis" misses is what we are talking about is the shift away from a pre-bundled offer as the only way to transport the content (music) as the distribution cost for single elements were too low towards a user bundling approach. In other words its moving away from CostCo and the great big packets and towards those nicer supermarkets where you can actually choose what you want. This means moving towards more retailing offers like Buy One Get One Free (BOGOF) and the like. This will tend to mean that albums won't be able to contain filler tracks that are just rubbish but you will be able to buy more dynamic combinations of elements from a single company, band or shop.
Chirping away about "Used to be $10 for a CD now its $1 for a track" is just plain silly as saying its the end of the industry. What it means is that the distribution cost has now been practically eliminated so all that is pretty much left for the companies is the profitable bit, remember the creation and shipping of a CD (although cheap) is a business cost.
The industry has big big issues, but that has nothing to do with albums v mixed basket and everything to do with actively preventing people buying music in a mixed basket approach.
An Eye for an Eye will make the whole world blind - Gandhi
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.
I just don't see how major music companies are relevant today, when for a small investment, any music group can record their own music at CD quality or better, burn CDs for small production runs, farm out CD production to a mastering company if they hit it big, set up a website for e-commerce and publicity, etc etc. Any genre of music, from classical to folk-rock to metal to New Age, can be recorded fairly easily these days. In many cases (orchestras), the performance is a much bigger headache logistically than the recording, with so many artists involved.
With micropayments and the ease of putting content online, it's hard to see what value EMI, Columbia, and their ilk bring to the table. Most of the music that I enjoy can be found on sites like emusic.com -- and no matter what sort of music you prefer, the artists would be able to record and produce it without much more effort than it takes to perform it. Let's cut out the inefficient middleman and buy directly from the musicians!
On the topic of albums, they may be declining, but there is definitely something to be said for a well-imagined and well-executed album. IMHO an excellent example is ELO's "Time" album; the songs flow into one another, creating a continuous artistic work, rather than a collection of haphazardly-assembled songs. "Down to the moon" by Andreas Vollenweider is another example.
Paleotechnologist and connoisseur of pretty shiny things.
The overhead is. Artists themselves shouldn't worry, as long as touring isn't a problem. I know myself and 50,000 other people will pay upwards of $70 in less than an hour of opening to see Tool come to town. For all those that leech off the artists and don't do anything but make it harder to distribute and enjoy music, yeah, they're pretty F'd. Good riddance.
'Cause I don't. I've lamented the death of the LP since CDs appeared; the only benefit CDs ever gave me was that I didn't have to flip the disc over. What did we lose? Well, in a lot of cases, liner notes, the cool label on the media, etc.)
;)
What I miss is the *packaging* of the LP. They were big and afforded great album art, along with all kinds of neat extras (like the spinning wheel on Led Zeppelin III, or the zipper on Sticky Fingers, or the stickers and posters in Dark Side of the Moon). And even without the extras there are just so many album covers that are just great *art*. It was the cover that made me buy Joy Division's "Closer", even though at the time I'd never heard of them. Frankly, the album cover, AFAIC, is still the best part of the record.
So, hey, music industry...why don't you downplay the actual tracks and hit up on the packaging? In the Internet world everything is just a stream of bytes so your bytes aren't much more special (and certainly not worth more) than anyone else's stream of bytes. So give it up and make something tangible, keep-able, desirable. Put the disc in a wooden box with a wool interior, or wrap it in tinfoil, whatever...make the *experience* more meaningful. As much as I enjoy the convenience of buying a track in iTMS, I am missing an "experience" that I got with some of the better-packaged albums.
And the crazy thing is that this is not new to the music industry; they've put out special collectors editions of stuff for years and years; I have CDs that came in pseudo-film cannisters, wooden boxes, even bubble-wrap. Sure I paid a premium but I didn't just want the music, I wanted the creative packaging as well.
Witness the power of the free market at work. When you've been fixing prices for decades to shore up your profits, you shouldn't be surprised when that system comes crashing down, once an innovation comes along that turns your industry on its head.
This is how OPEC will feel, if ever we get off our asses and start making commercially viable electric cars.
You, Sir, were not alive in the 80s.
