Record labels are b0rked
In a barn-burner of an interview, academic Bethany Klein of the University of Leeds discusses the fundamental broken-ness of the record industry and the growing acceptance of acts that license their work for commercials. Klein's just finished a book, As Heard on TV: Popular Music in Advertising, which explores the subject in depth.
Major labels function with the assumption that 90 percent of artists they sign are going to fail — that should have been a red flag for everybody. I mean that’s a bizarre business model in any arena. But particularly in the cultural arena, the idea that the system through which culture is transmitted is dictated entirely by profit should concern us, because that’s going to narrow the types of culture that are transmitted. And then, on top of that, the alternative venues of distribution are stuck in the shadows of these major labels. So it’s not like there’s a viable alternative, necessarily, for artists who don’t fit into this very narrow range that can become the 10 percent that are profitable and popular.ROCK STAR! (Brought to You by HUGE ADVERTISER!) (via Anil Dash)
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Record labels are being denied something they are eminently qualified for because they are politically incorrect?
Interesting.
I've always considered it this way .... the comet has landed, nuclear winter has set in, the dinosaurs are running around convinced they'll survive it all because they can afford lots of lawyers ..... meanwhile the mammals are doing something small and different to survive ....
Artists are continuing their move away from depending on record label sales; record labels seem to be the only ones still missing the point.
E.g. Beyonce. She is now running a clothing company Dereon. She wears them in the video of the first single from her new album, and even adds a line about them in the verses of the second single (Single Ladies).
Sounds like her music is now partially intended as a commercial for her consumer goods. That goes beyond even licensing music for advertising.
Support your local artists who are really talented. Culture belongs in your community, nurture and grow it. The time of the corporate sponsored rock god is over. It was a short lived aberation in history.
While you're at it, write letters to your favorite record-company supporting bands and tell them that you'll refuse to buy any of their CDs that come through a major record lable, but will happily pay to download them, if released in a drm-free, high quality MP3 format.
And then, you know, actually carry through on it.
Is it? Strikes me as perfectly reasonable (unlike many other aspects of the record business). Surely it's common in many industries to have a broad entry product pipeline, in the expectation that many will fall by the wayside before or after launch? I believe the pharma industry operates on the assumption that 99% of investigational new drugs will fail testing before ever reaching the market. And still makes huge profits.
All the cool kids are listening to
Screamo-R&B-Electro-AutoTune hybrids....
http://www.youtube.com/watch?v=-TH5ibABP4U
srsly the music is over. Brokencyde just fuckin' killed it.
Honestly I don't know how the above video could possibly fail harder. "Dispiriting" is the only word.
Regordane: Pharma industry isn't really a shining example itself. Most regular businesses have a higher return rate than 90%, I believe. In these times, I sincerely hope they do.
Taniwha: The dinosaurs were suing the mammals?
probably - doesn't help if you're a reptile and the climate is changing though ....
I'm sure that Bethany's experience in writing papers like "Will the Real Eminem Please Stand Up?: The Artist as Polysemic Text" gives her a strong insight into the real-world business of selling products, managing cashflow, and artist development. But it seems to me that her argument is more than a little flawed.
On one hand, she's castigating the record companies for signing up bands which aren't actually popular (the 90% who don't get hits). On the other hand, she's saying that everyone else isn't getting a fair chance at distribution.
So... record companies should concentrate solely on bands which are hits, because anything else is a bad business model... but they should be blamed for the fact that people who are so uncommercial they never even thought they had a 10% chance of success didn't get distribution from them...?
You can have it one way, or the other, but not both, which is something that I'd expect an academic to know. Record companies need to change their business models, but either they focus solely on the most marketable products (which may actually prove to be physical appearances of megastars rather than shipped bits) or they adopt a low-cost, "we work for you" service model that's open to everyone.
But they can't do both, which seems from this quote to be what Bethany is criticising them for.
Plus, of course, if you want to read Bethany's thesis in full, you'll need to pay £50 for the priviledge, and the publishing company will ship you the bits printed on dead trees. As an academic book, even at this price, it's unlikely that it will turn much of a profit (certainly not for her).
So I think that, perhaps, she ought to look at the business model for the bits she's creating, as well as the business model for the bits that musicians create.
@ Regordane - damn, you made my point exactly! It's exactly how pharma operates (or used to - nowadays, as far as I understand, the industry is more fragmented, the portfolio risk is pushed to single smaller companies, I think they're called CRO's, but don't quote me on this, as I know relatively nothing about this industry).
@ Remmelt - actually, why is it not a shining example? And what does "return rate" mean? If "return rate" means "making money off of R&D", then pharma is doing OK. The ratio should be dollars in, dollars out, methinks; not how many of the projects you try succeed. Similarly, I have no clue how many projects IBM's R&D money pays for; just that it results in them staying profitable. It's irrelevant if that's with a "success rate" of 1% of ideas.
