What is *good* Music to you? I'm more Lyric Driven than most Good Lyrics to Singing with Emotion will turn my ear So What I like may be not considered *good* music because the music is secondary to the Lyrics and Meaning Looking at the industry. . . I agree with Jeff GOOD MUSIC [to anyone's ear] is out there Finding it is a H*ck of a problem Rocket River
The Record Industry's Decline Record sales are tanking, and there's no hope in sight: How it all went wrong Brian Hiatt and Evan Serpick Posted Jun 19, 2007 2:29 PM For the music industry, it was a rare bit of good news: Linkin Park's new album sold 623,000 copies in its first week this May -- the strongest debut of the year. But it wasn't nearly enough. That same month, the band's record company, Warner Music Group, announced that it would lay off 400 people, and its stock price lingered at fifty-eight percent of its peak from last June. Overall CD sales have plummeted sixteen percent for the year so far -- and that's after seven years of near-constant erosion. In the face of widespread piracy, consumers' growing preference for low-profit-margin digital singles over albums, and other woes, the record business has plunged into a historic decline. The major labels are struggling to reinvent their business models, even as some wonder whether it's too late. "The record business is over," says music attorney Peter Paterno, who represents Metallica and Dr. Dre. "The labels have wonderful assets -- they just can't make any money off them." One senior music-industry source who requested anonymity went further: "Here we have a business that's dying. There won't be any major labels pretty soon." In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million. Digital sales are growing -- fans bought 582 million digital singles last year, up sixty-five percent from 2005, and purchased $600 million worth of ringtones -- but the new revenue sources aren't making up for the shortfall. More than 5,000 record-company employees have been laid off since 2000. The number of major labels dropped from five to four when Sony Music Entertainment and BMG Entertainment merged in 2004 -- and two of the remaining companies, EMI and Warner, have flirted with their own merger for years. About 2,700 record stores have closed across the country since 2003, according to the research group Almighty Institute of Music Retail. Last year the eighty-nine-store Tower Records chain, which represented 2.5 percent of overall retail sales, went out of business, and Musicland, which operated more than 800 stores under the Sam Goody brand, among others, filed for bankruptcy. Around sixty-five percent of all music sales now take place in big-box stores such as Wal-Mart and Best Buy, which carry fewer titles than specialty stores and put less effort behind promoting new artists. Just a few years ago, many industry executives thought their problems could be solved by bigger hits. "There wasn't anything a good hit couldn't fix for these guys," says a source who worked closely with top executives earlier this decade. "They felt like things were bad and getting worse, but I'm not sure they had the bandwidth to figure out how to fix it. Now, very few of those people are still heads of the companies." More record executives now seem to understand that their problems are structural: The Internet appears to be the most consequential technological shift for the business of selling music since the 1920s, when phonograph records replaced sheet music as the industry's profit center. "We have to collectively understand that times have changed," says Lyor Cohen, CEO of Warner Music Group USA. In June, Warner announced a deal with the Web site Lala.com that will allow consumers to stream much of its catalog for free, in hopes that they will then pay for downloads. It's the latest of recent major-label moves that would have been unthinkable a few years back: * In May, one of the four majors, EMI, began allowing the iTunes Music Store to sell its catalog without the copy protection that labels have insisted upon for years. * When YouTube started showing music videos without permission, all four of the labels made licensing deals instead of suing for copyright violations. * To the dismay of some artists and managers, labels are insisting on deals for many artists in which the companies get a portion of touring, merchandising, product sponsorships and other non-recorded-music sources of income. So who killed the record industry as we knew it? "The record companies have created this situation themselves," says Simon Wright, CEO of Virgin Entertainment Group, which operates Virgin Megastores. While there are factors outside of the labels' control -- from the rise of the Internet to the popularity of video games and DVDs -- many in the industry see the last seven years as a series of botched opportunities. And among the biggest, they say, was the labels' failure to address online piracy at the beginning by making peace with the first file-sharing