Interesting music read

Retail Music Industry Battles Extinction

In a period of lackluster sales, illegal downloading isn't the only factor affecting the depressed music industry. Disgruntled consumers have contributed significantly to the decline in retail music sales. Retail music sales, valued at $12.5 billion in 2005, are predicted to fall to $10.5 billion by 2010, according to a recent Mintel report. The major labels have been quick to blame consumers, but slow to listen to their needs.

"The growing distance between the music industry and its consumer is due to a number of factors," said Justin De Santis, analyst for Mintel. "These include lawsuits against individual consumers, payola practices, and, most recently, restrictive use of digital rights management."

Music labels have a negative stigma to overcome, brought on by battles against illegal downloaders, radio "pay-for-play" scandals and homogeneous artist offerings on radio stations. The introduction of iTunes and similar sites has slowed the decay of music retail sales, but it has not stopped it. Even though technology is starting to work for the industry rather than against it, labels still face the challenge of meeting the demands of a diverse consumer marketplace.

In an effort to keep up with the digital marketplace, industry leaders have marketed artists to sell single songs rather than complete albums. This new marketing strategy has contributed to the lack of strong up-and-coming musical talent in the marketplace that exhibit "staying power," such as legendary iconic artists like Prince, the Beatles, or U2.

While illegal downloading has hurt the industry, big labels have relied on obsolete strategies for over a decade and have been late in exploiting emerging technologies. As a result, the bond between independent artists and their fans have become stronger. Although the music industry is just starting to use digital distribution to its advantage, overall sales will continue to decline unless companies learn to adapt more quickly to changing technologies.

According to De Santis, "The current renaissance of underground media has further driven the consumer away from the major labels and has contributed to the downturn in their sales."

 

the album format is dying and will be dead before much longer.

Methinks you overstate. Better said, album format is returning to the popularity it had outside of the 1965-1985 period? For example, I am guessing that the early Beatles sold way more singles $s wise than thier albums. Same thing goes for Elvis in the 50s.

 

If artists could just write hit singles, that would be all they need to do. I suspect that bands will still need to write a CD worth of material to get the 2/3 hit singles to fall out. Artists would also need more than hits to play a 2 hour show. The market may be singles driven, but the hard core fans will want more, like all of the songs from aband's recording session that produce the 2/3 hits.

I can see releasing 4/5 sonds from a band's recording session as singles (ie not the 10 songs CD), which are all then sold on iTunes. I heard Huey "Every Band Needs At Least One Musican" Lewis say that given the current market it was crazy for the label to force a band to write a whole CD. From HL's p-o-v, there is no way that their audience is going to let them play more than 3 new songs per show, no matter how great they are. HL tours also probably only increease the sale of GH packages anyway, ignoring any CDs of newer material.

 

FCC Launches Payola Probes of 4 Radio Giants

Documents are sought from Clear Channel, CBS, Entercom and Citadel, sources say. The agency's step comes after settlement talks stall.

By Charles Duhigg, Times Staff Writer
April 20, 2006

The Federal Communications Commission on Wednesday launched formal investigations into pay-for-play practices at four of the nation's largest radio corporations, the biggest federal inquiry into radio bribery since the congressional payola hearings of 1960.

Two FCC officials with direct knowledge of the matter confirmed that the agency had requested documents from Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp. over allegations that radio programmers had received cash, checks, clothing and other gifts in exchange for playing certain songs without revealing the deals to listeners, a violation of federal rules.

The FCC requests, known formally as "letters of inquiry," are the first step in investigations that could result in sanctions ranging from financial penalties to the revocation of stations' licenses.

An FCC spokeswoman declined to comment. Representatives of the four radio companies could not be reached for comment.

In the past, radio executives at firms including Clear Channel, the nation's largest station owner, have said that company policies prohibit accepting gifts for airplay and that internal probes have not revealed widespread wrongdoing.

The four broadcasters have been negotiating with the FCC for weeks to forestall a federal inquiry by offering to discontinue certain practices and pay limited fines. But those talks stalled last month over the issue of how much the broadcasters should pay.

