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In reflecting on the world of the Music Business in 2004, there were some very profound and dramatic changes that changed the nature of the Music Business itself. 2004 will always be remembered as the year the ‘Big Five’ became the ‘Big Four’ and don’t be surprised if you’re reading at this time next year and we’re telling you about the ‘Big Three’! Beside the Sony/BMG merger, 2004 will also be remembered as the year labels utilized aggressively utilized video games as a marketing vehicle for the launching of many of their artists.
It will also be remembered as the year when the public finally said “No Thanks” to the Concert Business in a very loud and clear way. The summer touring season especially, was taught some very painful and costly lessons regarding who and exactly how much the public is willing to pay to see an act and what they are no longer willing to pay for! As a result Clear Channel has removed Service fees from its ticket prices and drastically reduced parking at many of its venues. The Industry also learned some very valuable (and long overdue) lessons on the volume of acts the marketplace is able to absorb as well as the actual live-viability of some of those acts.
Of course, the most profound impact on the the music business, was the closure of four major labels; DreamWorks, Arista, Elektra and MCA (although MCA was reborn with far less staff as Geffen). These closures accounted for the loss of nearly 600 jobs. New labels were not as plentiful as in years past.
Of note, EMI Music Publishing Executive Evan Lamberg formed E.V.L.A., a new label via Atlantic for EMI-signed writers, Simon Fuller (American Idol) formed 19 Recordings in the US and UK, Artist Manager Dave Benveniste has a new label venture – Velvet Hammer Music via Sony/BMG and Artist Manager Joe Simpson (manager/father of Ashley & Jessica Simpson)formed JT via Geffen, Producer Kanye West has formed Good Music via Sony/BMG in Los Angeles. Shaquille O’Neal has come back into the Music Business via Deja 34 out of Atlanta.
In looking back over the past year, we’re reminded of the many conversations we had with various Music Business Professionals from both sides of the Atlantic concerning the current state of the today’s Music Industry. Without exception, there seems to be a very sobering sense that the Record Business we have known for the last 25 years is now gone. This is extremely troubling for many, sad for some and terribly exciting for others.
We see these times as an incredible opportunity for a total re-invention not just for Record Label A&R Depts., but for the entire spectrum of the Music Industry. If you as an Artist, Band, Agent, Manager or any other Music Business professional can not see that the old paradigm of artist development (the actual long-term process of building a career from the ground up) has been completely re-invented over the last few years, then you need to get out of this business. The old methods of doing things no longer apply. This may sound obvious to many of you, but you wouldn’t believe how many so-called professionals within the business today that we speak to still believe that the only way an act can have a viable career today is to get that act signed to a major label. What we find so sad is that these people who believe this (and there are many) cannot even see that the very system they feel can & will accomplish this for an artist no longer even exists!
We’ve said this before, but it bears repeating – though no one has actually come out and said it (truth is, they may not even be consciously aware of it), Major Labels today are, with very rare exception, no longer willing to be in the business they have built over the last forty years. The ‘old’ process of signing, recording and developing talent takes far too long and is way too costly to achieve the results they desire in the time they have allotted. As a consequence, whether intended or not, (and this is the part many people simply can not see) is the Major Labels are now in the Promotion and Marketing business, but of course, only for those experienced artists who have already been developed that can be turned into Multi-Platinum sellers. Well, that certainly would be great, but that just isn’t the world we live in anymore. Of course, there will always be Platinum sellers in the future, but far fewer of them. Today, there is simply too much choice available.
It’s fascinating to observe some of the most influential Music Publications out there today such as pitchforkmedia.com, Blender to name 2 have hardly any mainstream artists in their Top 50 of 2004. Today, it’s all about choices. The future of the music business will be thousands of niche artists selling fewer records. Much like cable television, which has a fraction of the audience but is profitable! And this is the most profound difference from the past in terms of A&R signings and looking at what will work in the Marketplace.
Under the old paradigm, the public, the majority of the time, only wanted (with few exceptions) what the Major Labels signed and sold to them (of course, that may have something to do with what was available, which is our point). Today, choices of music, are vastly wider and you have a far more of a diverse artist selection, not to mention various new formats make the choices almost infinite. And, as most of us have known for years, the marketplace is far broader (yes, people between the ages of 30-50 WILL BUY MUSIC when presented with Artists that they can connect with) than the Major Labels ever cared to acknowledge. How else could Ray Charles sell two million copies of a CD via a coffee chain (Starbucks) (before winning 5 Grammy’s) or James Taylor sell over 1.3 million Christmas CD’s via Hallmark without his CD even being available at retail?
If either of these artists were at a Major Label, (James Taylor was with Columbia/SONY for 27 years up until last year) they most likely would not have sold more than 100,000 copies- tops!