service, Napster. "They left billions and billions of dollars on the table by suing Napster -- that was the moment that the labels killed themselves," says Jeff Kwatinetz, CEO of management company the Firm. "The record business had an unbelievable opportunity there. They were all using the same service. It was as if everybody was listening to the same radio station. Then Napster shut down, and all those 30 or 40 million people went to other [file-sharing services]." It all could have been different: Seven years ago, the music industry's top executives gathered for secret talks with Napster CEO Hank Barry. At a July 15th, 2000, meeting, the execs -- including the CEO of Universal's parent company, Edgar Bronfman Jr.; Sony Corp. head Nobuyuki Idei; and Bertelsmann chief Thomas Middelhof -- sat in a hotel in Sun Valley, Idaho, with Barry and told him that they wanted to strike licensing deals with Napster. "Mr. Idei started the meeting," recalls Barry, now a director in the law firm Howard Rice. "He was talking about how Napster was something the customers wanted." The idea was to let Napster's 38 million users keep downloading for a monthly subscription fee -- roughly $10 -- with revenues split between the service and the labels. But ultimately, despite a public offer of $1 billion from Napster, the companies never reached a settlement. "The record companies needed to jump off a cliff, and they couldn't bring themselves to jump," says Hilary Rosen, who was then CEO of the Recording Industry Association of America. "A lot of people say, 'The labels were dinosaurs and idiots, and what was the matter with them?' But they had retailers telling them, 'You better not sell anything online cheaper than in a store,' and they had artists saying, 'Don't screw up my Wal-Mart sales.' " Adds Jim Guerinot, who manages Nine Inch Nails and Gwen Stefani, "Innovation meant cannibalizing their core business." Even worse, the record companies waited almost two years after Napster's July 2nd, 2001, shutdown before licensing a user-friendly legal alternative to unauthorized file-sharing services: Apple's iTunes Music Store, which launched in the spring of 2003. Before that, labels started their own subscription services: PressPlay, which initially offered only Sony, Universal and EMI music, and MusicNet, which had only EMI, Warner and BMG music. The services failed. They were expensive, allowed little or no CD burning and didn't work with many MP3 players then on the market. Rosen and others see that 2001-03 period as disastrous for the business. "That's when we lost the users," Rosen says. "Peer-to-peer took hold. That's when we went from music having real value in people's minds to music having no economic value, just emotional value." In the fall of 2003, the RIAA filed its first copyright-infringement lawsuits against file sharers. They've since sued more than 20,000 music fans. The RIAA maintains that the lawsuits are meant to spread the word that unauthorized downloading can have consequences. "It isn't being done on a punitive basis," says RIAA CEO Mitch Bainwol. But file-sharing isn't going away -- there was a 4.4 percent increase in the number of peer-to-peer users in 2006, with about a billion tracks downloaded illegally per month, according to research group BigChampagne. Despite the industry's woes, people are listening to at least as much music as ever. Consumers have bought more than 100 million iPods since their November 2001 introduction, and the touring business is thriving, earning a record $437 million last year. And according to research organization NPD Group, listenership to recorded music -- whether from CDs, downloads, video games, satellite radio, terrestrial radio, online streams or other sources -- has increased since 2002. The problem the business faces is how to turn that interest into money. "How is it that the people that make the product of music are going bankrupt, while the use of the product is skyrocketing?" asks the Firm's Kwatinetz. "The model is wrong." Kwatinetz sees other, leaner kinds of companies -- from management firms like his own, which now doubles as a record label, to outsiders such as Starbucks -- stepping in. Paul McCartney recently abandoned his longtime relationship with EMI Records to sign with Starbucks' fledgling Hear Music. Video-game giant Electronic Arts also started a label, exploiting the promotional value of its games, and the newly revived CBS Records will sell music featured in CBS TV shows. Licensing music to video games, movies, TV shows and online subscription services is becoming an increasing source of revenue."We expect to be a brand licensing organization," says Cohen of Warner, which in May started a new division, Den of Thieves, devoted to producing TV shows and other video content from its music properties. And the record companies are looking to increase their takes in the booming music publishing business, which collects songwriting royalties from radio play and other sources. The