The Music Industry

This is a letter to the editor I sent out some time ago and it never go published, probably too long or I missed the issue after the article I was responding to. I don't recall which magazine I was writing to.

I was intrigued by Larry Compeau's letter in the March issue on the music industry. While he makes some very good points, I believe he gets caught in his own web. Jon Iverson is right on the basic tenants of any company, 1) conduct relevant market research, 2) understand (your) consumer behavior. But Mr. Compeau then marches off, as so many of us do, into feelings and off-logic support of his desire for better music and pricing.

Britney, Madonna, Janet, the Spice Babes and all the other low talent high gloss acts are the results of 1) conducting relevant market research, 2) understanding (your) consumer behavior. Mass marketing and hype is where the money is. So are large arenas and screaming teens. We, the people who want good sound are the low value outliers in the music world.

For many of us, we compare today's stars to those of our youth when the Beatles, Stones, The Who, and Led Zepplin ruled the airwaves. I would hate to learn that these groups were actually "over-hyped" or "managed". But of course they were. The star building model has been around a long time and is a simple progression. In the olden days, music producers scoured the clubs and fairs for talent. They moved the talent up to the big leagues through careful management and marketing. Than someone realized it was a lot cheaper to build a star than to find one. So today, they build for the mass market and all they have to do is listen at a few college clubs for market direction.

What Mr. Compeau missed was that his conversion was the same as his parent's. Our children will have the same conversion. All those one-hit-wonders will hit the dumpster just like ours did (but I still have my Plastique Bertrant, Greg Kihn and Rubinoos albums). It is a part of the-circle-of-life. Coke and Pepsi know it is all about image. In taste tests, nobody can tell the difference. But they know you are what you drink. The music industry also knows image and that more money is spent by the young on image products than by older people on real music. To a teen, you are what you listen to.

The only area the music industry is struggling is in figuring out how to make money on the new delivery mediums. Even this should be categorized as "knowing the market". It does not take a visionary to know hard recording mediums will be history in ten years (except for us outliers). It does not take a rocket scientist to know the soft medium is stealing market from the hard mediums. And finally, is does not take a PhD to know any industry which does not have control over its intellectual property is an industry going out of business.

We hear a lot about how much the music industry holds us back and how we should resist letting them get hold of the digital music world. But we have to remember that they built the music industry, they own the studios (infrastructure), they parse the junk, they locate and promote talent. Most importantly, they put up the front money to market the pop bands like Madonna as well as Harmonia Mundi. Where do they get this front money? From album sales.

In that free music world of 2020, there will be no "music industry". All bands have to record with their own money because there is no mechanism for getting money for songs. All the big recording studios have closed so all recordings are poor. All bands are garage bands because they only make money on club concerts. There are no arena bands like Madonna because nobody can come up with the $900,000 deposit on the arena. I know a lot of you are thinking, "Yes, but the real talent will rise to the top", but will it? If a real talent appears, there is still no revenue stream from songs, only concert appearances. The promoter will have to make money on every appearance. The bands will have to split a larger portion of the concert revenue with the promoter. So even the high-talent bands will be broke and have day jobs.

If we choose this route, I believe the overall quality of music will decline, it will be harder for real talent to get exposure and there will be less incentive for musicians to make a career out of playing their own music. I hate how much I have to pay for CDs and SACDs. But I know the system is not just disks and I know distribution of music for free is not the answer.

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Copyright 2007, Peter Jay Smith