With the spring semester now over, this will be my last entry (at least for a while). I hope that you’ve enjoyed something that I’ve posted and found at least one band that moves you. To wrap up this blog, below is my perspective—the perspective of a naive amateur—on the present state of the American music industry.
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With the record industry in an indisputable state of decline since the early 2000s, most journalistic attention has focused on the negatives of its slow demise rather than the promising new directions that musicians and independent record labels are exploring.
Journalists’ pessimistic outlooks are largely understandable; the situation looks bleak. Since the advent of the web 2.0 era, many have speculated that we as a society are witnessing a patent decline in the appreciation for excellent music. Among these dissenters is renowned author and public speaker Andrew Keen, who informs us in his book, The Cult of the Amateur, that in the last decade over 1,000 music stores have been shut down due to declining revenue. Moreover, illegal downloading has siphoned considerable funds from the Record Industry. Keen estimates that, in 2005 alone, over 20 billion songs were illegally downloaded. The result is an approximate loss of 1.1 billion dollars to the Recording Industry Association of America (RIAA).
According to an article by Brian Hiatt and Evan Serpick of Rolling Stone, roughly 5,000 record label employees have been laid off since 2000, many as a result of the necessitated merger of Sony Music Entertainment and BMG Entertainment in 2004. And it’s probable that another period of mass layoffs will accompany EMI and Warner Music Group’s pending merger. Peter Paterno, representative of Metallica and Dr. Dre, cautions, “Here we have a business that’s dying; there won’t be any major labels pretty soon.”
Still, some view statements like Paterno’s and reply, “Good riddance.” They view the decline of the record industry not as an indicator of immorality or lack of musical appreciation, but as a sign of progress. And this progress is two-part: (1) Technological advancement is rapidly eliminating the record industry’s primary sources of revenue, and (2) societal development is resulting in the democratization of the music industry, shifting power away from immense multi-billion dollar companies—i.e. Universal Music Group, BMG/Sony Entertainment, and Warner Music Group—to many smaller, independent corporations.
The first area of progress is reflected by the format in which consumers purchase music. Since the beginning of recorded sound, many have actively sought better means in which to distribute it. In the last forty years alone, the popular format has shifted five times: from 8-track tapes to vinyl, vinyl to audio cassettes, audio cassettes to compact discs, and finally compact discs to digital. That’s not to say that technological advancement has wholly eliminated preceding formats or that the creation of a format has always coincided with its being the most popular. In fact, despite the invention of the record preceeding that of the 8-track, more records are being pressed today than ever before while 8-tracks were completely phased out of retail by 1982. However, the format which is most profitable has changed, and vinyls now account for very little of the industry’s revenue.
With the public approval of each new technology, consumers were encouraged to repurchase old media in a new format. Statistician Michael DeGusta graphs this phenomenon in his article “The Real Death of the Music Industry,” which illustrates how, in past decades, the popularization of a new format would result in a significant rise in sales. One such sales spike is evident in the mid 70s, when the cassette became a widely utilized medium. And sales trended upwards once again in the late 80s as the compact disc became a popular format. Hence, revenue loss has partially resulted from the end of the temporary increase in sales that came about as consumers replaced older formats with CDs. A key difference, however, is that the technology to move music from one format to another is now commonly available. Personal computers allow individuals to make digital copies of music purchased on a CD. As a result, the industry cannot expect another sales spike in the near future or, perhaps, ever again.
The popularization of the digital format has other implications as well. Physical mediums allowed record companies to bundle materials together in an effort to increase their value. For example, it was once common for singles released on vinyl records to include an A-side and a B-side track. The A-side would contain a featured song—something that the producer thought would be a hit and would encourage people to buy the record. The B-side would have a secondary song, one that wasn’t expected to garner much attention and usually wouldn’t even appear on the artist’s LP. This convention was essentially a means of justifying steep increases in the cost of vinyl records.
Bundled materials, in the form of albums, have consistently accounted for about 90% of the music industry’s total revenue in the past 40 years. Whereas before, one had to pay for 10 or 12 songs in order to have access to the few on an album that they wanted to listen to, digital media now allows people to easily purchase the music they want without paying for the music that they don’t. This approach is, of course, much less profitable for record companies.
As previously mentioned, the second area of progress has to do with the democratization of the music industry. In the past century, the logistics of music distribution had made it practically impossible for artists to make their music available to buy without the assistance of a major record label; the required costs and infrastructure of the physical world were simply too daunting for any individual artist, regardless of their musical talent, to contend in the market. Due to their stranglehold on the means of distribution, large record labels achieved a unique and privileged position of power. More than a source of profit, this position afforded record labels the capacity to act as cultural gatekeepers, selecting which artists were heard and would ultimately become popular.
