Don’t Ignore Economics…The Labels DidI received an email from a reader last week. He said:
“…I am actually a producer that spent 25 years financing and producing independent music. Now I have to sit back while my property is stolen by theives while moral relativists like you argue that it is right. What do you do to put bread on your table? How would you like to bust your ass at your job for a lifetime and when it comes time to retire you find out that everyone else thinks your retirement account should be handed out to the world? How would that feel? You haven’t a clue about what is right and wrong. In the end downloading of recorded music will put an end to great records. Why make them when no one will pay for them………………….
IT’s a generation of people like you that feels that everything should be free and cares not who that hurts that is fucking up this world………..”
Adulthood is great. But one of the more unfortunate aspects of being an adult is that you tend to lose perspective of big ideas because of the numerous tactical activities you undertake each day just to keep your head above water. For most people, that sucks up so much mental energy that almost no time is dedicated to reflecting on the bigger picture.
I use the word unfortunate because when the world around you changes and you don’t adapt to those changes, life can get hard. Big ideas do have profound consequences. Record labels are the most prominent examples of that.
Some people and companies have a vision of how the world ought to be that doesn’t square up with how it really is. Lucian Grainge, Universal Music’s CEO-to-be was quoted in a recent New York Times article saying, “I believe that the CD will outsurvive me as a format.” That might be factually true, but it doesn’t give much confidence in his visionary abilities. If Steve Jobs were put in charge of Universal Music 10 years ago, could you ever imagine him saying something like that? Why the board of Universal would ever consider putting someone like Grainge in charge in this day and age is beyond me.
Anyone in the music business who’s not aware of digital trends has no business being in the music business. If there’s one big idea that everyone should know to really understand where the music industry is today, it’s this: Over the last 100 years or so mechanical reproduction made it possible to produce copies of books, records, newspapers, etc. Distributing those copies was hard and expensive, thereby making those copies scarce and valuable as products. Today, digital reproduction makes it possible for anyone to cheaply copy and distribute things like music, so they’re not scarce and therefore have little value as products. And that’s that. There’s no going back.
It doesn’t matter whether you hate that idea or not. You can kick and scream and curse the darkness all you want. You can complain about fairness or about how file sharing has killed your career. But none of that is going to change the winds of economic history.
Think of the record industry as a big bucket. The Internet gradually punched millions of tiny holes in it. The industry tried to plug those holes. It didn’t work…way too many of them. Instead of plugging the holes, it should have thought about how to build or buy new buckets.
The labels resisted the winds of economic history. Lots of individual music artists still resist them. But the economy is like a vapor that sweeps across the landscape. It isn’t kind to things that try to get in its way.
There’s nothing wrong with wishing things were the way they used to be as long as you don’t act like it.
February 16th, 2010 at 10:13 am
Regarding CDs: CDs are still the easiest way to listen to music for people who don’t use a computer much…and that’s a LOT more people than you and I might think. We use the Internet. We understand how to use a computer, rip a CD to files and sync them to an MP3 player or cell phone.
Until the Internet is as available wirelessly as AM radio is, then CDs are going to be the most common medium for listening to music: in your car, or in your living room.
There are 300 million people in the United States. Only hald have access to broadband internet, and what percentage of those are computer savvy?
YES, CDs will eventually go away. But think for a moment what that would mean: wireless Intenet everywhere, like radio. When will that be here? And when will people replace all their CD players in their cars and their homes?
We “Internet-centered people” would be quite surprised at how long that will actually take.
February 16th, 2010 at 10:15 am
Typo correction: Only HALF have access to broadband today…
February 16th, 2010 at 10:40 am
Glenn, you’re absolutely right. CDs still make up the bulk of music sales. I think it’s something like 2/3 of music sales. Most of the people purchasing CDs are older people. But even a few percentage point drop in CD sales numbers results in billions of dollars of lost revenue. And I wonder how all of that revenue will be replaced once the older people are replaced by younger people.
