Monday, April 21, 2008

"Rumors Of My Death..."

"Rumors of my death have been greatly exaggerated" - Mark Twain.

It's in vogue these days to write about the impending death of the music industry. Those who predict such a dire ending for a monolithic industry don't study history too carefully. Other media industries that have been in their "death throes" in the past include : the Radio Industry, the Newspaper Industry, the Film Industry, Madison Avenue, the Magazine Industry, the Local News Industry, the Network News Industry, etc., etc.

The Music Industry will streamline and survive.

The problem with music is that most of it is created, stored and marketed entirely in the digital domain. There's no buffer to prevent instant digitization, which can be file-shared before the creator has a chance to monetize his work. To understand what I mean, consider that a painter paints on a canvas, which can only be photographed, never truly digitized.

Some recording artists have experimented with creating an artificial buffer to prevent this instant digitizing of their work. Bruce Springsteen released his latest record on 180 gram vinyl first. There was no point in anyone digitizing the vinyl record knowing that a purely digital CD would be released eventually. Meanwhile, Springsteen bought himself a little time and some profit from the vinyl collectors.

Another "buffer" is the trend toward advance CD sales. The artist ensures that a certain number of his fans will buy his latest CD before the release of the digital- hence sharable- product.

This buffer concept is bound to take hold as long as attitudes of consumers trend towards illegal downloading. From a recent New York Magazine article : "...according to BPI, for every digital track that is paid for, twenty are downloaded illegally for free. Domestic sales of physical CDs, meanwhile, plummeted 18.9 percent over this past year (2007) alone."

Interestingly enough, recent investigations into, a major file-sharing network that was shut down last fall, determined that some of the music is posted for download by industry insiders-- people who work in mastering labs, CD shipping warehouses, promotion companies, even radio and CD review personel. "The industry, in other words, has to investigate itself. And what it will discover is that some of the major culprits in this crime are the very same people the crime threatens most— those who work in or profit from the music industry. File swapping is, to a remarkable degree, self-sabotage." (NY Magazine) Isn't this a bit like all those middle class voters who vote against their own financial interests because they focus on the wrong issues at election time? I'd say.

The real story isn't the war between "the suits" and "the pirates". Until it discovers the solution to monetizing creative work, at least enough to cover the expense of creation, the "industry" isn't dying, it's simply contracting.

Look at the big layoffs in December 2007 at Sony BMG and Universal Island Def Jam. The layoffs hit the middle and low-level employees the hardest. Those who didn't get the ax also didn't get Christmas bonuses. Warner Brothers stock is down 58%. How long before the layoffs start? EMI, which was purchased by Terra Firma recently, plans to eliminate nearly $200 million in annual expenses before the end of the year. Let's speculate how they'll do this...uh...layoffs? "Almost four months after Terra Firma boss Guy Hands announced plans to lay off as many as 2,000 staffers worldwide at the troubled major label, he has yet to pull the trigger on the bulk of the cuts." (New York Post, April 14, 2008). Don't worry folks, the trigger will get pulled. Who will lose their jobs? Certainly not top level CEOs, the so-called "suits" that "pirates" like to smuggly claim they are doing battle against. The layoffs will be mostly mid-level to low-level staff, probably some of whom are free downloaders and file posters themselves. And by the way, EMI employs 10,000 people. That's a 20% cut in staff in case you suck at math.

By file sharing an otherwise purchasable track or CD we are effectively insuring that people much like ourselves will be laid off, the suits will still have their jobs (nearly everyone who ran a record label in the 1990s still runs a record label today), and eventually when all this contraction is finished, a vastly streamlined and rejuvenated industry will have invented many clever new ways to monetize with buffers.


Tim Wheeler said...

I agree that the music industry is not dying.. but its power is being re-distributed. With the fall of each label comes a rising of another tide: The power of the individual artist to reach a larger audience.

Sure, its a wall of white noise, but so many are breaking through it, most of whom would never have had a chance to make it to the very few spots on the roster of the majors. Maybe its just perception, but it at least appears to be true. It almost seems hopeful!

Maybe, just maybe, the "music industry" is becoming a "field" where someone with a high level of talent, a considerable amount of skill, and a formidable amount of persistence can apply themselves and build a "good-paying" career, based on his/her dedication and work. The ability of the average player to build a loyal audience who will support their music, independent of the whim of a small group of people who hold the power to accept or reject them.

Less superstars and chosen-ones, for sure, but a rising tide for the middle-class musician.

When I was a kid, and told my dad I wanted to go into music, he just rolled his eyes and told me I needed to get a 'real' job. I think my kid's generation has the potential to get a better response from their parents...

Anonymous said...

sounds like to me like you are describing natural selection.