In the last decade, however, the need for artists to sign with major record labels has significantly diminished. Because The Internet has created numerous new media outlets and provided global access at an affordable price, the immense costs of producing and distributing music have been all but eliminated. Social networking sites, streaming radio stations, YouTube, and music blogs provide artists with limitless—and mostly free—circulation of their work while also granting consumers the ability to form communities centered on their music. The democratization of the music industry means that not only can each artist act as their own promoter—successfully distributing their music to tens of millions of people—but each of their fans can do the same. With the restrictions of the physical world removed and The Internet readily available, major record labels are simply obsolete.
But the death of major record labels (progress) does not necessarily signify the death of the music industry; and, indeed, that isn’t the case. A recent Harvard study concluded that more music is being produced today than ever before, and the amount of money being paid in support of music is at an all time high. The failure of some individuals to distinguish the music industry from the profit margins of major record labels is why those like Andrew Keen, Peter Paterno, and so many journalists that report on the industry are so convinced of its inevitable demise.
Focus should be directed away from the failing practices of antiquated institutions and towards the promising new business models of individual artists and independent record labels. In order to remain competitive in today’s economic climate, sales tactics must be adapted to work with new technologies and to capture the attention of the file sharing community.
Many independent artists who are currently flourishing have embraced file sharing as a means of publicity, and they generate revenue by connecting with fans on a personal level—what techdirt contributor Mike Masnick calls the “Connect with Fans (CwF) + Reason to Buy (RtB) business model. By encouraging file sharing rather than condemning it—as the RIAA did when it levied numerous lawsuits against file sharers in the early 2000s—artists avoid forming adversarial relationships with their fans.
An example of the successful implementation of this business model is Trent Reznor of the band Nine Inch Nails. Reznor goes to great lengths in order to facilitate the building of an active community of fans. He releases everything he records for free download; encourages fans to communicate through his website forums, chat rooms, and free iPhone app; and asks fans to generate content to be displayed on his website. As a result, Reznor’s fan base is devoted and eager to buy when he makes items available for purchase. When Reznor released a number of limited edition packages of music and memorabilia ranging in price from $10 to $300, all 2,500 sets sold within thirty hours, netting Reznor a profit of roughly $750,000.
And the model is not only successful for artists who have already achieved a great deal of fame. Corey Smith, a high school teacher who moonlighted as an amateur musician at open mic nights, made an effort to connect with fans by releasing his music for free online and offering $5 pre-sale tickets to many of his shows. Despite regularly selling tickets at a severely reduced cost and offering his music to fans at no charge, Smith’s live shows generated nearly $4 million in 2008.
After witnessing its success, Independent record labels have begun to adopt this model as well. Oskar Humlebo’s label, ‘Songs I Wish I Had Written,’ often releases artists’ work on The Pirate Bay before offering it through other outlets. That’s because Humlebo and the artists he represents wish to encourage remixing and the sharing of their music in other creative ways. The same is true of Terry McBride’s label ‘Nettwerk.’ Shortly before the 2009 album release of hip-hop artist K-OS, Nettwerk released all of the song stems that appeared on his album and encouraged fans to create their own mixes. The most popular fan mixes were compiled and released simultaneously with K-OS’s. That year, both the professional and fan-made albums took spots inCanada’s ‘top-50’ charts.
In each of these examples, artists and labels made a significant profit without complex licensing agreements, stringent copyright restrictions, or by charging for each individual transaction—all the old methods of the record industry. Instead, fans purchased a product that they wanted at a price that they were glad to pay. While old models continue to see diminishing profits, here we have one that works: one that is profitable today and will only become more lucrative as technology and society progress.
The Palace Flophouse
Due to Alison Mosshart’s involvement with Dead Weather, it’s been quite a while since we’ve seen anything new from The Kills. But with The Dead Weather now on indefinite hiatus, singer Alison Mosshart and guitarist Jamie Hince are once again free to pursue their duo venture. Resulting from their rekindled partnership is Blood Pressures, The Kills’ fourth LP.
On Blood Pressures, the clear standouts are tracks “The Last Goodbye” and “Pots and Pans.” These tracks stubbornly disrupt the pace of the album, as though Mosshart and Hince had something to say that just couldn’t wait. As “The Last Goodbye” begins, Hince’s calm strumming immediately sets it apart from previous songs on the album—mellower and more lyrically rich. In an interview for Spinner, Mosshart explains, “It’s one of those ones that you just sit down with an acoustic guitar and wrote a song and love it so much. It was so kind of straight and normal—sort of like Patsy Cline—that something had to happen and it couldn’t be on a Kills record, but Jamie played around with it and tried different instruments with it.”
