The music industry is alive and well - and being financed by the musicians

So Two Door Cinema Club’s album has leaked. The band’s singer Alex Trimble has written fans a message about this, and, like David Lowery’s recent rant at an intern  regarding the topic of illegal downloading, it’s been doing the rounds online. I much prefer Trimble’s more gentle, thoughtful (and pleaful) take on the situation than Lowery’s; but regardless of tone, both pieces add to the sense of a music industry in deep crisis and a bunch of suffering musicians getting ripped off by their listeners.

However I’ve got a hunch that the music industry’s probably doing fine…and, in a sense, probably generating as much, if not more, dosh than ever before.

I think of the music industry as something different to the record industry. The record industry – individuals and companies manufacturing and selling records – is generally screwed, because the digital revolution has led to a situation where recorded music has been reduced to a set of ridiculously-easy-to-copy files. However, the same digital revolution has also led to an enormous explosion in the number of bands that are actually in a position to record, distribute and promote music; this means that the music industry – which I think of as all the people, products and services generating revenue as a result of music-making, not just CDs and MP3s – has a much bigger customer base than ever before. This customer base is not the music-purchasing public though – it’s the musicians who, in most cases, are no longer the people generating income from music, but the people financing this industry.

There have always been thousands of bands all over the world that have wanted to make records. However, until about a decade ago, when advances in technology started to put ridiculously good recording equipment in the hands of musicians, release-quality recorded music was expensive to produce and very difficult to distribute, meaning that only bands with a significant budget (those who were signed or had investors) generally got to put out records. However, these days, every Tom, Dick and Harry has an album up their sleeve, because they a) simply bought a laptop and an audio interface and recorded it on that, or b) availed of studio time that is now much cheaper than it used to be (due to studios having to compete with the aforementioned laptop and audio interface). As for distribution, getting an album into the ears of a (theoretically) global audience is now incredibly cheap and easy thanks to the likes of iTunes, Spotify and so on. 

What does this mean? A huge increase in the number of bands releasing albums. However, most bands – understandably – are reluctant to pour their hearts and souls into recording an opus only for it to only ever be played by their mums. So they start to buy services that might give the album a chance to reach the great unwashed. Graphic design. Manufacture. Photography. Web design. Web hosting. E-newsletter design. Public relations. Radio pluggers. Printing of posters. Distribution of posters. Online advertising. Digital distribution. Venue hire. Smoke machine. Hairy sound guy…the list goes on. Generally speaking, all the above services come with a price tag, and thanks to the explosion in the number of bands releasing music independently, a big “DIY-release” market has developed as a result, packed full of companies, consultants and freelancers catering to the 'needs' of the DIY musician (not to mention a whole load of pro-audio equipment vendors selling gear that promises to make your record sound like it was recorded at Abbey Road).

And here is where the opportunity for musicians to get ripped off really lies. For the vast majority of self-releasing musicians, the whole ‘some bastard downloaded my album for free’ argument is a bit of a sideshow. (In fact, independent musicians are generally delighted when somebody downloads their album illegally, because it hints at the fact that somebody somewhere actually likes their music). No, the opportunity to get properly robbed arrives when bands start to purchase the ‘DIY-release’ style services I mentioned earlier.

The problem is – and I speak from personal experience here – that bands are not like normal customers of goods and services. For most musicians – certainly those without children – their music is their baby. They don’t think rationally about it. They love it so much that they are prepared to spend whatever it takes (or whatever they have) to help it succeed in that big bad music-filled world out there. They ignore the fact that people are not buying music in the droves that they used to, and that there are probably more artists flogging music than ever before. The idea of a return on an investment doesn’t figure in their thinking at all, and many artists releasing albums now don’t have any management, meaning there is nobody in the background to say ‘whoa, don’t spend all that cash on putting together a triple disc limited edition vinyl press of your concept album about beans’.

This generally results in musicians making four big mistakes: 

1. They don't set a strict-enough budget or consider the fact that they need to actually sell X number of records to make their money back

2. They don’t shop around for the best deals on the things they do need (if they actually know, of course, what these things are)

3. They invest in things they absolutely don’t need (over-the-top packaging; posters; narcotics for the A&Rs who are unlikely to attend the launch party anyway)

4. They hire unscrupulous, snake-oil-salesmen who operate out of a glorified shed in a field north of London promising fame and fortune to artists in the form of a £1,500 per month ‘reputation management’ arrangement

I’ve made many of these mistakes in my time; but in hindsight I don’t think I would have made them had I grasped the importance of the ‘record industry’ / ‘music industry’ distinction I discussed earlier. If musicians understand that the record industry is dying on its arse, and that the notion of people paying for recordings is becoming increasingly quaint (whatever we feel about the moral implications of that), it forces them to think more creatively about how to monetise their music rather than simply hoping millions of people will buy their next album. And if artists understand that the ‘music industry’ is increasingly about servicing a market of DIY-musicians with products and services that may or may not result in album sales, it might encourage them to think in a more business-like way, decide what actually might generate a return on an investment, work with the right people or agencies and crucially, avoid the snake-oil salesmen – or at the very least, ask some probing questions about the snake oil.

