Record sales plummet but the music plays on
Published in The Times (October 22nd, 2010)
The deeply wonderful Elvis Costello has a new record out. It is available as a download, on CD, on vinyl and as a 78. For younger readers, these chunky black discs were the main format for records until the 1950s, when singles took over. Funnily enough, Tom Waits is also releasing his new record with the Preservation Hall Jazz Band as a 78 — but he is going one better, bundling it up with a record player. Yours for $200.
This is the new world of music business economics. The conventional wisdom is that such moves are a sign of desperation. Surely this is why Guy Hands is suing his former friends at Citigroup for £7 billion for persuading him to buy the bombed-out EMI, Britain’s best-known record company?
And why Rob Dickins, a former boss of Warner Music UK, told a conference last weekend that he wants to see albums sold for £1. His logic is that it is the only way to revive sales. Others disagree, arguing instead that the price of singles should be doubled. Panic on the streets of Soho.
But the conventional wisdom is wrong. The music business in Britain is doing well. Yes, record labels that grew fat and lethargic on the vast profits of CDs are crumbling, record shops are going out of business and CD sales plummeting. But overall the music business is growing. Revenues across the industry as a whole rose nearly 5 per cent to £3.9 billion last year, just as they grew the year before.
Thanks to Napster and file sharing, music was one of the first big global industries disrupted by the internet. So it has a head start on the chaos now engulfing publishing, printing, film, retail and all the other industries fearing meltdown. It is not dying but evolving at high speed, and its survival tactics should be studied closely.
While slow-witted big labels decay, new players and new revenue streams are emerging: dozens of them, many unexpected. The manager of the Magic Numbers was amazed to have to start producing cassettes midway through a recent tour, but they sold well. “It’s all about the pennies now.”
Live music is thriving, boosted by the festival scene, while there is money to be made from ringtones, video games, TV, advertising, merchandising and sponsorship. Every time you hear music in the media, a publisher is smiling. But having so many revenue streams means everyone has to work much harder, move much quicker and take more control of their own affairs.
The godfather of the new economy is Trent Reznor, of Nine Inch Nails. He realised the importance of building a close relationship with fans, then offering something unique — and that free could be the key to success. So he released an album as a free download, then made more than £1 million in a week by selling extra tracks, deluxe and signed editions. Astonishing for a product given away — but studies show that illegal downloaders spend more on music than other fans.
Few bands have learnt the lesson better than Mumford & Sons, who had 4,000 people see them in New York this week after a summer of riotous festival crowds. How did this happen, given minimal radio support? By touring endlessly, promoting hard and using the net to bond with fans, who become “brand ambassadors” and sell tickets direct. Imogen Heap, whose creative life is lived online, is another example, even asking fans to select tracks and cover art for her releases.
Music is reverting to a cottage industry. “It’s like 1973 all over again,” said one veteran. So young grime artists sell bespoke T-shirts and hats that they promote on stage. Indie bands flog back catalogue on memory sticks after gigs. Big names do deals with supermarkets and coffee chains. And more and more artists wind down from shows by pushing product: the lounge band Pink Martini spent an hour chatting to fans after their last London concert, selling 300 CDs. You get out what you put in.