The Year The Music Dies ....... the music industry is falling apart, and nobody cares

i figure as long as pressing plants and the means for independent labels to put our CD's stays in tact, it won't be so bad. and even so, rampant downloading would keep music distribution of a sort afloat, although i hope it doesn't come to that.

there's too much money in the damn industry anyway, and it's going to the wrong people. it's not like movies, where lack of capital has a direct impact on the quality of the product; it doesn't actually take much money to record a song and make it sound good ('professional'). and most working musicians are barely getting by as it is, so i can't imagine that getting any worse. if their income starts to depend more on performing, so be it. but i doubt the whole sales/royalty system will fall apart, it just has to adapt.

Producing/mixing/mastering: $1
Manufacturing of the CD + booklets: $1
Marketing, promotion and discounts to retailers: $3
Distribution & company overhead: $3
Songwriter royalties: $1
Performer royalties: $1
Net profit for record company: $1
= wholesale price of $11
avg gross margin for retailer: $6
avg selling price ex VAT: $17

When sales decline ten percent, that means fixed costs (company overhead, most distribution, recording and marketing/promotion) will quite quickly eat up nearly ALL (in this case, about $0,70) of the profit margin for the label, whereas the retailers have a bit more cushioning (unless wholesale prices rise, and those will be quickly reflected in retail prices). The only way towards survival for the label is cutting overhead, cutting recording costs or selling directly to consumers, because spending less on promotion will make things even worse...

I bunch of them just got together to start selling downloads.

"It's about fucking time."

-Matt, who won't miss it. Well, maybe a bit of the avarice...

Sam Goody's closing an assload of stores in the Twin Cities metro. I'm not sure if they're doing the same nationwide or what. For selling copies of Play in the year 2000 for $19.99, I say good fucking riddance.

unless there's two of yers.

This is the first I've ever heard of him.

Maybe. Why don't you want to buy music online? I can understand that one benefit of the shop is being able to chat about music etc.
But you can chat about music online, here for example, and most of ILM are way more interesting than your average record store employee. (Shout to my man Charlie of "Charlie's Orbit", Brighton ... not you of course.)

If you want real product, then what's wrong with buying it online and getting it delivered in about a week? If you want instant gratification, download.

Maybe ten dollars is TOO cheap to provide record shopping environments ...

HOWEVER ... here's what I think may happen.

As the music biz goes down, their ability to sue the pirates will recede. Also, fewer albums will be being released. And many will be "out of print".

Specialist music shops / second hand shops will become download experts. They'll install computers and fat internet links, and fast CD burners and decent printers. And when you go in looking for obscure and rare stuff, they'll be able to offer either originals, second hand CDs, or will go online and find stuff for you and burn you a copy cheaply.

This will be accepted because there's "no other way" to buy the music legally. These CDs burned in the shops will be higher quality than those you can make at home.

Small record labels will do a deal with these shops, allowing the shops to pay a small license for the right to do this. The shops will do it out of a sense of justice and to get a catalogue of "masters" which they can then burn legit copies of.

Hence specialist shops will evolve into custom franchise CD manufacturers. You'll still chat, they'll still show rows of jewel cases filled with interesting covers ... it's just that when you buy the CD, you'll wait while a blank is burned and the cover printed. And it'll cost five dollars.

Make it happen, man.

Sam Goody is one of the worst record stores EVER, also.

That's bcz their business models are crap, I hate it when I see them blame consumers for not buying into these new 'legit' music services when generally they charge too much per download, don't have a good enough selection, don't market these programs aggressively, songs are encoded using annoying formats ('liquid audio' etc.) They shouldn't be blaming the consumer for not responding to crappy, backward business models; like any other business, they should be trying to revise their business models as fast as possible to be as adaptable as possible instead of fading off into irrelevance.

With this brand new service, you can purchase music downloads from more than 90 independent Norwegian record labels.

You will find releases from Norway's leading artists across all musical styles - buy your favorites as single tracks or select the entire album at a discounted price! For musiconline users only; check our list of exclusive repertoire!

Exactly. The problems facing the "music" industry are akin to the problems facing the airline industry. There will always be a want/need, in a sense, for people to travel quickly by air, just the old model of the gigantic carrier with global reach and lousy customer service (i.e. United) is obsolete.

