Music Industry is a dying business why? Read my conversation with another industry professional
Posted: December 15th, 2009 by Khoa Le in Advice Corner, Behind the Scenes, Business, Inspiration, Random thoughts | 4 Comments »
I had forwarded the link to a few buddies of mine which I won’t reveal, but I had an email conversation with someone about the post I had put up yesterday (read yesterday’s post). I think he hit the nail on the head when he replied to me that the Article tells him that it is a dying industry and it sucks to be a producer and songwriter. Here is the conversation:
Anonymous: What it tells you is that producing is a lousy business – especially for hip hop.
Me: Basically. And it tells you that you really need a hit record to go anywhere. But it also tells you that you need to have a lot of passion to be in it.
Anonymous: Unfortunately it is a passion and no longer a way to make a living at your passion. It tells you that it is a dying industry that barely functions by not paying people.
When the market can no longer support full time producers and professional song writers you wind up with songs no one wants to buy. But as the tide turns it will be acts and musical groups that survive due to touring – everything else will be incidental.
I think the key will be finding new ways to monetize your songs – the traditional methods really don’t support making a living. Even at say 40K a song – how many can you sell per year? Say at your peak it is say 10 0r 20 a year – major acts make that in a week.
I still think the only way to make $ is the 360 deals – they just have to be well funded.
Me: You make a great a point. I think I want to blog this topic. I think its realized, but I think many are in denial still thus not fully expressing their opinions and complaints. Not sure what that would do but I don’t read too many talking about it.
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Great topic and I think I can add something of substance to this discussion. Music is a great passion of mine but unfortunately god never blessed me with creative talent like Khoa, so i was left to pursue opportunities in the business side of music. My career started in 2001 with an independent label which was eventually bought out by a major label and since then, the major label entered into a joint venture with another major, and has since left the music industry, leaving me employed by the second biggest major label in the industry which also shares the same name with one of the world’s leading electronics companies. I have intimate knowledge of Artist/Producer/Mixer/Sample contracts, I’ve worked on artist royalty audits, prepared reports for high level executives, and have even supplied critical information in artist renegotiations. But enough about me, the industry is on life support! The labels got fat in the late 90’s and early 2000’s. Physical albums were flying off the shelves as if there were $100 bills stashed in the sleeve copies…and oh the profit margin on physical cd’s was unbelievable! Remember when Sam Goody and Tower records were selling cd’s at $21.98…well those cd’s cost well under $4 to make (including a $1 allocation for marketing expenses). Boy were those great times in the industry. I even heard L.A. Reid when he was running Arista, through a party in Puerto Rico and everyone from execs to the mailroom was invited, all expenses paid! Boy have times changed! The company I work for can’t even afford a softball team, or an employee Christmas party!
Let me give you some facts from a report that I put together in 2008. From 1996 to 2001, CD sales grew 61%. From 2004 to 2007, they declined 32% and are now back to 1994 #’s. Since 2001, Digital music downloads experienced 490% growth. In 2007, Digital track sales grew 49% over the previous year’s sales to a total of 844 million. In 2008, digital track sales were 1.4 BILLION! Seems like great growth, but the profit margin on digital is no where close to what it is on physical and so the labels are getting raped now. They are trying so hard to make money, its ridiculous! They are coming up with all sorts of gimmicks to exploit music for a profit and nothing is sticking. They tried the ringle (ringtone with a single), the vingle (promo video with audio single), the pringle (an mp3 with a can of pringles, j/k) but you get the picture.
In order for the industry to survive, I think it is very important that the labels re-embrace the EP/ singles format. 99% of recording agreements are based on the LP format. With the advent of digital distribution methods, the public’s general accessibility to artist’s and new music, the labels need to start writing agreements around an EP or singles format! Instead of getting 1 album from an artist every year, you can get a new EP say every 6 months. This will allow the artist to stay relevant in the industry and if a single bombs, no harm no foul, get back on your grind and release another one. Careers end when LP’s bomb.
360 deals are not the answer! Trust me. It’s a ploy for the labels to get involved in touring & merchandise. Labels have wanted to get a cut of this money for decades and the “360″ deal is their key to the door. They sell the 360 deal as an idea of the label wanting to groom and artist’s career and development and be involved in everything the artist does to create a brand and an image. On the surface this sounds great, but its only ploy for them to rape you. Don’t get me wrong, these deals are great for acts like Jay-Z or Beyonce because they have bargaining power and can get a 150 Million dollar deal but for smaller up & coming acts the 360 deal is only a means for them to sign away their rights and everything of value that gives them any leverage.
Major labels shot themselves in the foot. They created the standards for this industry. In the past, radio was the only way for people to hear about new artist. They put out great singles, but had terrible albums. They took advantage of people and never really got theirs in return.
I think right now Major Labels are experiencing Karma from what they’ve committed in the past. In my opinion, what they did in the past and even now is what I call a crime. The music industry is probably the only industry that isn’t even supported by a UNION. If there is, that needs to start working lol.
In the film industry, if you worked on a major film with a gigantic budget, workers were paid a certain rate and had to be paid that rate because of the union. In the music industry, there’s no standard rate. It use to be a respect thing for Majors to give producers like $5k to $10k a track. But there was no line. Some said if you want to get on this album, you give it to us for free. And that’s what an unknown producer does! Gives it to them for free to get major credits so they can get on bigger work.
Now, it’s even worst. I’ve heard of major labels giving producers under 1k for a song! How do these people expect to get quality work if they can’t even pay producers. We are the ones that gets the songs done from the beginning to end.
I just feel that the quality of work from the Majors are not being produced. Thus their future collapse. They got uneducated JO’s working as A&R’s, directors, and etc. And most probably have their own side gigs. If they worked in the software building world, and if they were caught using what they developed for the company for their own company, I’m pretty sure they’d get caught and sued. But no in the music industry. A&R’s have their own management companies, production companies, and etc….and they split the work between majors and their own self interest. Until they can gain enough contacts and success off their own interest to quit the major label.
But you see my point? There are no standards, no rules, no regulations…..nothing is being done! Which is why in my opinion, the industry is falling apart.
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