Clear Channel proposed a fine of about $1 million, according to people with knowledge of the negotiations. Some commissioners were pushing for as much as $10 million, those sources said.

"We were in the process of trying to reach settlements, but when talks were inconclusive, we decided we needed more information," said an FCC official who spoke on the condition of anonymity because the investigation was continuing. "We will continue to speak with the parties and to hold those who have violated commission rules accountable."

The FCC requires that radio listeners be informed anytime there is an exchange of items of value for airplay of specific songs.

The FCC's action comes amid New York Atty. Gen. Eliot Spitzer's pay-for-play probe, launched in 2004, which has alleged wrongdoing by both music and radio companies. In February, Spitzer sued Entercom, alleging that high-ranking executives had implemented scams to trade cash for airplay of songs by such artists as Avril Lavigne, Liz Phair and Jessica Simpson.

Entercom has denied the allegations.

The other three radio companies are also under investigation by Spitzer, who has shared his evidence with the FCC.

Radio programmers at stations around the country say that fear of regulatory scrutiny has scared them into airing fewer new songs. Instead, many stations are sticking to less diverse playlists.

Bryan Tramont, who served as chief of staff to former FCC Chairman Michael K. Powell and is now an attorney in private practice, said the inquiry appeared to be more than a fishing expedition.

"The FCC would only launch a formal investigation if they had information leading them to believe possible violations have occurred," he said.

Other FCC insiders said this new stage of investigation could put broadcasters more at risk of previously undiscovered evidence of wrongdoing being found. The investigation could give the FCC access to millions of previously unexamined documents. It could also expand to include stations and radio executives across the nation.

"Until now, we've been limited to the evidence Spitzer gave us, but a formal investigation will compel the radio companies to answer certain questions, which are usually pretty exhaustive," said another current FCC official familiar with the inquiry. "It will all be on the record now, and once we start demanding documents, we can keep on going until we're convinced we've found everything."

Spitzer has been critical of the FCC's negotiations with radio companies, saying that if the federal government allowed stations to settle it would undercut his efforts to force tougher sanctions and rules on the industry.

"Unfortunately the FCC, contrary to good public policy, has not pursued an investigation of the underlying facts," Spitzer said in April. His representative could not be reached for comment.

The last time the FCC took action on pay-for-play allegations was in 2000, when it fined two stations in Texas and Michigan $4,000 each for not disclosing payments received from A&M Records in exchange for playing songs by Bryan Adams.

But the investigation launched Wednesday was evidence of the FCC's vigilance, said federal officials.

"The chairman has always taken these allegations seriously," said one FCC official, referring to FCC Chairman Kevin J. Martin. "We're not worried about criticisms."

The FCC's new investigation is the largest federal radio bribery inquiry since Congress opened hearings on pay-for-play in 1960. Those inquiries resulted in the first federal "payola" laws and killed the career of famed disc jockey Alan Freed, who pleaded guilty to two counts of commercial bribery and was fined $300.

 

The Rise and Fall of the Hit
The era of the blockbuster is so over. The niche is now king, and the entertainment industry – from music to movies to TV – will never be the same.
By Chris Anderson

On March 21, 2000, Jive Records released No Strings Attached, the much-anticipated second album from NSync. The album debuted strong. It sold 1.1 million copies its first day and 2.4 million in the first week, making it the fastest-selling album ever. It went on to top the charts for eight weeks, moving 10 million copies by the end of the year. The music industry had cracked the commercial code. With NSync, a pop-idol boy band fronted by the charismatic Justin Timberlake, Jive had perfected the elusive formula for making a hit. In retrospect it was so obvious: What worked for the Monkees could now be replicated on an industrial scale. It was all about looks and scripted personalities. The music itself, which was outsourced to a small army of professionals (there are 60 people credited with creating No Strings Attached), hardly mattered.

Labels were on a roll. Between 1990 and 2000, album sales had doubled, the fastest growth rate in the history of the industry. Half of the top-grossing 100 albums ever were sold during that decade.