Free music: why David Lowery's letter to Emily White has totally missed the point

Recently musician David Lowery wrote an article on The Trichordist blog where he took a young NPR intern, Emily White, to task for admitting in a blog post that she and her peers didn’t really pay for music in this new-fangled digital era.

In a passionate, much-talked-about but ultimately rather over-the-top open letter addressed to her he made the argument that people who did not pay for music were behaving immorally and causing a social injustice; in fact, he went so far as to imply that people who downloaded music for free were guilty of causing the deaths of rock stars.

His thoughts went viral and no doubt many of my musician and producer friends clearly sympathised with them, as when I logged into Facebook I found that around 20 musical chums had posted a link to his article. I understand their motives; however – and speaking as a musician myself – I have to take issue with the original blog post.

There are so many things wrong with Lowery’s article and his arguments that it’s hard to know where to start, but let’s begin with economics. When supply outstrips demand, generally speaking prices fall. And when supply seriously outstrips demand, prices approach zero. Which is what has happened with music – there is simply no scarcity of it any more, for two reasons: one, and like it or not, music is now available on millions (billions?) of computers in incredibly easily-to-copy files as opposed to in exclusively physical formats, and two, the revolution in home and project-studio recording means that there has been a huge explosion in the number of recordings available.

It doesn’t matter what either Lowery or indeed the ‘adherents of Free Culture’ that he refers to think of the ethics of this situation, the reality of it is that there are just more songs available now – and in incredibly easy-to-avail of formats – than there are people who want to listen to them, with all the inevitable implications this has for the cost and purchasing of music. It’s astonishing that Lowery, who has been teaching music undergraduates about the economics of the music business for the past two years, has not grasped this obvious point (or simply tries to wish it away).

Secondly, throughout his whole article, Lowery ignores something even more obvious: digital revolution or no, the vast majority of musicians have never made much (if any) money out of their art. Let’s go back to 1997, when the Spice Girls were big and, more to the point, before file-sharing had really got off the ground. If you made an album then, you would probably have had to pay a substantial amount of money to record it (it was before the days of 128-track digital multitrackers in every bedroom); you would then have encountered high manufacturing costs (I remember paying £150 to manufacture 10 CDs in 1998); finally, you would have had to work out how on earth you were going to distribute and promote your opus.

The upshot? It cost you a truckload of money to make an album; a truckload of money to manufacture it; and after all that you probably wouldn’t have been able to sell it in any meaningful quantities at all, due to shelf space in record shops being so difficult to attain and advertising costs being prohibitive. What did this mean? Any independent musician daft enough to make a record in the 90s would end up selling 5 copies of his album and incurring huge debt.

Contrast that with today. Thanks to inexpensive computers and audio gear, recording is so cheap, it’s practically free; manufacturing is, in the digital realm at least, also free (it doesn’t cost anything to generate an MP3 version of a track); and digital distribution via the likes of iTunes, Amazon and Spotify, is, surprise surprise, more or less free as well.

Throw in the potential of (free) social media, email, digital ‘fan-funding’ and cheap online advertising and, if you play your musical cards right, you could actually end up making money from a record that you made for next to nothing. Or, at the very least, generating a decent fanbase that might in the future lead to some sort of income, via live performances, merchandise or other gimmicks.

Extremely few musicians will ‘make it’ to the extent that they’ll make a shedload of cash, but that’s always been the case; and at least the current situation means that more musicians than ever before will experience the joy of establishing a fanbase that extends beyond their mum and dad (and it’s worth noting that, believe it or not, some musicians are in it for the listeners rather than the money; if the internet doesn’t provide the latter, it certainly provides the former).

It would have been nice if Lowery had mentioned some of these upsides provided by the digital revolution, or pointed out that musicians now get a whole lot of incredible stuff for free themselves that would have been filed under ‘pipe dream’ in the past (free recording, free manufacturing, free distribution and arguably some free marketing are not to be sniffed at). And you don’t hear Lowery argue, for example, that by opting for the free, ‘self-recording’ approach, musicians have put a lot of recording studios out of business, or caused the deaths of record producers (as somebody who self-produces a hell of a lot of my music, I sincerely hope that I have not inadvertently killed anyone).

Another thing that Lowery is very quiet about in his article is the fact that musicians are by no means the only group that are affected by the digital revolution or the advent of ‘free culture’. The fact is, if you are creating anything that can be turned into a file – be that a news article, a book, a piece of software, a video game or a film – you are presented with exactly the same vexing question that faces musicians: how the hell do I make money out of this content in a context where file-sharing is ubiquitous?

Lowery completely fails to answer this question in any meaningful way – or to mention that despite the prevalence of file-sharing and free music there are actually still plenty of ways of monetising music. There are film-sync deals; publishing deals; revenue generated in various ways from advertising; live appearances; merchandise; digital Radiohead-style ‘honesty boxes’; royalties from airplay; and royalties from Youtube video plays.