This is a fantastic idea, except: it still would rely in part on that material only being available through "licensed dealers." I'd guess that file-sharing would decrease dramatically if anyone could walk into a store, preview anything they wanted, and walk out with it immediately for a few bucks -- but you'd still have to get rid of it entirely for that to be as solid a model as it sounds.

Nothing.

Ned's collection alone could form the basis for about a hundred such stores.

once you figure in the various distributors & middlemen required you're back at square one on all costs except packaging and shipping. and then since everything is digital you're REALLY up against file-sharing, without even "b-but the nice package it comes in!!" etc to fall back on as enticement for the remaining albumists

also sean is otm - to imagine that the big corps aren't already working these alternate scenarios through and coming up with dozens of ways to benefit from each of them is totally delusional.

To see how actual industry folk are responding to the obvious failures of the industry, check this thread at the Velvet Rope.

As far as store closings go, chain-wise Tower has closed many stores, with more to come. Virgin is losing massive amounts of money and may do the same. The biggest reason? Best Buy.

Woohoo!

The President: Ned, the economy is collapsing, thanks to the complete devastation of the recording industry! We need your help!

Ned: Finally, recognition for my immense knowledge of music! What can I do to help, sir?

The President: We need you to sell off one of the wings of your collection. Since you bought every single CD ever produced, there's been a serious music shortage! For the love of God, we need your help in reversing this situation before we have rioting on the streets!

Ned: Never! They're my babies!

The President: You leave us no option but to use force! Prepare to meet your maker!

Ned: Fools! My compound is lined with thousands and thousands of layers of MC Hammer and Vanilla Ice records! You'll never penetrate through something that dense!

The President: General, blast Godspeed at maximum. It will put him to sleep, then we can just walk in the front door and take what we need.

General Hillary Rosen: Sir, yes sir!

Ned: YOU MONSTERS! I KILL YOU NOW!

As Yancey said, this has been tried before. Back in 1990, 1991 or so, a small number of Record World outlets could make on-order compilation cassette for customers. A person would browse a catalog (mainly filled with back-catalog Sony stuff IIRC), fill out a form, then continue shopping while the cassette was made. I have an even faint recollection that they tried this with CDs but I never saw this in a store. I'm not entirely sure why this died; I have an even fainter recollection that royalties were a key reason.

If it was introduced today, I don't think it would seriously dent music downloading -- it's just not as speedy or as private -- but if it had a chance to develop into a robust service back in the early '90's, I think it would have at least retarded some of the explosive growth of p2p.

The record industry has squandered all their assets through vertical integration and the payola system. Vertical integration forced people to make choices they wouldn't normally make, with regards to programming and cross-promotional tie-ins. They also laid down and accepted the pay-to-play system that has destroyed radio. This seemed like a "safe" way to do business - it gives a concrete result (airplay) for a certain amount of money. However, now they have themselves in a situation where NOTHING gets played without payment, no matter how much a certain radio programmer enjoys it. They have been squeezed to the point where they can only support giant artists with this system, and even these artists need pay-for-play support.

Ironically, this morass gives the independent labels an advantage, in a strange way. The independents actually have BUILT their brands. People actually DO pay attention when a new releases a new record. People might actually pay a small fee for a monthly sampler CD from . Plus, the independents don't have to shell out the dough for airplay ("promotion"), they can let filesharing and fandom drive sales.

In the last 20 years, the cost of production and distribution for music have come down to unimagined lows. The music industry has spent the last 20 years increasing prices, hunting down "pirates," spending all their money on consolidation and monopolistic schemes. And now they are left with a customer base that is completely disloyal, and a failing business model that can't survive without government-sponsored corporate welfare.

Good riddance.

What sort of financial incentive is there going to be for taking care of the back catalog too? Who is going to make this stuff available in re-mastered form without making any real profit on it?

and where exactly, phil. d'you think the shop would get the music? the major chains in the states just fomed an alliance -- Echo -- to license the tracks. no shop could make a go at this wihout licensing the tracks, and the majors would never -- strike that, have never and aren't likely to anytime soon -- agree to a licensing fee that allowed this scheme to be financially viable.

for one thing, if it was allowed to happen, there'd be no competitive difference between the majors and indies regarding distribution. and they're not about to let that happen.

for another, if the majors were to set the price lower, why bother with resellers? and why would the public pay for full albums instead of just the songs they like? and if so, there goes the profit margin.... (one successful single pays for a lot of filler tracks)

SAD FAN: "I wish to have this track issued on a run of 50 in Deepest Turkeminstan by a guy named Slyzo."

