I wrote this for a college paper last year.
By Steph Macleod
On the 15th of January 2008, record label EMI said it would be cutting between 1,500 and 2,000 jobs worldwide as part of plans to reduce costs by £200m a year. Claire Enders, an industry analyst, told the BBC that the record industry had shed half its workforce since 2000 and the cuts could affect up to a third of EMI's 5,500 staff members. Although restructuring had been expected for some time these cuts are a reminder that the Music Industry is changing rapidly. The 'Big Deal' with the 'Big Cheque' could be a thing of the past.
After years of uncertainty about the company's future, EMI was sold to Terra Firma in August last year for £2.4bn or £3.2bn including debt. But why is such a major record label, which has been making gargantuan sums of money since taking over US label Capitol Records in 1957(home of Elvis Prestley), been spewing out a historic loss in profit? There are a number of contributing factors.
The digital download has hit the music industry hard. While the music industry is accountable for bringing us many moments of joy, happiness, and unfortunate despair, it is still an industry whose main purpose is to make profit. The launch of iTunes, in April 2003 proved to be enormously popular in the US, with about 85 million songs being downloaded in its first year. In 2004 iTunes was launched in the UK, Germany and France, and by October 2005 it was estimated that U.S. customers were purchasing over 1.8 million songs every day. The iTunes Music Store also controlled over 80 percent of the U.S. digital music market. So there is evidence showing the sale of music. Until recently, if you're a music fan, you've bought a physical product that produced music to feed your needs. Records, tapes, CDs, they all had the basic purpose of getting single albums to you. They're on their way out, and in their place is digital sound—mp3s, the AAC format supported by iTunes, and many others. They can hold track information for instant display, including album art, which can be stored at a much higher resolution than the physical picture that came with your old CDs. They're convenient; your entire record collection can be stored on a 3.5 inch hard drive, rather than the countless bins necessary for a record collection or the massive wall space of a CD collection.
The best thing about mp3 is they cost absolutely nothing to produce, other than a little bandwidth. They are much easier to buy in bulk and they can be sold for less making their profit margin much greater. In short, they're a much better, marketable product.
This could be why companies such as iTunes are making it easy for any band, not just a band on a label, to be placed in their on-line store. After all, it costs them very little, and who knows? The band might sell well. It's like a flea market of music, and that is shaking the very foundations of the RIAA (Recording Industry Association of America) and the big record companies.
We are living in a Golden Age where almost anything is attainable through the use of the internet. On a grand scale, the internet is relatively still in its infancy but the problem lies with the rapid acceleration of technology. While it is absolutely fantastic to be able to share personally created photographs, music and video using P2P (Peer to Peer) software like Azureus it is still very much an infringement of Copyright Law to share Copyright protected items using these online services. Doing so is piracy and will leave those responsible subject to criminal prosecution. Unfortunately file sharing copyright material is as fashionable as buying music over the counter these days, and as it appears not to hurt anyone it funds organised crime and terrorism. The ability to get music for free instead of paying for it has contributed to the fall of overall revenue at Warner Music. In 2007, profits plunged 74% to $18 million USD due to fewer album releases and poor CD sales. Its overall revenue fell Revenue fell 11% to $928 million. While we have the ability to develop and use technology to share with each other, we are far behind in developing protection for copyright material. To say that it is an impossibility to hack into or crack any and every kind of software is ludicrous and is more likely to fuel the passion of digital pirates globally. If protection of copyright material is not addressed then business, including record labels, stand to lose everything.
Mainstream radio is controlled by mainstream record labels which push artists designed to meet specific audiences. This has grossly caused the decline in the quality of mainstream music. The mainstream market is dominated, at the moment, by the INDE music genre (not INDE record labels unfortunately) who's quirky attitudes, bad haircuts, one song albums with the same hooks, crap musicians, crapper songs, are being force fed and brainwashed into the minds of the idiot public. Yes that's me and you. Being signed to an INDE label, I do see and hear a colossal amount of amazing and talented music out and about in the 'real' world. But major labels, as do the INDE labels, find great difficulty in bringing this music to our attention. There is too much of a risk factor in regards to money loss. They need something concrete that they know will sell, usually on past models. The revelation of online community sites like MySpace has blown the music industry apart and brought average Joe, the hypothetical bedroom guitarist from Bognor Regis, and his music to the rest of the world…FOR FREE! MySpace has allowed multiple forms of creative media and entertainment to be uploaded for free and is networking people of all sorts on a mass scale. MySpace has millions of musician profiles of practically every genre of music and then some. Now people don't and won't tune into mainstream radio to be told what's great, to be told by matter of opinion what the album of the year is, to have annoying hooks brainwashed into their memories so they just have to buy it to get a little release. 80% of Brittney Spears fans are now irritated by her music but I think they only have themselves to point the finger at. While the record companies continue to make profits from poor, albeit a little ruined by the system Brittney, she has been abandoned by everyone after cracking under the manipulation of fame and fortune. It truly is a cruel circus.
People are also starting to wake up to the ridiculousness of reality TV music competitions i.e. the X-Factor and Pop Stars (US). Having noticed that the winner, of what really is a popularity contest, isn't that great after all, and that Simon Cowell has made a few bucks out of a couple of number 1 hits, including the coincidentally and annually timed release of a Christmas number 1, the comeback kid (competition runner up) arrives in the charts with a new manufactured look and a brilliant catchy 3 minute song that consists of a repeating chorus and single line verses. You have to hand it to Mr Cowell; he is brilliant at marketing a product. If you are having difficulty with my last statement, here are a few reminders:
· Liberty X Vs Hear Say (Heresy)
· Alex Parks Vs Lemar Obika
· Duffy Vs. Lisa Pedrig (Welsh X Factor)
This has been happening due to the fact that the general public who watch this nonsense are inclined to buy what they are told. It's all very crafty.
People are starting to notice they are being taken for granted and people don't like that. They are having a revelation to a world where they can have whatever they want if they are but brave to be a little decisive for a change.
In conclusion, the rapid change in the music industry could see major record labels being made extinct in less than a decade. Although Warner have come up with a solution in which the ISPs would charge their customers extra so that all copyright music would be available for free download if the ISP pays a substantial amount into the PRS pot. This is looking unlikely. There is a revolution happening in the music industry and it's very exciting. Manufactured music will dye out and people will be drawn back into the live gig. That's where the money will be made; in the quality of live performances and the sales of limited edition merchandise at gigs, as well as digital download sales. Artists and musicians are very nervous about signing any deal with a major record label these days unless the deal is really worth it long term. This is great for the INDE labels out there that are truly in business for their artists and the love of music not the profit.