State of the music industry pt.4: Towards a progressive future

4. Towards a progressive future


The file-sharing sphere will of course be influenced by major label-influenced media, especially internet media, in which major labels are heavily invested. Yet marketing practices upon which the majors have increasingly relied are, of course, much less effective in a cultural sphere where the industry does not control content, platform or distribution as it largely has done since its inception, and in recent years (since the last round of mergers in the 1980’s) has almost entirely dominated. The industry model has become obsolete to growing millions, as (similarly to any freedoms) once people have tasted free-roaming access to the treasures of musical culture, they will not accept being denied them. They will not accept their choice of music or the mode of its consumption being dictated to them. The majors cannot address this in the age-old solution of format change. Any attempts to introduce a new format they can control would fail, as unless an unlikely qualitative leap in sound quality is achieved, no one will be prepared to return to (in the words of Peter Mandleson) the ‘days of flogging a CD in HMV for £20.’ The large labels will, it seems, become increasingly dependent upon catalogue, and also live revenue and merchandizing from 360o deals where their parent companies will look to take advantage of their cross-promotional capbilities.
Yet the finite nature of catalogue and performers demands that these revenue streams be perpetuated. The majors could cut their losses, and focus exclusively upon efficiency by concentrating on blockbuster acts and tightening the conveyor belt of teen idols. Many blockbuster acts have little interest in 360o deals, as they are already established and would rather cut out the middle-man. A few, perhaps in increasing numbers will be happy to sign on if it makes financial sense, and the industry will strive to make sure that it does. Madonna already has, albeit with Live Nation, a live promotions company rather than a label (further illustrating the shifts in industry power). With manufactured acts the majors can get a large slice of an entire career (however long it lasts), with multiple revenue streams. Therefore in many cases they will make more money from a good-looking, malleable cross promotion- ready act than from one with ‘only’ wonderful songs. It is most likely that they will focus all their efforts on cross-promoted superstars, leave organic music to the independents, and poach any acts who grow to a sufficient size as to be efficiently monetisable. Majors are currently also looking to increases the monetisable time scale of catalogue publishing and licensing rights. Yet all these options are, again, short-termist anti-cultural solutions. If new catalogue and current artists continue to fail to compete with their predecessors, a major industry collapse is surely only a matter of time. If back catalogue and heritage acts are this popular now - amongst a generation that grew up with music industry-mediated platforms, surely the popularity of more organic music will only develop with file-sharing capability and internet access growing daily. There will of course still be a co-existing multi-media market driven by television and commercial radio – but there will also be an increasingly powerful sphere where by peer recommendation unaided by mass marketing will determine popularity. Is there a way for the major labels to provide long-term security and to monetise the new cultural sphere of file sharing?
The file sharing phenomenon has created a new ‘year zero’ with a new direction that the industry must adapt to. The old rules no longer apply. So far it has reacted with the same endemic defensiveness, short- termism and sense of entitlement that helped put it in its current position. All three of these perennial major label characteristics showed in their failure to buy out Napster when they had the chance. Tower records chief executive Russ Solomon believes that record companies have been primarily concerned with forcing a new format succession as an answer; ‘record companies have been busy trying to create new technology…rather than focusing on music.’ There is, however an entire new market with millions of consumers hungry for specialist product, who can be reached with no delivery, manufacture or storage overhead fees. What an incredible opportunity the big 4 have to be proactive, to move forward by realizing that at this moment what is necessary for their business is also what is good for culture. A historical opportunity to develop a model that is both financially and culturally sustainable – a mutual necessity in the long term. If they can produce quality catalogue they will continue to control a cultural resource of fundamental importance and value to society that will remain monetisable as long as it continues to perform this function. Not only will this allow for the continuation of lucrative licensing and publishing revenues, but it also constitutes the best chance of providing successors to today’s most popular acts in the live arena.
Very recently, Nic Garnett (former head of IFPI) has claimed that ‘There’s a growing realisation…that culture ultimately trumps technology. Governments, as much as the creative industries, are finally working with the idea that music and other forms of creative expression have special needs’. If this is true, perhaps the big 4 and the British Government will begin to shift direction.


Format change will not be accepted. History has shown that the biggest boosts for the industry have usually been artist driven. In the 1940’s, a stockpile of new songs recorded by new talent helped the industry double its turnover after World War 2. EMI dragged itself back from the brink after the same war by investing in new A&R staff, a decision that brought them the incalculably valuable asset of the epoch-changing vision of George Martin. Throughout the 1950’s, new artists effected a catalogue boom. The first year alone of the rock ‘n roll boom (1955-1956) increased American industry profits from $227 million to $327 million. There is nothing as lucrative as a new artist who genuinely articulates with (especially youth) culture. Elvis Presley and the Beatles brought people back into the record shops and industry revenues to soaring and lasting new heights. Columbia’s success in the 1950’s and 1960’s has been largely credited to their policy to be always looking for talent, anywhere they could find it. They tapped natural living resources rather than focusing on a centralized assembly model. In 1983 the industry had been shrinking for four years. After the typical phase of conservative reaction, Sanjek tells us, ‘artists began to suffer less from the straightjacket of their labels creative inertia’ and artists were ‘now in a position to make new music which would [paradoxically and ironically] of itself stimulate sales.’ Hall and Oates and Michael Jackson’s Thriller (amongst others) went on to lead a spectacular comeback. When the American industry faced a downturn in the early 1990’s, the Seattle ‘grunge’ scene facilitated a new boom.
Organic artists create living culture which articulates. This produces catalogue of enduring value. Already, half of both Philips and Deutsche Gramophone’s turnovers are guaranteed by the diminishing return of catalogue. Majors have historically depended upon versatile catalogue with across the board appeal to survive economic setbacks. Without the protection of this resource, neither the catalogue nor the live acts capable of driving the industry will endure.
Charles Kennedy, of independent label Invisible Hand tellingly remarked that ‘if the industry had spent what it’s spending on fighting piracy on developing artists it wouldn’t be in trouble.’ The majors have recently panicked having realized the irreplaceable value of articulatory catalogue, and are seeking to extend copyright to prevent recordings nearing their publishing expirations from falling into the public domain as they claim they need them. Barfe points out that it is a depressing state of affairs and illustrative of the majors’ complacency (having left it so late to tackle this issue) that they are in the position of needing to fund new music with royalties from Elvis and original rock n roll. Perhaps the short term-minded ‘if it ain’t broke don’t fix it’ approach has left an over-mature and increasingly anachronistic model that even all the King’s horses and men will not be able to rescue.
Once again, majors may have to look to independents for the way forward, as new musical forms and specializations have always been the independents domain, with the majors poaching and appropriating their successes. Majors should rather appropriate the independents labels’ conception of their artists’ value. Creative artists, rather than created artistes must be appreciated as the industry’s greatest assets, rather than be viewed as potential liabilities that must be kept in order. Creativity, rather than plastics and metals must be considered the industry’s most important raw material. They must source and nurture living culture that can self -perpetuate rather than assemble and market its hyperreal replica.
The future is highly uncertain as the dust from the big-bang of the digital shift has yet to settle. Musical culture is in transitory motion, groping for a foothold in a new unfamiliar cultural space created by a series of technological advances. It will be fascinating to see the forms it will eventually take. It will also be fascinating to see whether or not the major labels will be able to reposition themselves, and survey the industry once more, from the top.