Buried in bailout news of every kind here in DC proper, there is one industry you won’t see the country rallying round: Banks making horrific investments? Nope, billions already burned. Auto industry failing to keep pace with global innovation? Don’t be silly – of course we’ll bail them out even if we won’t buy their cars. Music industry crippled by illegal distribution of its product for years after it tries to adapt by requiring people to actually pay for things they take? Not in a million (or billion) years.
I have been reading a history of The Replacements and am constantly reminded how the tale of working your way from a basement practice to house parties to local label that makes good until a corporate giant suddenly owns your work and it all disintegrates is like flipping through ancient tablets now. I might as well be reading a manual on how to meld chainmail together to combat dragons in as much as it is relevant to today’s marketplace. Things are changing so fast in the music industry that every time I put this article to bed another shake-up occurs! (Like the current Rolling Stone and it's "death of the CD" mention. Choice nuggets included the shuttering of Circuit City/3 of the 6 Virgin Megastores and Borders threatening to reduce it's music section by 70%. Handy charts show us that the U.S. has closed nearly 3,000 record stores since 2003 and that iTunes accounts for 20.8% of overall music sales with Amazon climbing to 8.3%. Worth a quick browse in the checkout line.)
Deals to tap into social networking and e-file trading abound – facebook placements, myspace creating another realm entirely, e-music having it’s own e-label and exclusives that are actually getting reviewed on Pitchfork. Where to begin? On a local level, folks like Gypsy Eyes have released their artists and more or less admitted defeat in actually selling product. On a national level, the fine people at Touch and Go, who not only put out a lot of wonderful and iconic music – but also distribute many of the largest indie labels, raised their hands and came clean that they just don’t know what to do and need to shut things down to figure it out.
The only constant seems to be that no one truly knows what the future holds for the music biz. Not that it stopped me from asking! I poked and prodded the best and brightest at all ends of the spectrum – from giant semi indie to tiny local label – in hopes of making some sense of it all. Here goes.
“If W. was smart, he would have claimed the appointment of a copyright czar as his lasting legacy,” half kids Absolutely Kosher owner and Misra Records GM Cory Brown when asked what 2009 holds. “The czar won't do a thing until a studio or label head commits suicide, distraught at the betrayal of the general public and the mounting debt. Then, public pressure over intellectual property defense will reach a fever pitch. Of course, this could lead us into direct conflict with the Russians and the Chinese over illegitimate MP3 sites. This era will be known as the 96kbps Cold War. Illegal file transfer will be branded as neo-communist and the RIAA will start building tiny robots that will shoot laser beams at offenders, disintegrating them and leaving only their shoes behind. More and more hard drives will begin cracking due to the bizarre changes in global temperature and this will have more of a profound effect in changing people's behavior than the robots, sending people back to the record stores for CD's & LP's and new ultra-cheap USB drives (don't even get me started on the USB collectors). Record stores will offer coffee and free wi-fi, people will hang out and a crazy thing will happen - people will start talking about music! In public! I mean, I think that's what will happen,” he smiles.
Brown has always had a way with a witty ramble but he manages to touch on all of the major issues on a global scale in pretty succinct fashion. Now more than ever the protection of copyright is paramount and if you think that just means within our borders than you haven’t traveled much. Ryan Catbird of Catbird Records and blogging fame took the needs of the local Mom + Pop Record Store even further:
“I understand there are some caveats and exceptions, but I stand by my assertion that an on-demand system for in-store fabrication of CDs, DVDs, books, magazines, and newspapers is the way to move forward. And by that, I simply mean that if these industries could cut out the huge costs associated with the mass manufacturing, printing, and distribution of their product, their balance sheets could start looking a lot better a lot faster,” he surmises. “And recognize that I’m not talking about downloading stuff and then printing it at home on your HP Deskjet– I mean that retailers should be equipped with the technology to fabricate these items, in high-quality form, on the spot, when a customer wants to buy it. Granted, maybe the technology’s not *quite* there just yet, but I think my point still stands. You don’t see the short-order cook go into the diner in the morning, fry 1,000 eggs, and then wait for 1,000 customers to order them. That would be rather inefficient, don’t you think?”