But even as NSync was celebrating its huge launch, the ground was shifting. Total music sales fell during 2000, for only the second time in a decade. Over the next few years, even after the economy recovered, the music industry continued to suffer. Something fundamental had changed. Sales fell 2.5 percent in 2001, 6.8 percent in 2002, and just kept dropping. By the end of 2005 (down another 8.3 percent), album sales in the US had declined 20 percent from their 1999 peak. Twenty-one of the all-time top 100 albums were released in the five-year period between 1996 and 2000. The next five years produced only two – Norah Jones’ Come Away With Me and OutKast’s Speakerboxxx/The Love Below – ranking 79 and 91, respectively.

It’s altogether possible that NSync’s first-week record may never be broken. The band could go down in history not just for launching Timberlake but also for marking the peak of the hit bubble – the last bit of manufactured pop to use the 20th century’s fine-tuned marketing machine to its fullest before the gears were stripped and the wheels fell off.

Music itself hasn’t gone out of favor – just the opposite. There has never been a better time to be an artist or a fan, and there has never been more music made or listened to. But the traditional model of marketing and selling music no longer works. The big players in the distribution system – major record labels, retail giants – depend on huge, platinum hits. These days, though, there are not nearly enough of those to support the industry in the style to which it has become accustomed. We are witnessing the end of an era.

What caused a generation of the industry’s best customers – fans in their teens and twenties – to abandon the record store? The labels cried piracy: Napster and other online file-sharing networks, along with CD burning and trading, had given rise to an underground economy of stolen music. Of course, there’s something to that. Despite countless record-industry lawsuits, traffic on the peer-to-peer file-trading networks has continued to grow, and about 10 million users now share music files each day.

But technology didn’t just allow fans to sidestep the cash register. It also offered massive, unprecedented choice in terms of what they could hear. The average file-trading network has more songs than any music store – by a factor of more than 100. Music fans had the opportunity for limitless choice, and they took it. Today, listeners have not only stopped buying as many CDs, they’re also losing their taste for the blockbuster hits that used to bring throngs into record stores on release day. If they have to choose between a packaged act and something new, more and more people are opting for exploration.

Technology also gave consumers a new way to buy music. Rather than having to purchase an entire album to get a couple of good tracks, they can buy songs à la carte for 99 cents each. The online music industry is primarily a singles business, which depresses album sales further. Meanwhile, the music marketing machine has lost its power. When consumers were buying mainly from record stores, prominent in-store displays could drive tremendous demand, which is why the labels paid so much for them. But now most of the largest record store chains, from Tower Records to Sam Goody, are either in bankruptcy or emerging from it with greatly diminished clout. MTV doesn’t play much music anymore, and money-losing Spin magazine was just, well, spun off for a fire-sale sum.

When it comes to lost marketing power, nothing compares to the decline of rock radio. In 1993, Americans spent an average of 23 hours and 15 minutes per week tuned to a local station. As of summer 2005, that figure had dropped to 19 hours and 15 minutes. Time spent listening to the radio is now at a 12-year low, and rock music is among the formats suffering the most. Since 1998, the rock radio audience has dropped 26 percent. What’s killing rock radio? A perfect storm of competition. Start with the 1996 Telecommunications Act, which added more than 700 FM stations to the dial. This fragmented the market and depressed the economics of the incumbents. At the same time, the limits of ownership in each market were relaxed, which led to a nationwide rollup by Clear Channel and Infinity, whose operating efficiencies included bringing cookie-cutter playlists to once-distinctive local stations.

Then came the cell phone, which gave people something else to do during their commutes. And finally, the iPod, the ultimate personal radio. With 10,000 of your favorite songs on tap, who needs FM?

Practically every other sector of mass media and entertainment has witnessed a similar shift away from hits. Last year the Hollywood box office take fell 6 percent, continuing a decline in attendance per capita that started in 2001. The average top 25 blockbusters in any given year so far this decade have accounted for 5 percent less of the total box office gross than in the 1990s, even as they’ve cost 57 percent more to make.

