I am beginning a new series of blog posts regarding the new music industry.  In it I will layout some definitions, myths, and truths as they pertain to the music industry, record industry, radio industry, and more.  These industries are notorious for confusing the musicians, fans, and businesses that work in them.  Let’s try to get some things cleared up.

First, the music industry is not the record industry. Let’s get that straight. The music industry is comprised of musicians; the record industry is made up of corporations and business people.

Secondly, CD sales do not mean the music industry is in a dismal state.  The way that the numbers are skewed is ridiculous.  Rather, the music industry is booming. The major labels want you to believe that they are a product of the economy and the piracy issue.  Even the state of radio has changed dramatically.  We have changed the way we as listeners consume music.  We have changed the way we hear about new music.  Failing companies have tried to change their models while others have stuck to their guns.  The bottom line is that the fans won’t wait for them to catch up.

How many new artists did you hear in 2010 compared to new artists in 1996? The music industry is alive and thriving, regardless of what you read about music downloads and CD sales or radio.  Let’s talk about the condition of radio.

1996

The number of commercial radio stations? Roughly 6,100.

In 1996 the top ten radio companies controlled only 600 or so radio stations.

2010

The number of commercial radio stations? 6,479.  That’s an increase of just over 300 new stations.

Today Clear Channel owns more than 800 radio stations.

One company today controls more radio than the top ten companies of 1996 combined.

I am not happy with the current way that radio stations are run. The majority of major market radio stations nation-wide (USA) are owned by Clear Channel, reaching the majority of the country. I would classify that as a monopoly. Fifteen years ago there was diversity among the markets. Today, the stations are owned by a few large corporations and play the same tracks by the same artists all day long, all over the country.

Number of markets reached by radio in 2008

I for one do not like to be “sold” something. Especially music. I like what I like. I don’t need some major record label spending millions of dollars to tell me why I should buy the latest pop record that the 13 year old girls are buying. I will go to shows, talk with friends, and work with artists. These are a select few ways I find new music.  On a side note, here’s a related post I wrote on buying songs versus buying artists.  Remember that the music industry is changing daily.  Bands need to find new ways to make a dollar.  We all know at this point that it’s not going to be from your next album.  It will be from partnerships, collaborations, integration, and networking.

There is little chance for an independent artist to get serious exposure on the radio without being endeared by Clear Channel. The upside to this situation is that the radio stations in their current format, and as we know them, are on their way out, just as are the major record labels.  The music industry is changing, not dying.

If you haven’t noticed, Internet radio, Pandora, AOL Radio, Shazam, Last.fm, and other digital music outlets are exploding.  These platforms are affecting the way we consume music.  Why would someone listen to a Top 40 station anymore when they can pull up Pandora and have a highly customized library of music literally catered to them?  Why buy a physical CD when you can have your music streamed to you anytime and anywhere?  Services like these are intelligent and adaptive. This is what makes them appealing. Major record labels, and in turn major radio, tells us what to listen to. The digital platforms allow us to decide what we listen to. Pandora and similar platforms listen to the user and adapt. They are embracing social media in its truest sense, encouraging constant communication from both sides.

The old way of doing things is changing.  Major record labels, FM radio, and traditional print advertising will never cease to exist completely. They will, however, cease to be the norm.  CD sales are declining.  Radio is becoming just one big playlist.  Illegal downloads are thriving.  Yet in spite of this we are discovering new working bands on a daily basis and purchasing their music, tickets, and merchandise.

The music industry IS NOT the record industry.  The record industry as well as radio are losing out.  The music will prevail.

That’s a wrap for the first post in the series titled “The New Music Industry Series”.  Coming up, I’ll be writing about how an artist can make money and survive in the new industry without a record label, how to use social media as a band, whether or not you need a manager, and much more.

The surface answer would be that the labels are taking all of the money for themselves. How much are they taking? How much does the artist get? It varies from artist and label, but typically it’s to the tune of pennies per album sold to the artist and the rest is divided up between the label, management, producer, etc. That huge advance that the artist got for signing a contract? That’s not really their money. The label just loaned it to the artist so they could make a record and eat for a couple of months while doing it. The band has to pay all that money back. Meaning usually they need to go platinum before they even see a penny in profits.

We need to make sure that we don’t just believe whatever it is that we’re told.  There’s always a spin on just about any argument.  So are digital downloads robbing the music industry blind?  I believe that the industry has taken awhile to realize that there are adaptations that need to happen in order to appeal to the consumer and still turn a profit.  If people are downloading music illegally, find a way to capitalize on it.  And lawsuits are the worst way to try and make your money back.

Is the RIAA For Real?

The Recording Industry Association of America (RIAA) has been complaining for years now that illegal downloads were killing their CD sales. Sure, I can believe that.  But are they really hurting that badly in comparision to the independent labels that are trying to sell albums to the same consumer base?  You tell me.  Just look at the major record labels share of the market below.

Image from http://wikipedia.com

But then they started complaining the legitimate digital downloads are the cause of the decline in CD sales. Really? Maybe they need to restructure their sales pipeline and focus more on what people are actually buying in that case. Just a thought.  The RIAA and major record labels should have struck a deal with Napster right off the bat to develop a system where everyone wins.  The Electronic Frontier Foundation has put some serious thought into such a system.  A system where you can download all the music you want and the artists still get paid.

