Confessions of a Ranting Lunatic

With the rise of the digital era, more and more people involved with major labels in the music industry are starting to be fearful of the decline of physical record sales, and the incline of free digital downloads. Many people have argued that this ratio, and the idea of music being “free”, will kill the music business. However, some believe that all of this change is nothing but a giant opportunity for a whole new design of the music industry; and a new, intensified connection between artists and consumers brought by an increased convenience in accessing music. When the first Audio Tape came out in the early 80’s people thought being able to copy music from the radio would make record sales plummet. What turned out to happen was an entire generation of kids, who loved metal music, recording bands and trading tapes with each other. This trading was free massive marketing and promoting, which led to metal concerts selling out for an entire decade. This is a small example of the opportunity now given to us with the accessibility of technological advances like the Internet. Where as the tape trading was limited to a county, or maybe as wide as a state, the Internet combined with digital audio files allows immediate global promotion. To most, that sounds like a pretty good deal.

The major labels are most concerned with Internet file sharing and music downloading because they obviously stand to suffer the most loss from the decline of physical record sales. On January 10, 2008, The Economist Magazine published an Article entitled “The Music industry from Major to Minor” which stated “…according to Nielsen SoundScan, the volume of physical album sales dropped by 19% in 2007 from the year before…” These numbers undoubtedly scared the major labels, yet its no wonder that the consumers, and the artists represented by the major labels themselves, didn’t jump aboard to try to help these labels. Could it be ongoing, public un-fair attitude of the major labels? Either way, artists have been leaving the major labels in search of better deals, ones that seemingly support the predicted new direction of the music industry. “Madonna left Warner Music to strike a deal with Live Nation… Radiohead deserted EMI to release an album over the Internet…” says The Economist article. Radiohead’s Internet release coined the phrase “Tip Jar Release”, because they put the album up on their website for digital download, and allowed people to donate however much money they deemed appropriate, IF they deemed paying for it appropriate to begin with. That’s right, Radiohead practically gave their album away for free, and millions of people still donated enough money for the band to make a pretty profit off of it. This Internet release is a perfect example of adapting to the digital era, and it is exactly what the major labels tried NOT to do. They worked so hard to preserve the old way of doing things. This may be why artists and consumers are unwilling to help the major labels, and are in more support of artists going Independent, so as to be in more control of how they are marketed and represented. The Economist Magazine also stated

“…Because majors are cutting costs severely, particularly at EMI and Warner Music, artists are receiving far less marketing and promotional support than before, which could prompt them to seek alternatives. ‘They have cut out the gut of the middle managers and there are fewer people on the ground to promote records.’”

Have the major labels not realized that it does not matter that there are no people promoting on the ground, because nobody is on the ground to promote too? Anybody on the ground is, in this day-in-age, on their cell phone or Ipod Touch, consumed in the endless streams of the Internet. Also, it is a wonder how costs of marketing and promotion could be such an issue when websites likes MySpace, Facebook, Twitter; YouTube, Hulu, BlogSpot; WordPress, and any of hundreds of other social networking utilities are FREE. At no cost to you within 20 minutes you could make a flashy colorful MySpace page with your songs on it and that page will be viewable to any one of over a billion people around the globe who are subscribed to MySpace’s services. With an estimated 130 thousand new registrations a day, Myspace is quickly becoming a convenient, brilliant way to market not just music, but anything.

So the industry is changing. We all know this; some have tried (and failed) to stop it. The next move is to figure out how to adapt to this, and some bands adapted very well. Nine Inch Nails recently release their “Ghosts” albums over their website, but here’s the clever part: They offered it in an array of formats. For free, you could download the first 9 tracks from “Ghost I” in DRM(Digital Rights Management)-free MP3 format. For $5 you could download “Ghosts I-IV” in an array of different formats, all DRM free. More options were available all the way up to the $300 Deluxe Edition box set with all albums, a DVD with multi-track files for remixing, and an array of other goodies. If we’re correct, NIN offered a free album, AND gave permission to remix at will. By the major’s standards that’s suicide. What were the major labels forgetting when they started ripping their hair out over the release? To never underestimate the enthusiasm of a fan, because the $300 deluxe edition was the first thing to sell out, and it did so overnight. This is the kind of adjustments that are going to be needed if labels, major or minor, are to survive the new digital media.

An effort being made by some labels is to join forces with cell phone companies. Most cell phones these days allow you to download songs right to your phone, and then transfer them to your computer later. The most popular form of this is Itunes and the Iphone. From your Iphone you can directly access the Itunes store and download any amount of music your phone has capacity for. Major labels are trying to go a step farther, and allow for “free downloads” that will just be paid as a part of your subscription to your phone service. It will work somewhat like cable television, where you pay a certain amount a month for unlimited access. This is a move in the right direction, however nothing will compare to free access, but people will keep trying.