Network TV ratings continue to fall as viewers scatter to cable channels; since 1985, the networks’ share of the TV audience has dropped from three-quarters to less than half. Ratings of the top TV shows have fallen dramatically since the 1960s. Today’s top-rated show, American Idol, is watched by just 18 percent of households. During the ’70s, American Idol wouldn’t even have made it to the top 10 with that kind of market share. Collectively, the hundreds of cable channels have now surpassed the networks in total viewership. No single one dominates.

Even television mega-events have lost their allure. In 2005, the World Series had its worst TV ratings of all time, 30 percent lower than the previous year. Ratings for the NBA playoffs last year reached record lows as well, down 43 percent from 2004. The ratings for the Grammy Awards in 2006 were down 31 percent from two years ago. And the Winter Olympics this year had their lowest ratings in 38 years, down 36 percent from the 2002 Games in Salt Lake City.

The trend holds for other media. Just 52 percent of Americans read a daily newspaper, compared with 81 percent four decades ago. Magazine newsstand sales are at their lowest level since 1970. And the number of weeks the average best-selling novel remains at the top of the list has fallen by half over the past decade.

Before you shed too many tears for the declining hit, remember that the era of the blockbuster was an anomaly. Before the Industrial Revolution, culture was mostly local – niches were geographic. The economy was agrarian, which distributed populations as broadly as the land. Distance divided people, giving rise to such diversity as regional accents and folk music, and the lack of rapid transportation and communications limited the mixing of cultures and the propagation of ideas and trends.

Influences varied from town to town, because the vehicles for carrying common culture were so limited. There was a reason the church was the main cultural unifier in Western Europe: It had the best distribution infrastructure and, thanks to Gutenberg’s press, the most mass-produced item (the Bible).

But in the early 19th century, modern industry and the growth of the railroad system led to a wave of urbanization and the rise of Europe’s great cities. These new hives of commerce and hubs of transportation mixed people like never before, creating a powerful engine of new culture. All it needed was mass media to give it flight.

In the mid- to late 19th century, several technologies emerged to do just that. First commercial printing technology improved and went mainstream. Then the new “wet plate” technique made photography popular. Finally, in 1877, Edison invented the phonograph. These developments led to the first great wave of pop culture, carried by such media as newspapers and magazines, novels, printed sheet music, records, and children’s books.

Along with news, newspapers spread word of the latest fashions from the urban style centers of New York, London, and Paris. Then, at the end of the 19th century, the moving picture gave the stars of stage a way to play many towns simultaneously and reach a much wider audience. Such potent carriers of culture had the effect of linking people across time and space, effectively synchronizing society. For the first time, it was a safe bet that not only did your neighbors read the same news you read in the morning and know the same music and movies, people across the country did too.

We are a gregarious species, highly influenced by what others do. And film was a medium that could not only show us what other people were doing but could endow it with such an intoxicating glamour that it was hard to resist. It was the dawn of the celebrity age.

The arrival of broadcast media – first radio, then TV – homogenized our adulation even more. The power of electromagnetic waves is that they spread in all directions essentially for free, a trait that made them as mind-blowing when they were introduced as the Internet would be some 60 years later. Broadcast emerged as the best vehicle for stardom ever.

From 1935 through the 1950s, the Golden Age of Radio led to the rise of national broadcast celebrities like Edward R. Murrow. Then television took over. By 1953, an astounding 72 percent of TV households watched I Love Lucy on Monday night.

This marked the peak of the so-called water-cooler effect, the buzz in the office around a shared cultural event. In the 1950s and 1960s, nearly everyone you worked with had seen Walter Cronkite read the news the previous night, and then tuned in to whatever top program followed: The Beverly Hillbillies, Gunsmoke, The Andy Griffith Show.

Throughout the ’70s, ’80s, and ’90s, even as more channels arrived, television continued to be the great American unifier. Nearly every year, TV advertising set a new record as companies paid more and more for prime time. And why not? Prime-time TV defined the mainstream.