Have the record labels considered that the rest of the country is in a recession?  They’re not the only companies losing money!  Consumers will buy less products overall and opt for cheaper alternatives, i.e. iTunes, Rhapsody, and other digital music services when their dollar doesn’t stretch as far?  Not to mention that it’s easier to acquire these digital files in the first place.  No hopping in the car and driving to the store, only to find out that they don’t have it in stock.

The Downward Spiral

Image from http://money.cnn.com

When cassette tapes started being outnumbered in sales to CDs, did the industry try to keep pushing tapes? Or did they instead start manufacturing more CDs and releasing older albums in CD format? They embraced the new format and pushed it (while hiking the cost each year, of course).  How are they making up the difference?  If you want to take a look at their year-end physical CD shipment numbers, they’ll charge you.  If the labels are being hurt by digital downloads, and their sales numbers and cost per unit reflected that, why not make this information free to the public instead of charging $25 for a week of access just to view the very data that could corroborate their claims?  That’s one way they’re trying to make up some lost sales.  Another is by suing people for downloading music online.  We’ve seen time and again where the RIAA slams a huge fine on a person and then spends five times that amount in litigation costs.

While the record labels are claiming a decline in sales due to pirated music, the RIAA then turns around and spends almost $1.4M in lobbying costs in the second quarter of 2010!  Seriously?  They’re dumping millions into lawsuits that only return a couple thousand dollars per settlement, all in the name of “making an example out of someone.”  Are these “examples” working?  Apparently not. (Note: They also forget to mention that one of their top label executive’s very own children were pirating music illegally. I didn’t see the news article on that one.) The RIAA has abandoned its peer-to-peer monitoring and is instead now working with Internet Service Providers (Comcast, Verizon, etc) to deter pirating.

I am a big proponent of artists and musicians being fairly compensated.  An industry group or third party organization can be a great thing for all musicians and everyone involved in the music industry.  Is the RIAA that organization?  I do not believe it is.  They’re deteriorating and not adapting to the ever changing industry like they should be.  As a result, the artists have been conceiving their own ways to further their careers.

I’m here for the artsist.  I love working with independent musicians.  And I will continue to keep a pulse on the industry that I work in.  All of you artists are too busy creating music and trying to avoid being taken advantage of.  Let me help.

Cheers,

Josh

1: How does music affect a person?

Music is just as powerful as smells, sights, and the sensation of touch.  I might even go so far as to say that music is more powerful than the other senses in terms of emotions.  It has the ability to affect our mood  When we have emotional ties to a situation, our brain will associate whatever we were listening to with that emotion. This is why certain songs conjure up feelings of sadness (a song that was on the radio when your girlfriend broke up with you or when your dog died), feelings of happiness (the very next song you heard when you found out that you got first place in something), or just simple reminiscing (songs that you used to listen to when you were younger or lived in a different place).  Music also has the ability to affect us in conjunction with our sense of sight.  If you’re watching a movie, music plays just as important a role as what you’re seeing on screen. It helps take you up and bring you down with the mood of the actors. It can evoke feelings of sadness that the actors are feeling or make you anxious along with them.  Or it helps build suspense and puts you on the edge of your seat. The sounds attached to the screen are powerful tools that build dynamics and ensure that your emotions are going in the direction the filmmakers intended.  Music is powerful!

2: What are some brief issues when downloading music illegally?

By “sharing” files and then propagating those to even more people (without paying), you are literally stealing from the artists, labels, and management companies. Sure, nobody wants the major labels to make any more money than they already are without justly compensating their artists, but the bottom line is that it’s stealing. Period. The artists don’t always make much money as it is, but by using online services (or even swapping external hard drives), we are cheapening the music. We are saying to the artists that their music isn’t worth our 99 cents. We pay $1.50 for a bottle of water, but we won’t pay $1 for a song that we really, truly appreciate? There is something very wrong with this. Pay for the music you consume. Get rid of the illegal music that you’ve traded online or borrowed other peoples CDs. It’s hard, but it’s the right thing to do. If you were a painter, you wouldn’t paint for free and pass out your artwork to thousands of people without expecting even $1 for it. Come on, people. You’d hate it if it happened to you, yet it happens every day. Do something about it.  Don’t help the industry crumble even more; the major labels are taking care of that.  We need to help compensate the artists with what they deserve so that after the industry has evolved into its next form, the artists will still be there.

3: Do we spend too much time listening to music?

I don’t believe so. You can listen to music while driving, working, studying, working out, sleeping, and eating. It helps to pass the time, and often encourages creative thought. At the same time, music can be mathematical and highly structured.  This is one reason that so many people in so many different walks of life appreciate it.  It’s a common bond between us.  It helps break the ice in conversation.  But with all things, one can consume too much.  It becomes too much when we replace conversation with human beings with music.

These are my quick thoughts on the three questions my friend presented me.  I hope they spark some interest in you as they did me!

Cheers,

Josh Walker

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Just think.  iPhones on t-mobile!