Is the music industry in serious decline or is it booming? Well… both.

‘Economy’, ‘Credit Crunch’, ‘Recession’. All very real to some people, but at the same time as the job cuts, the music industry is reaching more people who are consuming more music and more artists are making a living from it (some are even selling downloads and merchandise by the truckload). So what IS going on?

Forward thinking music 2.0 businesses that should be expanding are being forced to cut back.
Sirius XM laid off 50 staff including some disc jockeys, Pandora had to cut their team from 140 to 120.

These businesses are thriving in one sense, with more members, fans and subscribers every day – Pandora also stated that their listenership is ‘growing rapidly’ – and yet they are still struggling to fund their staffing costs. I think that this is because their ideas and business models are sound, but the market and industry as a whole is just not ready for them. Not just yet. The ones that aren’t adapting are looking even gloomier; Time Warner is expecting to cut 1,250 jobs across the media and entertainment sectors following it’s recently reported fourth quarter loss.

Then there are the small music businesses that are doing well, making a successful living from the music industry (isn’t that what it’s all about?). More people are doing so every year. They are selling downloads, CDs, T-shirts… it’s great!

Music businesses are split into two sections in my mind. There are the businesses of old, who have always relied on selling huge numbers of a physical product and ignoring the new ways of connecting with music fans. You’ll hear from them that ‘pirates’ are causing job losses, but in reality, they are selling less physical products than they were 10 years ago because 10 years ago people were still buying CDs in bulk to replace their out-of-date cassettes and vinyl. Those figures were unsustainable and it was unrealistic to expect that surge of purchasing to continue. The other trouble with that strategy in today’s digital world is of course, single song downloads. Why buy a turkey of an album for $15 when iTunes offers the best song for $.99? So yes, Sony’s music profits have declined 41% and Warner music can increase digital revenue yet the total revenue slides 11%. These companies are struggling to find a new way. We all know that.

The other section of businesses I would call music 2.0 businesses. People and teams who are looking for new models for success in the music industry. They may be online distributors or sell music-related products or services. They may be websites streaming to consumers for free (gasp(!)) or an artist giving their tracks away. What sets them all apart is how they look at building a community and reaching out to fans, with a view to creating real interaction, enjoyment and value for the consumer. Often on a personal level, because blogs and websites may be run by independent bands, and therefore often it’s the artists themselves answering the emails. This makes their music genuine, appealing, and because they don’t blow hundreds of thousands of dollars on old media marketing of average artists, they can (and do) succeed woth a small yet loyal fanbase. You could even put a band such as Radiohead in this sector, because although they are affiliated with a major label, their idea of branching out with a new concept and a ‘name you own price for our album’ strategy created a stir as it tried to push music consumerism forward.

Many successful careers and companies are crafted during tough economic times, let’s face it, people can’t throw money around so they only make the smart decisions (Gary Vaynerchuck taught me that). The smart advertisers and investors are siding with the ‘future’ of the music business, and shifting away from the dinosaurs, hence the split in the news headlines.

Maybe you should think about where your music career is now, where you want to be, and how you can appeal to fans and investors alike in these tough times, in order to create a relationship that you can both benefit from.

Lee Jarvis.

Well, it’s always been on the cards, but the biggest news of the week is that Apple have finally been able to make iTunes tracks available without the Digital Rights Management that was essentially ‘watermarked’ into all previous tracks.

So you can now buy a tune from iTunes and play it on Microsoft’s Zune player or similar by SanDisk. It really took us until 2009 to get to that stage? The major labels and countless independents have been selling DRM-free tracks via Amazon for about a year, so why did they hold out on Apple?

Steve Jobs announced that EMI were willing to drop DRM back in 2007, but the rest of the majors (Universal Music Group, Warner Music Group, and Sony Music Entertainment) have held out for some unknown reason. Actually, the reason is know; it’s because majors have no idea how to move forward in this music evolution. They were unwilling to hand over DRM-free copies to iTunes because of the scale of it’s sales, fearing a loss of control and rampant, escalating piracy. They struggle to keep hold of things like DRM so that people don’t ‘steal their money’.

Here’s a thought. Will Apple’s news make much difference? The people who already buy millions of tracks from iTunes are doing so (mostly) happily and playing them on their millions of iPods and iPhones. As far as they know (or care), DRM has never been an issue. People who have wanted to download DRM-free music for their non-Apple devices have been able to find it fairly easily. Will these settled buyers bother to jump ship? Especially with the new price rises too (more on that later). The infamous Bob Lefsetz thinks the news is very much a non-issue, saying that “the only people who care about DRM don’t pay for music, they just steal it. Otherwise, Amazon would have eclipsed Apple and the Seattle company would own the online music market”.

Is it all too-little, too-late?

Lee Jarvis.

Cross-posted at our Music Jobs website in the USA

I’ve been thinking some more about my post last week, debating how much you actually earn from selling your music online these days. Coupled with the news that’s been finally weaned from Radiohead’s ‘In Rainbows’ Album and the fact that the more forthcoming Trent Reznor’s figures on Nine Inch Nails’ ‘Ghosts I-IV’ album, I thought I’d blog further on the topic of what you can earn by giving your music away.

