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The Day The Music Stands Still

The following is the 1st piece I wrote on the subject of the current state of the music industry. Written as a research paper in 2007, I basically copied and pasted my original version here, minus most of the citations I originally had in the paper. It’s based on 2007 information, but I think the basic point remains the same:

You hear that? That is the winds of change. Today’s music sales are down 50% from 2000. On October 31, 2007, leading music sales authority, Billboard, announced that sales for the week, where the top selling album sold half-a-million copies, were down 18%. The next week, where the top album sold over seven-hundred-thousand copies, sales were still down 13%. October brought little good news to mainstream recording artists, their respective labels, and the music industry in general. The tenth, brought the ground-shaking news that Radiohead had released their latest album exclusively over the internet, for whatever price the consumer wanted. Eight days later, Madonna announced she would leave her long-time record label, to sign with a new one, which specialized in concerts. Many artists and industry analysts have said this is only the beginning of a paradigm shift where mainstream musicians try to reinvent the way music is sold in order to stay competitive. The mainstream artist’s main threat is their independent counterparts, who have embraced changing technology and times in order to bring their sales up and their visibility to all-time highs, setting themselves on an equal playing field. If the mainstream artist does not adapt their independent counterparts’ ways, and embrace technology, the mainstream artist will face more trying times, be on a level playing field with the world of independent music, and eventually face obscurity.

Back in the day, there was no way to get just one song off a record. Therefore, if you heard this great song during a movie, you had no choice but to buy the whole soundtrack. It did not matter if you hated the rest of the songs in the movie; you were paying for the whole album. Sure, you could buy a single by itself, but not every song is a single, and not every single is sold in hardcover. But that all changed on April 28, 2003, when the “iTunes Music Store” opened for business, allowing the sale for a now six-million songs from any album available for purchase. The opening signaled on-demand sale of songs; no longer did the consumer have to buy an album to get that one song. The online store is such a driving source, it accounts for 70% of the legal music downloading market, which has thus far translated into three-billion 99-cent songs download in four years. For the American mainstream artist, this means far less album sales, but much more digital downloads.

Financially, a one-sided sword points right back at the mainstream artist. Take The Fray’s How to Save a Life for instance: the album has sold two million copies, if the band makes 10% of the $14 Wal-Mart sells it for, then the band is making $1.40 per album, or $2,800,000 overall. The single How to Save a Life has also sold two million copies, thus if the band makes 10% off of the one buck iTunes sells it for, they make ten cents per song, or $200,000 overall. Now of course, every artist has varying figures for what they receive from sales, but the point is made. The artist is not making even close to half the money with digital song sales, than they are regular hard copy albums, which is a problem for the mainstream artist if album sales are going down, and digital song sales are going up. On the other side, the independent artist, whose music is not mainstreamed in stores and on radio, has few album sales, but does have word-of-mouth on the internet, thus getting more song sales off iTunes from consumers who want to own the song they heard on the artist’s MySpace page.

Say the consumer buys an album, but are afraid they might lose the album, or damage it, thus they stick in the CD-Rom drive in their computer, bring up Windows Media Player, and rip the album to their computer. Their friend, who does not have the album, wants to listen to the album also, but instead of letting the friend barrow the CD, they make a copy of the CD, and give it to the friend. The artist, whose CD is in question, has just lost another sale due to the consumer sharing the joy of music. The RIAA’s official take on the subject is against the practice, “Record companies have never objected to someone making a copy of a CD for their own personal use. We want fans to enjoy the music they bought legally. But both copying CDs to give to friends and downloading music illegally rob the people who created that music of compensation for their work.”

It is a natural reaction when you hear good music, to share it; “Have you heard that great new song?” If the person you are telling this to has never heard this artist or song, they might be hesitant to buy, and instead might want to try it out first. Being you love this music; you copy the CD and give it to them. Now, one of three things will happen, they will not like it, they’ll like it and keep it, or they’ll like it, and buy the real thing. Before ripping and copying CD’s came around to an affordable technology, easy sharing of music was impossible without buying the album; making for many a disappointed music fan, and leaving a sense of rejection for whatever the artist comes out with next, even if it is “good.” The point is, music is meant to be heard, and good music is meant to be shared, if shared, then the word spreads, and sales go up. In the short run, the musician and record companies might lose money, but in the end, they might actually make money, benefiting both the record company, and the consumer’s joy of music.