And YOU, my good sir, were not alive in the 50's and 1960's, else you'd know that those were the true golden years of the one-hit-wonders. After all, "making a record" meant a 45 rpm single phonograph disc back then with the primary song on the "A" side and some filler material on the "B" side.
Music industry has been a dinosaur for years, and face it they where never interested in the consumer. For years people HAD to purchase a CD, Tape, Album for all of song, and 10 or 11 pieces of crap filler. Its the EVIL P2P people that our killing the industry they say. Cassette tape have been around for decades and decks biggest selling features being that of high speed dubbing, & synchro starting. Piracy has always been around and always will be. Music always has and always will be copied. Its nothing new, what is new is by being forced to sell music in piecemeal, People are only buying what they want and not getting ripped off on the filler. Using digital format, we make backups. CD/Tape get lost, stolen, broken we don't go out and buy a new one, we burn a copy. (After buying the Metallica Black Album 4 times, who in their right mind would play for yet another copy of something you have already bought and own.) Now while I may download a song, If I like it (ie listen to it more than once) I will support the ARTIST and buy a copy or at least order a t-shirt or something from their website. Nobody ever has any love for the greedy labels, who do nothing but take most the profits of the artists. Today with digital formats the artist can bypass the label all together and guess what they get 100% of the profit and nobody misses the label. We the consumer are not forced into paying extra money for bad songs that we will never listen to.
CDs started out pretty expensive. I think my first CD was about $30 or so. In the early 90s, new CD prices were going down on a regular basis, to the point where they were making it harder for the used CD shops to stay in business. A lot of large and medium sized labels were able to get their releases out for $9, which made buying a new release a lot easier to swallow than deciding to wait a few weeks for it to show up at the used shops for $6-8.
After a lot of the better used markets started to dry up, what I noticed is that new CD prices kept creeping back toward $20, and some of the shops that used to exclusively sell new CDs started selling used CDs as well... for $12-15.
The Harmony House chain used to be a big deal in southeastern Michigan. As the industry changed, they stopped expanding locations. Eventually, they started closing a few stores, then collapsed to one store for classical and one for everything else. Then they just went to one location. I started making a regular trip to start buying some previously expensive niche label stuff that used to be well over $20 - Mille Plateaux, Forcetracks, Mute, etc. because now they were dumping everything at half price or less.
When I read the articles covering Harmony House's woes, the company spokesmen blamed it on the internet. While there's some validity to that, it wasn't the internet that kept most people away. It was the fact that their stock was regularly overpriced. If CD priced had continued to go down from their low, they should have reached the $5 mark by now.
In retrospect, I wonder how much piracy $5 CDs would have avoided, because I know my purchasing habits started to change from the most expensive releases before reaching the less expensive. Maybe it would have gotten to the point it is today anyway, but I doubt you'd see the level of wholescale consumer rebellion the labels are dealing with now.
I miss the days when listening to an album was an experience. This was because the artist carefully crafted the album to create a mood or feeling. Many artists would write 40 songs and turn 10 into an album. Now they write 2 songs and fill in the others with generic three chord rock songs about how they once knew a girl and something happended.
I am hoping that the death of the album is a good thing. The last thing we need is another Nickelback album. The death of the current market structure and format can only give the artist more freedom to be creative and that's what I really miss about mainstream music.
Until then, I'll keep looking for those indie bands that get it and keep listening to my King Crimson albums on my headphones.
I grew up in the 80's and 90's when MTV's focus was music and music videos. If they weren't playing a video, they were playing something about a band or the music. They promoted new artists all the time. This is where I heard of all the new artists, along with a lot of other people. MTV was on basic cable, so just about everyone with cable got it. This was great promotion for the record companies. In the last decade (maybe more) MTV started to focus on reality tv. Some has been entertaining, but the more they focused on this, the less people found out about new music. Sure, they'll play videos on their other stations, but not too many people get those. The record companies seem to have lost a great source for promoting new artist. Your local clear channel station is not going to take a chance on a new artist/band like Arcade Fire or LCD Soundsystem.