performance-rights organization ASCAP reported a record $785 million in revenue in 2006, a five percent increase from 2005. Revenues are up "across the board," according to Martin Bandier, CEO of Sony/ATV Music Publishing, which controls the Beatles' publishing. "Music publishing will become a more important part of the business," he says. "If I worked for a record company, I'd be pulling my hair out. The recorded-music business is in total confusion, looking for a way out." Nearly every corner of the record industry is feeling the pain. "A great American sector has been damaged enormously," says the RIAA's Bainwol, who blames piracy, "from songwriters to backup musicians to people who work at labels. The number of bands signed to labels has been compromised in a pretty severe fashion, roughly a third." Times are hard for record-company employees. "People feel threatened," says Rosen. "Their friends are getting laid off left and right." Adam Shore, general manager of the then-Atlantic Records-affiliated Vice Records, told Rolling Stone in January that his colleagues are having an "existential crisis." "We have great records, but we're less sure than ever that people are going to buy them," he says. "There's a sense around here of losing faith." Additional reporting by Steve Knopper and Nicole Frehsée
i wonder if this will help the RIAA's case. RIAA goes after innocent mom and TEN YEAR OLD DAUGHTER Suit - A Beaverton mom says the record industry terrorized her with bogus claims Wednesday, June 27, 2007 ASHBEL S. GREEN The Oregonian Staff A disabled single mother from Beaverton has filed a federal lawsuit against the Recording Industry Association of America, claiming that she is the victim of abusive legal tactics, threats and illegal spying as part of an overzealous campaign to crack down on music pirating. The recording industry sued Tanya J. Andersen, 44, in 2005, accusing her of violating copyright laws by illegally downloading music onto her computer. Andersen claims in a suit she filed last week in U.S. District Court in Oregon that the recording industry refused to drop its case after its own expert supported her claims of innocence. Instead, industry officials threatened to interrogate Andersen's 10-year-old daughter, Kylee, if she didn't pay thousands of dollars. The intimidation included attempts to contact Kylee directly. A woman claiming to be Kylee's grandmother called the girl's former elementary school inquiring about her attendance, according to Andersen's suit. The recording industry dropped its lawsuit June 1. Jonathan Lamy, a spokesman for the recording industry association, said he respectfully declined to comment on the specifics of Andersen's case. But Lamy defended the recording industry's overall strategy to combat illegal file-sharing, which he said has stolen billions in revenues in the past few years. After taking on the Internet businesses that made it easy to copy music for free and mounting an education campaign, the industry was still losing lots of money, Lamy said. "Despite all these efforts, there was still not a sense of risk by the individual person downloading music online," he said. So the industry started taking legal action against individual computer users it accuses of illegally downloading music -- 21,000 people since 2003. Tanya Andersen was one of those people. She said she received a letter in 2005 from a Los Angeles law firm accusing her of illegally downloading music. As directed, she called the Settlement Support Center, which Andersen's suit called the "debt-collection arm" of the recording industry's campaign. Andersen said she had never illegally downloaded music but was told she had to pay $4,000 to $5,000 or she would be ruined financially. An employee said he believed she was innocent, according to the suit. "He explained, however, that defendants would not quit their attempts to force payment from her because to do so would encourage other people to defend themselves," the suit says Andersen offered to have her computer inspected. Instead, the recording industry sued her. The record industry claimed that she used a certain Internet name to illegally download music at 4:20 a.m. on May 20, 2004. Andersen searched the Internet for the name and easily learned that it belonged to a young man in Everett, Wash., who admitted on his MySpace account that he illegally downloaded music. Andersen provided the information to the record industry, but officials responded by publicly accusing her of downloading a series of violent, profane, obscene and misogynistic songs. Andersen was an avid user of mail order CD clubs, so "defendants knew that Ms. Andersen listens to only country music and soft rock," the suit says. The recording industry's expert finally confirmed that Andersen's computer had not been used to download music, but attorneys still demanded that she pay money before they would drop the case. "They wanted it to appear publicly that they prevailed," the suit claims. "When Ms. Andersen declined