The day the music industry died

The day the music industry died
There is no money in recorded music any more, that’s why bands are now giving it awayRobert Sandall
Having waited four years for their heroes to finish another record, Radiohead fans were understandably excited last week to learn that the band’s seventh album, In Rainbows, will finally be released on Wednesday. But what really rocked the fanbase – and heightened the air of gloom enveloping the global record industry – was the news that In Rainbows could be preordered and downloaded perfectly legally for as little as 1p at Radio-head.com.

Currently out of contract and thus entitled to dispose of their recordings as they see fit, one of the most popular bands in the world had decided to let the fans decide how much their latest album was worth. An MP3 file of In Rainbows would have no price tag. Honesty boxes, it seemed, were the new rock’n’roll.

If the Radiohead faithful appeared somewhat nonplussed by this move – “The danger is that people will stop seeing their music as important,” one fan posted in a blog; “I will gladly pay $20 knowing the artist will get the money,” pledged another – the band’s strategy was anything but mad, and not even that revolutionary. Last week the Charlatans announced they would be giving away their new album as a free download. Earlier this year another rock band, the Crimea, did the same.

In July Prince arranged for 2.5m copies of his new album to be cover-mounted on a Sunday newspaper and issued several hundred thousand more free of charge to anybody attending his London concerts in August. The scale of this charitable epidemic can be measured by a quick browse of the Free Albums Galore blog that lists more than 800 albums by a range of artists – from the Beastie Boys to some unsigned metal bands – all of which are free to download.

Related Links
Radiohead: In Rainbows
What looks like commercial suicide is, in today’s reality, sound business sense. Records, CDs or downloads now have all become downgraded to the status of promotional tools – useful to sell concert tickets and fan paraphernalia. While there is still good money to be made in music, and particularly on the concert circuit, the record business – blame it on piracy, too many CD giveaways or the advent of the recordable CD – is a busted flush.

A revealing story doing the rounds in America tells of a young rock band who decided to stop selling their CDs at gigs after they discovered that by offering their CDs for $10 they were cannibalising sales of their $20 T-shirts. The truth now is that a rudimentary cotton garment with a band logo stamped across it that has probably been manufactured for pennies in a Third World sweatshop costs about twice as much as an album recorded in a state-of-the-art western studio. And even at that price, recorded music isn’t selling.

Album sales are currently in freefall all over the world. The 10% drop in the UK over the past year is dwarfed by a 15% slide in the US, 25% in France and a whopping 35% in Canada. The bankruptcy this summer of the CD retail chain Fopp, HMV’s announcement that its profits halved in the first six months of this year and Richard Branson’s recent decision to dump the Virgin Megastores – which have reportedly lost him more than £50m in 2007 – are only the most visible signs of a crisis that has rocked the music industry on its axis.

The point isn’t just that people are buying fewer CDs; they are paying as much as two-thirds less in real terms today for the music they listen to on their iPods than they used to when the compact disc first took over the market. Twenty years ago a chart CD cost about £14. Today you can buy the same in a super-market for £9.

The online market may have grown recently, but not enough to fix the hole. Here, too, margins have shrunk. A download of a single track now costs 79p against the £4 a CD single cost in 1999.

The impact on the bottom line of the record labels has been catastrophic. When EMI’s subsidiary Virgin put out the Spice Girls’ debut album in 1996 the company cleared roughly £5 in profit on each copy sold. That margin has since shrivelled to around £2 – and only then for albums that are significant hits. Industry insiders estimate that only one of the new British acts that has “broken” in 2007 – the pop diva Mika – will actually make his record company any money.

This has not gone unremarked in the City. When the private equity firm Terra Firma bought EMI recently it paid about a third, in real terms, what the company nearly fetched 10 years ago when a sale to its competitor Universal was mooted. That decline mirrors what has happened over the same period to the retail price of new CDs, and it also reflects the scale of the cull of EMI’s workforce, which has shrunk in 10 years from more than 10,000 worldwide to about 4,000 today.

The mood of panic is palpable, and there are no obvious solutions in sight. In America the recently appointed co-chairman of the Columbia label Rick Rubin, formerly a record producer by trade, has spoken of his ambition to turn the company around by refocusing it along the lines of a cable TV business – making Columbia’s entire catalogue downloadable to customers who pay a monthly subscription.

Another senior figure at Columbia has dismissed this plan as “potentially the last nail in the coffin”. The recent establishment of a “word of mouth” department at the label reflects the loss of control felt within a business that has lost a grip on its market.

