Update: For 2011 Music Industry Statistics, please go here.
*this originally appeared as a note in fb on September 22, 2010*
For some reason the past week I have been bombarded by questions and opinions about the state of the music industry – what’s right with it, what’s wrong with it, what needs changing, what needs enforcements etc.
These are all arguments that I have heard before and I agree with all of them. What I don’t agree is with the diagnosis that:
- The current music industry is full of crap, dreary dross; and
- That capitalism is to be blamed for this state.
I don’t think so. I think the problem that needs the most urgent attention is the product itself. Marketing, media support, even governmental and legislative support is just that – support. We need to have a product that the masses want, first and foremost, then only we can figure out the rest.
Please allow me to share my side of the story, so that we can better understand and appreciate the dynamics of the market and see how we can improve it so that more people can get a slice of the pie.
Firstly, the state of music industry has always been robust, it has never been in a decline. It is probably a lot more robust today than it was 10 years ago. What has declined is physical CD sales in comparison with other formats. Digital, mobile and live experiences such as concerts and festivals have seen super insane growth.
People are consuming more music than ever. Time, distance, language, ethnicity, religion, genre, logistics etc are no longer major deterrents in getting your music out there in the marketplace. Ease of travel and availability of low cost carriers and budget hotels as well as the rise of social networking that allows you to find new friends in foreign places also mean going to a concert anywhere in the world is not such of an impossibility anymore. Music, and its related experiences, is no longer an elitist product – it is now accessible and readily available to anyone anywhere as long as they are willing to part money for it.
In quick numbers, comparison between 2006 and 2011 revenues for worldwide music sales:
- Digital: USD2.9 bil to USD14.8bil
- Mobile: USD1.0 bil to USD7.3 bil
- Physical: USD1.9 bil to USD5.7 bil
- Concert tix: USD8.2 bil to USD12.1 bil
These numbers are DESPITE the fact that 95% of the tracks on digital platform is “stolen music” i.e. music tracks that are downloaded without payment to the artist or the music company that produced them whether via direct downloads or P2P. Imagine that. Only 5% are purchased legally, yet this 5% still amounts to a sizable USD14.8bil.
Now, that stupid, dreary dross that you hate so much? The ones that you think are inferior to what you produce? That same stupid, dreary dross (after this will be known as “SDD”) are the ones that are generating these numbers.
So, your next question will be why, right? Why theirs? Why not mine? Simple. The SDD are produced based on what the masses want.
Globally, 63% of adults (between the ages of 17-34) say they are passionate about music. Generally there are three suggested consumer ‘segments’:
- ‘Chameleons’ (who readily ‘blend in’) are more inclined to listen to music as long as it makes them fit in and current
- ‘Experiential’ music consumers who have an eclectic, diverse music taste.
- ‘Defenders’ who are committed to particular artists and are more inclined to illustrate this through self expression
At the drawing board, when the discussion of an album or a single takes place, we actually ask: which SDD should we produce today to appease the masses’ need for music that “defines” them? We debate hotly over to how we want the end product to look and sound like and which market segment it will appeal to. We debate over artistic consideration versus financial implications – how much money do we need to make out of this and how much money we can afford to spend; and what are the trade-offs? How much do we pander and bend to accommodate the consumers’ preference versus the artiste’s preference?
You want to innovate? This is where you innovate. It is not the movers and shaker’s duty to revolutionize the industry. It is your duty, the person who creates the product.
Music is stripped down to its most basic definition – a product to sell to the masses, instead of its more romantic definition of self-expression and soul-redeeming tool. The basic principles of creating a product applies:
- It has appeal.
- It sufficiently differs itself from other products already in the marketplace.
- It can be produced at an affordable and competitive price.
So it doesn’t matter if you want to sing rock’n roll or nordic heavy metal in whatever language. What we ask are these questions:
- Does it appeal to the right market?
- Does it have a unique signature, an identity?
- Can we produce this without breaking the bank?
- What are the combinations of best studio, best sessionist, best producer, best mixer, best PR people etc that we can buy with the kind of money that we have at our disposal?
- Can we then sell this product to make some profit to put food on the table?
It doesn’t matter if you hate all these marketing stuff and feel like a sellout and that it stifles your creativity. The fact is even if you reach into your own pocket to record your own music, if you have any intention whatsoever to make some money out of it as opposed to it just being a self-expression, you still need to take these things into consideration. They are real concerns, real laws of the market dynamics, real factors in getting you the money from the consumers’ wallet.
I completely agree that there is always a demand for all sorts of products, all sorts of music. But the size of the market it caters to is also different from one to the other. You want to appeal to the masses, you release something that the masses will lap up. If you say the masses are not your target market anyway and you will not sink to their level, then don’t.