to pay them, defendants stepped up their intimidation." Two years after filing the lawsuit, the recording industry agreed to drop the case only if Andersen dropped her counter charges. "They also emphasized that that if she did not abandon her legal rights, they would continue to persecute her and her young daughter, and again demanded to interrogate and confront her little girl," the suit says. Andersen finally filed a motion forcing the recording industry to provide proof that she illegally downloaded music. Hours before the deadline to respond, the recording industry dropped its case. Andersen continues to seek to recover her legal costs from the recording companies that sued her, according to her Washington-based attorney, Lory R. Lybeck. Andersen filed a new suit in U.S. District Court in Oregon last week seeking additional damages from the Recording Industry Association of America, a trade group for recording industry companies that controls 90 percent of the music sold in the United States; the Settlement Support Center; and MediaSentry, a private investigation company that assists the recording industry..
Another uplifting story about the music biz ... 30 Seconds To Mars, For Fu**s Sake EMI, What Is This Sh** by Paul Cashmere - August 18 2008 Is it any wonder the music industry is ****ed! How can a band generate more than $20 million in sales, not make one penny … and then get sued by their label for not delivering any more music. Welcome to the 30 Seconds To Mars story. Last week, EMI Records sued 30 Seconds To Mars for $30 million dollars for terminating their contract when renegotiations failed. Renegotiations we said, not the band walking out of a deal. Let’s repeat that point. A record company that sold more than $20 million worth of units for band they haven’t paid one cent to is now suing the band for $30 million for not giving them the chance to do it again. This is the record industry at its utmost lunatic stage. EMI Records is now owned by cash strapped Terra Firma, a company claiming that it has “the new model for the music industry”. Well they do that the new model … of by that they mean their new model is “insanity”. 30 Seconds To Mars lead singer Jared Leto has alerted fans to the madness this band is currently in. Here is his story To our Friends and Fans, Despite rumors to the contrary, 30 Seconds to Mars is NOT calling it quits. We are incredibly happy, healthy and very much together here, in Los Angeles, recording our new record. Besides this ridiculously overblown lawsuit (courtesy of Virgin/EMI), we are having one of the most inspiring, wonderful and exciting times that we've experienced to date. (More on that later...) Beyond this distraction, we are so incredibly grateful to all of you around the world that have supported us so passionately. We would never consider stopping this just yet. These past few phenomenal years have been beyond imaginable and we owe every single bit of it to you. Thank you all for that! So, as you may have heard we are being sued by our former record company for the ridiculously oversized, totally unrealistic and pretty silly (but slightly clever) sum of $30,000,000. Insane' Yea that's what we said too. A little history... We had been signed to our record contract for 9 years. Basically, under California law, where we live and signed our deal, one cannot be bound to a contract for more than 7 years. This is widely known by all the record companies and has been for years. In fact, so aware of it are they that they desperately try to make deals outside of California whenever possible. It is a law that protects people from lengthy, unfair, career-spanning contracts. This law also gave us the legal right to explore other possible opportunities. Yes we have been sued by EMI. But NOT for failing to deliver music or for 'quitting'. We have been sued by the corporation quite simply because roughly 45 days ago we exercised our legal right to terminate our old, out of date contract, which, according to the law is null and void. We terminated for a number of reasons, which we won't go into here (we'd rather not air any dirty laundry) but basically our representatives could not get EMI to agree to make a fair and reasonable deal. A few things to note... If you think the fact that we have sold in excess of 2 million records and have never been paid a penny is pretty unbelievable, well, so do we. And the fact that EMI informed us that not only aren't they going to pay us AT ALL but that we are still 1.4 million dollars in debt to them is even crazier. That the next record we make will be used to pay off that old supposed debt just makes you start wondering what is going on. Shouldn't a record company be able to turn a profit from selling that many records' Or, at the very least, break even' We think so. That, and other issues, like the new regime at EMI firing most of the people we know and love, wanting to place advertisements on our website, EMI owning 100 percent of the masters of our