February 16th, 2010 at 11:20 am
Mika,
As far as future economics of music…
By the time wireless Internet connections are reliably constant and available even when you are driving across Montana, music will no longer be seen as something that “only expert artists can create”.
It will be something that MANY people create and easily share…like baking cookies. “Here, I baked these for my friends; have a listen…”
It won’t be nearly as good, typically, as it was when artists were screened by labels for the ability to create music that people loved so much that would PAY for it.
But it will be good enough for “free”. Tasty enough for a fun little snack, even though you’d probably not spend money on it if you had to.
That said, now and then (and regularly) someone will come up with something unique and particularly tasty that will become quite popular in a viral way. And if they start performing that unique sound live, and IF being there live is necessary for the total effect, then they can make some good money with a live performance.
We are already seeing it among people who are immersed in the digital world and who love music: the ability to make music *is not seen as something really special*.
It’s not like 1959 when Elvis was a moneymaking sensation, or 1963 when the Beatles began to make their millions upon millions of dollars for their records.
Today, if a person makes some tasty loop-based beats for friends, they are not seen as some sort of extremely special talent, I don;t think.
— Glenn
February 16th, 2010 at 9:17 pm
Glenn,
Everyone in the world loves music, not just N. Americans. Just because Americans are as un-savvy as you say when it comes to computers, doesn’t mean that those folks in the rest of the world who access the ‘net via mobiles should be disregarded – there are many more of them. As mobile ubiquity becomes the norm, the web, which is just an application that resides on the ‘net remember, will be left in the dust. I write about this stuff often. Here’s an interview I just did for SXSW Magazine http://madebyfight.com/2010/02/sxsw-magazine-interview-with-dave-allen/ and here’s my latest essay on musicians and the web – http://madebyfight.com/2009/12/dear-musicians-please-be-brilliant-or-get-out-of-the-way/
February 17th, 2010 at 1:31 am
Dave,
This “mobile ubiquity”. Are you saying people will be streaming music over mobile phones with Pandora or a similar music service? Or do you mean they will be downloading tracks for later listening?
What about cars? Lots of CD players out there in cars. They are still selling cars with CD players today. When will they stop selling CD players in new cars? Not until the vast majority of people don’t use them.
February 17th, 2010 at 3:04 pm
I def agree with the author, times are changing and that’s a fact!! this is not a myth, its not a fairy tale, it’s not a prediction. I think people need to stop whining about CD’s, shyt they might as well whine about a-tracks while their at it. No1 cares and this huge tidal wave of new customers DO NOT CARE about the artist being “paid”. If your music is quality you WILL reap the benefits of shows, sponsors, ad placements etc. People who are creative/artistic understand what “spreading their wings” mean (CREATING FANS) creating new ave’s for their work to be seen, heard and in the long run they benefit. Everyone needs to have a new or a continuous hustle (and not focus on 1 thing selling your records period). BE CREATIVE try new things, experiment with whatever kind of music/talents you have. things are possible! but whatever it is you do stop complaining about a universal movement, this is what it is there’s absolutely nothing you can do about it. get that in ur head and move on with your life.
February 17th, 2010 at 3:17 pm
mp3’s era is here to stay. DJ’s love getting the latest leak and record labels love leaking records via the mp3/internet. when last have u got a leaked record on CD? it’s funny how a label/producer would leak records via the internet to create hype but them moan about low sales lol. if you want your music played to mass media, radio, blogs, etc you better get it to them in mp3 format through an email.
my laptop does not have a cd drive. (what about that) lol. so i buy mp3’s if it leaves an inspired impression on me and i would like to hear more. but 80% of my music is emailed to me. because if you send it on a cd I do not and would not get to it. love mp3’s find new thngs you can get your MP3 TO WORK FOR YOU.
February 17th, 2010 at 3:18 pm
@kerry Your point about people not caring about whether you get paid hits the nail right on the head. In fact, that’s a fundamental condition in the business world. Most customers care about themselves. I think the faster people realize that, the likelier they’ll be to find innovative new revenue models.