Mike Fink, of local purveyors of beauty and wonder at The Kora Records echoes a belief in a physical product. “I wish I knew the answer to what 2009 holds but coming from (somewhat of a) niche label, I haven't given up on the CD as a format, with vinyl continuing its resurgence. The digital era hasn't won the day quite yet!” he exclaims.
In fact, it’s the quandary of what the physical product should be that still perplexes the industry in much the way it always has due to technological advances. Mike Treff of Soundscreen Design (a product design company from the folks at Insound) looks to find the heart of the debate. “Pay what you want schemes (such as the Radiohead “In Rainbows” digital release) are innovative in many ways, but still look to monetize something that some music fans simply don’t value…the pre-recorded content in digital, or non-physical, form. This demonstrates the lack of innovation that the industry must conquer before being able to solve its distribution issues. Distributors can only sell what they are given,” he adds pointedly.
“The ubiquity of music - on a fan’s device of choice, available on demand, and with a near limitless library from which to choose – should be the most liberating development to hit the music industry since the invent of records (echoing Brown’s semi ironic USB call to action.) Sadly, it has been met with fear and denial, kicking off a frantic race to monetize the wrong thing…the pre-recorded content…in any way possible. The question of what value fan’s place in the “product” is rarely asked or considered. Focusing on creating products that allow fans to live with their music, in very meaningful and tangible ways, is the path to relevancy the industry so craves, and has avoided for far too long. Creating products that fan’s value means understanding what it is that permits people to connect to music beyond the audio component. It means creating products that cannot be replicated on demand, are differentiated in the marketplace, and have a very special place in the fan’s life. The focus of 2009 should be on product development, and thus, the transformation of what it is distribution companies sell as opposed to how they find ways to re-sell / re-deliver the same thing they have been selling for 60+ years, pre-recorded audio content. Further, when distribution companies have different products to sell, they environments they are able to sell their products transforms accordingly.”
Chris Jacobs, the General Manager at Sub Pop, has been wrestling with this issue on so many levels as the label sports top selling artists as well as cult releases. “So, here’s the thing about where I see music distribution headed: I don’t really know,” he flatly admits. “I mean, with so many chains shuttering and/or decreasing the amount of space they’re willing to dedicate to music sales, one-stops and distribution companies closing warehouses (like AEC recently among others), etc., things sure don’t look good for physical record retail. That’s a pretty shallow and facile observation, though, and it boils down to sort of a combination of 1) stores are having a tough time selling something people get fairly easily for free and B) things are tough all over.”
Not that he doesn’t see a bright side as “places like Amazon and Insound are seeing big year-over-year increases and vinyl sales (primarily at the independent stores because the chains don’t really carry it) are way up, and digital sales continue to grow as well - so… the Amazon and Insound stats seem (to me anyway) testimony that there’s still demand for the long tail/deep catalog stuff (the sort of thing that used to be the specialty of Tower Records), plus the easiest/most convenient way for people to get new releases. And, that’s really part one of the message: demand for music is convenience sensitive. We need to try hard to make it really easy for people to buy our records – easier than it is to steal them, say. That’s a big factor in the Flight of the Conchords/iTunes thing we’re doing right now – trying to make it as easy as possible to buy tracks from the show/eventual album.” (The label makes the featured song from each episode available immediately.)
Getting to Treff’s point, Jacobs counters that “the increasing vinyl sales thing is the other part: make records in formats which have physical attributes that are cool and interesting and valuable and which you just can’t get digitally. We’ve always tried to do that with CD packaging anyway, but the perceived (and, arguably, actual…) value is so much higher with vinyl, due in no small part to the simple fact of its size. I’m pretty convinced that most people just shelve the vinyl they’re buying, w/o listening to it, and actually use the mp3s they get with the download coupon. But, that’s cool too! I’m rambling though, and much of this has more to do with our general strategies than distribution. Basically, I see distribution going in two ways: more specialized, fancier, pricier LPs (or t-shirts, or stickers or lamps, or whatever w/download coupons), and then more immediate, convenient and omnipresent digital. And we are, of course, eager to accept money for either from pretty much whomever,” he smiles.