Then came the great unraveling. A new medium arose, one even more powerful than broadcast, and its distribution economics favored infinite niches, not one-size-fits-all fare. The Internet’s peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time. In other words, it’s the opposite of broadcast.

It will take decades for our entertainment industries to internalize the lessons of this shift. If your goal is to make a hit movie – but not necessarily a good movie – you must follow the Hollywood rules. Do pay as much as you can for the biggest-name star you can lure to the project. Don’t try to be “too smart.” Do have a happy ending. Don’t kill off the star. If it’s an action movie (and, all things being equal, it probably should be an action movie), more effects are better than fewer. Certainly it’s possible to break these rules and still have a hit, but why take chances? After all, you’re investing a lot of money.

This hit-driven mindset has leaked out of Hollywood boardrooms and into our national culture. We have been conditioned by the economic demands of the hit machine to expect nothing less. We have internalized the bookkeeping of entertainment risk capital. This is why we follow weekend box office results like we do professional sports – to keep score and separate the clear winners from the seemingly obvious losers.

Fixated on star power, we follow the absurd lives of A-listers with attention that far exceeds our interest in their work. From superstar athletes to celebrity CEOs, we ascribe disproportionate attention to the very top of the heap. We have been trained, in other words, to see the world through a hit-colored lens.

If it’s not a hit, then it’s a miss. It has failed the economic test and, therefore, never should have been made. This Hollywood mindset is now how we allocate space on store shelves, fill time slots on television, and build radio playlists. It’s all about allocating scarce resources to the most “deserving,” which is to say, the most popular.

Ultimately, our response to hit culture is to reinforce hit culture. The world of shelf space is a zero-sum game: One product displaces another. Forced to choose, each link in the entertainment industry naturally selects the most popular products, giving them privileged placement. By putting our commercial weight behind the big winners, we amplify the gap between them and everything else. Economically, this is the same as saying, “If there can be only a few rich, let them at least be super-rich.”

But now the audience is turning to a distribution medium that doesn’t favor the hits alone. We are abandoning the tyranny of the top and becoming a niche nation again, defined not by our geography but by our interests. Instead of the weak connections of the office water cooler, we’re increasingly forming our own tribes, groups bound together more by affinity and shared interests than by broadcast schedules. These days our water coolers are increasingly virtual – there are many different ones, and the people who gather around them are self-selected.

The mass market is yielding to a million minimarkets. Hits will always be with us, but they have lost their monopoly. Blockbusters must now compete with an infinite number of niche offerings, which can be distributed just as easily. Justin Timberlake still makes albums, but today he has thousands of bands on MySpace as rivals. The hierarchy of attention has inverted – credibility now rises from below. MTV and Tower Records no longer decide who will win. You do.
Adapted from The Long Tail: Why the Future of Business Is Selling Less of More, copyright © 2006 Chris Anderson, to be published by Hyperion in July. Chris Anderson (canderson@wiredmag.com) is Wired's editor in chief.

 

Watershed moment that we have all been expecting ...

Unsigned band set to crash charts
By Ian Youngs
Entertainment reporter, BBC News website

Essex rock band Koopa could become the first unsigned group to land a UK top 40 hit thanks to new chart rules.

Their download-only single Blag, Steal & Borrow is on course to enter Sunday's top 40, early sales figures suggest.

Chart rules were changed at the start of January to count all digital single sales, even if there is no CD version.

"It's fantastic that a band like us can have an opportunity to put ourselves into the top 30 with Razorlight and U2," manager Gary Raymond told the BBC.

Until 1 January, an artist needed to release singles on CD or another physical format - and therefore have a record deal - to qualify for the chart.

But bands who sell songs themselves through approved download services are now eligible.

Koopa were at number 17 in the unofficial midweek chart - based on Monday's sales - and are expected to end up in the lower half of this week's top 40.

"With the new rules, it does give hope for genuine talent," singer and bassist Joe Murphy said.

"You don't need to be dictated to by the big boys, by the record labels.

"You can release a song and if you've got the fanbase and people buy it, you'll get into the charts - it's great."

Other unsigned bands with healthy followings were likely to follow suit, he said.