One – fading – hope of the major labels is that they can somehow grab a share of the profits their artists make elsewhere. When Robbie Williams resigned to EMI in 2002 for a reported £80m this new deal guaranteed the label a piece of the action from Williams’s highly lucrative concert tours. But many young artists since have become wary of such composite arrangements. Some have decided to bypass the major record companies altogether.

One of the hottest new names to emerge here this year, the rave metal band Enter Shikari, refused to sign to anybody and in March released their debut album, Take to the Skies, on their own label Ambush Reality. In the past these tiny, so-called indie labels have usually been funded by majors anxious to covertly purchase credibility for their products with a young audience traditionally distrustful of big music corporations.

But that is not how it is with Ambush Reality. The marketing of Take to the Skies was largely down to the band themselves, who have played nearly 700 gigs since forming in St Albans in 2003. Word of mouth, coupled with a band presence on MySpace, has done the rest.

In November 2006 Enter Shikari became only the second unsigned act after the Darkness to sell out the leading London rock venue the Astoria. Take to the Skies entered the album chart at number four in March. In May they undertook a major tour of America – the first British band to do so without the support of a big record company.

This upending of the music business was neatly predicted back in the 1990s by the guitarist of the American hardcore band Anthrax who described their new album as “the menu; our concert is the meal”. This comment recalled the Beatles’ producer George Martin’s observation about his protégés’ first LP, Please Please Me from 1963. It was, Martin said, “just a memento of a concert”. Now, likewise, bands sell CD recordings of their performances at the end of the night.

The reprioritisation in recent years of live music over the recorded variety has been dramatic. Attendance at arena shows rose here by 11% last year. By the time 2007 bows out, 450 music festivals will have taken place in the UK.

Every week brings news of another frenzied assault on the box office. Last Monday Ticket-master reported that 20,000 tickets for the Spice Girls’ first reunion concert at London’s O2 arena in December sold out in 38 seconds, with 1m fans registering to buy. Three weeks back more than a million clamoured for seats at the forthcoming Led Zeppelin reunion. Glastonbury disposed of its 135,000 weekend passes for this year’s event within two hours – taking more than £21m in the process.

Ticket prices, especially for Alist artists, have soared as the price of CDs has tumbled. You could have bought Madonna’s entire catalogue for less than half what it cost to see her perform at Wembley Arena last summer where the best seats in the house went for £160. With the Rolling Stones at Twickenham a view from the pitch would have set you back £150.

Now that live music rules, nobody bothers to complain about what it costs any more. Euphoria at the news earlier this year that the Police had reformed obliterated all concerns that it cost between £70 and £90 to see them play at Twickenham in September. I spoke to many fans at one of those gigs; not one complained about the ticket price.

In the light of these numbers, the probability is that music fans now are spending more money on their passion than they were in the heyday of the CD. They have rediscovered an ancient truth that music is, at root, a communal experience as much as it is something that goes on between your ears.

Interestingly the band now tolling the death knell of the record industry, Radiohead, seem currently to have mixed feelings about live work.

“They probably will be playing some dates next year,” a spokesman said last week. “But Thom Yorke doesn’t like touring much.”



Have your say

This is all for the best as far as I can tell. Since the creation of downloadable music, ipods and mp3's, music was only ever going to be free. Even under control, people can basically steal anything that is online... Free albums, singles, b-sides, everything! Recorded music will be readily available for free at the will of the musicians and songwriters.
Back in the day we all had something to say about bands and artists that couldn't perform live, and over the past few years we've been inundated with amazing live performances. Small venues, concert halls, festivals! It's everywhere! We've all got what we've all wanted, and with the inevitable demise of industry big cats, and live music being the way for musicians to earn a crust, the standard of our much loved live gigs is only going to get better.

"ho.. ho.. ho... The times they are changin'..."

Bob X

bobbio, Hemel Hempstaed, Oceania

Yes, $20 for a CD, of which the artist gets around $1. This is a great thing for the music industry. Fans will be willing to donate more for each CD than the record industry ever gave them and bands will be more willing to produce solid content.