"No more albums", "No more filler tracks"
Not all bands write their singles and then pad the rest of the album out, some actually write about 20 songs, select the ones they like the most, and release an album. THEN they choose what songs to release from the album.
It's only the American Idol and other reality show winners that choose the singles prior to releasing the album (most likely because they're covers) and then pad the rest with crap.
I'm sure I'm not the only one who thinks that there are better songs on the album...
Summation 2
They have a lot of cash, and a lot of strings to pull in washington that will prolong any death to long after we are all dead and gone.
---- Booth was a patriot ----
So let me get this straight, rock stars will now have to actually WORK for the money they make? They can no longer rely solely on record sales to provide their multi-million dollar mansions. Boo-fucking-hoo, I've always supported the music I like by going to seem them in concert. An album is a way to create interest and get new fans to come see you live. This is the new music market the "record industry" had better start slimming down.
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.
Record labels' bigger issue is replacing CD sales
By Troy Wolverton
Mercury News
San Jose Mercury News
Article Launched:11/17/2007 01:37:25 AM PST
In the end, the long battle by the record labels against unrestricted digital music may have been little more than sound and fury signifying nothing.
At least, that's how it's starting to appear now that two of the major labels in recent months have embraced in some fashion the MP3 format, which has no copy protection. The early returns from those moves indicate they've had little impact on the industry's fortunes - for better or for worse.
Instead, the moves highlight a bigger problem. And that is how the labels are going to replace sales of CD albums, which constituted the core of their business and have plummeted in recent years.
"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."
For years, the major record labels fought a pitched battle against the MP3 format. The format doesn't allow for any copy restrictions, which made it a popular choice for songs swapped on illicit file-trading sites such as the original Napster and Morpheus.
To combat such piracy, the major labels insisted online stores that sold music had to wrap songs and albums in digital rights management (DRM) technology, which can restrict the number of copies users can make of a song or the number and types of devices it can be played on.
But online music and electronics vendors complained that such restrictions were limiting sales, in part because not all formats worked on every type of player.
In the past year, the music labels have become increasingly receptive to those arguments. In April, EMI announced it would make its entire catalog available for sale in DRM-free formats. In August, Universal Music Group, the world's largest recording company allowed the sale of a significant portion of its catalog in the MP3 format.
The labels' moves have opened up competition in the digital music space. In September, Amazon.com launched a digital music store, featuring only MP3 tracks. Meanwhile other, older digital music vendors, including iTunes and Wal-Mart's Web store, added DRM-free tracks.
Because those songs lack DRM, they can be played on just about any digital music device.
Although it's still early, DRM-free music seems to have had, at best, a slight positive benefit to the music industry.
Sales of DRM-free music to date have "outperformed" EMI's expectations, and Wal-Mart has seen its MP3 sales grow "considerably" since August, when its Web store made them available, representatives for the two companies said. However, neither they nor other labels or Web stores disclosed specific sales results.
Overall, the number of digital songs sold each week seems to have been unaffected by the launch of the major DRM-free stores since May, according to data from Nielsen SoundScan. Digital song sales - both of tracks with and without DRM - are in the same range after May as they were in the weeks before DRM-free sales started.
But that's small consolation for an industry whose wholesale revenue in the United States was down 11 percent in the first half of this year, according to IFPI, the industry's global trade group. That's on top of declines in retail sales in six out of the past seven years, according to the Recording Industry Association of America.
Even if the effect has been questionable, some analysts think that eventually all the labels will sell DRM-free music.
"The writing on the wall, for the most part, is here for DRM," said Michael Gartenberg, a vice president and research director for Jupiter Research.
But not yet. Universal and Warner are still just experimenting with DRM-free music, and Sony BMG isn't even doing that much, analysts note.
"The marketplace wil
Oh wait.
The movie folks fought like heck to kill the VCR. And in the end, not only did home video not kill the movie biz, it likely saved it. Try to image a movie industry that only makes money from theatre showings and the occasional soundtrack. Now it's not tapes but discs, but we have the movie, the director's cut, the remaster, the collectors box set. I doubt Disney pumps out all those direct-to-video sequels because home video is killing their business model.
Likewise, when the music industry folks finally get their heads out of their butts, they'll realize direct digital distribution is not a threat, but rather the savior.