"I wouldn't be surprised if we see a few more but it would be great if we could be the first."

Gig veterans

Koopa, from Colchester, have been together for seven years in various forms and have built up a fanbase on the internet and on the live circuit.

They have played almost 500 gigs in the past three years, including a headline show at the Mean Fiddler in London last summer.

Record labels have already contacted them on the strength of this week's chart showing.

"It's absolutely out of this world and fingers crossed it could be the start of a good career for us," Murphy said.

"If someone comes along and gives us an offer, we'll talk to them.

"But it depends whether we need it. If we can get enough exposure and get in the top 40 by the end of the week, do we necessarily need a large label?

"Probably nowadays, no you don't. We'll get the exposure ourselves just from being in the charts."

Their success is a result of years of hard work, he said.

"It's not easy to get people buying, and we've done quite well because we're quite big on things like MySpace so we've been able to advertise ourselves via the internet.

"But it's not as easy as people think, even with the new rules. They need to be genuine bona fide sales."

Mobile downloads

The live experience is just as important as sites like MySpace, according to Mr Raymond.

"There's no point being an internet band. You've got to be a live band and you've got to be able to hack it."

The bulk of Koopa's followers are teenagers who are buying the single using a mobile phone rather than an online store, Mr Raymond believes.

It costs £1.50 to send a text message and receive a code to download the song on a computer.

"The average 16-year-old doesn't have a credit card but they've got a mobile phone," the manager explains.

 

Study: P2P effect on legal music sales "not statistically distinguishable from zero"
2/12/2007 8:49:06 AM, by Ken Fisher

A new study in the Journal of Political Economy by Felix Oberholzer-Gee and Koleman Strumpf has found that illegal music downloads have had no noticeable effects on the sale of music, contrary to the claims of the recording industry.

Entitled "The Effect of File Sharing on Record Sales: An Empirical Analysis," the study matched an extensive sample of music downloads to American music sales data in order to search for causality between illicit downloading and album sales. Analyzing data from the final four months of 2002, the researchers estimated that P2P affected no more than 0.7% of sales in that timeframe.

The study compared the logs of two OpenNAP P2P servers with sales data from Nielsen SoundScan, tracking the effects of 1.75 million songs downloads on 680 different albums sold during that same period. The study then took a surprising twist. Popular music will often have both high downloads and high sales figures, so what the researchers wanted was a way to test for effects on albums sales when file-sharing activity was increased on account of something other than US song popularity. Does the occasionally increased availability of music from Germany affect US sales?

The study looked at time periods when German students were on holiday after demonstrating that P2P use increases at these times. German users collectively are the #2 P2P suppliers, providing "about one out of every six U.S. downloads," according to the study. Yet the effects on American sales were not large enough to be statistically significant. Using this and several other methods, the study's authors could find no meaningful causality. The availability and even increased downloads of music on P2P networks did not correlate to a negative effect on music sales.

"Using detailed records of transfers of digital music files, we find that file sharing has had no statistically significant effect on purchases of the average album in our sample," the study reports. "Even our most negative point estimate implies that a one-standard-deviation increase in file sharing reduces an album's weekly sales by a mere 368 copies, an effect that is too small to be statistically distinguishable from zero."

The study reports that 803 million CDs were sold in 2002, which was a decrease of about 80 million from the previous year. The RIAA has blamed the majority of the decrease on piracy, and has maintained that argument in recent years as music sales have faltered. Yet according to the study, the impact from file sharing could not have been more than 6 million albums total in 2002, leaving 74 million unsold CDs without an excuse for sitting on shelves.

So what's the problem with music? The study echoes many of the observations you've read here at Ars. First, because the recording industry focuses on units shipped rather than sold, the decline can be attributed in part to reduced inventory. Gone are the days when Best Buy and others wanted a ton of unsold stock sitting around, so they order less CDs. The study also highlighted the growth in DVD sales during that same period as a possible explanation for why customers weren't opening their wallets: they were busy buying DVDs.