I think we are all open to that scenario.
God loves a cheerful giver.
Great article. Also, tech (itunes, amazon) may reduce barriers to music buyers they are not infallible. Take the case of DJ Mehdi having having the wrong song listed as his on iTunes for 2 years. http://blogs.myspace.com/index.cfm?fuseaction=blog.view&friendId=45212850&blogId=377351364
No one wants to bail out the major labels because they've been pushing a bad product for so long. The CD (or record or tape) format doesn't work for comsumers because it packages one or two good songs with nine or ten bad ones. The majors are pretty good at producing hit singles, but they're horrible at creating great albums. That's why iTunes has been so successful. It allows me to download one Britney Spears song without purchasing all of the other junk on the album.
Music is a good that must be experienced by the consumer, and an experience that is 80% bad doesn't prompt a lot of repeat purchases. It shouldn't be surprising that concerts and other live performances are still hugely popular and profitable (hence Madonna inked a nine-figure contract from LiveNation). After all, just as the entry argues, the concerts offer the promise of a unique experience that is at least somewhat unpredictable.
John, you should also talk to Bill Daley at Crooked Beat. He was just telling me about the deals large retailers like Best Buy have worked out that make it possible for them to sell new albums for $7.99-- through a trade for marketing loop hole. While the actual cost for the same albums is well over that, forcing small stores to either take a loss if they choose to carry the album or piss customers of by their higher price.
He's also told me about similar corporate giants buying over 20k worth of albums from a small distributor and then a year later, returning most of it to the distributor, forcing them into bankruptcy.
Don't quote me on the facts--as I was working and checking in used vinyl while he told me this-- but I'd suggest he's someone worth talking to about this whole topic.
John, awesome.
Seriously: fuck all record labels, large or small. I hate them all, of course they don't know what they're doing. we should buy stock instead, I'm not joking.
What I mean is: labels had it easy when distribution was hard (that is, no one knows, or wants to know, how to print a cd, stamp a record, get it shipped, hire print designers, etc.). The only value they add is a) editorial selection, which is 99% outsourced to blogs now, and b) distribution, for which they are now painfully unecessary. Shut it down guys, and stop taking money from artists in exchange for doing almost nothing.
Man I miss Tower so bad. I think I spent $1000 at their going out of business sale.
Best physical format ever: The MiniDisc
Digitally recorable, tiny, futuristic looking, and durable as hell. I cannot believe it did not destroy the CD instantly.
I want Amazon MP3 and eMusic to add digital liner notes that are built right into iTunes.
It's a shame that Jason Bond feels the way he does and I know he isn't alone. I think labels haven't done enough work to let the public know what it is they do. The truth is, most musicians do not want to be in the record business. They want to tour and record and in some cases talk to the press. Typically, they don't want to arrange for pressing, they don't want to do their own PR, coordinate distribution in multiple territories, call radio stations and record stores or even spend time keeping the books for every dollar generated from record sales. They may not have the wherewithal to even set-up their own website. Labels provide a support structure for bands so musicians can make music. They create relationships and refine work flow processes, some of which take years to form and cement, so that bands don't have to. They often provide financial support when no one, not even the blogs, know who they are. DIY is a very powerful ethic and an important one, but there is nothing wrong with getting help from experienced people and when those people invest time, money and effort into success, they should share in its profits. Lord knows, when the projects don't succeed, the label is both blamed and in debt. I agree that the major label system takes advantage of artists and I wish there was more money circulating among the independents right now because people were buying music, but just because there's no money coming in doesn't mean that there isn't work to be done. We get 1-7 physical demos a day as well as countless email inquiries from bands wanting to work with us and the economy and the internet haven't changed that. We're a small, struggling company of 4 full time employees located in a scrubby office under an overpass and next to the train tracks. Everyone here works their asses off for far less than they're worth. We offer free internships too if Jason or anyone else would like to learn what a label actually does instead of trolling website comment sections and hating.
