Aqualung

I found this article about how the Recording Industry managed to kill istelf long before people started downloading music, making it even more likely that people would download music once the technology was available to do so. I think it does a really good job of analysing the mistakes that ended up making illegal downloadis such a popular alternative.

1. CD sales are not the same as record sales.

At first, this may seem like semantics, but my distinction is between the actual compact disc - the physical item - and the concept of a record - the music an artist records to put on a CD. When the CD was invented, profit margins for what were once moderate sized labels shot through the roof. If you had a back catalog of good music, you were about to become a millionaire if you weren't already because everyone was replacing their vinyl with CD's.

Record profits resulted and multi-national corporations took notice. In much the same way "dot com" start ups managed to convince venture capitalists to back questionable opportunities, independent labels began to entertain offers to sell themselves to the highest bidder. Corporations saw this as a long-term money making venture that would be great for their portfolio and their shareholders.

What they failed to realize is that the CD gravy train would soon come to an end as people finally replenished their collections and went back to their normal buying routines. The years of off the chart sales came to an abrupt end and corporations were stuck with bloated record divisions and they had no clue what to do - the end result when you replace creative minds seeking talent with bean counters seeking profit.

2. Longevity trumps the flavor of the week.

Because labels were feeling the pinch and because they were now subject to corporate budget constraints, annual reports and shareholders, they began to look for ways to cut costs. One of the first places they looked was artist development and promotion. I remember reading about how A&R departments were slashed to the bone and promotions departments saw their budgets cut dramatically.

Labels, in a desperate need to justify their existences, cut off their noses to spite their faces. Instead of trimming corporate expense accounts and the bloated salaries of their higher ups, they decided to rely on things like cross promotion, radio, television and other forms of media to do the legwork their promoters had done previously.

Worse yet, they focused on one-hit wonders and bubblegum pop to push profits ignoring their own rich history and tradition.

It's expensive to develop an artist. It is common knowledge that for every 12 artists signed to a label, 10 lose money, 1 breaks even and 1 makes enough to pay for the development of all the others put together. It's a really risky business. But, the small independent labels didn't care because they wanted to discover the next Bob Dylan or Bruce Springsteen. They knew that one major success could make up for a string of costly failures.

Unfortunately, that equation doesn't work in the corporate environment. You have to justify your budget every year, every quarter. If the only way to do that was to release lowest common denominator music that would sell fast but fade just as quickly, you did it.

They even managed to forget how they got to this point in the first place somehow missing that what are now termed "heritage" artists like Springsteen, Tom Petty and others were what sustained them over the long haul, not The Backstreet Boys and Britney Spears. Those were bands and musicians developed over years and they didn't come cheap, but they made up for it in the long run.

[More...]

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MusicMan

Very good point about how they accepted investor money during the technology upgrade rush and set themselves up for failure by promising similar returns for years to come. I'm sure there were a few Angels and capital firms who had the insight to see that coming, but many probably didn't. And when sales died off, the next round of investors most likely wanted record executives to tighten the screws and primarily sign and promote bands that were cookie cutter manufactured artists, to have a more firm guarantee of profits. So to save their own asses and avoid bankruptcy, they sold the soul of music to make investors happy.

That is, in my opinion the tipping point where they traded the loyalty of investors for the loyalty of their consumers, and it's coming around full circle again because without consumers, who the hell is going to invest in your company.

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Uncut Rubber

Very good article - nice find Aqua!

The trend towards centralisation and depersonalisation described here isn't as far in Europe as it is in the States, but still, it's frightening. Man, the idea of all the labels that own 90% of the music industry together being countable on one hand's fingers is just plain sickening.
I'm glad to have a good independent record shop in the neighbourhood, and I hope it will last... I buy all my CDs there.

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Kameraad Pannekoek

This is why I like local music over at school. When shows are free everywhere, the only bands playing are the ones who don't give a damn about the money. All in all, it's a good article.

