Is the Recording Industry Doomed to Fail?

There's been a lot of talk lately in and out of the "music business" about the future, and most of it is doom and gloom.  Declining sales, internet piracy, the internet, cheap recording software - all have been blamed to some extent for the financial woes that record labels are facing.  Does it have to be that way?   This blogger says "Yes."    The "recording industry" - which is distinct from the music industry - is probably doomed to fail in its current form.

Before we get into that, let's take a little step back in time.  The "music business" goes back much farther than the monster we know today.  Archeologists have found a 35,000 year-old flute in Germany, made from vulture bones.  Certainly by biblical times and the rise of the ancient Greek civilization there were professional musicians, so people have been earning a living from music for thousands of years.

Throughout history, this has been done by an artist composing and performing music.  The more prolific an  artist was in terms of creating music or being heard live, the better a living they made, but being a musician was a job, and required much time and effort.  The most successful musicians had patrons who sponsored them and paid their living expenses by commissioning works, but most musicians simply traveled from place to place and played music.

By the nineteenth century, printing presses allowed the development of sheet music publishers, which made popular compositions available to the masses.  Then along came Edison and Marconi, and everything changed.  Sound recordings became the ultimate disruptive innovation, changing the way music was listened to, and the way revenue was generated from it.  No longer did the public need to travel far to hear a famous musician, or wait until they came to town.  Now, they could run down to the record store and simply purchase a recording.

It took some time, but soon the focus would shift from performing music live to selling recordings.  Record sales became the be-all, end-all of this new industry.  The vast majority of musicians were poorly compensated, and wound up signing the rights to their creations away for a chance at stardom.  The typical record deal involves a cash advance and studio time, and then chargebacks for every little expense.  An extremely small percentage of artists ever "recoup" - cover all the label's expenses - and make a lot of money.  But when one does, they make enough money for the label to cover the expenses of dozens of other artists.  More importantly, the label retains most of the future royalties, so recordings  that continue to be popular for years or decades continue to generate revenue for the label.  Meanwhile, the pattern for popular musicians became release an album, tour for a few months in big venues, take a couple of years off, (go to rehab) and record another album with a couple of great songs and a bunch of filler cuts.

The "recording" industry was tied deeply to the broadcast radio industry.   Radio plays drove sales, after all, and best-selling albums would get a lot of airplay.   Radio discjockeys were important predictors of record sales, and in many cases were kingmakers.  Radio and record labels were in business together, and deeply intertwined.

But things have changed.  Technology has once again had a major impact on how we listen to music - it has become personal, intimate.  We listen to songs, not albums. And we listen to them largely by ourselves.   We listen to ipods, and mp3s, in our cars, on trains, at work.   No one has to rely on a radio station - you can customize your personal playlist, and carry thousands of songs with you wherever you go.  Radio becomes irrelevant - that thing you listen to when you forget your ipod.

More importantly, music has become easy to produce.  For decades, record labels kept the bar high - studio time was expensive and the best producers were on a tight leash.  Marketing cost money, videos cost money, getting your music heard cost money.  It would take literally hundreds of thousands or even millions of dollars to produce and market an album.  But now, anyone with a computer and a couple of hundred bucks can do it.  There are open-source DAW programs like Ardour that are free - free! - and are better than a professional studio had a few years ago.  You can buy mics and interfaces at Guitar Center, have CDBaby or TuneCore distribute your music and market it yourself using the internet.  In fact, many traditional artists are re-recording and re-releasing their classic hits so that they retain control of the recordings.

More importantly, consumers are realizing that there is much more and much better music available than what the record labels tell us.  Just watch the Grammy's - same 'ol same 'ol.   And the paradigm is shifting back to where it always belonged - to working musicians playing live in front of a lot of different, smaller audiences.

Is internet piracy bad?  Yes, of course. Theft is theft.  But piracy is not the root cause of the recording industry's woes; progress is.   The RIAA is not going to save the recording industry, diversification is.  Once they understand that there is no more big pie, they can find ways to live off smaller slices.   Once they realize that the diversity of music is the future, not the same cookie-cutter recording artists, they can build a business plan around it.

Is selling records bad?  Of course not.  I'd be a hypocrite if I said it was.  (Shameless plug:  check out our album) But, for years, the concert has been a marketing tool to support album sales.  This is all backwards; the album should support getting the artist out in front of people.

The landscape will change quite a bit in the next few years.  It will be interesting to see who survives.  My money is on lean-and-mean record labels who build strong relationship with the consumers and venues.  Who realize that the sound recording is not the end product - the artist on stage is.


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