R&D for music is like R&D for pharma or tech in that you create a bunch of stuff and determine what's viable to make real money only after a while. So far so good. Historically, this meant producing a CD, distributing and promoting it, and hoping that customers would like it. High cost, low success rate, therefore you need high margins. Still, it made sense a while ago.
Nowadays, the cost of "music R&D" has gone down. Any monkey can produce a good demo, release it online, shout about it on mylastfmspace, get a buzz going, and presto - the R&D process has dwindled down to a talent scout browsing myspace ad local newspapers and offer a re-record of their demo in a real studio (i.e. Arctic Monkeys).
So far the response to this by record companies has been to do exactly what Remmelt seems to want - increase their success rate by focussing on Britney Timberlake, who are much more certain to sell a bunch of CD's than all these crappy indie bands that no-one understands anyway.
Add to this that the traditional distribution channels are no longer controllable by record companies and that purchase behavior changes drastically and it's no wonder that these poor old record companies can't keep up. The whole business model is under massive pressure from at least four angles at once, and the value they once could add (scouting/investing/distributing/promoting) is so far reduced that it'll take a whole army of McKinsey's to figure out how these companies are going to keep from being disintermediated even further.
Mind you, I'm not taking a side (least of all "theirs"), but the discussion is probably not as easy as "those st000pid biggg fad execzz!". Anyway.
#8, Remmelt:
It's often been said that 50% of small businesses close within one year, and 90% close within 5 years. The Small Business Association suggest 66% within 4 years.
Is the record industry's 'popularity contest' method more democratic than the patronage system responsible for much 'classical' music?
A 10% success rate is good in any industry. Really. Shoot, I don't even read 10% of the blog posts on BoingBoing and I like the site. Most just don't interest me.
I suppose it's good to shake your fists at the way the world is, but sometimes it's just the best we can do. Do you want strap down American and force them to read/watch/listen to all of the artists out there just so they can have a success rate better than 10%?
@Garmt... Sadly, the "Arctic Monkeys discovered on MySpace" meme is a myth. They weren't discovered on MySpace - their manager and record company promoted them there. The band told interviewers that they knew nothing about MySpace.
In fact, all of the artists who've been labelled as "discovered on MySpace" (the likes of Lily Allen and Sandy Thom) were simply promoted on the site by their record company.
Record companies have long been experts at marketing artists as "discovered on the streets", as it makes them sound more authentic. It's just that these days "the streets" are the streets of the internet.
Listen to small mammals music! There's a treasure trove of artists outside the labels.
Not to beat a dead horse, but VC operates pretty much on the "significant percentage of bets don't pay off" model. It's risk management, and the statement that it's a bad business model is flawed, at best. I can certainly see something of an analog between VCs looking for the next Google and music companys looking for the next Coldplay or whatever.
Lenny Kravitz, the perfect front man for the Brave New World of Ad Rock; looks great, can cover any old tune...or make up a realistic simulacrum that sounds ok to the suits.
@Ian Betteridge - I'm sorry; I'll make my metaphors more exact :) I quoted them as an example of a band that became popular without the help of a record company, to show that in "todays' world" this is easier than in "ten years ago-world", when record companies were still reigning supreme (somewhat). Arctic Monkeys may not have been on MySpace but they were a huge hype in all the big news magazines before they had signed with anyone.
My name is Mike Shinoda and I play in a band called Linkin Park.
This conversation is incredible. I've been talking about the same things on my site...I would love to hear some of your thoughts there:
http://www.mikeshinoda.com/
http://www.mikeshinoda.com/blog/Music_Business-Featured/music_middle_class
http://www.mikeshinoda.com/blog/How_To-Responses_To_Fans-Music_Business-Featured/how_to_artist_royalties_indie_v_major
I wanted to investigate this evolution in my Master's degree work, but got sidetracked into some other stuff. However, my general thinking is along the lines of:
The business/working model to which musicians are evolving is actually a step backwards, towards patronage. An individual or group of those who appreciate an artist will pay for performances and/or compositional work.
Nothing earth-shattering here, but I think it is worth investigating... Randy:
Not that it can be overdiscussed or anything, but this revelation dates back to about the time of Lester Bangs. Or even Alan Freed.
Apparently the 'shadow' of the majors helps to invigorate the underground/counterculture/alternate scene in a way acceptable to all concerned parties. We sometimes forget that there's an upside to living under an overpass.
Their topline is a baseline for everyone who doesn't buy in.
I've worked for independent music labels for 15 years. This kind of thing is true up and down the line.
You HAVE to put out crap records you don't like in order to finance records you DO like that will sell less (perhaps like George Clooney making "Oceans 11" in order to finance "Good Night and Good Luck"). Unfortunately it's tough to figure out what will actually sell; you can probably count on one hand the number of people in the music business who could have predicted that an album of all traditional old timey country music would go multi-platinum ("Oh Brother Where Art Thou" soundtrack). This means taking chances on unknowns is de rigeur.