The state of the music industry pt2.: The real problem

2. The True Nemesis


The future, therefore, would appear on the surface to be reasonably rosy for the majors. Yet despite their undeniably potent capability to maximize profit from what they have, unless they begin to fully consider the long-term, they are vulnerable to true disaster. All their catalogue exploitation and cross-promotion activities are premised on the continuing replacement of monetisable catalogue, as copyrights will expire. They are also becoming dependent upon live revenue from large tours, revenue which is likewise dependent upon successors to today’s most enduringly successful acts. Yet the big 4 are alarmingly failing to produce new artists with the necessary long-term appeal to drive these areas of the industry, and are increasingly reluctant to invest in new talent (due to breaking costs).
A no.1 single in the USA during the 1980’s would typically require 600,000 to 1million sales, today it takes less than 100,000. In the UK, between 1982 and 1992, annual single sales fell by 25 million, and by 1993 a no.1 was achievable with 20,000 sales, a figure which would have struggled to attain a top 50 placing in 1966. Single sales have, however, picked up in recent months. Back catalogue (in both record and licensing revenue) is now the industry’s most dependable earner. 2009 is expected to be a vintage deep catalogue year as all The Beatles albums (remastered in mono) will be re-released in September. Publishing businesses share of total industry revenues dramatically increasing – by as much as 29% between 1996-2006 (now standing at 41%), whilst the new recorded music share fell by 17% during the same period. Despite the latest August 2009 US market figures, where album sales have fallen by a dramatic 37.2% compared to August 2007, the US publishing group BMI has announced record $907 million revenue for August 2009. This cannot be entirely blamed on file-sharing and competition from other entertainment forms, as the public taste in live music illustrates.

It has been suggested that heritage acts are most popular during recession as people demand more ‘bang for their buck’ and that is best achieved by hearing hits from an act they have grown up with, rather than risk it on an unfamiliar contemporary, yet this trend outdates the onset of the recent recession. As contemporary acts struggle to capture the public’s imagination, the coinage of those who have done so is raised and nostalgia has become big business. Each summer amphitheatres across Europe and the USA now fill their schedules with recession-proof veterans. Will Page, the chief economist of PRS for Music, believes that this is the major issue facing the industry -“The question the industry should be asking is this: who’s going to invest in the career development of artists to create the ‘heritage’ acts of tomorrow?”
There are a few enormously successful acts with little musical pedigree, but with with longevity, such as Madonna. Her recent appearances however, were described by Times critic Lisa Verrico as constituting ‘a concert only in its most modern meaning’ as the ‘not-quite-live music takes a back seat’. Ironically, Verrico claims that ‘Madonna faltered only when she tried to look credible, notably pretending to play guitar during half a dozen tracks. Her faux soloing, complete with taped feedback, was excruciating to watch.’ Despite such exceptions, the artists with long term appeal are almost exclusively made up of artists of musical prowess, who play their instruments and write their own material. Alternatively, performers such as Elvis Presley or Frank Sinatra (who were largely supplied with their material) had huge quality and interpretive ability as live performers, and a wealth of quality catalogue to draw upon. Both models appear to be a dying breed. This has as serious ramifications for the future of catalogue exploitation as it does for the future of the live music industry.
Although the British live industry grew by 14% last year, Page says that this can be ‘almost entirely explained by rock and pop veterans.’ This issue is equally problematic in the USA (the largest live market) where Billboard’s list of the top 25 worldwide tours of 2008 shows results that would not look out of place if they were from 1985. Bon Jovi tops the list, selling out 99 shows and grossing over $210 million. Bruce Springsteen was 2nd, with Madonna, The Police, Neil Diamond and The Eagles all featuring in the top ten. Only one act from the top ten had released its debut recording in the new millennium (Rascal Flatts, a pop act with ties to Disney who released their debut in 2000). However, the most recent results are also the most damning. The results for the top 25 worldwide tours of 2009 show that 6 out of the top 7 grossing acts have a recording history dating back more than 35 years (AC/DC, Tina Turner, Bruce Springsteen, The Eagles, Fleetwood Mac and Elton John). The exception, Britney Spears made her recording debut 12 years ago and had not toured for several years (and neither writes her own material nor sings live). A further 7 acts in the top twenty positions have a recording history dating back at least 25 years. This leaves Coldplay, Pink, Nickleback and the Dave Matthews band as the only four acts of the top 25 2009 worldwide tours to have both recording histories of less than 25 years and to be more than peripherally involved in writing their own material.


2b. Why is the industry failing to produce artists with longevity?