What I don’t appreciate is the consumers being belittled and called stupid or lacking in taste when they dismiss you and refuse to give you their money; or when media owners don’t put your song on heavy rotation (psst… media owners are subjected to the same market dynamics. Yes, even MTV). As a marketeer, I take offense when my customers are insulted. It was your choice too, you know. It all starts with the product that you are willing (or unwilling) to put out there. Otherwise you are just another music brat (or music snob, take your pick) who feels you are entitled to the consumers’ money without making the appropriate effort to give them what they want. Just because you have what you think is a good and winning product doesn’t make it so, a lot of other people have to think so too. And when I say a lot, I mean millions of other people.
Now, to the second point. Us capitalists. About USD5 billion a year is invested in artists by record companies worldwide. Around 30% of revenues are spent on artist development and marketing, this includes an estimated 16% that is spent on artist and repertoire work (A&R), a proportion that significantly exceeds the proportionate research and development (R&D) expenditure of virtually ALL other industries. Historical evidence in the past 20 years shows that an average of USD1 million is required to break a new artist in major markets.
I am not saying capitalists are not greedy money grubbers. But if we are going to risk that much money on your product, we’d better be damn sure that the SDDs will embrace it or we will not be able to get a paycheck by the end of the month. It is not easy to set trends, to persuade people about what’s cool and what’s not. It will be doubly hard if we have a product that only appeals to a very small slice of the market share because its marketing and promotion requires the same amount of money and effort for products that could yield us millions. In this unfair cruel world, millions trumps eclecticism.
I assure you 80% of the time I will not be able to release a record that I personally like. Hardly 20% of the time either. The portfolio and priority is always about the cash cows and the stars; and to see if anything can be done to fix the problem child. The dogs? We kick them out, even if we personally believe in them and really REALLY like them.
So at the very least, aim to get your music in the problem child category so that I can fight for you. And here’s a little secret. I am in the 2% bracket. Yeah. Even my bosses were surprised. The super elite is accidentally hired to sell products to the low-life masses. But it is not about what I like, is it? Not about my musical taste. There’s a lot of people like me in the industry. We fight and look out for the underdogs. But give me something that I can work with. Don’t force your stubbornness and musical self-righteousness on us and then curse us when your music doesn’t sell.
These are not observations. These are the cold hard facts. This is not even an argument. This is me sharing with you the view from this side of the metaphorical mountain. My challenges. My issues. What I have to deal with on a daily basis. What I have to walk into that meeting room and defend. What we capitalists do is merely to provide a way for the product to reach the marketplace and make the masses aware of its availability. Yes we are the “pushers” but we will not push anything that the market doesn’t demand, no one dares to take that kind of financial risk. Maybe someday someone will, but today I am not that someone. If the creator of the product decides not to abide by these market principles, don’t be angry at the industry or its movers and shakers or the media or the government or the music consumers or the God of rock’n roll who is now paying too much attention to Lady Gaga, Eminem and Justin Bieber. Yes the market doesn’t work in your favour. So? Shit happens. But did you do all that you can to make the market work in your favour at the first place?
Again yes, of course there are other external, intangible considerations like luck, looks and charisma. The good news is, when you have the money to back you up, you can manufacture your own luck, looks and charisma. Of course there are misfits, those lucky bastards who defy the laws and go completely against the grain yet become both a commercial and critical success. Unfortunately for me, I haven’t came across one yet myself. So I will operate under the laws and rules that I am given which dictates that I take extremely calculated risks; exceptions are made when exceptional products come my way. Guess what, that’s not my department, that’s yours. I can go completely radical and crazy in my marketing efforts, but in product development? I am your most frigid, puritanical, risk-averse traditionalist.
My question now is this: how will you, the creator, the artist, the musician react to this truth now that you know about it? Do you have a product that is demanded by the masses? Are you willing to modify it so that it does? How far are you willing to bend? What is the the tolerable amount of artistic licence that you will give up in exchange for commercial success?
Remember this: if you have a product that the masses don’t want, that you are unwilling to modify to make it desirable to the masses; please don’t become angry and self-entitled when you don’t get the adulation and love that you think you deserve and become bitter and jaded about the industry when music consumers reject your product and decide to buy something else. Grow up. I have to, so do you. Everyone does.
If we want to change the industry, we have to change it from the inside and it starts with the people who creates the content. You. The rest of us is just playing a supporting role, we are dictated by what the market wants. It is true, our hands are tied. But yours are not. You’re the messiah. Not us.
What are you going to do about it?
And yes, feel free to disagree. Peace out.
- The Economist on the State of the Music Industry (michaelgeist.ca)
- VmusicBook – How to get into the Music Industry (your-story.org)
- Post Human Era: Music For The Singularity (singularityblog.singularitysymposium.com)
- Digital-distribution goes from fee to flat rate (seattletimes.nwsource.com)
- Artists Make More Money in File-Sharing Age Than Before It (torrentfreak.com)