record...forever, and basically having a revolving door of regimes at the company made it easy to not want to continue as is. As the result of this takeover - and the firing of over 2000 employees - we have lost many of the people that were near and dear to us at Virgin/EMI and crucial to the success of 30 Seconds to Mars. A few of the great ones are still there, but it is hardly the same company we have known. After more than 5 regime changes in 9 years you'd think we would be used to the inconsistency, but the team that took the journey together for A Beautiful Lie was a very very special group of people and it's a huge loss that so many of them are gone. (Quick fact: There is not a single employee at Virgin Records who was working at the company when we signed.) FYI Virgin/EMI was not required to make this lawsuit public or to list such an egregiously and stupendously large amount of mullah. In fact, they were not required to set any price even close to this. We did not want to take this public, but we felt it best to explain our point of view to you, our friends and fans, in hope that you can better understand our point of view. We would always do our best to avoid a fight, but sometimes it's important to stand up for what you believe in. We hope that by doing what's right we can help to change things for the better, for ourselves and possibly others. P.S. We will always remain grateful to the people at Virgin/EMI who were so integral to our success. And we hope that, above all, we can find a resolution to this in as civil and kind a way as possible. There are certainly more important things out there in the world to spend time and energy on. To be continued... Jared Leto 30 Seconds to Mars
Although I think 30 Seconds to Mars are awful and should be sued for inflicting pain and suffering to every music listener with good taste, I am glad that they are fighting this lawsuit. Even if it does turn out that they are still in debt to the record label (which is highly possible, when you factor in nine years of recording, production, distribution and promotion costs), it might lead to more transparent accounting by record labels.
Swan Songs? By CHARLES M. BLOW Published: July 31, 2009 The music industry’s deathwatch kicked off about a decade ago, but it seems the vigil could soon be over. According to data from the Recording Industry Association of America, since music sales peaked in 1999, the value of those sales, after adjusting for inflation, has dropped by more than half. At that rate, the industry could be decimated before Madonna’s 60th birthday. The speed at which this industry is coming undone is utterly breathtaking. First, piracy punched a big hole in it. Now music streaming — music available on demand over the Internet, free and legal — is poised to seal the deal. The problem is that if people can get the music they want for free, why would they ever buy it, or even steal it? They won’t. According to a March study by the NPD Group, a market research group for the entertainment industry, 13- to 17-year-olds “acquired 19 percent less music in 2008 than they did in 2007.” CD sales among these teenagers were down 26 percent and digital purchases were down 13 percent. And a survey of British music fans, conducted by the Leading Question/Music Ally and released last month, found that the percentage of 14- to 18-year-olds who regularly share files dropped by nearly a third from December 2007 to January 2009. On the other hand, two-thirds of those teens now listen to streaming music “regularly” and nearly a third listen to it every day. This is part of a much broader shift in media consumption by young people. They’re moving from an acquisition model to an access model. Even if they choose to buy the music, the industry has handicapped its ability to capitalize on that purchase by allowing all songs to be bought individually, apart from their albums. This once seemed like a blessing. Now it looks more like a curse. In previous forms, you had to take the bad with the good. You may have only wanted two or three songs, but you had to buy the whole 8-track, cassette or CD to get them. So in a sense, these bad songs help finance the good ones. The resulting revenue provided a cushion for the artists and record companies to take chances and make mistakes. Single song downloads helped to kill that. A study last year conducted by members of PRS for Music, a nonprofit royalty collection agency, found that of the 13 million songs for sale online last year, 10 million never got a single buyer and 80 percent of all revenue came from about 52,000 songs. That’s less than one percent of the songs. So it was no surprise that The Financial Times reported on Monday that Apple is working with the four largest labels to seduce people into buying more digital albums. It’s too little too late. (Note: I wrote this column while listening to “The Miseducation of Lauryn Hill,” the last truly great CD I ever bought. Every track is a gem. When did I buy it? 1999.)