For once, i kinda agree with Michael. John, i certainly don't think it's fair to rip auto companies for making a product that people dont want, while letting record companies off the hook for years of a distribution monopoly. I remember seeing a statistic that something like 80% of artists on majors never got released, their music just sat on shelves. Then the internet breaks down this distribution barrier and people flock to it because they have a chance to listen to the music they want not the music record companies firmly want to believe. I firmly believe that if someone at BMG had their head out of their ass and licensed Napster rather than filing that first lawsuit, people would be more open to paying for digital music and we wouldn't be having this discussion. Ditto for early DRM free adoption. (this is totally different from auto companies since the investment in going non-drm free would be nil)
I pay for vinyl, go to a shit load of shows, and buy the occasional single off amazon. I remember in the mid 90s struggling to find ANY sort of likable music that wasn't being played on the radio. as a consumer, my life has been made considerably better by the plight of the music industry. i don't have much experience actually playing music, but i have to imagine there is a net benefit to at least having access to the market place.
Finally, i do legal for some friends who have a 3-4 artist label in their basement. they license one or two songs to release as singles and promote the shit out of them. they barely break even, the artists essentially work for vinyl to sell at shows, but again, even though a big pay day is less likely, isn't that still better than nothing?
@ cale - minidiscs, fuck ya.
Hey Cory (and everybody else) -
Wow - I just re-read my comment, I have no idea where that came from, I'm sorry. I slept about 4 hours last night, I apologize. I should clarify:
Small labels (or really any labels) that work hard to promote bands, and build an identity, and book shows, and provide financial support, are not who I'm talking about. I'm just shocked at how much power labels (of all stripes) still have in the music business, with the distribution and promotional tools that are out there now.
You're absolutely right: artists want to be artists, not suits, and that's where management comes in. And that's a worthy function. But the value that can be offered by management has shrunk in an age where bands promote themselves on myspace and sell music through iTunes - it /has/ to shrink, there's more competition (supply) out there. At some point (sooner rather than later) it gets to the point of diminishing returns, where the extraordinary effort that labels like yours put in to developing and promoting acts you feel strongly about only adds value at the margin. A lot of times it feels like labels are almost a barrier to good artists getting out there - instead of thinking out of the box, bands chase record contracts for lack of a more recognizable alternative. (I *know* this sounds ridiculous from your perspective. It's not the effort that's the problem, but the institution itself.)
This is admittedly anecdotal, but so many of the reasons I've heard bands give for wanting to sign with a label involve what I would consider rapidly outdated concerns - "legitimacy", distribution, promotion, etc. A 20-year-old starting a band in 2009 is going to be well-versed in facebook, myspace, email, twitter, and a dozen other promotional mechanisms and an army of blogs. And *all* of those guys set up and maintain their myspace page (or whatever will come next) well ahead of being signed. I wouldn't for a second compare the quality of myspace promotion to that provided by people like you, but one has to ask an honest question: does it matter? Does a band really need it's own website any more? And what does coordinating regional distribution mean in the age of the internet? (This isn't a cut on your comment, but an honest question.) How many of our assumptions about what "needs" to be done in the record business of because of, well, records?
Anyway - I'm the last guy who's going to criticize people who work hard for music they believe in, so let me apologize again, I was being an ass. But I think there are some tough realities about how power in the music business has shifted that needs to be recognized, by both bands and management. Bands need to realize the power that they have with mechanisms they use every day, and management needs to realize it's not the only player on the block any more (no matter how earnest a participant it might be.) Ideally there's a model that still incorporates everyone - the bands that just want to make music, and the erstwhile label head like you that want to live a life helping them to succeed.
Jason has been a little grumpy all day cause he was up all night working on the BYT Shit Show and then we all asked him to make changes last minute before launching it tomorrow.
I've been yelling at everyone on email all day, I feel so awesome! ugh.
Labels are still necessary.
There are bands in the DC area that were selling 40 - 100K singles on itunes before they signed a deal with a label (i can think of 2-3 in the past year). Shit, Downtown Fiction from Sterling VA cracked the iTunes top 25 last week and they are currently getting shopped hard.