Major label’s corporate environments follow the industrial models of businesses dealing in the production of standardized units of product, a task for which such models are far better suited. A major’s chief concerns are its stock value and its responsibilities towards its shareholders. Consequently, according to industry lawyer Kenny Meiselas, “There’s a lot less imagination at the [major] labels as they can’t afford to have too much imagination.” Sony is structurally typical of the majors in that only a fraction (9.1% in 2001) of its overall revenue comes from musical sources. Music labels are only a division of a conglomerate that must ‘synergize’ with the workings of the other divisions in order to be profitable and for the business as a whole to function harmoniously. Ed Bicknell, manager of Dire Straits has claimed that the board of Philips (then owners of Polygram) did not understand the music business side of their company. Ahmet Ertegun (co-founder of Atlantic records) has claimed that Majors are typically ‘run by non-music people’ who, although insistent on relevant experience for other areas of business, ‘would take anyone and let them run the music’. When mergers take place, artist rosters are decimated to nominally improve efficiency, illustrating how musical creativity is not perceived as an asset. For example, in 1988 Universal bought PolyGram and within a month had cut the artist roster from 65 down to 20 as part of its consolidation process.
Author Peter Wicke’s research suggests that production departments ‘consider themselves in manufacturing rather than the music business.’ The internal structures at majors are bureaucratic and hierarchical with each department having a ‘next in chain’ approach and A&R (Artist and Repertoire) managers overseeing releases as commercial projects. The bottom line has always been, (as far back Thomas Edison’s phonograph), concerned with quantitative rather than qualitative outcomes as, in economic terms the industry product was the record rather than music. Achievement and success for majors is measured by market share, with executives being incentivised by quarterly performance bonuses which exacerbate the endemic short term focus.
At industrialized major labels the creative process is subsumed into rationalized procedures. Conversely, independents are often expressly founded to provide a platform for marginalized and less formulaic music. Majors cannot base the structure of its contracts with its artists upon creating the psychological conditions most conducive to creativity when its entire operational procedure is necessarily run according to rationalized business practices. Creatively ambitious artists relish control and thus often make independents their first choice, or increasingly avail of home recording and set up their own distribution through their own websites (pocketing all profit and therefore often being financially better off than if they had had a major label deal). A major’s business model can only allow full creative freedom in rare circumstances, and then usually only to an artist with an established commercial pedigree, whereas independents can afford to be far more art and artist orientated. Majors must meet sales targets, independents have the luxury to aim to ‘make some great music together and see how far we can take it.’ They can choose music for its quality rather than for its saleability. A major can hire the best producers, musicians, studios and songwriters to help its artists, yet as part of an industry that chases profit with such an unpredictably performing product, its adopts ‘ruthless and exploitative’ organizational procedures (which are extended to their creative divisions) in order to maintain stable market performance and control the flow of production. Artists are ‘systematically exploited’ as record companies seek to limit the costs of production and the risks involved in any innovation. Artists seeking a wider audience are forced to compromise - ‘succumb to the sausage machine and be compensated with cash’, leaving no place for artistic principle in the industry production line. Risk is not an option traditionally and the ongoing decline in global music sales has exacerbated this institutionalized conservatism, resulting in further implications for creative quality.

This mechanical model impacts upon musical form itself. Chris Blackwell, (founder of Island Records) believes that the major labels’ consolidation and centralization since the late 1970’s has had a crucially detrimental effect upon the diversity of the music they offer. (Due to their 78% control of the world market, and stranglehold upon multi-media platforms, one could extend this concern to musical culture in general). Blackwell states that major labels ‘used to have people everywhere’, but are now so centralized that they prefer to assemble music ‘in-house’ rather than source quality ingredients- an assembly model.

There has always been an enormous difference between music that has been appropriated by the industry (Blues, for example) and music created by the industry (e.g. 1990’s boy bands such as Take That or The Backstreet Boys) – the creative and the created. In the opinion of musicologist Richard Middleton, author of the wonderful ‘Studying Popular Music’, although major labels assemble this music, they ‘do not create. They cash in they intensify a taste or accentuate a trend, they cannot start either. They are not leaders, but parasites’. Music that has been appropriated begins organically, created by people in order to express themselves and has (originally at least) practical cultural value and function. It then builds in to a movement, and if it achieves sufficient popularity to appear monetisable to the major labels, is absorbed by them. At first its originators are recorded, and then its musical nuances and style are formulated and standardized into a stylistic code that can be employed as the industry pleases. It is this stage that industry created music proceeds. Here, performers are selected for their video appeal with a target demographic with A&R teams frequently commissioning a small number of production teams, (such as the UK’s Metro productions and Sweden’s Cheiron) to both write and produce hit songs for them. Such teams typically ‘provide acts with entire packages minus vocals.’