Nielsen's Cheap Trick Dave Frey is the manager of Cheap Trick. They released their most recent album, The Latest through TuneCore earlier this year. I am a manager. One of my clients is a band called Cheap Trick. They have been together for 35 years and basically play shows and make recordings. Though the public is clearly buying singles and not CDs, they record songs in clusters. They can prepare/rehearse them, get good instrument sounds, and realize other savings through efficiency. Once a good drum sound is finally dialed in, why not record a group of songs? Anyway the band self released a collection of songs on 8-track, LP, CD, and digitally, called "The Latest" last summer. And since then the biggest thing I've learned is the power, (and price), of the band's fan information. For instance, Ticketmaster "owns" information on hundreds of thousands of Cheap Trick fans who have purchased their concert tickets. This is for sale. Amazon "owns" information relating to every Cheap Trick Amazon sale from day one. Their information is for sale. All Music “owns” a Cheap Trick "Artist Page" that propagates inaccurate out-of-date information. And many third party sites parrot their information, and that's for sale. Soundscan "owns" information concerning CD and digital sales. Their information is for sale. So, every couple of years when the band releases a new CD we hustle, work, and pay to promote it. This activity always raises their profile. And like clockwork Cheap Trick's former record company(s) release repackaged budget Special Products to cannibalize the new release. Once they buy this information they can better target their predatory product. So it was decided “The Latest” would not be registered with Soundscan. Maybe the former labels would have a harder time trying to trick the fans. But keeping information from Soundscan so that it can't be sold to competitors is impossible. Today I called Tunecore, our distribution company, pissed-off because a radio station I spoke with bought the digital sales information. I wanted to see if TuneCore could help stop the digital stores from reporting our sales information to Soundscan. It is common knowledge that Soundscan pays iTunes, Amazon, and others for information so that they can mark it up and resell it. Soundscan also acquires their information from the electronics chain, two bookstores, the coffee conglomerate, and the two big box discount warehouse(s) who still remain in the physical CD retail space. So selling information to predators is how Nielsen/Soundscan hurts musicians and I don't appreciate Soundscan selling my client's information to anyone. Similar to the 24/7 media that leaves no room for mystique, development, and nowhere to earn fans. Too much information in the wrong hands can kill. And when the light hits, it's often too soon, and like bugs under a magnifying glass everything's cooked.
