A change would do the music industry good

by Beacon Staff • February 6, 2008

Led by acts like *NSync and Britney Spears, the recording industry hit a high mark in 2000, selling 785.1 million albums, according to Rolling Stone.,If you bought a music CD in 2007, congratulations: you might just own one of the last albums ever manufactured.

Led by acts like *NSync and Britney Spears, the recording industry hit a high mark in 2000, selling 785.1 million albums, according to Rolling Stone. But CDs have proven to be a particularly tough sell since then, their numbers trending steadily downward.

2007 was a particularly meager year for sales. The total number of purchased CDs dropped to only 500.5 million, a 9.5 percent drop from 2006, reports The Associated Press.

After a long stretch of either ignoring the problem or not recognizing it at all, the major record labels are beginning to feel the stress of low sales.

According to the Jan. 10 issue of The Economist, "Warner Music's share price has fallen to $4.75, 72% lower than its IPO price in 2005 [.] EMI's new private-equity owner, Terra Firma, [has now gotten] rid of most of EMI's senior managers and revealed embarrassing details of their spending habits [.] Bertelsmann (BMG) may want to sell out to Sony next year."

The record labels ultimately have nobody to blame for this but themselves. These financial hardships are directly connected to their reliance on internet markets.

After some initial hesitation, labels gripped digital downloading in an all-out embrace. They believed online sales would make up for lost profit and help maintain the old label racket.

It wasn't a completely wrongheaded scheme: despite radically diminished album sales in 2007, the number of digital-single sales continued to rise, producing a hefty $836 million in revenue.

That figure is, however, somewhat misleading. As Steve Knopper reported in the Feb. 7 issue of Rolling Stone, "The labels' strategy of the last several years to emphasize digital downloads and ringtones seemed increasingly misguided in 2007 . even though digital-single sales grew by 45 percent this [past] year, they make a fraction of the money for the labels."

Simply put, hard copies just make the labels more money than internet downloads. So even though digital sales are rapidly rising, they aren't compensating for losses.

Labels also shouldn't bank on the idea that digital sales will continue to grow. Legal downloads are unlikely to seriously compete with file piracy, at least in the foreseeable future.

Legal methods of "grassroots" music sharing, such as MySpace and Bandspace, pose further complications for labels.

When the public-and especially college students--have the option between paying for a song and downloading it for free, many will choose the option that doesn't require cracking their wallets. Relying upon a perpetual improvement of digital sales is a potentially fatal flaw.

As if sensing trouble-or, as may be the case, impending doom-2007 saw several big-name artists distancing themselves from their labels, or even separating from them entirely.

Just review a few major recent entertainment headlines: "Paul McCartney leaves longtime label EMI to sign with Starbucks new record label, Hear Music." "Prince releases his new album, Planet Earth, for free with the Sunday edition of the British newspaper The Mail." "Trent Reznor announces the end of his 13-year relationship with Interscope Records."

There are other telling developments. The Eagles' new album is restricted solely to Wal-Mart stores. In Rainbows, Radiohead's latest effort, dropped initially as "pay what you want" and download only.

It seems that major artists no longer need traditional labels to be successful.

If the recording industry is to salvage what's left of its empire, there must be quick and extensive action. Labels have to retain big-name artists while reconnecting with consumers. Luckily for them, if handled correctly, both goals can be reached simultaneously.

First, labels must beef-up the overall quality of albums. Even an avid fan is hesitant to buy an entire album if contains just one or two songs that are single-worthy, with the rest taken up with filler. To do so would be an understandable waste of money.

Second, labels should sign "360 deals" with their artists. Such arrangements allow labels to take a chunk of those profits which come from tours and merchandise.

Finally, the industry must find a way to create an intimate bond between artist and consumer. In an age with lots of commercialization but little soul, this is harder than ever before. But it's an integral part of rejuvenating labels.

The public is more likely to buy a product to which they feel familiar. Having artists speak directly with fans is an excellent way to facilitate-or at least simulate-a bond.

Many performers have already opened the channels of two-way communication via official blogs and heavily personalized MySpace pages.

It appears one thing is certain in the continually changing climate of professional music: if the traditional recording industry does not adapt soon, it will most certainly perish.,Douglas P. Case