The fact is, labels still provide legitimacy in the eyes of the public, promote in channels unavailable to the unsigned artist, and open doors otherwise shut to an unsigned band.
Good or bad, many labels also provide what I would describe as a small business loan. I'm not sure how many people realize how expensive it is to operate a music group - from recording, touring, promotion, merch, equipment - w/o an established revenue source (or a loan from mom and dad), its VERY difficult to get a serious operation off the ground.
Although physical sales are down, there are still MANY labels making a shit ton of money. The problem was in the 90s, labels had so much cash they'd sign anything in hopes it would be the next big thing. It's the same situation as the real estate meltdown. The fucking bubble burst and the technology changed. In one situation its derivative instruments, in the other its digital downloads.
I guess the idea is, who cares about distribution. If you're a musician that wants to make money off of your music, you need to understand that your music and performance has become, and must be treated as, a product. its up to the musician to decide what the best avenue is to get his or her product out there, be it a large label (if they can get on one), a basement indie (if its worth splitting their royalties) or a self release on itunes (which costs like 9 bucks).
check out this site...
www.mybandstock.com
they are going to be the future.
YES. That is how it should be done. Excellent.
PETER WE NEED TO COLLECT THOSE FACES.
Records will never die because they allow fans to establish a personal connection with the music. Album covers are a completely underrated visual counterpart to music. Bands that invest time in creating complete albums album and design innovative artwork will find a market in physical record sales. It's a lot easier to get attached to the new Vetiver album, with its black silhouette of the forrest and mountains over a night sky blue, than it is to form any sort of lasting relationship with a faceless single off of iTunes or Emusic.
Vinyl and record players need to be promoted more heavily. I recently saw a record player with an iPod dock attached to it--that's the type of technology that will help bring these two sides together.
PS. great fucking article. i don't why this issue doesn't get more mainstream press. It's a pretty freakin big industry. Whoever figures out (aside from digital download monsters) how to solve this problem will rake in mountains of dough.
sort of related to all this;
i'm reading a great book about how the labels killed themselves called Appetite for Self Destruction. two really interesting things so far; one, when labels got rid of the single, remember that? they said nobody was buying singles? actually singles were selling fine, but labels wanted people to be forced to buy the entire album.
second one was retail; labels decided to kill the Tower Records-type stores by signing more lucrative deals with Wallmarts, K-marts, etc. BUT they didn't realize that those stores didn't want music for music, they wanted music for promotion, so they'd slash the price of cd's to get people in the door. Then they started editing the content, but by then it was too late to go back to the Towers of the world!
i think management companies will replace labels for those bands who don't want to do it themselves. I also believe people need to expect to pay for music in some way if they expect to keep hearing it.
dan - you didn't agree with me. You agreed with some schmuck who doesn't ain't recognizin that I was here first and is using my name.
I was wondering why what "Michael" said was actually interesting for the first time instead of a load of pompous crap.
Yes, Matt, because you are the pantheon of interesting commentary. Like the message you just posted. Nah, that wasn't predictable at all. No way.
Its another article all together but I like Martin's point about management companies being the future for band's hoping for a more extensive reach. In the sense of making "money" and not records - we are already there. Touring has become consolidated to a few very powerful companies even at the 100 person club level and the most successful (monetarily) indie bands have insanely active and strong management companies guiding their careers. The model laid out by the Pearl Jams and Dave Matthews and in some ways even the Madonnas has been adopted by Wilco, Interpol etc... to great (comparatively) financial reward. Putting out records is only a tiny piece of the pie for all of those artists.
The jury is out as to whether it hurts their music but any system that allows a band to work solely as musicians and live a relatively comfortable life is worthwhile.
actually matt, what imposter Michael said wasn't interesting. although it started with the impossible to dispute "major labels made bad product" it degenerates into the completely banal "britney spears argument." If one out of every ten songs released by majors was Toxic things would be completely different.
as to Martin's last point, I ate at outback steakhouse. you're welcome Of Montreal.
ha! "how do you want that cooked" "um, medium obscure".