Dude. No Worries... I'm sorry, but all those '100 line posts 5 at a time order makes this thread as unreadable as the sea of schlock in music today is unlistenable. Lots of good stuff in there, if you have the time and patience to find it. Let me join the madness, though, I suppose. I agree with Jeff that it seems there is a shortage of 'good' music these days, but back to the original point... I think it's just that we're just overwhelmed by the amount of music today, and it takes more work to find what is worth your time. I agree with those that have stated that trusted/knowledgeable sources of music evaluation do exist, and that things will settle, at least a bit, where those will stand out and a more clear method of marketing an act will distance itself. That said, the original article paints a pretty clear picture of what's going on, but seems to be a little too worried about business as it has been. Maybe it's just the depth that it goes into, but my personal opinion is... who cares? It is what it is. Product obsolescence is not limited to this industry, and if their little formula for making gobs of money to promote artists that haven't earned it is now backfiring, too bad. If they are mad that they can no longer get the cost of an album 3 times over by committing to new standards of media every 10years expecting past fans to revamp and update their system, well... I have no sympathy for that either. Their inability to find a sure act to promote to guarantee returns on investment is quite frankly not my problem. It's not my fault that most people's taste in music is so bad that they can't find a way to predict what is both good and marketable. Must be a heavy realization that's been a long time coming. Marketing unsustainable acts that have little talent is what a big part of what brought them to the world of single serving artists in the first place. What I can't agree with is that this is somehow iTunes or other online music seller's or the ipods fault. Singles have always been here, this is nothing new. The new market is capitalizing on the current scenario in the music industry combined with today's technology. The fact that it doesn't fit into yesteryear's business plan is no concern of mine, and further, I don't see the 99¢ price tag on a song as some huge problem... for the consumer. Do people who are able to subvert copyright laws by using the internet to illegally get music think it's egregious? I'm sure... but if I want a song in digital format, I don't think it's crazy to assume that it's worth a dollar. There are, of course, alternatives. Overall, I found the read interesting, but not necessarily a clear picture of what should be, more just another explanation of how things have changed. I liken the situation in the music industry to the news. Lots more places to get it, some old ones having trouble competing. And while the quantity and accessibility is improved, the quality for the most part has declined if by nothing else but an inundation of those that (often misleadingly) would claim authority on what is deemed to be of quality. Subjectivity is more a factor, getting noticed is more important than having something of worth to present, and what a consumer likes has become more important than quality... that goes for both providers and consumers as well.
Yessir...$30 is all you need: http://cheaptrick.shop.musictoday.com/Product.aspx?cp=10_21036&pc=CTAM64
I actually take it the opposite direction. People who can find only a single "hit" song they like on a record have poor musical taste to begin with. I can't imagine having only one song I like on a Johnny Cash record or a Townes Van Zandt record. You say, there aren't any of those artist anymore. And I say, in the current flip a song industry there won't be one ever again. If you are an artist interested in production a "hit" song, you aren't going to have the kind of depth it takes to become great. The internet kids see this as a way to stick it to the man. Sure, that's true, but don't say the freedom now rests with the artistic freedom. That's just ludicrous.
The first part of a six part series ... The State of The Music Industry & the Delegitimization of Artists - a Six Part Series by Jeff Price Part I: Music Purchases and Net Revenue For Artists Are Up, Gross Revenue for Labels is Down Did you hear? The success artists are having doesn't count. The music industry is over. Fewer albums are selling; revenue is down; the music being released is “crap”; everyone just steals music; the subscription services didn't take off; the RIAA is suing music fans; there are huge layoffs at the major labels; artists sell no music and make no money….it's a broken record. The problem is, most of this is simply not true. Even worse, this perspective delegitimizes and hurts artists and the music industry. There is a lot “right” going on. Based on what we have been hearing, most have no idea that music purchases are up over 50% from 2006 to 2009. Take a look at the Nielsen numbers below: (For brevity sake I will just provide their own headline and a few bullet points with a link back to the actual Nielsen reports for more details.) <hr> Nielsen Music 2006 Year-End Music Industry Report 2006 U.S. Music Purchases Exceed 1 Billion Sales Growth In Overall Music Sales Exceeds 19% over 2005 Digital Track Sales Increase 65% from 2005 The full 2006 report can be found here. <hr> Nielsen Music 2007 Year-End Music