February 18th, 2010 at 9:53 am
We released a CD in 2008 and have shifted about half of those we pressed up. The world has changed so rapidly that we now sell almost none here in the UK and literally can’t give them away. We have tried to give them out free after gigs by bands in our genre and the response is almost universal now: ‘Thanks but we don’t use CDs any more’. In the UK, all the record shops have closed – there are less than 300 independent stores in the whole of the UK, most of the big chains have closed and the remainder now sell 90% DVDs and CDs are relegated to a section at the back. Supermarkets sell about 50 titles of big-four-labels’ TV-talent-show-related dross. The CD is dead in the UK. We have to be way more creative in finding ways of getting our music out there.
February 18th, 2010 at 10:00 am
@ Vince, it looks like you UK guys are more advanced than us folks here in Obamaland
February 19th, 2010 at 1:01 am
Glenn,
Forget the idea that people want to “own” their music in future. They want to access it..the CD is just a container and the future doesn’t fit in the containers of the past..
February 19th, 2010 at 1:52 pm
As Dave said, CD is a container, yes, and probably will be eventually replaced by another media, such as mp3 players or cell phones, but also that depends from customer demand, I am sure people at USA and Europe are more into those new devices, and well, so we do, but not the same amount of people.
I talk also about customer habits and budget. My country is the second producer of illegal records for movies, music and software (after China) and one reason beside the affordable price is because we still are custom to use cd playing devices, technology is not always affordable for us and we are 45 million people in here who most of us does not use a credit card. So the main consume of music comes by buying an illegal CD for less than a US dollar.
I am sure there are a lot of countries like mine where buying / downloading music online is not a total reality, not in daily life, and that people is still into buying albums, sometimes… they even still even buy virgin tapes!
Music is being listened in the whole world and most of the world economy is bad, very bad and I think if that majority is still listening cd, and expecting for their favorite artist next album… there are still record companies for a little time, while piracy makes them blow, I think it will be like needed to be destroyed to be born again, it will just take some time to be defined if new direction will be online, will depend from de media, the device where is listened, the price and maybe… the artist quality and resources.
I can always be wrong.
February 19th, 2010 at 2:40 pm
My point is this: CDs will be around a lot longer than Internet people think.
Internet people live on the Internet. On the Internet, digital is the way music is heard.
But the real world is a lot bigger than the Internet “world” where I am talking to you right this moment.
In the real world, most people have CD players. They have them in their cars, where they listen a LOT. They have them in their homes. As Jose’ said, most of the world cannot afford MP3 players and computers…or $200 cell phones with a 2-year $80/month data plan.
Internet discussions are biased and skewed toward seeing all things as Internet-driven.
That is what I tried to explain in my first post. CDs still FAR outsell digital tracks. Look it up. I fell for this, too for a few years, and then when I really looked at the real world… things were not what I thought.
Younger people are hip to digital. And guess what? They have the least income to spend…particularly in this bad economy. So they won’t be buying a lot of T-shirts and “merch”, and they won’t be going to as many concerts, either. Particularly when you look at the ticket prices Live Nation will be charging.
The older generation has more money to spend. And they listen on CD players. When I start seeing my older relatives using iPhones to listen to music, and when I see them hooking their home stereo amplifiers up to the Internet to stream music, then I will know the end of CDs is *truly* at hand.
February 19th, 2010 at 2:44 pm
One other point, who made Susan Boyle the largest selling artist in the world, surpassing Lady Gaga last year?
Older people. Who *buy* CDs.
Think about it.
February 21st, 2010 at 4:28 am
First off, I completely agree with Glenn Galen on this ‘CD” topic – and I think another thing that is being left out here, is that not only are ‘CD’s’ going to still be around for awhile – but even if/when they do die – what’s to say they won’t make a comeback one day?
Just look at ‘Vinyl’.