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Glorfindel

Good investigative work Aqua, when I think back to when I was getting into music we depended on the independent DJ's at Vancouver's large FM stations playing all different kinds of music. In the small town where I was living at the time, we had one record store, and the latest trends in the music world always arrived a little later for us. One of the prime sources of new bands to check out was when our older brothers and sisters came home from University with a new batch of albums. It was kind of like Christmas in a way, playing the new records and discovering bands we never heard of before. With the destruction of the whole infrastructure as described in the article you posted we are losing so many potential new artists that it's sickening, all in pursuit of the mighty dollar. What in God's name does Wal-Mart or Target know about music, they don't even sell good stereo equipment or instruments, simply a slash and burn discount mega store who have a pitiful selection to choose from, thank God for my store in California, I've purchased over 40 CD's in the last six months from them and most of them were Less than the download from i-tunes would have cost, including the shipping!! Plus they are not compressed unlike the AAC or MP3 versions you pay for online, I don't own and i-pod so I prefer the full WAV version to play on my surround system, the difference is very noticeable. I posted in another forum on this subject months ago, and a musician commented in the thread telling me that from every CD sold, his band gets only $1.70 out of every $10.00, with the record label getting the rest. That is just outrageous!! 2 years ago CD sales were holding steady at around 80% of the market, with downloads at about 20% of the market. The article I read argued that the discounted pricing on CD's had allowed the industry to maintain a good share of the market, but the profit margins for the labels was very small, so sales were good but not profitable enough to satisfy the bean counters. I never imagined anything like what is happening in the industry right now, truly a very tragic situation for music lovers all over the world.

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meanceprimeaux

I read somewhere,(about 3 years ago or so) that most record companies nowadays use bpm formulas to sign bands and decide on singles and so forth. It was all pretty mechanical and seemed really beancounter-ish to me.

But I mean really, record companies have, for many years, sucked at growing talent. They have had "formulas" to a lesser extent for years and years. They are truly puzzled when a band with "the right look" and "the trendy sound" doesn't do well. They are like "we did all the right stuff, promoted them correctly, but still no one will come see them" NEVER realizing the band actually SUCKS. They were so overwhelmed with the overnight success of Nirvana, that all the record companies IMMEDIATELY sent reps to Seattle to sign ANY BAND that REMOTELY sounded or looked like Nirvana. Hence the burst of Seattle grunge bands in the early nineties. They didn't understand WHY people liked it, so therefore they could only go by general looks and sounds.

Aqualung

That might be the most important thing right there.

Now, though, they've just started manufacturing tastes, too, by promoting bands with the pure rhetoric that can really convince the masses.

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Aqualung

I found another article about this subject.

This month's announcement of a back-room deal between ISPs (internet service providers) and the big record companies to spy on suspected copyright infringers and reduce the quality of their internet connections is just the latest paragraph in the record industry's long, self-pitying suicide note, and it's left me wishing they'd just pull the trigger already and stop beating their chests and telling us all how unfair it all is.

Under the new scheme, the rule of law is replaced by a cosy inter-industry deal. Whereas before, anyone who wanted your ISP to spy on your internet connection would have had to show evidence to a judge and get a court order, now any joker who claims to be an aggrieved copyright holder can do so.

And whereas actual criminals are punished by judges who make rulings that are proportional to the offence, and which are calculated to minimise external harm, the new scheme allows ISPs and their pals in the record industry to randomly shake up your connection like a snow-globe, dropping some or all of your services – whether you're using your VoIP phone to speak to your dying granny in Australia or downloading the latest hit single from the guy who did the "Crazy Frog Song".

[...]

I'm a science fiction writer by trade, but even I am impressed by the incredible inventiveness on display in the figures used by the record industry to justify this measure: they add up all the kids who've downloaded a song this week, multiply by the highest retail price, add 30% to account for the wear and tear on their faces from tugging at their beards in dismay, and announce a billion quid "piracy loss" that government and ISPs have to step up and do something about right now, please and thanks, and forget about all that tedious law business.

The law is for "minor crimes" like rape and murder – when it comes to serious crimes like downloading songs, we need a "streamlined process" that makes the War on Terror look like a slow-moving, cautious thing.