Industry Report 2007 U.S. Music Purchases Exceed 1.4 Billion Growth In Overall Music Purchases Exceeds 14% over 2006 Digital Music Accounts for 23% of Music Purchases Full 2007 report can be found here. <hr> The Nielsen Company 2008 Year-End Music Industry Report 2008 U.S. Music Purchases Exceed 1.5 Billion Growth in Overall Music Purchases Exceeds 10% over 2007 Overall Music Sales, Digital Track Sales, Vinyl LP Sales, Set New Sales Plateaus in 2008 Digital Music Accounts for 32% of Music Purchases Full 2008 report can be found here. <hr> The Nielsen Company 2009 Year-End Music Industry Report 2009 U.S. Music Purchases up 2.1% over 2008 2009 Overall Music Sales, Digital Track Sales, Vinyl LP Sales, Set New Plateaus 2009 Digital Music Accounts for 40% of Total U.S. Music Purchases More than 10 Billion Music Purchases in the U.S. for the Decade The full 2009 report can be found here. <hr> To summarize: In the four years of 2006 to 2009, music purchases increased from a record starting point of 1 billion purchases to the new record point of 1.5 billion music purchases. These specific figures do not include the sales and other income streams Nielsen does not track or disregards. Specifically, any “purchases” generated via subscription based streaming services like Rhapsody and Mog are not included. Neither is revenue generated from Digital Millennium Copyright Act compliant streams (non-terrestrial based plays via satellite radio, Pandora, LastFM, Jango, 8Tracks, Slacker etc.). Nor do they include most band selling direct-to-fan sales, bundling of music with merchandise (i.e buy the t-shirt, get a free album, buy Guitar Hero and get the Soundgarden album), on-line drop card redemption, sales of tracks for game play in Rock Band, ad revenue generated via YouTube and other streaming video sites, traditional public performance royalties, gig income, “pay what you want” donations to the band for music, stem sales, synchronization licenses, ringtone sales (these are listed separately by Nielsen), publishing royalties, fan club subscriptions and a lot more. All of these uses, plays, licenses and purchases generate revenue, just like a paid download. When you include these additional uses/purchases, the numbers go off the chart. The reality is: More musicians are making money off their music now then at any point in history. The cost of buying music has gotten lower but the amount of money going into the artist's pocket has increased. There are more people listening, sharing, buying, monetizing, stealing and engaging with music than at any other point in history. There are more ways for an artist to get heard, become famous and make a living off their music now than at any point in the history of this planet. Technology has made it possible for any artist to get distribution, to get discovered, to pursue his/her dreams with no company or person out there making the editorial decision that they are not allowed “in”. The majority of music now being created and distributed is happening outside of the “traditional” system. And to reiterate, sales are up… Seeing that the Nielsen stats are readily accessible and accepted as legitimate, why then are we left with the impression that music sales and revenue are down? The simple answer is album sales and overall gross revenue from music sales (CD and downloads) are down. The increase in music purchases comes from the people buying individual songs. The decrease in revenue comes from a $0.99 song costing less than a $16.98 physical album as well as fewer purchases of physical CDs. The impact of this is fascinating. First, music fans are buying more music from a wider spectrum of artists. Second, despite the cost going down to purchase music, the net revenue for a self-distributing artist is up as compared to what an artist traditionally earned via a label. Third, the entire financial model of the labels (well, at least post 1960) was built around selling a full-length physical album. Due to this, it is the record label (and those artists signed to them) that net less money off the sale of the music. Let me provide context. The financial food chain of the music industry used to be as follows. A distributor sells a CD to a retail store for a wholesale price (let's say $10). The retail store marks the CD up to $16.98 and make $6.98. The distributor takes a “distribution fee” of 20% of the wholesale price (in this case $2) and passes the remaining $8 back to the label. A band signed to a major label could expect to earn a band royalty rate of $1.40 - $1.70 per full length CD sold. This band royalty was paid through to the artist if they had “recouped” the band royalty fronted to them by the label (i.e. an “advance”) - most do not recoup. Compare this to self-distribution to iTunes though TuneCore: an artist makes $7 for each album sold at $9.99 and $0.70 for each song sold at $0.99. By selling just two songs on iTunes for $1.98, the artist makes the same amount of money as if a $16.98 full length CD was bought. An artist sells one digital album for $9.99 and makes 500% more than a signed band. The price may have dropped for the music consumer but with self-distribution the artist makes more money. Part II: The Impact of DMCA Streams and why they should be considered Part III: How a skewed perspective delegitimizes artists Part IV: The Growth Phase is Over? Improved Label Margins Part V: When Good Laws Turn Bad Part VI: The Hills are alive…..