Vinyl has made a HUGE comeback now, not just because of their nostalgia, but because of the love for the ‘artwork’ (or ‘cover’ work), and the fact that they just sound so damn good. Mp3’s are certainly an ‘option’ – but just because they are a current ‘fad’ or preference amongst the younger audiences, should not mean that we MUST accept that format, and that format ONLY. I really don’t even see the true ‘point’ or ‘argument’ here. We should always have a ‘choice’ – period (or as long as the technology is available.)
I think another point that’s been lost here (or hasn’t really been brought up within this thread yet) – is that CD’s are a ‘physical’ product in which you can sell ‘on the spot’ at your shows. I’ve certainly played my shares of shows and have YET to have anyone at those shows approach me, asking if they could buy an Mp3 song from me. (nor have I ever heard of anyone else being asked this on the spot either.) As a long-time recording engineer, nearly ALL bands or artists that I’ve recorded over the years, ALWAYS want plenty of CD’s to take around with them at all times & sell at their shows. Hell, point in case – I was just at a show the other week and saw a band play that were actually really good. After the show, I approached the band in order to buy a CD from them. The singer replied, “well, um….we don’t do CD’s – just Mp3’s, so when you get home, you can just go to ’such and such dot com’ and buy our record from there.”
(yeah, right.)
Well, as a consumer – I wanted a damn CD, not just because of the artwork and physical ‘product’ to add to my growing collection, but also because CD’s just ’sound better’ to me. And besides that, by the time I got home – I couldn’t even remember the bands name – so just forget it! This band not only lost a potential ‘fan’, but also lost $10 in the process, PLUS the satisfaction of knowing that someone would have been listening to EACH & EVERY song that they ’supposedly’ worked so hard on.
This is also another great advantage of the CD (or the Vinyl record for that matter) – the fact that listeners will purchase the ENTIRE album, (wether they like it or not:) thus generating even more profits for the artists (not to mention aside from the money end of things – they also actually ‘listen’ to each of the songs on that record – which seems to be another really ‘annoying trend’ nowadays, where these lazy people just want to buy 1 or 2 popular ‘tracks’ off a record, and never even hear the rest of the album.) In this case, not only are the artists themselves getting cheated, but so are the listeners when you think about it.
But all-in-all, I simply think trying to use ‘any’ or ‘all’ formats is a very ‘good’ thing – simple as that. I just don’t see where restricting one’s self to ONLY crappy Mp3’s is being ‘creative’ or the smarter way to go. As long as all of these technologies are available to us – simply ‘use them’! Where’s the problem?
And lastly Mr. Schiller – I STILL don’t understand (nor agree) with your stance or statements in regards to these ‘times are a changin’ so just deal with it’ attitudes that you put forth. You continually say things like “there’s nothing you can do about it”, “these forces are too large and you’ll never beat them”, or “hustle with the new program or you’ll just get lost & left behind.”
Let me at least ask you this: ‘How do you know all of this for 100% certainty? “Why are you so sure of yourself on all of this, and why do you think that there’s only this ONE, new way to do things now?
And again, I say all of this with all due respect to you. But I just keep hearing you say over & over in nearly every article now, that the record companies fought all of the battles and lost, and so will you. You also keep stating that there’s absolutely ‘nothing’ we (the artists or engineers) can do about any of this, and if we don’t conform – we simply die.
Where is all of your proof on this? How do you know where the industry, the laws, or even the technology is going to be in say, 1,2,5 – or 10 years from now? Who’s to say for certain that CD’s won’t be around for many more years to come, or again – even make a nice comeback down the road like Vinyl did? Who’s to say that some form of future technology (and/or ‘laws’ for that matter) may in fact ‘completely’ prevent ANY type of pirating or ‘free’ downloads eventually? Who’s to say that those of us that actually prefer to have 100% ‘full control’ over ALL of our music, sales, downloads, etc – won’t prevail eventually?
I’ve stated before in other posts of yours – that with ‘time’, collective voices, & perseverance – we very well COULD be able to have all of these things – but ONLY if we keep at it and never give up hope. I’m always amazed with the fact that you are so quick and willing to just ‘throw in the towel’ and completely give up in all of these areas. Why?