In 2005 the Chairman and CEO of Warner Music Group, Edgar Bronfman, gave a speech as the CTIA Wireless I.T. & Entertainment Conference where he said “Madonna has just released a ringtone from her first single “Hang Up”, off her new album Confessions On A Dance Floor, and that’s one month before the track goes to radio and even longer before the album’s release.” This was a good move on Warner Music Group’s part because they utilized these new promotional opportunities to their fullest. According to Bronfman, in 2004 230 million dollars was brought in by Mobile Music Retail alone, which was far more than anybody had predicted. Bronfman displays the blatant validity of his point by saying “…to prove my point, …by reminding you of those skeptics who, only yesterday, were laughing at the idea that there would ever be a significant demand for ringtones and master tones” Yet another example of the growing opportunities brought by this so called “threat”. Bronfman even predicts, “Wireless will become the most formidable music content distribution platform on the planet.”

One reason for high mobile downloads is the demand for convenience. Bronfman again gives an example of this demand:

“…Last fall in Japan, KDDI launched an over-the-air download service available to their wireless subscribers. Within seven months after launch, their 3G user base of one million subscribers, had already downloaded more than 10 million songs, and did it, by the way, at a price significantly higher than online downloads. By the end of the month, KDDI expects the number of downloads to reach 20 million.”

The key of that statement was “at a price significantly higher than online downloads.” With the option of downloading songs for free at their house, people in Japan were willing to pay extra cash to get music precisely when they wanted it, wherever they may have been. That proves that not just in America, but around the globe, convenience comes above all else. We as people are always willing to pay whatever price for extended convenience. Convenience is one of the reasons that free downloading spread so quickly, because downloading content from the comfort of your own home is easier and quicker than going to a store. Convenience is what the Internet and file sharing brings us. Convenience is why brick-and-mortar retail stores are going out of business, and convenience is a reason why the major labels feel threatened. The labels that will make it in the future music industry are the labels that find ways to increase convenience, and put a price on that convenience. KDDI’s over-the-air downloads are a proof of that.

Bronfman further demonstrates the opportunities that this new digital media offers us when he says; “When you greatly increase the amount of content available and vastly increase the number places where the content is available, you set the stage for real and sustained growth.” While some would disagree with that statement, and say that increasing content and places of availability too quickly sounds like un-sustained growth, increasing availability is very important. That is a key factor in increasing convenience, and to global promotion.

The global promotion brought by the digital era is the main reason hope is on the horizon for not just labels, but for any and all independent artists trying to get their music heard. Itunes has 8.5 million songs for sale, none of which have been left unsold, not to mention any old “Joe the plumber” can put his music up for sale on Itunes at virtually no cost. With 65 million average customers, there’s a pretty good change that Joe’s songs will get sold. Myspace Music has an estimated 25,000,000 musicians, each of which has been viewed. With these possibilities there is no possible way NOT to get your music heard. This kind of mass FREE promotions would have been a joke to discuss 20 years ago.

Some analyze this as a threat because it could eliminate the need for artists to be under labels. If an artist can promote him/her self, and through these social networking utilities contact venues, vendors, merchandise production companies, etc… than there is no need to sign with a label who proposes to take most of your money anyways. What this means is that more “360” and “Net-50” deals are being proposed, but are still less appealing than keeping 100% of the profit and working for yourself. Labels are going to be forced to keep up with “convenience” model that the future is taking, meaning, being able to offer the artist a level of convenience, especially concerning money, that working for themselves would not offer. Once again this need not be a threat, but an opportunity. An opportunity for record labels to be in the best interest of the artist, and to be a “one-stop-shop” for the artists that they represent. In 2005 Warner Music Group tried to incorporate those very ideals by having the producer and the artist in charge of ringtone reproduction for mobile sale. Bronfman says; “That’s right, producer, along wit the artists-and not some third party technology company-were creating their mobile content. And that is emblematic of the approach to mobile we are taking”
With Internet popularity rising, label’s wireless phone collaboration, new global promotion opportunities, and simple fact that people will always love music, the future of the music industry looks very bright. At the CTIA conference, Bronfman comments on how exciting these opportunities are not just for the consumer, but also for the artist themselves.

“The world we grew up in is being transformed-really at a breathtaking pace-from a place in which a very limited, very finite number of physical goods are available in a finite number of record store to a virtual universe in which ALL the music ever recorded is available digitally, in ANY possible combination, almost anywhere, and all at the touch of a couple of buttons.”

Skeptics say, and one would have to agree, that once you put a song on the Internet, it is there for anybody to take, and do what they please with. That fact leads us to the heart of what major labels are afraid of, a world where people are used to freely taking, remixing, and releasing songs as they please with absolutely no repercussion or legal action. A world where copyright has an entirely different meaning, and maybe won’t exist at all. Although this is scary, people like Nine Inch Nails have proved that it does not have to be. Live concerts will always be a premier choice of music intake, and artists will always be able to sell a shirt with their name on it to people who dig their music. Although the new opportunities span greater than t-shirts and concerts, the inspiring thing is that one doesn’t have to travel far outside of merchandise and small gig’s anymore to achieve a fan base and actually make money doing what you love. No more to you have to fit the “Star Model” for a mass amount of people to hear your music. To conclude, there are always obstacles, but always opportunities, and music will always be a profitable industry.