However, when these copied songs are distributed on peer-to-peer file sharing networks; that is when the artist and record industry has a problem. They could be losing hundreds off one song you share, due to the widespread popularity of these programs and sites. Moreover, it is not enough that you are mass sharing, the chances are you are in on the downloading of these illegal downloads. It is extremely easy to use these programs, just go to one of their websites, and download their program ex. Limewire. Once in, you can share any number of files on your computer, from games to music. Alternatively, you can download files yourself; just type in the search criteria, such as artist or song title. Once you find the particular file you are looking for, depending on your connection speed, you could have the file, free, on your computer, with unlimited use. No matter what kind of artist you are, this process, completely at the mercy of the fickle consumer, hurts you. Even iTunes cannot help here, as the average iPod owner only buys twenty-two tracks. This means the average MP3 player owner still gets their music by other means.

The most probable answer for why the consumer would illegally download music probably lies with the greenbacks. The asking price for Britney Spears’ release, “Blackout,” is nineteen dollars, but big retailers such as Wal-Mart roll that price down to fifteen. Still a sharp dent in the wallet, especially when Christmas shopping for your fellow members of the Britney Spears fan club, so the cheaper answer would be to digitally download it off Wal-Mart.com, which would be ten dollars. Since the fan club is big, the much cheaper solution would be to illegally download the album. But wait, what about the little message on the liner notes which says, “Giving away illegal copies of discs … is illegal and does not support those involved in making this piece of music — especially the artist.” Oh, that’s sad, but it’s not like somebody else will buy the CD, or the artist will miss the money, maybe it would do Britney Spears not to have my money to spend on drugs and the like. The same could be said of other artists, will they really miss the money? Will not somebody else buy the CD? This thought process and reasoning plays out in the consumer’s mind across America, daily.

In a recent poll by Billboard.com, 29% of Radiohead listeners said ten dollars was a fair price, especially since most of the money was going to the band. While 20% said, five was a good price because it is more than the artist usually makes per album. Only 18% said they would pay nothing, because it is a gimmick to make a point.

Nevertheless, before the consumer even thinks about money, they have to decide what to buy. In the 1950’s the genres of music were counted on one hand: Pop, Rock, Jazz, and maybe a sub-genre of doo-wop. Today, there is hundreds, if not thousands of genres; in rock alone there’s: Alternative Rock, Christian Rock, Classic Rock, Hard Rock, Heavy Metal, Indie Rock, Iranian Rock, Piano Rock, Pop Rock, Punk Rock, and Soft Rock, just to name a few; and those sub-genres have sub-genres. The range of artists and genres on the average person’s playlist is greater than ever before, and even the greatest or richest music fan could not afford to buy the album of every artist they like, thus the consumer is back to the money problem.

For some, there is nothing worse than buying an album that has a good song on it, expecting the rest of the album to be good, only to be disappointed, ripped off. It is only since downloading music came about that you were able to do something about it, you can listen to every song on the album and see if it’s worth buying, worth keeping the downloaded version, or to throw away all together. With the internet, artists can give you thirty-second previews or even full previews of songs on MySpace, all without you keeping the music. Of course, the thirty-second previews take the song out of context, and leave you thinking, “Hey Jude is the most boring song I have ever heard,” and the MySpace previews only have the radio singles you already know. Therefore, if the consumer wants to avoid the hit and miss, he has no choice but to download freely.

Consider this: if the casual music fan only listened to mainstream radio, the chances are slim of them finding something the consumer likes. After all, the only songs played are radio-friendly, old, dull, tried, and tested in focus groups and dog kennels. This system eliminates any chance of the causal listener of finding anything new and exciting, and therefore most classic rock lovers are never going to hear VHS or Beta’s You Got Me, and love song lovers are never going to hear Hellogoodbye’s Here (In Your Arms). An entire generation will write this era of music off as one of the worst, when if they heard the whole story, they might say it was one of the best.

The consumer also cares about convince. What is easier? Getting out of the house, going to Wal-Mart’s music section, and hope they have the CD you are looking for? Going to iTunes, taking out your credit card, and entering all this personal information just to download one song? Or, going to a peer-to-peer file sharing program and having the song or album you want on your computer, yours to keep, in less than five minutes? The consumer will select the latter, easily; there is no competition. The record companies cannot fight it; it was bound to happen. The only thing they can do is go with the consumer, and not against it.

Just like with copying, some artists and record labels are now seeing the benefits of sharing the joy of music, hoping the word will spread, without the consumer keeping the music, but still being able to listen to the whole thing without paying. Throughout the second half of 2004, and first half of 2005, Christian rock band Sanctus Real streamed their whole sophomore album, Fight the Tide on their website, free. The result took them from little known group, to having four top-five singles on the “Hot Christian Songs” chart. Today, several music-oriented websites, such as freemusicfriday.com, by artist and label permission, give out free music on a weekly basis to the hungry consumer, hoping they will buy the full album, or at least spread the word to another person. The word “Free” is not a dirty word in the music business anymore, but rather a marketing tool.

