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Friday, June 22, 2012

The State Of The Music Industry And How It Affects EVERYONE - Read Carefully!

David Lower (co-founder of alternative rock acts Camper Van Beethoven and Cracker), recently shared with the world a lengthy, detailed overview of the hard times that EVERYONE within the music industry is facing in a big part due to "new" technologies that have completely changed the way the public gains access to NEW releases and their favorite artists.

Here are some of the VERY valid points he made:

1) No, artists can't simply tour and sell t-shirts.

It doesn't work.  In fact, shockingly few indie artists can pull this off, except for those developed at some point by the major labels (ie, Amanda Palmer) or a serious group of professionals.  Most of the others that are managing to squeak out a living on the road are doing it with great difficulty and are working non-stop.

2) The recording is now effectively worth $0; its surrounding ecosystem has collapsed.

Some people buys CDs.  Less purchase vinyl.  iTunes downloads are still increasing.  But averaged across all formats and personal valuations, the recording has effectively become worthless.  And that has had drastic repercussions for the music industry, and the lives of otherwise creative and productive artists. 

3) Spotify is not a beneficial solution for artists.  Certainly not right now, and quite possibly, never.

Will Spotify ever put a meal on an artist's table?  That's extremely speculative.  Sure, it might eventually mimic Sweden-like penetration in the US.  But that is not happening right now; it's not a fair solution for artists right now.  Instead, it is shuttling people like CEO Daniel Ek towards stratospheric riches, fattening major labels, and potentially giving Goldman Sachs bankers another joyride.

4) Kickstarter will mean something to artists in the future, but only to a relative few.

Amanda Palmer may hold the world record for a long time, but there will be other Kickstarter stories.  Some will come out of nowhere, most will involve previously-established artists, particularly those already developed by a major label or similar entity.  This will not replace the vast financing once offered by recording labels.

5) DIY is rarely effective, and almost always gets drowned by the flood of competing content.

It doesn't matter if you're singing directly into the ear of your prospective fan.  Because they're listening to Spotify on Dre headphones while texting and playing Angry Birds.   Some can cut through, but most cannot without serious teams, serious top-level marketing and serious media muscle.  Justin Bieber ultimately needed the machine, no matter how beautifully his YouTube story gets spun.

6) Sadly, most artists are worse off in the digital era than they were in the physical era. 

Actually, we have David Lowery himself to thank for this realization.  Because the implosion of the recording has impacted nearly every other aspect of music monetization (though certainly not music creativity itself.)  And its replacement is generally a fraction of what a 'lucky' artist could expect in an earlier era.

Again, all great for fans like Emily White, but not so great for everyone else.

7) Younger people mostly do not buy music; they do buy hardware and access. 

They gravitate towards free digital content, and occassionally pay for things like concerts when they have the money.  Emily White isn't a fourteen year-old, she's a young adult that probably doesn't want the morality trip.  And neither does anyone else - regardless of the generation. 

8) Older people buy less music than before; they more frequently buy hardware and access.

If you really want to sell a marked-up bundle, make another Susan Boyle.  It's still a market that doesn't revolve around free music and constant fan contact.  But older people file-trade, they stream, they steal and they buy less than before.

9) Google is a major part of the problem.

Lowery is right.  Google is not interested in protecting content creators; their interests lie elsewhere.  Copyright is a nuisance to them, unless it involves their own code and algorithms.  In fact, anything beyond the DMCA erodes their ability to serve customers, remain competitive, and make money. Which is why the Pirate Bay is one of the 'hottest' searches, and why adding 'mp3' to any artist search produces pages and pages of results. 

10) You are a major part of the problem.

Just because it's legal, doesn't mean it's helping musicians.  It's not file-trading, but the payouts on Spotify, Pandora, Turntable.fm, or whatever else are shockingly low.  It's a rounding error, towards 0. The paradox is that music fans are living in abundance, while artists are barely getting scraps. 

11) Google, the ISPs, and hardware manufacturers have won.

It doesn't matter how brutal the war with Hollywood becomes; how many Dotcom mansions get raided.  Music fans aren't going to start buying albums again; in fact, beyond the playlist, the concept of pre-packaged bundling will become increasingly foreign to newer generations. 

It's not about who's right, it's now the world the entire music community lives in.

12) Everyone lies about stealing.

I've only heard a few people actually admit to file-trading: my close friends, Bob Lefsetz, and Sergey Brin.  If you have an iTunes collection of more than a few thousand songs, you've almost certainly swapped, torrented, or swapped hard drives in your life.  And almost everyone has a collection of a few thousand songs.

13) Mass-marketed, 'lottery winner' style successes will continue.

Niches are available and sometimes responsive; more often, top-down mass marketing wins.  And most musicians are playing extremely bad odds.

14)  This ISN'T the best time to be in the music industry. 

Conferences like MIDEM make money off this sort of Kool-Aid optimism.  But I work in the music business right now; I was at a major label in the late 90s.  And the reality is that this is the greatest time ever for fans, but definitely NOT the best time for those trying to make money from those fans.  And as David Lowery so darkly described, it can be one incredibly depressing trip for even a 'successful' artist. 

That's the reality we now live in, and you really have David Lowery to thank for making it obvious. But what do you think about all of this? Leave your comments below.

Related links:
David Lowery.com

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