• Category Archives Music Industry
  • “Fruit and Flowers” are Expensive!

    The Economist has a fascinating article about the changes the music industry is facing. It starts:

    In 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

    They go on to talk about the trend for artists to leave major labels and strike out on their own, citing Madonna, The Eagles and Radiohead as recent examples. These artists are realizing that if the consumer doesn’t want to pay for music and, increasingly, sees the physical CD as a storage headache, they will need a business model that brings in money from other sources. But the major labels continue to struggle.

    BMG’s recent decision to drop Taylor, Kat and Ruben is a sign of just how out of touch their promotion is. All of those artists sold a respectable number of albums, but respectable just isn’t good enough to support the bloated business model at the major labels. And it’s not just manufacturing, marketing and payola that costs money – The Economist points out that there are other expenses:

    EMI’s new private-equity owner, Terra Firma, paid a high price for the business in August 2007. Now, having got rid of most of EMI’s senior managers and revealed embarrassing details of their spending habits (£200,000 a year went on sundries euphemistically referred to in the music business as “fruit and flowers”), Terra Firma is due to produce a new strategy later this month.

    “Fruit and flowers” is an industry euphemism for hookers and drugs. Hey don’t look like that – everybody needs a little R&R at the end of a busy day! You mean they don’t provide that where you work?

    Anyway, the article is a good read for anyone interested in the changes affecting the industry and what labels and artists are doing to try and adjust. You can read the whole thing here.

  • David Byrne on the State of the Music Industry

    ThreeDimen posted this article on the forum just before Christmas but for those who missed it …

    David Byrne was the former front man for Taking Heads. (Incidentally, he and I are close friends … well actually that’s not strictly true, but he did ask me if he was in the right line for ‘will call’ tickets at an Al Gore speech last summer in New York. After my eyes stopped bugging out – OMG!OMG! That’s David Byrne!!! -I said ‘yes’ and he commented that it was a little confusing. I agreed. So, BFFs!)

    Anyway. my BFF David wrote a fascinating article for Wired magazine on the future of the music industry and the different business models available to artists. (If you look down the left-hand side, you’ll notice MP3s of the interview he conducted – these are well worth listening to if you have the time.)

    David’s central point is that the old music industry is dying an that we are reverting to a time when what mattered was the music and not the product.

    What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that’s not bad news for music, and it’s certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.

    He explains that much of what the record label used to do for artists is no longer necessary – huge advances to cover recording costs are no longer necessary for example, when an album can be recorded at home on a laptop. Manufacturing and distribution is becoming less important every year as music shifts from CDs to downloads.

    So in this changing landscape, he outlines the six possible business models – read the whole article to understand them, but I found this interesting.

    Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison. Of course, not everyone is as smart as those nerdy Radiohead boys. Pete Doherty probably should not be handed the steering wheel.

    In the end, David’s conclusion is that, while the old industry is dying – and the executives who have lined their pockets for years on other people’s talent should be very afraid – there has never been a better time to be an artist because artists have never had so much choice about how to run their careers.

    The only question I’m left with is this: If the old model is dying – and I agree that it is – how does an artist promote his or her music so that people actually know it exists? The manager of Arcade Fire, who is interviewed for the article, says touring is the answer. And to bring things back to Bo – that sounds OK to me!