Saturday, August 23, 2008

Times Are A-Changing In the Recording Industry

Image courtesy of Javier Kohen

I’ve previously blogged about my complaints regarding today’s movies.

I also have a beef about today’s recording industry too. The record industry is the part of the music industry that sells sound recordings of music. The record industry includes songwriters, recording artists, record producers, sound engineers, talent managers, and those who work in artists and repertoire (A&R), manufacturing, distribution, art, marketing, promotion and entertainment law. Several of these (especially A&R, marketing and promotion) are usually direct employees of a record company, others are typically clients or contractors of a record company, although in recent years some of these relationships have begun to change.

In the early years of the phonograph in the late 19th century, the music industry was dominated by the publishers of sheet music. At the start of the 20th century, the importance of recorded sound grew in the business, and at about the end of the first World War, records supplanted sheet music as the largest player in the music business. Since 2001, record sales have dropped off while live music has continued to grow, decreasing the importance of the record industry. During this same time, there has been more emphasis on internet-based applications like YouTube and consequently the music video that so dominated the airwaves during MTV and VH1’s heyday has become relegated to the arena of nostalgia.

Not surprisingly, some people are excited about these changes and others are uncertain about it. I’m somewhere in the middle I suppose because I’m part of the generation that uses the internet, I-Pods and cell phones, but still remember the days of LPs, cassette players, and typewriters. Yes, for those young folks out there, IBM once made typewriters. Plus gasoline was around 75 cents a gallon and we were upset about it then.

In the first half of the 20th century, it was the literary artists like Ernest Hemingway, F. Scott Fitzgerald and John Steinbeck who were the movers and shakers in pop culture. They were the rock stars of their day. Then the rock stars like Elvis and the Beatles came along. For my generation, it would be along the lines of Michael Jackson (how the mighty have fallen!), Madonna and Kurt Cobain.
I should also mention how radio affected this whole matter too. Radio and rock and roll have had the most remarkable symbiotic relationship in media -- the synergy that everybody has tried to re-create in media conglomerates. Radio got free content; music labels got free promotion.

Radio's almost effortless cash flow, and mom-and-pop organization (there were once 5,133 owners of U.S. radio stations), made it ripe for consolidation, which began in the mid-eighties and was mostly completed as soon as Congress removed virtually all ownership limits in 1996. A handful of companies now control nearly the entirety of U.S. radio, with Clear Channel being at the top of the list. Clear Channel is also one of the nation's major live promoters, and uses its airtime leverage to force performers to use its concert services. I won’t even waste space about how they did a number on the Dixie Chicks. That is already well known.
Radio, once ad hoc, eccentric and local, underwent a transformation in which it became formatted, rational, and centralized. Its single imperative was to keep people from moving the dial.

The music business suddenly had to start producing music according to very stringent (if unwritten) commercial guidelines (it could have objected or rebelled -- but it rolled over instead; what's more, in a complicated middleman strategy of music brokers and independent promoters, labels have, in effect, been forced to pay to have their boring music aired). Format became law. Everything had to sound the way it was supposed to sound. Fungibility was king. Familiarity was the greatest virtue.

But then, just as radio playlists become closely regulated, the Internet appears.
The beginning stages of today’s music world can be traced back to one development: Napster. I remember so well as a college student around ten plus years ago when Napster came along and the recording industry wasn’t sure what to make of it. While it isn’t really all that now, Napster set the music world on its head. Now look at what we have. While I’m sympathetic to those who complained that copyrights were being violated and artists were losing royalties, it was also a sign that the truth of the matter hadn’t quite caught on yet: we were moving away from the CD's which replaced the LP, and going to the internet instead of tuning into MTV. It was quite puzzling because in my mind, the recording industry had been pretty cheerful about embracing new technologies and ways of doing business until then. To this day, we are still in a state of flux.

Realistically, why do most people download music? To hear new music, or records that have been deleted and are no longer available for purchase. Not to avoid paying $5 at the local used CD store, or taping it off the radio, but to hear music they can't find anywhere else. Face it - most people can't afford to spend $15.99 to experiment. That's why listening booths (which labels fought against, too) are such a success.

You can't hear new music on radio these days. Not in Nashville, "Music City USA", Los Angeles or even New York. College stations are sometimes bolder, but their wattage is so low that most of us can't get them.

The musical universe has fragmented into sub-universes, and then sub-sub-universes. The music industry, which depends on large numbers of people with similar interests for its profit margins, now had to deal with an ever-growing numbers of fans with increasingly diverse and eccentric interests.

It is hard to think of a more profound business crisis. You've lost control of the means of distribution, promotion, and manufacturing. You've lost quality control -- in some sense, there's been a quality-control coup. You've lost your basic business model -- what you sell has become as free as oxygen. But there is zero evidence that material available for free online downloading is financially harming anyone. In fact, most of the hard evidence is to the contrary.

It's a philosophical as well as a business crisis -- which compounds the problem, because the people who run the music business are not exactly philosophers. Which is why CBS Records missed out by a good bit on rock 'n' roll when Mitch Miller was head of A&R. They passed on The Beatles and The Rolling Stones. Although I have to admit his accomplishments are still quite remarkable. He was after all just human like us.

Who were the ones fomenting this hysteria about Napster and free downloads? RIAA is funded by them. NARAS is supported by them. But it wasn’t being done for the artists benefit. If they really wanted to do something for the great majority of artists, who eke out a living against all odds, they could tackle some of the real issues such as:
· The normal industry contract is for seven albums, with no end date, which would be considered at best indentured servitude (and at worst slavery) in any other business. In fact, it would be illegal. The movie industry used to operate like this up until the 1950’s.
· A label can shelve your project, then extend your contract by one more album because what you turned in was "commercially or artistically unacceptable". They alone determine that criteria.
· Singer-songwriters have to accept the "Controlled Composition Clause" (which dictates that they'll be paid only 75% of the rates set by Congress in publishing royalties) for any major or subsidiary label recording contract, or lose the contract. Simply put, the clause demanded by the labels provides that a) if you write your own songs, you will only be paid 3/4 of what Congress has told the record companies they must pay you, and b) if you co-write, you will use your "best efforts" to ensure that other songwriters accept the 75% rate as well. If they refuse, you must agree to make up the difference out of your share.
· Worse yet, when records go out-of-print, we don't get them back! You can't even take them to another company. Careers have been deliberately killed in this manner, with the record company refusing to release product or allow the artist to take it somewhere else.
· And because a record label "owns" your voice for the duration of the contract, you can't go somewhere else and re-record those same songs they turned down.
· And because of the re-record provision, even after your contract is over, you can't record those songs for someone else for years, and sometimes decades.
· Last but not least, America is the only country I am aware of that pays no live performance royalties to songwriters. In most European countries, Japan, and Australia to name a few, when you finish a show, you turn your set list in to the promoter, who files it with the appropriate organization. Then he or she pays a small royalty per song to the writer. It costs the singer nothing, the rates are based on venue size, and it ensures that writers whose songs no longer get airplay, but are still performed widely, can continue receiving the benefit from those songs.

In short, the music industry is less about producing music and more about keeping the books. There will always be a need for people who can keep records, track royalty payments, negotiate contracts, and what have you. But in terms of writing, producing, recording and playing music, these methods are changing. An independent artist who is also a good business person, keeps their head on straight and stays true to themselves while also keeping an open mind can do quite well these days. That's right! Artists who are also good business people. Not business people who only see music as being about a commercial product rather than a form of expression. Now that is an original thought!

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