Posted on 06/29/2007 10:29:49 AM PDT by ShadowAce
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:
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."
Well, what about big-production music, and music that really can't be performed live?
The record companies, like magazines, provide editing.
And they generally do as good a job of editing music as the editorial staff of the Newsweek does editing news.
Or "National Review", "This Rock" and "First Things." I could never find this writing on my own. But then again, without copyright protection, writers would stop writing altogether.
I have no problem deciding for myself what news is trustworthy and important and what music is good.
I don't have the time. Most people don't.
Bingo! Seems like every new rock singer is a graduate of the Scott Stapp vocal school.
There are no longer any punks.
There are kids who dress up the way English kids used to dress in the late 70s - like some bizarre ghost-dance religion.
And these imitation punks don't beat anyone up - they just talk about it. They wouldn't want to mess up their retro outfits.
Emo's chord vocabulary, song structures and vocal style comes directly from the postpunk groups like Magazine, The Cure, This Mortal Coil, the Cocteau Twins, Siouxsie And The Banshees, Joy Division, Wire, the Buzzcocks and all the other groups who came out of punk's first wave and then learned to play their instruments.
The influence and pedigree are obvious. The Buzzcocks, in particular, should sue.
Also try your local Goodwill stores, at a buck per pressing. You will find some jems.
Yellowcard is a popular choice, as are Death Cab For Cutie and Taking Back Sunday. Mineral are considered by some to be the fathers of American emo.
The one band in the genre that I currently enjoy is Heavens.
I lost interest in punk after the Clash broke up. The Ramones were a lot of fun too.
Punk was dead by 1979. The last great punk album was London Calling - if it was even punk anymore at that point.
The last good Ramones was Road To Ruin, IMHO.
The current band that best captures the feel of those outfits, to my mind, is The White Stripes.
No need for a record label anymore. Lease a little studio time, and upload your music. If the fans like it, you should have no problem getting a little up front money to lease a tour bus and stage. If your tour is successful, you are in the big leagues, with millions to be made on your next tour.
The music is substantially crap.
How’re those country music sales going?
You need to get out more. Spend some time in a pit and then talk about not messing up their outfits. Tell Henry Rollins there is no more punk. He will kick your ass so hard you're wearing it for a necklace. Punk permeates most 'hard rock' these days. Overtly punk bands: 'Reagan Youth', 'Angry Samoans', 'DRI', 'Fear' plus many more.
Most of the 'postpunk' bands you list have nothing to do with punk, more like 'New Wave' suckyness. Like I said up thread, lame mumblers that can't play their instruments.
I repeat Emo is an outgrowth of 'Adult Contemporary' not punk.
We have a nominee for Dishonest Statement of the Year!
This is where I see a real benefit to the emerging model. Each individual song must have value, and they don't need to be marketed in packages of 10 or 15 at a time.
An artist could work on one song and get it really right, then release it. A month or two later, the next really good song comes out, release it.
I also think the pricing of content should be changed, so that an obscure, 30-year-old song doesn't cost as much as a current top-10 hit.
Go to satellite radio! It's all out there, including a lot of stuff you wished you'd gotten into decades ago. I have a XM SkyFi3 and can record 10 hours of new content every night. I'll never listen to regular radio or buy another CD every again.
Whose pit?
Rise Against's?
Shook Ones'?
Tell Henry Rollins there is no more punk. He will kick your ass so hard you're wearing it for a necklace.
LOL!
If Henry Rollins ever dreams about "rocking my ass" he'd better wake up and text me an apology.
Unless he has a really pressing spoken word engagement at the local coffee house, that is.
Punk permeates most 'hard rock' these days. Overtly punk bands: 'Reagan Youth', 'Angry Samoans', 'DRI', 'Fear' plus many more.
"These days"?
The bands you list are 30 years old, playing the same retreaded riffs they were playing in 1980. Their members are pushing 50, if they haven't already passed it.
They are museum pieces, like those septuagenarian doo-wop groups that tour the festival circuit.
Most of the 'postpunk' bands you list have nothing to do with punk, more like 'New Wave' suckyness. Like I said up thread, lame mumblers that can't play their instruments.
The groups I listed specifically came out of the UK punk scene of the 1970s. They preceded the New Wave.
I repeat Emo is an outgrowth of 'Adult Contemporary' not punk.
No, emo is an outgrowth of those same postpunk bands I listed, as well as the "Revolution Summer" bands out of DC like Rites Of Spring, Soulside and Embrace.
I hear you. I’m curious. On the other hand, I understand Corgan said that Iha’s drug use was responsible for the Pumpkin’s breakup. If that’s the case, I’m not sure I’d want to be back with them either.
They’ve played with Melissa auf der Maur before; I think she’s a good sub for D’Arcy. We’ll just have to see how this whole thing plays out. All I know is, a day w/o Pumpkins is like a day without sunshine, guilt-ridden, angst-laden sunshine, but sunshine nonetheless. : )
John Williams?
Glad you like it.
It’s possible that, though sales are down overall, MORE money is getting into the hands of the artist with those downloads.
“You simply don’t have record labels anymore .”
Actually today the publishers are in the position that the labels used to be. The labels are dead and don’t know it.
George Strait was (is) the last great country act -- and he was sort of a bridge between the old Jennings/Nelson/Haggard era and the modern "country rock" crap that clutters the airwaves these days.
Nickel Creek
Allison Krause and Union Station
and greatest hits from Alligator Records.... oh yeah!!!!
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