 

The Album, a Commodity in Disfavor
By JEFF LEEDS
Published: March 26, 2007

LOS ANGELES, March 25 — Now that the three young women in Candy Hill, a glossy rap and R&B trio, have signed a record contract, they are hoping for stardom. On the schedule: shooting a music video and visiting radio stations to talk up their music.

But the women do not have a CD to promote. Universal/Republic Records, their label, signed Candy Hill to record two songs, not a complete album.

“If we get two songs out, we get a shot,” said Vatana Shaw, 20, who formed the trio four years ago, “Only true fans are buying full albums. Most people don’t really do that anymore.”

To the regret of music labels everywhere, she is right: fans are buying fewer and fewer full albums. In the shift from CDs to digital music, buyers can now pick the individual songs they like without having to pay upward of $10 for an album.

Last year, digital singles outsold plastic CD’s for the first time. So far this year, sales of digital songs have risen 54 percent, to roughly 189 million units, according to data from Nielsen SoundScan. Digital album sales are rising at a slightly faster pace, but buyers of digital music are purchasing singles over albums by a margin of 19 to 1.

Because of this shift in listener preferences — a trend reflected everywhere from blogs posting select MP3s to reviews of singles in Rolling Stone — record labels are coming to grips with the loss of the album as their main product and chief moneymaker.

In response, labels are re-examining everything from their marketing practices to their contracts. One result is that offers are cropping up for artists like Candy Hill to record only ring tones or a clutch of singles, according to talent managers and lawyers.

At the same time, the industry is straining to shore up the album as long as possible, in part by prodding listeners who buy one song to purchase the rest of a collection. Apple, in consultation with several labels, has been planning to offer iTunes users credit for songs they have already purchased if they then choose to buy the associated album in a certain period of time, according to people involved in the negotiations. (Under Apple’s current practice, customers who buy a song and then the related album effectively pay for the song twice).

But some analysts say they doubt that such promotions can reverse the trend.

“I think the album is going to die,” said Aram Sinnreich, managing partner at Radar Research, a media consulting firm based in Los Angeles. “Consumers are listening to play lists,” or mixes of single songs from an assortment of different artists. “Consumers who have had iPods since they were in the single digits are going to increasingly gravitate toward artists who embrace that.”

All this comes as the industry’s long sales slide has been accelerating. Sales of albums, in either disc or digital form, have dropped more than 16 percent so far this year, a slide that executives attribute to an unusually weak release schedule and shrinking retail floor space for music. Even though sales of individual songs — sold principally through iTunes — are rising, it has not been nearly enough to compensate.

Many music executives dispute the idea that the album will disappear. In particular, they say, fans of jazz, classical, opera and certain rock (bands like Radiohead and Tool) will demand album-length listening experiences for many years to come. But for other genres — including some strains of pop music, rap, R&B and much of country — where sales success is seen as closely tied to radio air play of singles, the album may be entering its twilight.

“For some genres and some artists, having an album-centric plan will be a thing of the past,” said Jeff Kempler, chief operating officer of EMI’s Capitol Music Group. While the traditional album provides value to fans, he said, “perpetuating a business model that fixates on a particular packaged product configuration is inimical to what the Internet enables, and it’s inimical to what many consumers have clearly voted for.”

Another solution being debated in the industry would transform record labels into de facto fan clubs. Companies including the Warner Music Group and the EMI Group have been considering a system in which fans would pay a fee, perhaps monthly, to “subscribe” to their favorite artists and receive a series of recordings, videos and other products spaced over time.

Executives maintain that they must establish more lasting connections with fans who may well lose interest if forced to wait two years or more before their favorite artist releases new music.

A decade ago, the music industry had all but stopped selling music in individual units. But now, four years after Apple introduced its iTunes service — selling singles for 99 cents apiece and full albums typically for $9.99 — individual songs account for roughly two-thirds of all music sales volume in the United States. And that does not count purchases of music in other, bite-size forms like ring tones, which have sold more than 54 million units so far this year, according to Nielsen data.