On October 10, 2007, the music world was rocked; Radiohead had released their highly anticipated album on a global-scale, free. What was widely considered the best music group of the past twenty years, had forgone their long-time label, and tried an experiment the record industry would watch intently. Stone Gossard, founder of Pearl Jam, gave a hint of the direction his band could move if Radiohead is successful, “If they’re successful, I have no problem following their lead”. Why would Radiohead radically shift their paradigm? “Partly just to get it out quickly, so everyone would hear it at the same time, and partly because it was an experiment that felt worth trying, really. It’s fun to make people stop for a few seconds and think about what music is worth, and that’s just an interesting question to ask people”.

The results so far have turned out well; critical reviews called the album one of the band’s best albums, in an already storied career. Rolling Stone called the album, “All of [In Rainbows] rocks … it delivers an emotional punch that proves all other rocks stars owe us an apology”. While sales numbers have not been released as of yet by the band, they have called recent sales reports of 1.2 million “exaggerated,” but that the average price paid is in the neighborhood of $8. Whatever the outcome of this grand experiment is, Radiohead is not the only mainstream artists trying this new method. Nine Inch Nails released a new concept album a few weeks later, in a similar fashion, with lower quality version being free, and a higher quality version being five dollars. The group gave a reason similar to Radiohead, in that they want to get it out to as many people as possible.

Nevertheless, both of these bands have one thing in common, they are free of their longtime record labels, giving them the freedom to try new things out, and explore the future. However, for artists such as Nine Inch Nails, they are not exactly sure what the future is, “I think that right now, the music industry is between business models. I don’t know if this is the wave of the future”.

One easy answer that is picking up steam is the longtime staple of touring. USA Today cited touring as one of the primary reasons for Nickelbacks recent success, because of their often-exhaustive efforts touring across the world. On October 18, 2007 Madonna announced a blockbuster deal where she would leave here longtime record label, and sign with concert promoter “Live Nation,” under a $120 million dollar deal, where Madonna is guaranteed at least fifty million. Music agent Dennis Arfa explains the business sense behind the deal, “Touring is where the goldmine is. The record companies have to make money off the records. Live Nation only needs [the records] as a promotional tool for touring.” Madonna’s tour sales for 2006 were upwards of $193 million, thus under this new deal, she would have made over $120 million dollars, while Live Nation would have made upwards of seventy million. People, such as Linkin Park manager Peter Katsis, hope these trends in the music industry lead to the day where artists are in total control of their music.

Let us face it: the people that run the corporations and record labels are in it for the money. The market is people that can sing, and people who want to hear their music; the record labels can supply this demand by getting the artist out there by putting them on the radio, advertising, TV and radio appearances; they sell you. Moreover, without their help, you cannot get exposure, and you certainly cannot make any money, or so they would like you to would believe. This working relationship has become strained over the years as the artist is coming to the realization that they do not need the record label anymore, after all, there is less money in it today.

Hence, how does big record industry respond to consumers’ complaints of price, choice, convince, and quality of their music? Well a new peaceful solution is the “Ringle,” a two-to-three track mini album with an artist’s new radio single, another song off their CD, maybe a remix, a cell-phone ringtone, and maybe cell-phone wallpaper. The asking price is five-to-seven dollars, half the price of a CD and less than a third the songs, all for a profit margin of thirty-one to forty-three percent for the record company. By Christmas of 2007, most if not all of the major music retailers will by carrying the “Ringle”.

Another marketing tool musicians are using is social-networking sites like MySpace. The millions of users on the site make it easy for an artist to get exposure. Twenty-five-million plays on MySpace for Colbie Caillat has brought her song, “Bubbly” from obscure independent song to one of the top five songs in the country on the main Billboard singles chart. Now, most artists have MySpace accounts, some, such as Paul Wright, use it as opposed to a normal website, since website developing, and maintenance fees can be time-consuming and costly.

One thing is certain in the music business, and that is nothing. Even top artists do not know what course to chart next. Should they experiment and find new ways to sell their music? Alternatively, should they wait for a proven formula, then change? Musician, John Mayer, sums-up the attitude of the current music industry best in his song, Waiting on the World to Change, “So we keep on waiting, waiting, waiting on the world to change.” As long as the music business is waiting, sales will continue plummeting, while those who experiment will keep rising up the ladder of success. Until the music industry changes, the first shall be last, and the last shall be first, with sales shifting in favor of the experimental independent artists. John Mayer also sum-up the independent musician’s mentality in his Live Earth version of Waiting on the World to Change, “We’re not waiting, waiting, not waiting on the world to change.”

Note: If you want the 2nd major piece I did on this subject, which I did in a powerpoint presentation, you can get the gist of what I was saying with the powerpoint by downloading it here:

The Day The Music Stood Still

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