HAPPY FAN: *records to mp3* "Done."

SAD FAN: "My collection is complete!"

HAPPY FAN: "You ARE sad."

*descends into the 'u r all gay' meme, dies*

Mime descending, the latest fad among the teens.

Tracer - With hard disc space prices dropping, at some point people will just store (and perhaps trade) the high-quality versions. And anyway, why should we trust stewardship of these valuable cultural artifacts to a couple of corporations?

and where exactly, phil. d'you think the shop would get the music?

Uh?

The internet?

(And later, licensing from small labels.)

the major chains in the states just fomed an alliance -- Echo -- to license the tracks. no shop could make a go at this wihout licensing the tracks, and the majors would never -- strike that, have never and aren't likely to anytime soon -- agree to a licensing fee that allowed this scheme to be financially viable.

Yeah, part of what I said in the previous post is that this would start to happen as the labels went down ie. ceased to be able to legally persue the shops.

for one thing, if it was allowed to happen, there'd be no competitive difference between the majors and indies regarding distribution. and they're not about to let that happen.

W/out the labels, who'd stop it?

for another, if the majors were to set the price lower, why bother with resellers? and why would the public pay for full albums instead of just the songs they like? and if so, there goes the profit margin.... (one successful single pays for a lot of filler tracks)

I was also suggesting that the shops made these custom compilations.

I'm not saying that these shops would have much of an edge over downloading yourself. I think any edge would consist of ...

- big cache, faster than searching and downloading

- better printer to produce glossier, more professional inlays

- social place to hang out ... you go there 'cos you like the shopping experience. (Remember I introduced this idea as a way of saving this last experience which people claimed to like)

anyway until phil's scenario includes getting music injected directly into one's brainstem by uberkewl fan-surgeons, it's got its sights set way too low if you ask me

How often have you looked at the hourly rates of a recording studio lately or at the prices for TV commercials, magazine ads, etc? The trend is up, not down. CD prices have increased about 1% a year since 1985. In real terms, CD's are cheaper than they have ever been - cheaper than LPs have ever been even.

And LPs sound better anyway

*ducks*

Consider this kind as a kind of timeline to today's music....

1900 - 1920's - The birth of jazz, blues, gospel and big band.

1920 - 30's - Big Band, jazz - a new term, swing.

1930 - 40's - More of the same, Sinatra, arguably the first 'pop' star.

1950's - The birth of Rock 'n' Roll and Rhythm & Blues. Jazz, blues and gospel fused together. Elvis shocks America, his music based on country, blues and rock and roll.

1960's - Pop music. It is no coincidence that both the Rolling Stones and the Beatles both cite James Brown as a major influence. The Motown era. The development of funk from the roots of blues, reggae and ska. The first ever live album is recorded. Bands of all genres become household names. Beatles, Rolling Stones, Pink Floyd, Elvis, James Brown, Diana Ross, Marvin Gaye ............ the list is endless. A golden era for music.

1970's - Hmm, difficult. Glam rock, Prog Rock, Disco (developed from funk) - all have their roots still in R&B and R&R. A new form of R&R, Heavy Metal. Punk takes pop music back to it roots, simple chords, simple lyrics and shock value.

1980's - New technology leads to new forms of pop music, Michael Jackson, Madonna, New Order, Eurythmics take pop further. Bands like U2, Clash, Springsteen still developing the R&R and punk ethos further. Rap, a 'new' form is only funk taken further. The first appearence of sampling. End of the 1980's, the emergence of 'Britpop' from the Manchester music scene, a derivative of 1960's Merseybeat. The concept of manufactured bands (started by the Monkees) is taken further.

1990's - ? Certainly Britpop flourished in the UK. Grunge in the States, a mix of R&R and Heavy Metal and spawn hundreds of imitators. But what after that ? A number of US bands still persue the development of music and maybe only a handful of UK bands, Blur and Oasis especially. Where's the progression ? There was a growth in music exploiting technology but in creative terms, new music as an output has fallen. It seem the development of music despite all the new media available to us is pushed further underground.