One of the biggest reasons for the shift, analysts say, is that consumers — empowered to cherry-pick — are forgoing album purchases after years of paying for complete CD’s with too few songs they like. There are still cases where full albums succeed — the Red Hot Chili Peppers’ double-CD “Stadium Arcadium,” with a weighty 28 tracks, has sold almost two million copies. But the overall pie is shrinking.

In some ways, the current climate recalls the 1950s and to some extent, the 60s, when many popular acts sold more singles than albums. It took greatly influential works like The Beatles’ “Sgt. Pepper’s Lonely Hearts Club Band” and the Beach Boys’ “Pet Sounds” to turn the album into pop music’s medium of choice.

But the music industry’s cost structure is far higher than it was when Bob Dylan picked up an electric guitar. Today’s costs — from television ads and music videos to hefty executive salaries — are still built on blockbuster albums.

Hence the emergence of scaled-back deals with acts like Candy Hill. Labels have signed new performers to singles deals before, typically to release what they viewed as ephemeral or novelty hits. Now, executives at Universal say, such arrangements will become more common for even quality acts because the single itself is the end product.

With Candy Hill, Universal paid a relatively small advance — described as being in “five figures” — to cover recording expenses. Ms. Shaw, who formed the group with Casha Darjean and Ociris Gomez, said the members had kept their day jobs working at an insurance company and doing other vocal work to be able to pay the rent at the house where they live together.

If one of their songs turns into a big hit, they hope to release a full album, and to tap other income sources, like touring and merchandise sales.

But turning a song into a hit does not appear to be getting any easier.

Ron Shapiro, an artist manager and former president of Atlantic Records, asked, “What are the Las Vegas odds of constantly having a ‘Bad Day?’ ” — referring to a tune by the singer Daniel Powter that sold more than two million copies after it was used on “American Idol.”

While music labels labor to build careers for artists that are suited for albums, he added, “You have to create an almost hysterical pace to find hits to sell as digital downloads and ring tones that everybody’s going to want. It’s scary.”

 

Real Band, No Record Company
Internet Challenges Musician's Traditional Longing To Be Signed By A Label

NEW YORK, May 28, 2007

(CBS) When the band Clap Your Hands Say Yeah packaged and shipped its new CD, called "Some Loud Thunder," they released it without a record label. And this was after their first self-financed album had sold more than 200,000 copies, prompting plenty of offers from the big labels, which they turned down.

When asked why, Sean Greenhalgh, the band's drummer, told CBS News correspondent Anthony Mason, "The question that we asked record companies was essentially, 'What can you do for us that we can't do for ourselves?'"

Billboard magazine made the band the poster boys of a "do-it-yourself revolution." Even million-selling artists like Jewel are considering going it alone. Garth Brooks did; so will The Eagles with their next album.

One big reason: The Internet is now doing much of the promotion & distribution work, as fans themselves spread the word and the music.

"Now you have blogs, other places where people go — that's how the publicity happens now," said Greenhalgh.

So band members hired their own manufacturer, distributor and marketing company, and instead of the $1 an album they'd typically make from a record company, they'll get about $6 for every copy they sell.

Jeff Tweedy is lead singer of the Grammy-winning band Wilco, whose new album, "Sky Blue Sky," comes next week on the Nonesuch label. But he wonders how long labels will be important.

"Technology has evened the playing field. If the artist can gain more power over the situation — over the economics of the situation — why wouldn't they take it?"

Like many artists, Tweedy admits asking himself the question: Do record labels deserve that big a cut?

And his answer? "It's getting to be a really tough call" — because the record companies aren't moving albums the way they used to. CD sales plummeted 20 percent the first three months of this year.

Empty shelves are all you'll find now at Tower Records, which until December was one of the most famous music store chains in the country. But it's now out of business, bankrupt — the abandoned display cases another unsettling sign of an industry in turmoil.

As the industry tries to figure out where the business is going, bands like Clap Your Hands believe they're better off going it alone.

"It was definitely a calculated risk," said Greenlagh, "but we felt like we had everything in place to do it ourselves."

It's not necessarily their music that's revolutionary — it's their business model.

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