It's really good for everyone...but the RIAA.

anonymous, anonymous,

what goes around comes around. the fat-cat cash-grabbing suited-lackeys of major labels finally can no longer rinse bands of their credibility with promises of 'stardom' and 'money'. Nowadays, once the £250,000 advances have been used on actually making a record, promoting it, touring, and pblishing, the band will fall into huge debts with the major label, without seeing a penny of profit for years. and that's if they're lucky.
indie labels are now on the rise and, as mentioned, free album/track downloads are the only ways in which artists and indie labels can see any sort of recognition and/or marginal nett profit (often on merchandise and/or concert ticket sales).
If anything, this drastic change in the music biz is a good thing in my opinion. not only does it mean major record labels responsible for killing variety in music (eg. 2000 - 2007 = indie/emo decade) are going into liquidation, but it means other lesser known bands are more accessable and, just maybe, more creditable

Dan Schulze (Endeci), Liverpool, UK

I am concerned by where the music industry is going. It is not completly the industries fault, though they have been very ignorant towards digital music for the last 15 years and it seems that the digital monster has finally caught up with them and bit them hard. Some blame also lies with the consumer thinking that music is a free product. (that i think is the argument people should be really focusing on) It seems today there is a complete lack of respect to how much effort has gone into making a record and all the people involved. The band, the writer, the producer, the engineer, the promoter, i mean i could continue this list down to the electricity used to create the album. A lot of people need to get paid for the job they do. My issue with Radiohead is that the record company model works on "cash cows" making the money that they can then reinvest into breaking new younger bands. How are the "younger" bands gonna be able to survive without this backing. A wage etc..

James, london,

Isn't it funny that all the acts mentioned in the story except the "hottest new thing" are either 30+ years on or are a reformation of a group that split up and is now returning. Shouldn't you ask why that is - shouldn't the story not be that "album/CD profits are down" but that "new artists brought out by the labels are crap and the old groups that actually had some original material and a unique sound are touring because people are starved for good music and are willing to pay for it"?

Being old enough to remember, I can recall that the promise of CD was that the cost of an "album" was going to drop because it cost less to produce. Well, the label is finally having to keep that promise and they have been brought here kicking and screaming by the likes of a new "Internet" company - Apple.

The music business is just that - a business. If you don't provide your customers with a product they want to buy at a cost they are willing to spend YOU WILL GO OUT OF BUSINESS.

John, Little Rock, AR, USA

CDs have been overpriced here in the UK for many years- with the excuse of manufacturing abroad and distribution costs as the reason we fork out more than others. Yet while distributing music online costs a fraction of these prices the record companies still expect us to pay CD prices (£7.99 for DRM poor quality sound), I expect to pay a fair price for a product which is clearly inferior to a hard copy. Therefore I hope this Radiohead experiment pays off and record companies see they can make a profit without stiffing their customers.

Andrew, Billingham,

The death of the music industry is merely the end product of their own suicidal tendencies. For years they have taken the "punter" for a ride, over priced LP's, singles and then CD's, especially on back catalogue items some of which 10 - 15 years old cost the same if not more than when they were first released. Now the genral public has a new avenue through which it can get the music it likes, and it is driving quickly down this avenue and away from the corporates. As for ticket prices, its still a great big world, it means your favourite artists only come around occaisionally so you pay the price for that. I recently paid £40 to see Metallica at Wembley stadium, the only show they performed in England this year, was it fantatstic, yes, would I have paid more, absolutely.

Robert, Peterborough, UK

"What's left is the odd record from some guys who are working hard as salesmen and office people to but food on the table."

These are just the type of people who have made the best music in history. They are called "struggling artists" and their passion overflows into their music. Almost without fail every band that hit it big stopped making great music. The best thing to ever happen to music has been the internet and the rebellion of people against the big money music moguls. It is amazing how many people have bought in to the idea that a handful of people get to be billionaires, with multimillionaire artists right behind them, in order to have a vibrant globabl music scene. Direct access between musicians and the people who love their music is the new way. It will probably also lead to the first billionaire musician since someone is going to create an mp3 composition that will blow people's mind and charge directly to those wanting it. Record executive? No experience necessary!

Keith, Danbury, CT/USA

Actually I feel that 20 bucks for a CD is not expansive at all. Just think about how much you make a month. These artists put their sweat tears and soul into each record. Each record can be seen as an art peice. Would you pay 20 dollars for an art piece that you can enjoy for years to come? Seriously, if the whole free music movement becomes a mainstream expectation. The whole industry will collapse and no will will write music because there is nothing to be earned from it. At least no one will go full time into music. What's left is the odd record from some guys who are working hard as salesmen and office people to but food on the table.

Dan, Singapore, Singapore

I have been actively following and participating in the "free music" movement, as I feel that the end of the homogenizing influence of the major labels will be the best thing to happen to music. Blogs like "Free Albums Galore" mentioned above present an excellent way to explore recording artists you probably won't find in your local CD megastore. If your tastes are even more marginal or adventurous, try archive.org, which hosts amazing netlabels like Webbed Hand Records, Earth Monkey Productions, and hundreds more. There are literally terabytes of free downloadable music out there, so why go to the store and waste your cash on artists you know you'll be sick of by next year?