Pre-appropriated popular music contains the energy and feel that was responsible for the initial marketing-free success that drew the attention of the industry, and can be considered culturally authentic. Music of this order has historically tended to stand the test of time, whereas the ‘assembly model’ has fared significantly less well, despite often huge initial success (return). Assembly practices have however,been commonplace in the music industry for decades (e.g. Larry Parnes’ stable, The Monkees etc.) and there is a commonly held view that every generation has critics decrying the state of culture and eulogising times gone by. Theodore Adorno, writing in the 1930’s, bemoaned how popular music is divested of ‘spontaneity and promotes conditioned reflexes’, being ‘frozen under the centralized conditions and copycat policy’ of the music industry. Adorno saw popular music as simply another commodity with no extra- market autonomy (and therefore no resistance capability), nor any true expressiveness. Yet Adorno viewed nearly all popular music as such, including Rock ‘n Roll, and is criticized for being incapable of appreciating how forms of music other than classical can be genuinely expressive. Author Ian Macdonald more plausibly believed that the end of the 1960’s and the rise if consumerism allowed the major labels to create an overwhelmingly assembled musical culture. Any claims, he believes of the reduction of creative quality in popular music, is always a partially subjective matter, yet ‘clear to anyone with a modicum of musical instinct and an ounce of commonsense’. There is no doubt, however, that culture has become significantly more commodified since the second half of the 20th century where mergers and a general trend towards centralized powers in business has led to a vertically integrated oligopoly of conglomerate colossi who control content. By the 1960’s, the music industry had become a vast international complex only significantly divided geographically. This was the beginning of where, according to Russell Sanjek, ‘a bottom line orientation (began to have)a stultifying effect on the development and growth of the most basic raw material –creativity.’ Since the early 1990’s (assiated by the recent rise of MTV) assembled acts have been produced on an industrial scale. Accordingly, the overwhelming impression is of an industry with an implicit view that quick profit is paramount and driven by marketing mechanisms rather than by musical creativity - resulting in artists being encouraged to stay within the borders of musical boundaries rather than to transcend them.

Marketing strategies have made the language of advertising the mother tongue of popular culture, and have dramatically affected the form of major label music. In 1977, then newly appointed CBS President Walter Yetkinoff, claimed that ‘things are considerably different today. Every album has a complete marketing plan, with details on advertising displays and sales targets.’ By the late 1970’s, according to Russell Sanjek, major labels typically employed the ‘sophisticated unified advertising, promotion and marketing practices of producers of more mundane consumer products’. Today, industry control, standardization and mass production lead to a ‘sanitized commodity form’ of music. Stylistic conservatism rules, with marketing departments often directly intervening to change the sound, length or presentation of recordings. Majors conceive of their musical releases as marketable ‘units’ of ‘product’ to be aimed at clearly delineated demographics, such as saccharine ‘boy bands’ for the teenage girls and ‘rebel’ rock bands and hip hop ‘hard men’ for the boys. Conglomerates are able to target specific demographics and to encourage brand loyalty from an early age. In recent years a ‘tweenage’ market has arisen which treads a fine ethical line between providing entertainment and economic grooming, but as the 9-14 year old bracket are worth 260 billion per year in spending power, it is certainly good business. In 2008 Sony were successfully sued for illicitly recording various personal details of over 30,000 children under 13 years old. As Peter Jamieson, former managing director of EMI confesses, ‘The art in our business is finding out what people want to buy.’ Yet Jamieson’s ‘what the buyer wants’ stance is misleading. Marketing does not so much locate what people want to buy, as it does locate which people are able to buy, and thus cues the industry as to which demographics to target.
The recent recession seems to have only encourage the major labels to focus upon reactionary projects to the detriment of the diversity of musical culture. Economic setback has historically exacerbated the inherent conservatism of the industry, often to its own detriment, and the reaction to the file-sharing issue is no exception. On many occasions it has been a new musical movement that has lead the industry to recovery or prosperity, yet due to the industry’s financial and psychological investment in its model, its musical investments are becoming even more centralized. Majors are focusing on creating blockbuster artists with cross promotional potential and perpetuating the careers of established artists rather than addressing the problem of the creation of new catalogue and artists with musical longevity.
As strong brands, heritage artists represent sensible industry investments. They have dependably monetisable popularity with an older demographic with relatively high income. In recent years, typically less than 30 artists will sell over 1 million CDs per year, and only approximately 250 will sell more than 10,000 (worldwide). Sales and promotion are concentrated around a handful of multimedia marketed ‘blockbuster’ artists. Breaking costs are nil, and marketing costs are often minimal: The Police were able to sell out their entire British tour in less than 30 minutes. Shrinking revenues in recording divisions have resulted in the major labels now being reluctant to support a broad range of releases and blockbuster artists can also guarantee a return off their recordings, despite file-sharing. Crucially, they are typically also a powerful celebrity brand which makes them ideal for incorporation into cross-promotional activities. They are therefore extremely attractive guarantees to naturally conservative businesses where steady performance of stock is the generalized goal. In such environments it is in everyone’s (business) interests to, as far as humanly possible, negate risk. Yet development of a new generation necessarily suffers. This lack of sustainable creative development is the key issue. The infrastructure and marketing practices of major labels are objective and quantitative, leaving no room for the nurture of the subjective and qualitative. U2, and Bruce Springsteen and Aerosmith are just three examples of acts with immense popular appeal and longevity who, according to Don Passman would surely have been dropped by their labels in today’s corporate climate. All three had very disappointing sales figures at first (Aerosmith’s first album initially selling a disastrous 30,000 copies only), yet went on to become some of the world’s most enduringly popular acts. All have had lasting appeal across trends and generations – an achievement beyond any teen idol so far created. Artists need to develop in order to reach their potential. To place instant success above potential is to prioritize both trend above quality and commerce above culture.