These two examples provide an insightful illustration why several of the Major Labels are struggling today for their very survival. They truly can’t see what their customers want. But in much deeper sense they have no desire to get to know what their customers want either. Don’t get me wrong, there are several wonderful executives who work for the Major Labels, it’s just that the corporate culture of most Major Labels at the top is so profoundly out of touch with the times we live in, they can not see their own part in the problems that face them. The building of careers is a luxury of time they no longer choose to contribute to. They THINK they do, but the reality is the opposite. In the merger of Sony & BMG’s Music Divisions, they will let go of approximately 2,500 of their employees over the next five months, about 12% of their workforce and with 45% to 50% of that number coming from the U.S. operations. At this point, no one knows how many labels among the two labels will be closed or how many artists will be dropped by both companies as these two giants continue to streamline their worldwide music operations into one.
What’s so sad about this merger in particular is that, unlike some mergers, where the intention of the merger is a vision of creating something greater, and better, something that neither company could achieve alone, this merger seems to be a grasp at mere survival. Other Major Label Groups have also streamlined their operations. Warner Music Group will let go of over 1600 employees during the next year and just recently dropped 93 of the 195 artists from their rosters (47%) and closed Elektra, a once thriving and core label within the Warner system.
Last year EMI announced that it would drop 20% of its Artist roster over the next 12 months. Does this sound like an Industry that’s interested in building or developing anything? It’s like a struggling marriage where neither party is open, willing or even capable of really seeing what the issues are that continue to keep them stuck! So they just keep making decisions over and over that allow them to avoid examining what is really essential to their own survival!
‘The Revolution has begun!’
The opportunities today are vast and limitless for those artists, bands, managers, and other individuals and companies who truly understand what is actually occurring, who can step back and see the decaying mechanism that many are still struggling to maintain for what it is – not only a crumbling business model, but an entire way of viewing the world in which we used to live, but no longer do! The personal, business and artistic successes we are seeing today are from those individuals who can peer through this fog of delusion and see the business as it actually is; not as they want it to be or hope it will become, but how it actually is! Those individuals are moving freely and creatively interacting with our new social order while others, including some politicians (and apparently a lot of voters), are still clinging to a world or a way of thinking and being that no longer exists. It’s only a faint echo acting like some spirit lingering that does not know its dead. Enough of us have had enough therapy to know that often in life, some of our biggest upsets are created by our refusal to see the difference between a world that we make believe exists and the world that truly does exist.
Forward-thinking Artist Managers, Agents, Venues, Indie Labels and the artists themselves are the ones who have become (and truthfully have been for some time) responsible for building the next generation of career-artists. There are many current examples that illustrate this. Look at what Ken Levitan (Vector Management) has so tastefully achieved with the launching of Damien Rice’s career. Or how Coran Capsahw (Red Light Management) helped build and develop Dave Matthews’ career before RCA signed him, by never losing sight of what the most fundamental elements are in this business – Artist & Audience. Or Martin Kirkup & Steve Jensen (Direct Management) who have launched Jamie Cullum, a young “piano man” who had put out his own CD prior to his debut. The choices they made along the way in Cullums career, from showcasing him to the tastemakers at SXSW last year to not over-hyping him illustrate an entirely different way of thinking about an Artist and their career. Another great example is The Scissor Sisters, who went to the UK to launch their career, after finding no one in the US willing to sign them. Both of these acts went on to sell more than two million copies of their debut CD’s. More importantly, they have found been able to build a solid audience for themselves. Careers are not supposed to be events, that have huge a build-up and then are over like The Super Bowl. The best ones are long journey’s that are built on a solid and viable foundation that can sustain a wide array of paths and experiences. Each of these artists was able to build extremely solid and viable foundations without a Major Label and in most cases, no mainstream radio airplay at all. What these artists (and their managers) have in common (regardless of genre) was an entirely new way of thinking and approaching the marketplace with regards to the development of their careers. They all utilized new and non-traditional methods that did not have the luxury of an enormous marketing push behind it to create awareness. Most were lucky at the start to get Public Radio exposure and critical acclaim.
But today with so many more marketing and exposure options available to artists (ipods, webcasting, internet radio, websites, non-traditional retail; Amazon & Itunes to name just two) the acts who develop and build a career for themselves won’t necessarily be household names in the first few years, but will instead have built something musch more important – a very solid base of fans that actually want their music and will attend their live performances. These artists will have built their following over a long period of time, not through hype and over-exposure on MTV or other media outlets that in so many cases today actually damage careers instead of enhancing them. Today, more than ever, we’re looking for something real, something we feel a strong connection with. And more and more, we’re finding it in non-traditional ways.
