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. â€œThat was the moment we realised the game was completely up,â€ 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 (Â£200,000 a year went on sundries euphemistically referred to in the music business as â€œfruit and flowersâ€), 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.