If that’s not enough, it’s important to remember that the profit margins on music that is sold online can be much, much higher than in the ‘good old days’ that Lowery seems to hanker after (particularly where direct sales from websites are concerned). Ok, so you might be selling less music, but what if you are making £6 per album download from your own site, compared to £2 from a CD sold in a HMV store?

This is not to say that making money out of music is in any way easy, but I repeat: it never has been. Getting a successful music project off the ground has always required a whole load of things – I’d like to think that it all comes down to great tunes, but hard work, good hair, good luck, and knowing a bunch of hip journalists are probably far more important.

Throughout rock history, or indeed before anyone recorded any music all, musicians have always complained about how hard it is to make a buck from their art – and Lowery’s blog post, despite its current popularity with many musicians, is just the 21st century (dare I say internet) incarnation of that. It clearly struck a chord with a cash-strapped musical community; but I suspect that the wiser members of that community will see it for what it was – a rock star venting frustration at a lack of sales by first patronising, then picking on, an unsuspecting young intern. It might make him and some other musos feel good for a few minutes, but it probably won’t help him – or the aforementioned musos – make any more money.

Besides all that, I'd love to know if, in his youth, David Lowery ever copied a mate's copy of an album onto one of those quaint blank cassette thingys.

The end of the download is nigh

If internet rumours are to be believed, June 6 2011 may possibly be the music industry’s equivalent of “The Rapture” (for those of you who haven’t been on Facebook recently, or have been living in a hole in the New Forest, "The Rapture" was beginning of the end of the world, and was supposed to happen on May 21. Nothing of the sort happened, unless you are reading this on a cloud with Jesus or you are feeling rather hot and can’t concentrate on this article because a devilish imp is poking your bottom with a pitchfork). Of course “The Rapture” turned out to be a damp squib, but June 6 is more likely to live up to its reputation as being a day on which the music industry will change forever.

So what’s happening on June 6? Well, according to a multitude of newspaper articles and blog posts, it’s the date that Apple may unveil their ‘cloud service’ – a system that lets listeners stream music from the web. Now, as the cloud service in question hasn’t been unveiled yet, it’s not clear what form this is initially going to take. It could be that Apple are simply going to offer something similar to Amazon and Google’s new cloud systems, which allow you to upload and stream your music collection on the web, wherever you are.

But frankly, that’s a pretty boring approach, and unlikely to be what Apple’s “cloud offer” will be. If rumours are to believed, Apple have been working hard to secure licensing agreements with the “big four” record companies – Warner Music Group, Sony Music Group, EMI Group and Universal Music Group – which means all this is heading in one direction: a streaming service similar to Spotify’s, where listeners will eventually be able to stream whatever music they like (for a fee, of course).

If Apple does go down this route, it means that an en-masse switch from paid-for downloads to on-demand music streaming is now just around the corner – the rise of 3G web connections, increasing use of smartphones and Apple’s 75%-85% share of the download market would more or less guarantee that streaming becomes the de facto way that music is consumed. If Apple release a software update for iTunes containing streaming functionality, millions of iPod, iPhone and computer users in general all around the world would suddenly be able to stream music instead of paying to download files. The choice of tracks would be vast – significantly bigger than Spotify’s library, due to full music industry buy-in – and the reach of the service would be enormous too, thanks to Apple’s strong global position in both the download and mobile device markets. All this would arguably result in death of the download, and pretty quickly too.

What would be the impact of this on musicians? Well, for bands who are signed to a label and getting a significant marketing push, it would be fairly good news – it makes their music even easier to access. For musicians without a budget however, it would represent more of a headache. This is because streaming removes the attractiveness of a key tool used by musicians to entice people to sign up to email updates: the free download. For several years now, indie musicians with any clue whatsoever have been giving away downloads in exchange for the ability to communicate with fans online – with individual tracks, EPs or even albums being swapped for email addresses or Facebook ‘likes’. However, there is not much of an incentive for a potential fan to grab a free download from a band if a) they don’t really download music anymore and b) the track can be streamed anyway on iTunes.  

The free-download-for-email-address scenario that we’ve seen over the past few years has led to a situation where clued-up independent musicians have, to a certain extent, been able to bypass traditional gatekeepers – labels, journalists, distributors, promoters and radio stations – yet still make quite respectable amounts of money from music via direct-to-fan sales. Perhaps it’s a negative way of looking at things, but with downloads diminished as an incentive for joining a mailing list, indie musicians will be able to communicate directly with fewer and fewer listeners online; so ironically, technological advancement may lead us back full circle to a situation whereby only those with serious budgets can introduce consumers to new music - and create any demand for it.

But if you are an indie musician who has built a business model on free downloads, and all this does sound like the end of the world, don’t despair yet. Pretty much every technological development in the music industry has shut one door only to open another; and with all these developments, the trick is to stay ahead of the curve. The musicians who twigged that free downloads helped build databases first built the biggest databases (and sold the most music and merchandise); and it will be the musicians who twig how best to use streaming cleverly who will monetise the new landscape. The trick is to think fast. But the end of the download is nigh – get ready.