Bad news for the Music Industry

Looks like the music industry is heading for a complete collapse. Years of gorging itself at the trough of the CD (where they were were making crazy profit off each sale), they are now reaping their rewards:

IN 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

The music industry has declined from its heyday of the 80’s, but it was in this decade that it began its inevitable decline. The music industry discovered the profitability of “disposable music”, also known as the “one hit wonder”. They promoted one pop hit after another, and learned that they could produce music on a CD (which cost very little to manufacture) and sell it for outrageous markup until the average customer was paying up to $20 for a CD containing 1 hit and 8-10 other songs of questionable value.

I developed a rule in the late 80’s when buying music. I would not buy an album if 1) the first song released by the band was a cover of another song and 2) the band did not have 3 songs off the album that I liked. It was actually a pretty good rule. For Soundgarden’s “Superunknown”, I had heard “Spoonman”, “Black Hole Sun”, and “Last Wave”, so I picked up the album and was satisfied with the album. I went against my instincts and bought Smashmouth’s “Fush You Mang” after hearing “Walking on the Sun” and discoverd an album full of audio garbage. Did I really want to spend $20 to hear one song? No, but that’s what the music industry was forcing upon us.

Now, in the era of digital downloads, the music industry now faces a dilemma. No longer does the music industry reap large rewards off of one single. Instead, iTunes sells the song for $.99– a far cry from the profits they were reaping on the CD. The insane profits they are reaping on CDs are fading, and the music industry is no longer going to be able to operate as they had in the past.

Personally I hope we return to the era of good music. It’s a bad sign when the biggest tours around are The Eagles and the Police. Maybe instead of 30 bands that sound the same (Sugar Ray, Smashmouth, Barenaked Ladies, etc.), we can start exploring and promoting better music.

Here’s some advice for the music industry: watch YouTube. It used to be MTV that would promote music through videos, but as they don’t anymore, YouTube is a good gauge of what is popular and what isn’t. Just ask “OK Go”, who had a very clever video and a good song. YouTube and its ilk are also a good place for industrious bands to produce their own music videos and get some exposure, exposure that used to come from signing to a label.

I’m not exactly sad the music industry is facing inevitable decline. It’s time to put music back in the hands of the people, not music producers who have given us the tired pop hits from Britney, Lindsay, Paris, Hannah Montana, and a host of other lip-syncing Madonna wanna-bes.

h/t Instapundit.


3 Responses to “Bad news for the Music Industry”

  1. 1 tequilla mal
    January 12, 2008 at 7:57 pm

    Its all unravelling fast and it looks like EMI will soon become an irrelevance.

    I agree with you that downloads have changed the market dynamics for the music industry. What used to make commercial sense,(i.e CD Sales) no longer works.
    I am of the vinyl generation when an album something to be cherished. Presentation was all important, artwork was sublime. The Cover was a big part of the marketing effort – with inserts, lyric sheets and bonus goodies.
    I had to order Alladin Sane from my local record store to be sure I got my copy on the day it was released!.

    Peoples spending patterns have moved on and there is little if any perceived value left in the CD format. As you say music is now instant and disposable.
    Technology has driven recorded music towards the ubiquitous and now we are in the end game. Once something is readily available on multiple formats, its value has to diminish.

    So in such an environment its no surprise that the Music Industry has to search for a new purpose in life.

    EMI as a business is doing all it can to ensure its own survival. But by asking Artists to adapt to their survival model, the artists will be putting all their fate in the hands of the label as it navigates uncharted waters.

    Should anyone trust that a Record Label, run by a Venture Capitalist, would have the Artists commercial interests at heart??

    For once the Artists have the upper hand and they are right to vote with their feet.

    The future of the music industry has to be very different form where it has been up till now.
    For me its very simple.
    There is money in the Live events, ticket sales, Merchandise, Sponsorship, Brand extensions (fashion labels etc).
    Record Labels who only distribute music will fail as revenues diminish.

    Livenation.com (a live events company) signed Madonna in a $120m unified rights deal that makes sense for all parties.
    If EMI want a piece of the artists other revenue streams, then they will have to prove they can add value to the proposition and embrace the new dynamic.

    Right now few Labels can do what livenation.com do.

    In some respects this reminds me of 1978 and the commercial birth of Punk and I think something good will eventually come out of all this.

    I’ve been watch these guys at http://www.ebtm.com, & http://www.atticusclothing.com, – These kind of ventures could offer Artists revenues by Brand Extensions and pay the bills in the future. I expect more of innovative stuff like these sites to start springing up…
    As the Economist said, if the big labels were smart ( they aren’t or they wouldn’t have tried to suing their customers) they would have invested in such ideas when they had the money.

  2. January 14, 2008 at 2:46 am

    It’s really nice to be a musician and not be involved in the slimy fickle rat race of pop music, a world where artistry is way secondary to image and hype. Frank Zappa had it right 20 years ago: pop music sucks with few exceptions due to record company execs who have been the arbiters of bad taste. As a result, pop music been in a downward spiral for decades. In my experience, selling CDs only works at concerts, like selling souvenirs at a tourist attraction or art prints at a museum. Like the 8 track tape, CDs will be obsolete.

  3. 3 docattheautopsy
    January 14, 2008 at 12:46 pm

    Nice to see we agree on something, Willy. 🙂

    I buy CDs at concerts, and internet radio certainly exposed me to a load of music from Europe that never gets over here.

    And, of course, iTunes and other music venues.

    Zappa was a prophet, that’s for sure. Now if you excuse me, I’m going to go rock out to Hannah Montana.

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My name is Doc. Welcome to my blog. If you're visiting from another blog, add me to your blogroll (and I'll happily reciprocate). I have a Ph.D. in Chemistry and live in Wisconsin. If you have any questions, feel free to email me. My email is docattheautopsy at gmail. (No linking to deflate the incredible spam monsters).



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