Wow! Well, we have had musicians for millenia, and a recording industry for about a century, so I expect there will be music with or without Sony. Live performances to hype the ad-supported web-site? Who knows? Product placements, "Sponsored by Coke" (NO, the soft-drink, this is a family blog!) - I have no doubt that forces will emerge to separate folks from their leisure-type money, and musicians will get some.

Regards,

I always thought that the share of record sales proceeds going to artists was ridiculously small. I also thought that the bulk of their revenues comes from concerts and other gigs as well as advertisement for those who give in to that evil. I mean concert tours are known to exhaust artists, so the above reasons must be why they do so many, especially when they're broke. Am I missing anything?

So, from that point of view, what record companies are selling to artists is just advertisement and privilegded access to distribution channels, basically in exchange for around 99% of the value of the record. I am not sure they're playing any useful producer-consumer filtering role (anymore)... And if and when they are, consumers will keep using them as intermediaries.

When in a bad mood, I can even convince myself that the record companies' incentives are to flood the market with the easy listening stuff that is crowding out most of the better stuff these days. Why spend money educating the audience when you can dumb it down to progressively crave for cheaper and cheaper stuff to produce (excluding marketing costs...)? Besides, quality issue assides, records companies have helped turn the music market into a winner takes all business.

Conversely, if the marketing chain is broken, the audience may start to regain consciousness and a greater variety of creations will get listened to, and in turn, worthwhile artists better paid (okay, that's a value judgement, but I think it's widely shared). I mean, is marketing supposed to create value in and of itself? (besides providing information that I can get now for free from other net users etc.)

I know my reasoning is a little loose... Comments welcome.

Considering that most records lose money for the labels, not to mention the artists, the musicians are actually buying the possibility of access to mass markets from the labels. For many artists, they simply lack this incentive, especially if they don't fit with the mainstream sounds.

Indie labels manage to create boutique niches (Stax, Sun, and Motown of yore, Subpop, Matador, Sympathy for the Record Industry today), offering a greater potential of access to an, admittedly, smaller market. They also tend to be more artist friendly. Also, tour revenue may be better since they may not even have to worry about appeasing the Clear Channel Gods, using their venues for C.C. airplay, and the attendant financial "vigs" C.C. will then extort.

Also, these labels manage to record good records on the cheap (listen to the White Stripes -- great production value on a (red and white) shoestring). So, even the major's arguments about investing in the artist fails. Of course, it's disingenuous to begin with, since they freely choose to invest in certain artists while completely ignoring others, to the point of not releasing albums (Wilco, Aimee Mann).

Artists have an interest in doing whatever they can to get their music heard, because, one way or another, they will get money from this. Touring is obviously the best way, since music is fundamentally a performing art. Record sales can be nice, but they are clearly not essential. For the majors, who have predicated a business model on selling a lot of a few albums at a high price, and putting out many other bands as hedges, if the Internet, or if Big Radio, cut into their pies, they have nobody to blame but themselves. Especially if what they're selling isn't an attractive prospect to the artists.

This argument only makes sense if you assume that the audio industry is an intermediary. It isn't; it's a venture capitalist.

And for Don Henley, who IIRC has made a couple of absolute *dogs* of albums, which would easily have bankrupted him if he'd had to finance them himself, to accuse the record company of ripping him off, sticks in the mouth a bit.

Might I suggest this as a primer on the record industry from the point of view of recording artists.

http://dir.salon.com/tech/feature/2000/06/14/love/index.html

Whatever you may think of Courtney Love and her music (blech), she's a smart lady and it's a very lucid introduction to the economics of the situation. Reading up on Clear Channel and how they've put something of a stranglehold on both radio play and, more importantly, on the music venue business, is also essential.

Again Salon has covered this best, so:

http://archive.salon.com/ent/clear_channel/

Of course, Clear Channel has some significant conflicts with the record labels, but what is important is the news about the venues.

http://www.nytimes.com/2002/10/17/business/17SCEN.html

October 17, 2002

Music Sales Slump and Rock Fans Pay the Price
By ALAN B. KRUEGER - NYT

If you have gone to a rock 'n' roll concert lately, you probably noticed that the price of tickets has been rising faster than the decibel level. Although concert prices have always grown somewhat faster than inflation, from 1996 to 2001 the average price soared 62 percent, while the Consumer Price Index increased just 13 percent and the price of sporting events, movies and theater rose 24 percent....

Terrific Article....

This being an economics forum, I might voice some faith in the ability of the market to sort this out over time. After all, it's not in the interest of the music companies to cut their own throats by losing their performers, and it's not in the interest of the performers to actually lose money by giving stuff away. So as the industry's changing circumstances become better understood, something will get worked out. Even if it takes until a new generation of leaders arises in the industry to do it.

This all sort of reminds me of the near collapse of the big Hollywood movie studios that followed their forced divestiture of their theater chains and the rise of television and cable TV. (I can still remember the "Fight Cable TV" signs that were on movie theater marquees all over NYC when I was a kid.) The old-time movie moguls saw TV and cable TV as competitors stealing their markets and futiley tried to fight them.

Then while the studios were in disarray their troubles lead to the rise of a new generation of studio heads who saw TV and cable as potentially very lurcrative distribution outlets for them, and who changed policy accordingly. The result is today's entertainment media wonderland, for better or worse.

I once saw Michael Eisner give a fascinating talk not only about the business history of all this but also its creative-side effects -- how the management chaos in the studios created the window of time in which products like Easy Rider and Five Easy Pieces could come out, and the talents that produced films like that could rise to the top quickly, without being stymied by studio "suits" as they would have been before (or today). If Mike gets bounced by the Disney board he could make a real good college lecturer.

From the enlighting NYT piece referenced about

>>"Music itself is going to become like running water or electricity," the singer David Bowie said recently. "You'd better be prepared for doing a lot of touring because that's really the only unique situation that's going to be left."<<

For less famous artists than Bowie that seems to have always been the only money maker given the fixed costs in album production. What worries me is the apparent vertical integration between radios and concert venues. That's it, now "they" decide what you like and who you want to see in concert. The coming decade is not going to see any alternative artist rising to fame...

Paradoxically, I have never had as much freedom to sample alternative music as today if I go a little bit out of my way. And after all, deep down music is made for its own sake. So, we shall be able to hear good things for ever. What I have noticed lately, however, is that mainstream music is picking less and less on musical innovations.

It's become an alternative thing to hear what's really new is music today. Yesterday, the resistance to musical innovation was cultural, today it's become economic. Of, course if people weren't so artistically conservative to begin with, record companies would have to feed them with innovative stuff.

Yesterday, alternative music could hit the waves and progressively convert the main stream, today these two worlds seem to have been segregated (segmented?) from each other. Comments?

P.S. I should have put seems to in every sentence as I am pretty far from claiming expertise on this, but that would have only made reading more cumbersome ;-)

I don't like to play pirated music on the radio. On the other hand, sometimes downloading is the only place I can acquire a song I want. I try to buy the piece, and often can't. Of course, once I get to the radio station and play the song, I'm perfectly legal, assuming the artist is union, since the station has paid it's licensing fees.

I have a fair amount to say about this, but I'll be brief: Sturgeon's Law applies to music ("90% of everything is crap") and the easiest way to get to the good stuff will be used. Further, live performances are a different art form than recorded music. The ancient debate over the importance of the artist vs. performer is being starkly drawn, even if the artist IS the performer.