2000's - search me. Music is just not progressing. There is some great non-mainstream music but you seldom get to hear it on radio.

Who's to blame ?

I'm sorry, could you turn down your prized copy of Slippery When Wet and say that again?

Dan's larger point is of course valid. There's a whole lotta wonderfully weird stuff going on at present on the one hand, though I am wondering what the latest kickstart if any will be to something else. Ever coasting onward...

(I can't resist pointing out the obvious, but that timeline applies mostly just to music from the Anglophone world. That's somewhat irrelevant to the case you're making, as far as I'm concerned anyway, since I can't point to any really exciting new developments in the 90's+ for music from other parts of the world, though Cuban timba was at least new and exciting to someone.)

By Steve Morse, Globe Staff, 2/7/2003 (Boston Globe)

Experiments are rife in the music business these days -- and Boston will be a test market for one of the most novel of them. Clear Channel Concerts, the nation's largest concert promoter, has ambitious plans to record live CDs of its shows and sell them to patrons within five minutes after those shows end. Clear Channel is targeting Boston as the first site for the new plan, according to sources within the organization.

Multiple CD burners would be brought in, and the live CDs would probably sell for around $15 in the same way that T-shirts and other merchandise can be purchased after concerts. No one knows what the demand would be, but the project is expected to begin at club shows within a couple of months, then be refined and work its way up to the amphitheater level, though that may not happen until next year, sources say.

Clear Channel spokeswoman Pam Fallon would not confirm or deny word of the CD burning and sales plan. ''All I can say is that we're working on a series of initiatives in the next couple of months,'' she said.

Clear Channel vice president Steve Simon, who works at Cambridge's Clear Channel office and has helped manage the platinum-selling band Boston, is said to be heading the project.

another news story about the decline in album sales due to piracy.

Someone else pointed out elsethread that the industry had tried and failed to create a good working model where someone could walk into a store and walk out 15 minutes later with a custom-burned royalty-paid CD of all their favourite pop hits. They had better get working on this again if they really want to make money off of singles artist, or try to make radio pay for singles at a higher rate than standard airplay royalties, to offset the costs of creation.

I was listening to a very grown-up discussion about falling record sales. Of course, piracy was being blamed by this record company man.

The interviewer had done his homework and said that whilst blank CD sales had remain largely static over the last few years, the record industry was complaining only now of piracy.

Cue record company man to almost choke.

Then the interviewer said something like 'Isn't because people are tired of hearing the same old rubbish you are putting out.'

Cue record company man to have a fit of the "Er's"

Then the interviewer said the number of white label releases making it into the Top 40 singles was reaching an all time high. Implying that the music people obviously liked didn't even have record company backing.

Cue record company man to sound like there was an impending heart-attack on the way.

It was magnificent.

but *which* white labels are we talking about ?
and by who ?
and how are they getting into the chart ?
how *can* they i mean ?

Revive!

Can someone please explain why the music industry believes that the USB stick will generate excitement about their product(s)? The article's here.

Also: the Mars Volta USB gimmick costs $30? They're marketing music like premium vodka now?

The USB stick thing is absolutely gobsmackingly stupid to me. I get these things thrust at me as free gifts at work; who would pay £15 quid for one with tiny capacity for ONE SONG? Even a whole album?

but... it's the future! (lol)

they should have a pen at the other end. usefuller.

a pen? that's like a wireless printer, right? cool!

are these people even capable of embarrassment

the boosterism in that article is shameless

A friend of mine bought the Stones "Rolled Gold" set on USB stick. It had files at 160kbps. I would have expected a higher bitrate than that, wouldn't you?

i argued myself blue in the face with industry types behind these decisions. no one is willing to believe that if critics think they're a bad idea, they won't ever get promoted as anything but a bad idea. [in case you hadn't seen the deciblog's take on the mars volta USB gimmick, you can find it here.

more unbelievably, they really think these things will be reused. dear music industy: using the livestrong bracelet as your marketing model = not a good look. it's a good thing they'll never sell in sufficient numbers, otherwise they'd be destined for landfills all across the continent.

i guess what kills me about this is the insistence on delivering some physical product. is it impossible to refashion the production cycle around more ethereal [read: cheaper to produce] mp3s?