Now it’s 2011. As I mentioned in my Christmas post I intend to add tons of new posts in the first 4 months of 2011. As of now I don’t have any structure or plan covering these upcoming posts so I will encourage everyone to post their suggested topics as comments. I will certainly be adding more info on recording, playing live and band politics. Beyond that I will just write what comes to mind.
This morning I had a conversation with a musician friend about the demise of the music business. It’s interesting to note that some people are still arguing that the music business still exists. This is complete lie. The days of the huge labels controlling a massive industry are over. The labels that remain are pale shadows of their former selves. How did this come to be? It’s simple. They did it to themselves.
In the late 1980’s and early 90’s the music business underwent a format change. Vinyl records became obsolete and the CD became the new format. For the major labels (names like Columbia, Warners, RCA, BMG, Arista etc) this brought in a deluge of unearned money. It’s important to understand why this money wasn’t earned.
When CD’s were first introduced they were viewed as some kind of miracle. The supposed quality was in a new class. This new technology was promoted as extremely expensive to produce and manufacturer. This, of course, was a lie. Yes, the earliest releases cost huge amounts of money to create. Yes, the new production plants were expensive to build. Yes, the digital format had higher apparent clarity and as a result the recordings needed to be carefully produced in order to exploit this clarity but the whole story was cleverly hidden from the musicians and more importantly the public. The real story was that the manufacturing process was like most manufacturing processes and as the amount of units created rose the costs per unit plummeted. Soon after the introduction of CD’s the cost to produce each CD dropped from $6-8 to $1.25 per unit, On the other hand the labels had used the introduction of the new format to raise retail prices from about $7 per vinyl record to $14 for a CD. Their production costs had risen slightly and they had doubled the price. And then, like a rain of gold from the gods, every hit record from the 60’s, 70’s and 80’s became hits again.
What most people don’t realize is that the vast majority of music is bought by people 16-24 years old. This is a key factor in understanding the mechanics of the music business. It defines the way records are marketed. It drives the cycles of music movements and it means that a tyranny haunts the record labels. If they don’t get you to be a fan of some of their artists in that 8 year period then you are lost to them forever. Yes, there are some odd characters, like me, and, perhaps like you, that listen to new bands for decades of their lives but most people are not like this, they fall in love with certain bands as a teenager and they listen to them ’til the day they die. This makes the music business obsessed with youth culture and youth trends. They create them. They track them. And they exploit them.
The format change to CD’s didn’t change this pattern of human behavior but it did add an interesting wrinkle to it. Suddenly everyone that had loved music when they were young decided to completely rebuy their favorite artists of yesterday. This translated into a deluge of cash to all the major labels.
Rather than seeing it for what it was, an aberration, a strange one time gift, they decided that this was the new normal pattern and expanded their staffs – fueled by the river of money rolling in the door. The mania reached a fevered pitch and the word that money could be made in this remarkable way spread. Sony, the Japanese electronics giant, bought Columbia and Epic records in an effort to acquire their catalog. The thought being that they could introduce yet another format change ( the mini disc) and sell billions of dollars worth of gear to those crazy americans. They falsely believed that they could once again resell the complete catalog to the whole american public. All the while that this was going on the web was growing in scope in the background. It didn’t occur to any of them, as they counted their millions that the massive price increase that they had duped everyone into paying wasn’t in direct opposition to the MARKET. That’s the MARKET as an entity. The type of entity that levels playing fields with brutal indifference.
It is interesting to note that my experience working inside record labels as a manager had taught me that on the whole the executives of the large labels were lousy businessman. The upper echelons of the major labels are stocked with people who couldn’t run a Carvel ice cream store with any authority. On more than one occasion I sat through a lecture by an executive about how the music business was different. The normal rules and market forces didn’t apply.
All of this carping and self-delusion was a smokescreen to cover a little considered fact. It’s a dirty little secret. The Music Biz is an illegal cartel. To state that more clearly in case my terminology is kinda vague, the biz is a group of huge corporations that meet secretly to fix prices and control all supply to the stores. The same companies own the production and large portions of the distribution networks. They own it all and they never compete in the one area that counts, price. That’s why a visit to any large music retail chain will find the average music buyer looking at a sea of releases, all at the same price. Imagine that, what an interesting coincidence. How do they get away with it? Do you really have to ask? The answer is bribes. Big ones paid to politicians and regulators.
So now this particular blog has moved up to recent history. Starting in the very late 90’s the music business started to hemorrhage money. It couldn’t have happened to a more deserving bunch. Let me take a moment to point out, so as to be crystal clear, that I am not talking about musicians. Musicians have little to do with the music business. The music business if made up of people who know little about music and in my experience have little interest in music and more to the point none of the are musicians.
As file trading came on stream the fact that music CDs had never fallen to a market driven price sent the feeding frenzy of kids downloading into overdrive. Any what did the major labels do? Did they let the price of CDs fall since they were a dated technology? No they sued their potential customer base and got together to decide that they should RAISE the price of CDs. What utter idiots.
Now they are attempting, yet again, to use a potential price controlled monopoly system to get everyone to pay ridiculous prices for music – Apple’s I tunes. Yes it’s an amazingly convenient brilliant new technology that demands you pay the same damn price that doesn’t work in the stores. It makes this demand even though there are no costs of delivery, no physical format to manufacture and minimal artwork to produce. I expect that some of you will argue with me on this point. Go ahead I will argue back. Please keep in mind that the rise of filetrading devalued my life’s work by a factor of ten. Nonetheless I believe it can’t be fought and needs to be utilized cooperatively.
What does this mean to you, the dudette playing in a band? It means that the labels are of no value to you. They are whales beached in the sun. Their continued attempt to dominate the market will only serve to drive music from the center of youth culture. It will only serve to make every band have to make it by playing live and promoting themselves. It means that the labels will now move aggressively into merchandise (t shirts and stuff) and live fees as part of their contracts. It means that you should avoid labels like you avoid herpes. Oh wait a minute that’s a bad analogy for musicians…fill in your own…..Is there a way out for the majors? Yes, but I am not about to tell them how to do it. Right now there is a kid in his bedroom that has the same thought and he will end up buying their catalogs. Good for him……………..
Copyright Brad Morrison/Billiken Media 2011