[...]

So no, I don't think this is going to have any appreciable effect on filesharing. However, it will succeed in driving music-swapping even further underground, to encrypted protocols and offline hard-drive parties and private swapping networks. These are every bit as efficient at getting music into the hands of kids, but they're a lot harder to monitor and charge money for.

[...more...]

The end of the article talks a little bit about how the author thinks the record companies should be handling the situation instead.

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Glorfindel

That's another good article about this complex ever changing landscape about music/media and the file-sharing networks people all over the world use to exchange files. I agree that the industry are a bunch of dinosaurs trying to avoid the inevitable extinction of the way they do business. I will admit to taking part in a small way in this exchange of music etc., but when I find a band/artist/album I really like then I buy the whole CD. I've lost track of how many new groups I've found online and then picked their best CD's and bought them. The industry bigwigs are just grasping at anything to try and control the media we enjoy, rather than understanding the new world they are simply using their money and power to delay the inevitable. The biggest change I would like to see in the new music distribution frontier is the artist's getting at least 50% or more of the revenue from their music, considering the numerous ways to advertise and distribute their songs available now through technology the old method is no longer necessary, that's why Radiohead has severed all connections with their old label. Musicians have been playing music for a living for thousands of years, before anything like the RIAA existed and will continue after the current system spirals down the drain into history.

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sgtwatts

Thats the deal breaker with technology. As long as manufactures are always promoting MP3 players and Cell phones that can download music, no person in there right mind is even going to think about purchasing music in legitimate fashion. Think about it if they seriously wanted to stop it someone going to have to take a big cut somewhere. I know that the big companies like Apple, Microsoft, Sony, and ect. all pay some royalties to record labels just to cover music that is downloaded illegally.

Simple point and fact is bands are going to have to extend themselves more and more and quit being lazy and relying on CD's to push money into there pockets. If anything with all the contracts, promotionals, airtime they are getting major popularity. We live in a media hungry world where there is more than one way to make good money. Frankly I'd be worried if I was an artist and wasn't anyone downloaded my music illegally. Why? Because if I was I would know that all my concerts (tickets usually outweighed cost of CD's) I'd make up for it quick not to mention all the other avenues of TV's shows, commercails, and cameo's.

It does hurt Indie bands most definitely but, with there massive popularity it just goes to show you who "wants to be an idol" and who actually has talent.

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Aqualung

This is what a lot of people say. I am rather paranoid about being caught pirating music, so I don't know how many times I've heard of a band I think I would like, but haven't been able to find some of their songs for free, so I've just shoved them out of my mind to be forgotten. I think pirating music does some harm, but it also does some good. Sure, there are some people who have taken to only downloading - but there are others who don't have enough money to buy the music anyway (but now at least they get to listen to it), or people who want to sample music before they buy (so now they get to do that and actually do buy them).

+1

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Glorfindel

For the record Aqua, I only download content that isn't copy-write protected, in fact the program I use is legal and recommended by the US dept. of Commerce. They have multiple filters to remove any questionable files and will remove any material if asked by the original publisher's etc. Of course the burden is on the company/individual to make the request if they don't want their content distributed illegally, nearly ever site I visit has the same policy, but I subscribed to this program because it is legally recognized by the US authorities for providing a quality legitimate service to it's customers.

Because I live in Canada, our rules are different than your's, P2P file-sharing is legal here, for a little while longer at least. Your president sent his representatives to Ottawa some months ago to coerce our government to adopt the same rules that govern your online activities, can't say I'm too happy about a foreign government telling me what I can and can't do on the internet. This is just the beginning of a drastic change that is coming in the next few months, when everything thing we do will be monitored by a new regulatory body that works under it's own rules, no longer having to go through our court system to get warrants etc. to confiscate private property if they think it contains any questionable files. Better leave your i-pod at home if you leave the country, even if you legally bought the songs from i-tunes they will confiscate it regardless and then maybe later return it to you if they can find proof you did buy the MP3's on your device.