This is the tragedy of Major Labels -(Tragedy, in the classic definition is defined as “the fall from greatness through an unseen flaw in ones character). They keep looking for the “formula” that will give them the huge Multi-Platinum sellers that they once enjoyed. Only problem is, the system today doesn’t allow these types of massive sellers like it did in the past. Today, we have far too many choices. And that’s their tragic flaw. Major labels can not see that the harder and louder they continue to market their acts, the more the audience they’re trying to reach doesn’t seem to hear them or care for that matter.
It is this particular phenomenon that we believe will alter the type of artists, regardless of style, that will emerge and be able to build viable careers for themselves in the coming years. Will this new business model look like what came before? Not a chance! This will be one of the more difficult lessons for us as an industry to truly get. Letting go of what we’ve always held as the definition of success (Out-of The Box Top-10 radio hits, videos on MTV, endorsements for anything and everything, TV commercials, transitioning into motion pictures) These vehicles will no longer be seen as a path to career longevity. These are all things we have seen over and over during the last 5 years that have hurt careers when they occur too quickly or without any restraint. Too many of today’s ‘hit’ artists seem so afraid that this moment right now is their ONLY chance in life to have a career, that they simply overwhelm the marketplace with every conceivable form of over-exposure, and often like the Major Labels, don’t even see their own part in the short-circuiting of there own careers. Beyonce, Queen Latifah and even the wonderful actor Jude Law – who has appeared in six films over the last 7 months — are three examples who come to mind in different arenas of entertainment. Radio Hits, television ads, forgettable movies, MTV videos, magazine covers (Beyonce’s 25 non-music magazine covers over the last 18 months were enough to overwhelm and alienate even the most devoted fan), along with countless product endorsements, award show appearances, movie premiers, television interviews, even boxes of hair color that stare back at you with their image from every grocery shelf in America. So many of today’s act’s are not out of our cultural conscienceness for more than an hour. How can you ever look forward to anything when it’s never gone long enough to miss it? It’s like meeting someone for the first time and feeling you have to tell them every single thing about yourself on the first date. What’s the mystery? What’s left to discover? And yet this has become, especially in the Music Business of the last 12 years the “accepted modus operendi” to launching a hit act. Is it any wonder that we don’t have many artists who’ve built successful musical careers for themselves over the last 10-15 years?
The new breed of artists and managers (and yes, there are a few who do think long-term) emerging today do not appear to see their clients careers with this same unhealthy compulsion. They have a solid grasp of who and what they are and have been able to map out a career path that is consistent with that vision. This, more than anything is what will contribute toward building an artists career, rather than destroying it.
A development in the industry that we would be remiss in not mentioning is the recent trend of “upstreaming”. This is where an Independent label develops an act from the ground up and at a certain sales level, the act goes upstream to the Major Label system. The catch is, of course, that the smaller label will have to give up their acts to the major if the acts become successful. The great flaw in this scenario is that the major labels have traditionally thought that any act doing 100-250K on an independent label should be able to do at least three times that within a Major Label System. As we’ve seen over the last few years, ‘it just ain’t so!’ Most acts do not go from 150K to 500K in the course of 1 album. And there is nothing wrong with that. An act’s evolution (artistic & commercial development) is an organic process and a long one. We don’t expect children to walk in their first six months nor should we. Often, the problems with the Major Labels’ expectations are the unrealistic sales goals set for their acts simply because the act is now in a ‘Major’ system. So often I’ve seen labels set their spending based on totally unrealistic sales expectations. All too often, a label declares that its sales goals have not been met and drops the act. Is it any wonder that our industry has produced fewer and fewer career artists over the last fifteen years? That is also why all of the Major Label Artist Rosters will continue to get smaller and smaller. Like we said, they no longer have the desire to be in the career-building, artist development business and, as such, no longer need the enormous infrastructures they once had when they needed to support three hundred artists on a roster.
With the labels continuing to operate in this manner, you have to wonder where the great catalogs of the future will will come from. Well, one thing’s for certain, it won’t be from the major labels – they have no interest in this process. They want the natural forces of the marketplace to develop talent for them.
It is a truly fascinating phenomenon to watch the major labels put time, money, energy and focus into developing up and coming independent labels rather than develop artists themselves, something they historically di so well over the last 40 years.
The most fascinating aspect of this entire process to us is how many artists and bands today WANT NOTHING WHATSOEVER TO DO WITH MAJOR LABELS AT ALL! This is a truly a growing sentiment among a lot of unsigned acts today. A lot of Artists today, have seen too many acts careers over the last 10 years meander, implode or become lost in a system that they truly had no business being in the first place.
If Major Labels are to survive in the future they are going to have to re-invent themselves. They are going to have to start seeing their business as it truly is today – Not how they would “like it to be” or “how it was” but how it actually is. Like Werner Ehart so brilliantly said “The Truth will set you free, but first it will really piss you off!
Music Business Registry
write by Hebe