Maxwell Hammer's shared items

Friday, October 12, 2007

Why the music industry is dying

Throughout most of the 80's the Major Labels were all about consolidation. Top 40 was their invention. What they wanted was everything neat and divided up easily. They wanted to be able to tell people that these are the top R&B songs. These are the top country songs. These are the top mainstream songs. That's all you can listen to, because that's all we want to sell you. They wanted to minimize the number of artists and the number of albums. That maximized profits. What they hated was when there were thousands of little bands, each with a loyal little following. Consolidation was the best way to minimize costs. Once you had an album it's cheaper to run 5 million copies of one CD. It's just a matter of scale. The more copies you make of a unit the cheaper each unit is. That's something anyone who's ever had business cards or t-shirts printed has found out.

The plan was coming along well.

Then the record industry was struck with a one two punch. Hip Hop and Nirvana ruined the whole thing.

First Hip Hop came along. Sure, it had been around since the 70's, at least. But it was put out on it's own record labels. Little indie labels that the big boys only noticed when they would occasionally buy one of their producers or pick up one of their acts.

But MTV put on Yo! MTV Raps in 1988. While it had been big before, now Hip Hop blew up. Instead of sticking to their plan of releasing a million Milli Vinilli and Tiffany clones they had to change their strategy. There were a lot of rap acts suddenly making money, and the record industry wasn't getting their cut. So they had to sign all the big rap acts or they had to buy the indie labels that signed them.

Then Nirvana came along, with a thousand little moderate punk bands with them. The labels had to do the same thing with the white music. Top 40 as a genre was mostly destroyed by this. Kurt Cobain called 1991 "The Year Punk Broke", well Rap broke about the same time.

But, little by little, the recording industry did it again. They bought lots of little labels and just folded them into the bigger company. They created their own little fake indie Labels, like Interscope. See, Nine Inch Nails had a contract with a little indie label called TVT. Something went wrong with the negotiations when a big label tried to buy them for their wonderboy, Trent Reznor. So they just had him break his contract, gave him his own fake label called Nothing Records under another fake label called Interscope. They dared anyone to say anything, because they knew they had the meanest lawyers in town. Interscope was just started in 1990 and released such greats as Gerardo's Rico Suave. It was always owned and distributed by Atlantic records or a subsidiary.

They also signed a lot of indie artists from Sub Pop (name some others). They were initially offered very good contracts. Then later, in the mid 1990's these contracts weren't renewed. Michelle Shocked had her name stolen from her. The record label claimed they owned her name and wouldn't allow her to record under it for ten years. Juliana Hatfield had her contract just dropped. She found that the album she had just recorded didn't really belong to her and her label refused to release it. Even though it was finished and already paid for. They still hold the album God's Foot hostage. Fortunately you can find some staticky copies on Pirate Bay. Some fans say it's her best album ever.

Again and again this pattern was followed. Buy or create an "indie" label. Cherry pick the musicians you want and drop the rest. It worked and few noticed.

Finally their plan worked. Everyone was paying them. They had their fingers in everybody's pie. In the late 90's they had managed to cut down their roster of musicians to just a few. It was mostly just Britney, Christina Aguilera and the boy bands. It was a horrible time for music. MTV didn't play videos anymore. Radio didn't play anything new unless it was by one of the approved artists. The underground music scene, which had been around since the Beatniks, was really underground. You didn't hear about a band that wasn't one of the majors.

Then downloading came along. It was nothing new. The record labels had been aware of the possibility since the 80's. They saw it as a content delivery system, though. Their vision was that you would go to the record store, tell them what album you wanted, and instead of them having it in stock, they would download it and burn it for you. The Record Store as we knew it would just be an empty store where you could have anything you wanted.

The Labels couldn't wrap their head around it. Every metric in their system, all the accounting, was based on shipping units of Cd's, cassettes, LP's whatever. They had split themselves up into several units. One of these was distribution. If you cut them out where would all those VP's and Presidents of distribution go? How would they make their cut from the indie stores? They saw themselves not in the intellectual property business, but in the shipping and warehousing industry. They bought units. If you weren't selling a unit, what were you selling? They understood selling things that you could hold in your hand. That's it. If you separated that from the music then what did you have? Besides, they had been wary of any knew tech since they had lost a bundle with Quadraphonic sound in the 70's.

So they went on, oblivious, for awhile.

But it wasn't downloading that was killing their sales. It was the web.

With the web everyone could put out their opinion. Even if they didn't have a blog, they could write reviews on Amazon. They even put them right there on the page.

The Labels had never wanted to know what people thought about music. They wanted to tell them what to think. They didn't want to find out what kind of music they liked and then sell that to them. They wanted to tell them what they liked based on their age. If they were baby boomers, they got John Tesh and about a million classic rock box sets. The young and angry got Tupac, Marilyn Manson and Rage against the machine. All artists that seemed to be anti-establishment but they were part of huge multinational corporations. Everyone else got Britney and the Backstreet Boys. That's the way they liked it.

They even got rid of most of the indie record stores. You had a choice of where to buy music, Blockbuster, Best Buy or Wal-mart.

But, in the meantime, a million file sharers were out there ripping and burning. Telling each other about their great new finds. Obscure bands came out of nowhere and moved major units. A million music blogs were started. The corporate rock magazines, like Spin, started basing their print issues on what had been big on Pitchfork 3 months before.

The Labels weren't getting any of the money. Not even for distribution...which is where they always got a cut before. Indie labels had always made deals with the big boys to get their albums into stores. Not anymore. Why do you even need a CD when you can download from bittorrent? Even people that wanted to pay for these things couldn't. The Labels have huge back catalogs that they never release to the public. Millions of songs sit in warehouses and rot because they don't want the cost and trouble of having to issue them on cd. But they won't give them away, either. They would rather no one ever heard them again.

The Labels tried to buy the little distribution systems. It didn't work. Sure, they could buy Napster or Audiogalaxy, but as soon as they did, as soon as they started limiting the files available, everyone moved to a different distribution system. So they went after the users. They sued a few people to scare off everyone else. It didn't work, either. The filesharing systems just became anonymous.

So now the Labels try to protect their dying business model by lobbying congress and bribing politicians. Maybe this time it will work, but I doubt it. Legislation wouldn't have made buggy whip manufacturers profitable after Henry Ford changed the industry, would it?

1 comment:

Chrisby said...

Great read. I am turning in a contrast paper with the exact same topic. There's too much truth to be told and too many gullible main-streamers who cannot grasp the concept that today's music sucks.

oh and First!