The future of the music industry

I was talking with a friend recently (who is a music promoter and band manager) about the future of the music industry and what it is thats happening with it. It seems that there is hardly anything left to be able to sell anymore to make artists money.

Ever since the advent of the I-pod and internet music sharing (and many other things) the music industry seemingly doesnt have as many tangible things in order to make money off of. CD and record sales are extremely low for obvious reason and concert ticket sales cant fully support bands and the industry (especially smaller bands and labels).

What does everyone think the next step may be in order to make money off of tangible/ or non tangible items for the music industry?

I’ve noticed that P Diddy, has been using YouTube.com as a place to market and sell a lot of his music, clothes, fragrances etc. Is there something here that anyone sees as useful? Are there products that can still be sold?

I just thought this was an interesting problem to be solved.

Dave, what if musicians got paid for their music?!

My knowledge of the music industry and recording studios is quite limited but the way i understand things it’s almost impossible to do this because of how the recording companies are structured and how they contract talent.

It seems pretty retarded to me that the Recording label makes money off of a band’s music and the band makes money off of concerts, shwag and literally fractions of the Album sales. A bit ass backwards if you ask me.

Maybe somebody just has to go “Burt Rutan” on the music industry and do it differently and on their own.

There are alot of things that have become broken in the past few decades… transportation companies (planes, trains and automobiles), NASA, the Music Industry, TV, Commercial Advertising, professional sports… I could go on.

Rather than trying to fix the broken companies that make up these messed up fields maybe people should just start new ones that work better in the cultural and technological circumstances that now exist. Most of these fields suck because they were created nearly 100 years ago if not longer and they are still being run on principles that existed then and can hardly be related now.

That said, alot of my clients exist in these “broken fields” so my rant is only half hearted because at the end of the day it’s sort of my job to help them.

I just wanted to reply to DC with a bit of the vigor and sarcasm he’s used to from me.

With all of the sharing/theft, etc…you don’t make money on the music. You give it away as advertisement for the live performances that can’t be reproduced. Other industries have already caught on to that. In the underground house music scene, the producers don’t make much money per track, maybe $300-$1000. But they put the tracks out to get their name and style out, even giving away the promos to the popular dj’s so it gets played and everyone hears them. That gets them popular and then they get booked to dj at the big clubs and parties that charge $20-$50 per head and they make $3000-$10,000 to play records for 1-2 hours. 3 of those gigs per week and you make a nice bit of change. I have an old friend I used to spin with that pulls 5k to play for an hour, and the promoter also pays airfare, hotel, etc. He’ll get at least 2 of those gigs every week.

So the key is to have your model so that you make your money on what can’t easily be stolen. Things that can be stolen, etc…you use to your advantage as advertisement which many companies pay tons for.
When I was dj’ing, I gave away most of my mixtapes (yes i’m that old) and cd’s as promos. But that got my name out and then new people bought all of my cd’s (new one’s and old back catalog stuff). I became popular and then everybody that had a party or club event would put me in the roster almost automatically. That opportunity wouldn’t have happened if I had tried to be so stringent with making sure I was paid appropriately for my first mixes.

Radiohead had an interesting approach by giving away their music for whatever the listener wanted to pay. Including nothing.

It for sure created buzz, promoted and I think in their case, made more money than going through their label.

Good to hear from you Geoff. I appreciate all your rye bitter comments. I’m actually starting to miss them.

I agree with you too. Its a lot of strange corporates ragging on musicians. Check out the Rolling Stone 40th anniversary issue. DMB has some interesting points of view.

Even back in the day, the average sales for an album were 3,000 copies. That’s the average. Now, a record company will charge a band about $50k to record an album. They don’t have to pay up front, the money will be deducted from their royalties. Now, if they sell each CD for $17 and all of that money would be royalties, a band that sells 3000 copies of their album would cover that cost of recording…just. However, that’s not what royalties are, so you can see how the industry really has the bands by the balls.

The only way most bands survived was touring. That will not change in the future. I do think that with the high quality and lower prices for recording equipment, mixing on computers etc, will basically cut the existing industry out of the market. Bands will probably record their own music and sell on-line and at concerts. Now, there will always be space for the mega-stars, like Britney or Madonna or whoever. They can only exist with millions in marketing, so to become that famous will take an industry working behind the person. I suspect that while it will become more rare, these superstars will continue to be created.

I think Radiohead’s idea was really where it is at. They aren’t the first to just sell an album online, in fact bands have been released online-only albums for 3-4 years now…maybe more.

Basically the whole situation can be boiled down to the situation in all kinds of industries, including ID. When the tools of production and distribution become low enough, the big conglomerates can’t compete with the variety of small competitors. I’ve read about an open source code cel on Core before (write your own program to use the phone and use it on any network). I’ve also heard of an open source car (all the tech drawings for components would be available for downloading). It’s an exciting and scary prospect!

