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Who left it high and dry?: The future of music

Written by Freda Liu
Thursday, 01 January 2009 00:00

Charles Darwin might suggest that the credit crunch is just another unfavourable condition, among many others, for the biosphere of the music industry. It is all about survival of the fittest now.

Many call the music industry “half-broken”, and they say it for a reason: giant record labels, including EMI and Warner Music, have been suffering from losses long before the credit crunch bit. Now when the financial tsunami hit, it claimed two casualties in the first week of December alone: Entertainment UK, the arm of the troubled chain Woolworths, and major indie label distributor Pinnacle Entertainment.

With piracy being its biggest enemy, the already declining music industry's fate is perhaps at its blurriest. This constant battle has accelerated the decline of CD sales, one of the industry's most important revenues. According to the latest research announced by the Entertainment Retailers Association, illegal downloading is estimated to possibly cost 30,000 British jobs. Meanwhile, the retarded growth of digital unit sales is like salt poured onto its wound. Analyst Rich Greenfield from Pali Research concluded: "The first four weeks of [the fourth quarter of] 2008 have seen CD sales fall about 23% in total."

This is a 5-7% drop from the first three quarters of 2008. But, who really left the industry high and dry? It is a finger-pointing situation. One can blame Napster, MySpace, iTunes, or the greedy gene in each and every one of us for the coma of the music business.

For a long time, a record deal with a prestigious music label was the key to stardom for many artists. From recording, manufacturing, distributing and marketing a record to looking after styling and tour expenses, record companies maintained a globally functional system that worked for the last decade. But with the cutting costs for production, manufacturing and distribution, the flaws of this existing business model are slowly surfacing, and seemingly leaving the industry in dire predicament. Advancing technology may have triggered the decay of the present model, but now that the damage is done, what matters is what's next for the industry, and if these new ideas are good enough to break the curse and revive it.

Bandstocks attracted the attention of Patrick Wolf, who is asking fans to become shareholders of his upcoming album, Battle. Via Bandstocks, fans will have to sign up and then invest as little as £10 to fund the production cost of his fourth release. Wolf described it as the beginning of the future for the music industry, claiming that artists can no longer rely on conglomerate, corporate companies. It sounds like an ingenious idea for established names, but it also proves to work just fine for new and independent artists. Acoustic singer-songwriter Jersey Budd is currently the most invested in artist at Bandstocks, and has already raised at least £34,250 for his self-titled debut album. Budd revealed to me that he had turned down a major label deal to sign with Bandstocks, fearing that a label contract would not guarantee an album release. “I'm now in control of my own destiny more,” he said.

A Bandstocks contract provides artists with complete creative and marketing control of the album production, half of the net receipts and an album copyright reversion five years after the release. For Budd, Bandstocks has also shortened the distance between him and his supporters. “If enough people think I'm good enough to put their money in, I'll be ok. And this way, I get to look after the people that have invested in me.”

Is Bandstocks a profiting business or just a great concept? Only time can tell.

Buying shares of an unborn record may be risky if you are unsure whether your bank will go bust or not today, but how about paying for an album at the price that pleases you? In 2005, Canadian artist Jane Siberry, now known as Issa, brought a new concept for artists to survive in the Internet era; her music was available on her website for whatever one was willing to pay, even if it meant nothing. The innovative concept was famously adopted by Radiohead for their latest label-free release, In Rainbows, which was out in 2007 after their contract with EMI ended. The pay-as-you-please approach may not have generated much income (assuming many are like myself who thought it was only a joke and only paid a quid), but the physical copies and limited editions sold had probably paid all the outstanding costs. In Rainbows is an easily digestible record and, combined with their solid fan base, it was a calculated risk that Radiohead could afford.

After releasing the critically acclaimed albums like The Downward Spiral, The Fragile and the alternate reality game Year Zero, Trent Reznor from Nine Inch Nails pushed both himself and the music industry to a new boundary with his latest projects, Ghosts I-IV and The Slip, an entirely free album for legal downloading. While the first nine tracks from Ghosts are free, one has to pay US$5 for the complete collection in digital format, or more for a physical copy or a deluxe package. Ghosts' first week sales saw 781,917 transactions being made, and the money Reznor made was already up to US$1,619,420.

One may doubt if free music is the new future of the industry, but with more and more major artists experimenting with this idea, a newly evolved music industry is certainly shaping its way. The days of CD purchases are dawning, and the future revenues will rely on the amount of creativity in the production, marketing and distribution of music; artists and their teams may have to focus more on gigs or other merchandise. It can only be positive should this become the way forward.