Regarding ‘In Rainbows’,”More than three million people acquired the album,” points out Warner Chappell Music senior vice president of International Legal & Business Affairs Jane Dyball, who admits “I had doubts there was money to be made online”. That figure includes downloads sold across various retailers, and physical packages sold online and through brick-n-mortar stores, and Dyball noted that 1.75 million copies of the physical, full-priced release were shifted. The band may have decided to not give out any specific figures on sales, but that hasn’t stopped people from estimating revenue ($10m in the first week?) and average price paid per album ($5? $8?). Other companies are saying that these figures don’t allow for those who paid $0 for the album (ComScore.com), and Radiohead’s representatives then reply that those figures are inaccurate but don’t give us anything solid to go on. Despite the option of a ‘$0’ price on the official website, between October 10 and November 3 2007, ‘In Rainbows’ was still downloaded from Torrent websites to the tune of 2.3m downloads. So just about no-one can figure it all out once the Torrent numbers are thrown into the mix.

So how about Nine Inch Nails? Front man Trent Reznor must have thought it a huge success. Not only having the respect of your loyal fans and the Music Futurists out there… not only giving the old major labels an e-middle-finger… but also pocketing $1.6 million dollars in revenue in the first week. It must have been a success, as they’ve made the follow-up album ‘The Slip’ available for free download in multiple formats, all DRM-free and encourage you to “remix it, post it on your blog, and share it with strangers”. What an amazing attitude; these will surely go down in history as all-embracing album experiments. It should be right there alongside Michael Jackson being the first black artist with a video on MTV (Billie Jean, 1983). (your random fact for the day )

It wasn’t that easy though – Reznor reported earlier this year that in the two months up to January 2nd, his previous collaboration with Saul Williams consisted of 154,449 people downloading a standard quality of ‘NiggyTardust’ and just 28,322 of them paying the $5 for the higher quality version. In his blog, Reznor suggested that he was “disheartened” by the results.

So, it wasn’t the quality which drove people to illegally download via torrents. Reznor went back to the drawing board and tried a slightly different approach. He now understood the need for a physical product to help launch the album, in fact he released several variations for both CD junkies and hard-core NIN fans (the $300 Ultra-Deluxe Limited Edition of Ghosts I-IV immediately sold out its run of 2500).

At 43 years old, technically on the upper end of Generation-Y (if not Generation-X). Reznor is refreshing, and a true pioneer in his actions. Major labels may be starting to offer 360 deals for some artists, but GIVING the music away? That must be a long way off (if at all).

What would you give to have a Reznor in charge of your career? Well, maybe you can… YOU. Maybe Indies are gaining more and more advantages over the majors and you want to choose this path. If so, then this is the place to subscribe – I’ll be talking a lot more about this over the coming months.

Lee.

Generally, the two don’t overlap too much – dance music wants to stay cool and ‘underground’, and major labels will dilute your work in order to sell it to the masses, right? Well recently a rare deal was struck between Sony BMG and Dutch phenomenon Don Diablo.

Already a big name in the scene (he beat Armin Van Buuren, Fedde le Grand and Tiesto in the People’s Choice DJ awards), Diablo sees the deal as a way to launch himself on an international level, as Sony BMG will be marketing and distributing his forthcoming album. A ‘fusion of electro/hip hop and rock’ album that he himself wrote, produced, engineered, and even sang on! Why would such a multi-talented musician then hand over control to anyone else, let alone a major label? Well, with only a small team working with him at the moment, Diablo knows there is not enough time to push all the avenues that he wants too, such as T-shirts and merchandise, especially as this album has taken two and a half years to get everything just as he wants it. The workforce of a major will free up his time so he can be more creative, and they will make sure all the paperwork is completed on time. Alongside Sonny BMG’s huge international presence, their financial clout may help him break through the ‘just a DJ’ barrier that he feels he’s been held back by. Diablo insists that he will keep full artistic freedom, and has plans to sign new independent acts to his own imprint, as well as future ‘DJ friendly’ EPs and a live show for a US tour.

In a statement from Diablo’s Amsterdam-based performer’s management firm, Muzikology, Sony BMG also notes that in the near future it will be “developing into a music entertainment company that offers a wider range of activities and services to artists in order to create a loyal fan base and strong artist brands”. Maybe this will change the way music contracts are structured with majors? Or at least change the way they are often viewed from artists looking to make it on a global scale without ‘selling out’.

Lee Jarvis.

Well, here we go with the launch of the UK Music Jobs blogs! We hope to make your visit to the Music Jobs website a bit more informative and enjoyable, with news, reviews, advice and gossip from around the world.

My ’specialist subject’ is Dance music, although I aim to cover as much of the music world as possible. I love going to live gigs, so you’ll hear my rants on Jazz or Rock, and I’ll also bring you news from major labels and their latest troubles. I hope to cover these as completely as I can, and I expect a flurry of adulation / abuse as I attempt to do so. You guys may know more or feel different about what I write, so tell me so!  I want the emotional replies – blogs are supposed to be interactive, so please comment on anything you feel strongly about. I need to know what amuses and disgusts you so that I can delve deeper into the subjects that you all want to hear about.

The Music Industry is a big ol’ world, and I only have two hands and one groggy brain to try and get it all across to you…. but bear with me, it’ll be a fun journey.

Lee Jarvis.