Kayleigh Hatfield, Baltimore, MD, USA

When I bought my first CD player twenty years ago, CDs were so expensive (around 14 quid each) that I couldn't afford many and for years had an embarassingly small collection. Things are so much better these days and some of my favourite CDs have been extracted from the bottom of the bargain baskets in Tescos and Woolworths. If the demise of the CD industry means that rock stars, who in my experience are among the greediest and most selfish people on the planet, make less money than they used to, then that is absolutely fine by me.

Simon R. Gladdish, Swansea, Wales

See also OddioOverplay.com. It is the grandma of them all. It is still running today, offering inspiration to many other sites spreading the word about the amazing free music out there.

James, Westminster,

Anyone else think that Radiohead's marketing strategy for In Rainbows is the best thing that has ever happened to the Charlatans and the Crimea? Those two more or less forgotten/inconsequential bands are now getting name-dropped in more articles than they must have mustered during their entire careers up to this point.

Gabriel, Belfast,

This is already old news: for about 10 years hundreds/thousands artists give their music away for free via the so called 'netlabels' under a Creative Commons license, so you can legally download and copy them. This is gonna be the new music distribution model. If you want to know more about this phenomenon, just google netlabels, netaudio, copyleft music and netlabelism.

embe, Leuven, Belgium

I'm wondering why that poor woman last week had to pay £200,000 in costs to the music industry for free downloading when it seems the artists are giving away their music anyway. Where's the justice?

Laura, London,

He record companies have been the financial winner since the rise of pop music in the 60's. Through mergers and acquisitions, just a few majors control the some 90% of the market, with company execs deciding the next "Best Thing". They have stifled new acts, signing them to binding contracts thenshelving thier material in favour of thier 'act of the day'. The digital age is thier downfall. They failed to stop analogue copying, which took as long to copy as it did to play, now we can copy a whole album in minutes is it any wonder physical CD sales have slumped? Personally I prefer CD's, but I can see why people download. Why buy a whole album when you can get just the tracks you want. It's time the industry woke up and smelled the coffee. Give the public the choice at a reasonable price, and they will buy - keep ripping them off and paying telephone number deals to a few 'Top' acts and they will find another way.

Ron Murch, Milton Keynes, Bucks

I think you are right. As a result of badgering from my missus, I went out and bought two tickets for The Police, last month in Geneva... the cost was equal to £140 !!!

I can't believe I spent THAT much. I no longer have the albums and haven't replaced them with CD's... but if they are free to download now, I will.... but the concert, at the stadium filled with Swiss, neighbouring French and 000's of ex-pats was wonderful. The noise of the audience singing along will stay with me for ages...

But would i now go out and buy the CD?? Very doubtful.

Ike Numa, France,

Sorry to Say but I Really truly believe this is all terribly worded, almost as to be laced with the idea that the music these great artists are producing is going for free. Yes you can take it for free if you want, and yes if you do it will be the day the Recorded Music industry dies. But if you enjoy the ability to listen and get lost in the notes of each and every song that is put out by these artists ( at your own leisure, any time any place). I urge you to give up at least a measly 2 bucks to get your hands on it, because thats all they would see from a CD sale anyways. If you don't it will die and there goes music forever unless you want to fly to England to hear the band play there 1 show a year that will be all they can afford to put on.

Gladly paying $15 for an album i can enjoy as long as no record company is making 60% of hand shakes!

Graham Quee, Vancover, Canada B.C.

The truth is, I do not listen to the radio or any anglo recording anymore, other than the odd childhood time capsule. For me, Africa, India and Brazil are some of the few places where music is happening. Country, Rock, alternative, rap and so on, sound like the same beat to me, played over and over all around the world until people think they like it. But now force feeding is over. No more cynical depressive violent noise. At least not for me, thanks.

julie, Chicago,

@Ted

Come on Ted--the courts in their wisdom have decided that copies of these songs are worth $750 a piece, and you're griping about paying $20 for a whole CDs worth. Some folks just don't recognize a bargin when they see one!

g Anton, Tlalnepantla, Edo. Mexico

Record sales are in free fall because the music is really bad, it's that simple!

Steve Levine, clinton, ct

What about a completely unknown band? how do they even get noticed? LOVE LIVE 'THE OUTSIDE WORLD'!

