RFBX – In-Depth Specials - Money for Anything: How the Music ‘Business’ is Trying to Avoid Dire Straits
By: Chris Helsen
simon cowell: a visual metaphor
Ten years ago, as Toby L launched Rockfeedback.com into the developing musical cyberspace, the possibilities of just what the internet might mean to music were nowhere near being realised: file-sharing trailblazer Napster was just a year old, iTunes was still a year from launch and MySpace was not even a twinkle in a developer’s eye. Just a decade on and the velocity of change has blown things apart to the extent that, even in this short period, many have long been predicting the irrevocable downfall of the music industry as we know it.
The immediate benefits of change to your everyday music fan are well-known and too numerous to mention: whether you are someone who appreciates the opportunity of being able to listen to an unsigned Brazilian noise-rock band instantly, whether you simply enjoy not having to pay for music anymore or whether you just love reading Rockfeedback.com of an afternoon. But for all the obvious benefits to the Me Generation’s music fan, who really can have everything any time they want it (and most of the time legally, with the advent of Spotify), there can be no doubt that the many pros add up to whole load of cons for a huge proportion of the industry itself.
For some, a label-less music society is a great opportunity for the bands to take control of their own output and the likes of Ash, with their A-Z Series, have grabbed the opportunity to forge their own self-financed, anti-album environment from this malleable new world. But we are already starting to see the negative effects of the online revolution trickle down to directly affect well-known artists. It’s not rocket science, for a whole host of reasons – almost all related to technology – people don’t sell as many records anymore, and that shortfall needs to be made up. The first move seems to have been to try and shift dwindling record sales into touring revenue, but despite ever escalating gig prices, this is undermined as a long-term solution by the likes of Imogen Heap who, despite a healthy global fan base, announced in June that she couldn’t afford to tour anymore. Ted Leo, too, recently talked at length on his website about the shifting nature of being an artist in 2010, something which seems to be leading him to, of all things, musical theatre. Clearly something must be done.
rough trade east
So who’s in a position to do anything in the face of an industry spinning out of control? The people who have the most motivation to prevent this apparent impending doom are those who make the most money out of it. To begin logically, the ones who take your hard earned cash are the retailers. Here diversification seems to be the key. On the high street the likes of Rough Trade East and Pure Groove independent shops are increasingly using exclusive live shows and shop-as-social-destination to get people through the door, while the supermarkets only stock products they know will shift units and use them as loss-leaders to entice customers into a bigger basket spend.
There’s an unending list of ways to get digital music onto your computer or desired listening device through online means, and that would take a whole other article to cover, so to stick with more traditional retail the likes of Amazon and Play are attempting to move with their customers’ shopping habits. Amazon in particular has the closest challenger to iTunes monopoly with its MP3 service, uses wide selection, recommendations and customer service to draw traffic to site and, like the supermarkets, can cross-promote with other products. It is perhaps HMV, though, that have gone the most interesting route in recent years in terms of cross-pollination into other areas. As well as being unchallenged in shopping centres around the country since the demise of Woolworths and its purchase of Fopp and Zavvi stores, HMV co-run 11 music venues and various festivals alongside MAMA Group, sell tickets online and have just re-launched their own MP3 store. The message seems to be, if you ain’t making money out of CD sales, find some other stuff that does make money for your brand.
This is a philosophy shared by the four major labels (Universal, EMI, Warner and Sony BMG) who take home around three-quarters of revenue generated from music sales globally. Of course these big players have tried and will continue to try their best to use their power to protect the status quo – there’s plenty of lawsuits being fought around the world to prove that – but it seems that, for the first time in a long time, even they are having to bend to the will of the music fan and adapt to the situation in which they find themselves.
Again, the route is clearly one of diversification. Sony BMG, for example, have led the way in combining the reality TV boom with music, with Simon Cowell’s Syco label responsible for the output of all the X Factor and Britain’s Got Talent’s winners and losers. This is certainly a money spinner, but it is the magic term “360 degree business model” that everyone is really chasing. The key transition for Sony BMG, EMI, Warner and Universal to get there is the move from traditional contracts to “expanded rights” deals, meaning the label doesn’t just make money from each record sold, but also ties down a share of the touring and merchandising profits.
Take the recent activities of Universal Music Group – the monster at the heart of the music industry who can boast everyone from Lady Gaga to Mumford & Sons, the Drums to the Rolling Stones on their roster of labels including Island, Mercury, Polydor and Decca – as an example. As well as tying up expanded rights contracts with the biggest artists in the game (which was a model first explored by UMG’s own Sanctuary Records), UMG recently bought the Bravado merchandising company and have made moves into the big-money entertainment industry, including a Formula One venture: F1 Rocks. They will also be the official providers of music for the London 2012 Olympics. Whatever the hell that means.
As well as this, there’s also some very basic moving of the sights to different targets going on throughout the industry. Clearly the young music fan isn’t spending much on music these days – long gone are the days when kids saved up their pocket money to buy a record on a Saturday afternoon – so record labels are targeting the “grey pound” more and more, encouraging those reluctant to let go of traditional music listening practices to part with more money for deluxe edition content and box sets. The power of the “grey pound” is nowhere better illustrated by the events of August 2009, when a 92-year old Dame Vera Lynn became the oldest living person to have a number one UK album, while the Beatles broke another record with four of their re-mastered albums in the top ten at the same time. Despite having to roll with the punches of an industry that is evolving in ways no one can predict, these major players do seem to know what they are doing.
So, dear music fan, fear not – music isn’t going anywhere. If these powers be have anything to with it, the music industry machine will continue to rumble on. There are far too many whose livelihoods depend on it. Whether it ends up that the bands really can shape their own futures, or whether the major labels can cling on to – and perhaps even extend – their influence by getting a finger in every pie that still makes money, remains to be seen. I have a feeling the likes of Universal will take some beating, though. While this might not make for the kind of utopia some would like, at least they are now having to take notice of the desires of music buyer themselves. There is something strangely comforting to know that as long as there are parties this powerful fighting for it, the music industry in some form will always exist. And with this machinery alongside indies (like Rockfeedback’s sister label Transgressive) remaining as passionate as ever and determined to give artists with real talent a real chance, surely things can’t go too wrong for a while yet...