You also keep constantly stating that ‘the record industry has already fought & lost in all of these areas, and so will we, so don’t even bother trying…..”
Well, it may not have been the ‘perfect’ outcome, but as memory serves – they did ‘win’ in several areas actually. They brought ‘free’ illegal downloading as we know it, to the forefront and gave it a LOT of well-deserved attention. They also caused it to be somewhat more difficult at least for the piraters out there to ‘do’ all of the free-downloading compared to what it originally was. I could honestly care less about how much money or profits the record industry makes to put into their pockets. My biggest concern and main point has always been the same: “We as the artists and/or engineers, should always have the freedom and/or CHOICE to distribute, sell, market, and retain ‘full control’ over any of our products and what we do with it – NOT the other way around.”
If ‘you’ or any other artists out there wish to have your music given away for free, stolen, exploited, – whatever – that’s completely fine, and that’s YOUR choice. But that should NOT mean that we ALL have to conform to this ideology and be forced to just ‘accepting it’, and having no say so in it whatsoever. That just doesn’t make ANY sense to me at all.
It may not be today, tomorrow, or 5 years from now – (who really knows?) but I still have hope that with collective voices, determination, & persistence – ‘yes’, we just may in fact, prevail or ‘change’ a lot (if not all) of these current ‘fads’ and other forced methods in the ways that we now create, distribute, sell, and profit with our music.
But if we all do what you’re always saying to do, by simply just ‘giving-up’ or ‘going with the flow’ on all of this and never actually trying to ‘DO’ something about it – ‘no’, it won’t ever happen. That much is for sure.
February 21st, 2010 at 1:02 pm
@b Morris
I think it’s great if artists sell CDs at their shows. I’m all for making money any way you can. My greater point in all the writing is that there are bigger forces at play in the economy that are making distribution-based business models unprofitable. Record labels are essentially middlemen. But they aren’t needed as much anymore because fans and musicians can reach each other now. Labels can sue customers and they can continue to print up millions of CDs, but none of that is going to make direct communication between fans and artists disappear. And how do we know that CDs won’t still be huge in 10 years. Because they’re based on controlling distribution, which we all agree is a non-starter these days.
February 21st, 2010 at 2:18 pm
Mike,
I have followed your blog for sometime now. Normally you are dead on target with your observations. In this case you have missed the mark completely.
The question was “What do you do to put bread on your table? How would you like to bust your ass at your job for a lifetime and when it comes time to retire you find out that everyone else thinks your retirement account should be handed out to the world? How would that feel?”
You no more address an individual with concerns that your emailer expressed as you did than to tell someone who has worked all their lives for a pension only to find that the company they had worked for had squandered your pension on poorly made investments, etc. Regardless of that person’s position.
Or maybe you would. This clearly demonstrates to me a disconnect on your part.
Maybe the popular thing to do today is to bash the record executives that were responsible for producing decades worth of music, particularly if they are part of the big four, but in my experience I have learned that record producers all do not work for the big labels. This person above apparently produced “independent music.” He/she was not part of the ruling elite (one of the big four labels who would rule the record industry), but may have actually been one who helped aspiring musicians get their voices heard by others. Maybe this person’s approach was fair and equitable to the musician. Maybe this person deserves to addressed with some degree of respect.
To have opened this post by saying, “I received a delightful email from a reader last week.” was sarcastic and not very adult like on your part.
On this matter I would have to agree with B. Morris above. What empirical proof have you offered that this approach of yours to music will even be valid in the next five, ten, twenty years.
What would happen if after investing all this time and energy you have in promoting this concept you found you were no longer valid. “How would you feel?”"
February 21st, 2010 at 3:25 pm
@David
I didn’t intend for the post to come across as condescending…the sarcasm was intended to just set up the larger argument. I fully understand how difficult it is for folks out there and try never to intentionally belittle hard working people. I guess that’s part of the value of reader feedback…to help a writer modulate his or her tone. I’ve modified the post. thnx