Mike Jewell, St. Catharines , Ontario

Your article was music to my ears, pun intended. As far as I'm concerned the big record labels, along with the RIAA, can't die fast enough nor painful enough. In their demise they will never even approach the pain and misery they've inflicted upon countless musicians throughout their history. And that's a shame.

Richard Chapman, Centerport,

It's about time. Recorded entertainment has been incredibly overvalued for decades because of monopolistic control of access to media. The InterNet creates an open field for competition and access for many more artists to consumers. It is bringing recorded entertainment back into a realistic perspective and creating new opportunities for many artists.

Stan Thomas, Salt Lake City, Utah

A lot of bands here in the midwestern U.S. are still living in the '90s -- hoping to write a hit song, get signed, sell lots of albums. I keep telling them it doesn't work that way anymore.

Ben Yates, Ann Arbor, MI

I think its sad that the only reason all these huge bands are reforming for concert tours is because the have probably just noticed a huge dent in their royalty cheques.
they never would have reformed otherwise.

Norm, London, London

According to a story I saw in the British Press several years ago, a dissatisfied record company executive chose to inelegantly reveal that the true price for producing a CD from signing the band to the shelf in the store was 24 British cents. They sell the same album here for 20 Euros or more.
For years they have flagrantly overcharged their customers, given the bands a pittance and the producers and the record companies have walked away with their ill gotten gains. Music has in addition always been heavily involved with organized crime, as they control almost all distribution of books and music in the USA. So a group of scoundrels finally bites the dust. I, as a musician and a writer, hope they never get the taste of it out of their mouths!

victor compton, Cherbourg, France

I don't download music,and since the music industry started to go after illegal downloaders awhile back,I stopped buying music.I will no longer support the music industry in any way. As far as I am concerned,the music industry has truely died,and it was a large contributor to it's own demise.

ron, toronto,

Rebecca's right. The content owners used to view each technical advance as a business opportunity, from the wax cylinder to the CD. In the 90s, though, they began to see new technology as a threat. They don't understand it (or music). Now, they pay witch doctors in pinstripe legal suits large amounts of money to try to magic the new technology away, but they are clueless at making money out of it.

Frank Upton, Solihull,

It is not about the money for musicians and never has been. The biggest accolade is live performance, people coming to see you perform, that is the reward. I am a musician, I am not interested in being paid, but however am very thrilled by an audience.....what else is there?
Why should someone in a suit somewhere decide your craft for the benefit of their coffers? There was a famous sticker banded about a few years ago. ''KEEP MUSIC LIVE'' enough said.

smiler, Bretagne, France

Those that don't evolve to their changing environment are doomed to extinction.
The record industry in the arrogance and stubbornness are fiercely digging in their heels in in an effort to keep things the way they were.
They'd have more success preventing the Sun rising each morning.


Phill Barlow, Wirral, UK

The new Springsteen is only $9.99 via iTunes.

Danny, Chicago, il

The price of concerts is just as ludicrous. The ticket price may be £60, too expensive in itself, but when you can't actually buy the tickets because they're all pre-sold then they sell from touts, other agents, travel firms and on ebay for even more because normal fans can't buy them.

Ticketmaster doesn't have the lines to sell all those tickets in 38 seconds, and no-one selects their venue and seats and reads out a 16 digit credit card number in 38 seconds. They were all pre-sold!

So how do fans buy them? They don't. Rip-off businesses buy them for re-sale at their own prices. Artists, record labels and fans all lose out. Ticket firms clean up.

Jon, Winchester,

"In the first US trial to challenge the illegal downloading of music on the Internet, a single mother from Minnesota was ordered Thursday to pay more than 220,000 dollars for sharing 24 songs online."
From: http://afp.google.com/article/ALeqM5gLAoKFpytnYl3gaB4YbdeS-yu7iw
Pretty ridiulous, seems to me record companies have become complacent in their business models. They should be acting in a way that generates business, instead they punish their customers. If Google can do it for free, and still generate that kind of revenue, anyone can.

Rebecca, Boise, ID

Well having recently seen the new Springsteen E Street CD going for almost 20 bucks with tax, the death of current business model in music can't come soon enough for me. I doubt if I will like more than 2 or 3 songs on the album enough to pay money for, and nowhere near 20 bucks. I mean, come on, how can the music industry justify the cost of CD's going up from albums for Christ sakes? CD's for 10 bucks is obscene, 20 bucks is a deal killer.

Ted

Ted Trujillo, turlock, ca