I don't know why they haven't jumped on board years ago. You mean we get to sell music without the overhead of a physical plant to produce discs/tapes/whatever, without a transportation infrastructure to deliver the product to retailers, without having to share the profit with stores? What's the catch?
Yes, making quality copies is easier for the consumer than taping off the radio or making a dub from a friend. But 1) that fact doesn't negate any of the positives of the above paragraph. And 2) playing luddite and ignoring all the positives of the above paragraph doesn't prevent any of the issues of unlicensed digital copies.
So as it is now, the RIAA folks get all the negatives (from their point of view) of the internet and digital music, while refusing to partake in any of the positives.
One day they will wake up, just like the movie folks did. When that happens, not only will the digital revolution not kill the music industry, it will save it.
To the folks who say the music industry will go away because bands don't need it, I disagree. Not everyone has the resources to build/rent a studio and make masters. And throwing up your mp3s on the band web site is trivial when you're a local hit and expecting a couple thousand downloads; it's not quite the same when you're hoping for millions of downloads. Putting together a tour of college town bars with an old VW van is not quite the same as organizing an international tour of stadiums.
Yes, the current business model is something akin to the record companies are property owners and artists are overworked dirt get combed by share croppers. Yes, I hope direct community built between bands and fans through the web will give artists move leverage. But I doubt music companies as we know them will disappear any more than the web and digital distribution has freed authors and killed off the publishing houses.
Look at pre-2001 Afghanistan - music was considered sinful and evil and was banned. But people would still meet in secret and sing, and would still find ways of obtaining cassettes or CDs and listen to them behind locked (and presumably sound-proof) doors.
In fact I would say that BigMusic is anything BUT. They are only in it for the money, they don't care about art, about expression, or about individuality. Not that there's anything wrong with making money off of art, but it should most definitely not be the prime motivation. And the reason why music sucks so hard nowadays is because money has become the prime motivator for many so-called 'artists'. If anything the demise of the record industry (just the word 'industry' disgusts me) could usher a re-awakening of 'true' music - art for art's sake.
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.
It's not as if there is any shortage of talent out there- it's just that the only music you're ever going to hear is the mass-produced garbage that record execs think is trendy. Listen to any radio station in america and you'll notice they're playing a loop of the same 10 or 12 songs, over and over, day and night, for weeks on end. The radio stations are told what to play by the record labels. Recording equipment is cheap enough that any band who wants to record can do so, for at most a few thousand dollars. What the industry provides is *promotion*. TV ads, time on MTV, radio time- these are the things only industry insiders can get. Since they only pick a few acts every year in a genre for the royal treatment, they have to have a guarantee that every one will be a hit, which means they can't take chances on music that is different from the mainstream. So the music on the radio gets more inoffensive, unoriginal, and boring every year. If the record industry were to collapse tomorrow, it be would cause for celebration. It would certainly not affect the average touring band, and it wouldn't mean that musical innovation would suffer- the streets of america are flooded with good music and talented acts, and the big labels are simply not interested. What the world needs is more local labels, more promotion for the music that is out there and not being heard. MP3 and digital music formats are an excellent way to accomplish this. I say let the big labels burn! It's long overdue.
I'm not sure there would be all that much of a loss to the record industry by not selling physical CDs.
Retail shops (amazon, hmv etc) are going to take perhaps a 20% cut from the retail price. Then there's the physical cost of shipping, CD duplication and printing... so perhaps there's about $6-7 going back to the record company - that's $6-7 for 10-12 songs.
Or on iTunes - 10-12 songs cost around 10-12 dollars.
Presumably the costs of distribution are quite low on iTunes - after all there is no physical product or shop, and minimal staffing needs.
Which looks 'better' from a record industry point of view?
They're able to sell random old songs, and suffer (I presume) no limitations of keeping physical stock. Customers can pick random tracks and buy them as they see fit - classic long tail stuff. My hunch is that people will buy the same number of tracks (or spend the same amount on music at least) regardless of whether they're going for digital or 'hard copy' stuff... they just get to buy a better range for their money when it's digital.
The Ginger Dog