Wide Area News
Old-time music
by Russell Brown
CDs are not antiques. Yet.
Last week, I looked at the striking decision by the major music labels to abandon the technology that was supposed to underwrite their future – DRM, or digital rights management. Not only did DRM fail to prevent music piracy, it helped shift power in the industry away from the record companies and towards Apple, whose iTunes Store – at least in the US – dominates paid music downloads.
There were other portents. CD sales in the US last year were down 15 percent on 2006, and it might have been worse had not a clutch of big-selling albums rescued the numbers late in the fourth quarter. Download purchases were up 45 percent, but selling single tracks is a hard way to make money, and even optimistic predictions see downloads making up no more than half the market by 2012.
The stark fact is that music consumption is moving away from retail purchasing, yet more music than ever is being recorded. You can hardly escape music in daily life: radio, ringtones, music TV, video games, TV ads and promos, YouTube, MySpace and the ubiquitous iPod. Meanwhile Auckland’s big new Vector Arena is regularly filling for concerts. So what’s going on?
Beyond the head offices and intransigent lobby groups, music executives are realistic about change. Mike Bradshaw, the head of Sony BMG New Zealand, envisages a more vertical, comprehensive role for music companies. One company might run record labels and also offer management services, publishing and booking agencies to its artists.
It’s actually happening already. In October, after her contract with Warner Music expired, Madonna did not re-sign with the company she had been with for her entire career, but with Live Nation, a concert promoter. Live Nation got a stake in the various Madonna revenue streams – recordings, merchandise, live ticketing, concert videos – and the star got equity in the company and a pile of cash.
There is now more money in concerts for major artists than in selling CDs – an average 75 percent of their income. Even so, the $120 million value of the deal may be more than Live Nation can recover from an ageing pop artist, especially without publishing revenue (more of which next week). But Madonna was a trophy signing, brought on board to woo other acts. Michael Rapino, the CEO of Live Nation (which was split off from the Clear Channel radio network two years ago), told Fortune magazine at the time of the deal, “I am the worst enemy of the labels.”
Last June, Prince probably made more money by licensing his Planet Earth album as a giveaway with the Mail on Sunday than he’d have made selling the thing conventionally. As a consequence of the publicity (which enraged retailers), his six-date British concert tour sold out in 20 minutes.
Locally, Fat Freddys Drop did not see the spectacular multi-platinum sales for their Based on a True Story album replicated anywhere else. But they didn’t expect to: the group’s real income derives from live performance and, to a lesser extent, the associated merchandise sales. Its primary base in Europe is with Sonar Kollektiv, a company formed around dance music producers Jazzanova.
Sonar is largely a music and publishing company but it also has a line of clothing and a cookbook to its name, and promotes live shows. Remarkably, it also sells a selection of wine online (sometimes packaged with music), in conjunction with DJ-producer Rainer Trüby, who has been combining wine evenings with downbeat concerts since 2004.
This isn’t necessarily new. London’s reggae music sound systems have been known to operate minicab companies alongside their production, live entertainment, retail and pirate radio enterprises. But it does suggest that large corporates geared around massive retail sales of recordings (itself a relatively young part of the music business) will not be well set for a new world.
If they are unsustainable, they will divest before they disappear, and the intellectual property will be in the hands of new companies, probably staffed by people from the old ones. Music will still be a business.
Next week: The role of the internet and publishing.
Email: russb@dubwise.co.nz