Most of the material I download is very old, mostly replacing my old worn out vinyl albums that have seen better days, and the bands involved have made their millions already so I'm sure they don't really mind having their music still relevant decades after they produced it. When I find a new band that I really like, then I do check them out first, and so do most of the members in KMA I'll wager. Why not take advantage of the opportunity to listen to a new group, find their best album and then buy the CD. That is exactly what I do, so I end up buying a CD from a band I never knew existed before looking at a Youtube video or listening to an MP3 download of their music.

I don't own an i-pod, I don't really listen to my music on my PC either, I do a preliminary listen and some editing on the computer, but when I listen to music I use my main surround system. I have done some extensive testing on MP3's, AAC and other formats and I find them lacking the full detail of a properly mastered CD or vinyl recording, I personally think it is a shame that we are giving up the signal quality just so most people can fill their portable devices with 128 KBs files or AAC's equivalent. I will not download any song at 128 KBs period, I specifically look for 320 KBs, in fact in one of my other forums I have a thread dedicated to this subject. I personally think i-tunes is a rip-off, you can buy a CD including shipping for about the same price as doing it through i-tunes and you have the full glorious WAV version and the liner notes too, you just have to wait a little longer for it to be shipped. I realize that some people like buying individual songs, so I guess that explains why i-tunes is popular, I have never purchased a single song, I have bought complete albums online, they were decent, but not nearly as good as the CD version which was out of stock when I wanted to order it.

I have supported the music industry for over 30 years now, and made multiple format changes as the technology improved. When cassettes decks were released in the late 70's the RIAA was crying about people taping their friends music and not buying the original albums, but they survived and made their billions of dollars in profits. Most recievers/tuners had an MPX filter circuit added, this circuit removed the background carrier wave and allowed you to record a pretty good copy on tape of an FM signal. And somehow the record industry survived this as well, people still bought their records, and made custom tapes for road trips parties etc. using the technology to enchace the music they listen to and give it portability at the same time. I don't know about the US policy on blank CD's, DVD's, VHS, and cassettes, but in Canada we pay a duty on every one, and this money goes to the RIAA to distribute to their stable of artists, although I'll bet that they keep a lot of the money for themselves. This in no way is a windfall for the artists, but it did recognize that people do record on all kinds of media and rather than trying to stop it, they came up with a plan to work with the whole industry and create a system to put some revenue back into the industry.

Hmmm, I seem to have filled this page completely, lol, it's a subject that will continue into the future long after I'm gone from this world. Finally when the big corporations can get China to stop pirating/copying/distributing billions of illegal copies of all media, then maybe I would accept some limitations on how we use the internet and technology to enhance our lives.

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Aqualung

Stupid US Government and our inability to let other sovereign nations retain their sovereignty.

Stupid government in general and its propensity to grow and encroach upon the liberties of its citizens in the most unhelpful manner.


Yes, I generally hate the government.

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Uncut Rubber

Can't blame you for that... most governments suck. I mean, it was really a long time ago that I've heard of a ruling government (in any nation) that I could really agree with. But then I'm a bit in the political margin, being a supporter of the Greens and all.

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I hope that you will understand I do not mean to cause offence, and that no wolfbirds will be sent upon me as a result of this post.
Yours sincerely, Uncut Rubber

Kugerfang

While I know that (illegally) downloading songs is bad, I'd gladly pay up IF I COULD FIND AN ALBUM OF WHAT I AM LOOKING FOR (Apparently, everyone here hates Punk Rock) AND IF IT WASN'T SO EXPENSIVE.

Aqualung

Yeah, that happens a lot to me too. The CD stores in my town suck, and even amazon fails sometimes. Sometimes the only place you can find this stuff is illegally.

That's why I hate YouTube police, too. I really like some shows, but becaues they were so unsuccessful generally, they haven't been released to DVD. But they're also never on YouTube because people report them. So I can't watch the shows at all. It's really frustrating, because if they had the DVDs, I'd buy them, but they don't. they're not even in a position to make money off their material, and yet they're still enforcing their copyright.

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