Also, its not just about fixing the corporate end of the industry and the way things work within. Does anyone have any insight into what the next actual tangible thing that may come out of the music industry? OR is it just going to be sound and experiences from now on?

hopefully not for long. recording technologies are becoming cheaper and more and more musicians i know are doing it themselves (well), and looking to labels for distribution only… time will tell though… things are totally in a state of flux.

Lots of “bigger” bands are carefully watching the Radiohead experiment.

It’s no co-incidence that bands like U2 and Pearl Jam currently aren’t in a hurry to re-negotiate their now completed record deals. Both are said to be interested in some of the newer distribution models that are emerging.

Also of interest:
Madonna’s recent signing with a concert promotor instead of a traditional record label.

Paul Mcartney’s new album is only available at Starbucks…They are essentially his label.

Prince struck a deal with UK newspaper that “gave away” copies of his new album along with the newspaper.

The Vanocuver Sun (newspaper) did this recently. For a couple of days, in conjunction with Nettwork Records (I think), they gave away a compilation of songs from the Nettwork arsenal.

Sonic Youth is signed to Starbucks too. It sucks, because there aren’t many Starbucks in Montreal:(

-rock on!-

Sonic Youth and Starbucks…not exactly the combination I would have pictured…stranger things have happened.

As for not many Starbuck’s in Montreal…I guess Vancouver has filled Canada’s quota for Starbuck’s…I am less than 5 mins either on foot or by car to no fewer than 6 Starbuck’s locations.

shoot in seattle we measure distances by units of starbucks.

just a thought-

why are musicians pay structured differently than other types of “artists”. i know the history and tradition of the music business of course is based on recorded media, but if you were to compare for example to designers, why should a musician expect royalties and huge income streams.

i dont think you’d get much support in terms of the people used to getting million dollar contracts, but why is it that designers for the most part are paid salary, and have nothing to do with the success of their products? why shouldnt musicians be the same. the product is equal in terms of a commodity, while of course digital age copying makes things a little more complicated.

im not bitter in anyway (love what i do, and comfortable with the coin), just wondering why it is taken for granted that a talented musician (or actor for that matter) should make millions while talented designers make factors of 10 less.

just some food for debate.

R

it is easy to say that the independent route is the way musicians will take a larger share in the revenue, especially in light of the quality & availability of technology to do it own their own, but it is not any less of a grind to get the product out to the masses, thats is why the majors are still standing. they have much more in resources & sway push artists. other than upfront money why would u2 be content with “points” on albums sold?

you touched the youtube thing with puffy, many artists/entertainers have done the blog thing to create connections to their fans to some success & quite a few artists have made it big via music on myspace, so there are just soo many channels…so while it is easier to put music out there, there is soo much out it there that is somewhat disposable imo

well if you think about the investment in money & resources as well as their potential earning power of such “artists” there is not much comparison… that being said how many designers would forfeit some level of security for a chance of a big payout in the unknown? it is a good question though, after all most musicians (actors would be more like freelancers?) are just more visible employees of their parent labels/distributors; why should they be so elevated above the rest?

for arguments sake, i dont really see the difference. how is there necessarily more investment and money in making music? (esp. now when all you really need is a decent PC to record). the investment and capital required to bring a product to market (tooling, marketing, etc + inventory, distribution, etc.) can be huge. if anything, i’d think a physical product (compared to a recording) has higher costs than just producing a digital track of music.

i think what needs to be recognized is the paradigm shift that now allows music to be made by more people, more easily distributed and the lack of demand for physical CDs.

Perhaps in the future when rapid prototyping methods and ease to use CAD brings “design” ability to the masses, industrial designers may face the same issues.

ultimately, it comes down to the fact that people are only willing to pay for something the amount they value it. all the downloading of tunes (even with the radiohead donation model that didnt prove too successful) surely points to the root of the issue- music just isnt valued at what the industry/artists think it is. its not a technical issue or IP issues in my books, just a simple economic supply and demand one.

R

Kuchinsky: There are artists as you describe: session musicians. They are completely unknown and go around getting paid just to perform on a recording. As far as I know, they receive no royalties or additional compensation based on the album’s success.

As for the superstars out there, there are two factors that make them this big. 1. We live in a capitalist society and 2. the masses like larger than life superstars. Just look at all of the magazines out there that are dedicated to following star’s lives. I bet there are more of those than any other type.

true.

i guess im just pointing out that the capitalistic thing aint really working, so perhaps theres a flaw in the model…maybe people dont value their stars as much as the industry thinks.

bascially just saying the flaw is in the value system, not the technology, per se.

R