Another year, another downward turn for the record business. So what will the industry do?
While overall music sales were up 14 percent in 2007, most of that growth was due to the sale of digital tracks. More telling, album sales were down 9.5 percent, and every genre suffered a sales decline, from rap (down a whopping 30 percent) to rock (12.5 percent) to country (16.3).
So The Associated Press decided to ask a few industry insiders — and one notable businessman outside it — what, if anything, can be done to reverse the slide in 2008. Here are their opinions.
“Big” Jon Platt, President, West Coast Creative/Head of Urban U.S., EMI Music PublishingI don’t know if fixing is the right question ... it’s more, what can we do to build on a new business model? That’s the problem, is that everyone is trying to fix the old model, and that’s obviously not working, so we need to build on a new model.
The business itself has to get back into artist development, which I think has kind of fallen by the wayside at most labels — not all labels, but most. We don’t really have many new stars — we’re hanging on to the ones who have been here for quite some time, and there’s been no real bona fide superstars as we know them (in urban music) ... that have proven themselves to really be able to have a full career, sell three million albums on the first album and a million the second album.
We just have to be creative in thinking of ways to grow an artist. The digital realm is here to stay, and we’re capitalizing on that right now. From a revenue standpoint we’re capitalizing on it but we now need to brand real artists to that whole part of the business as well.
Everyone has to kind of dive into this, but again, it gets back to the one thing from the old model which should come to the new model, which is artist development. It all goes back to that, artist development and hit records, and if it starts there, who knows where it can end?
50 Cent, whose own album, “Curtis,” fell short of multiplatinum expectations this yearI think we are going to continue to see decreases in actual sales, and the reason why is the reason why we’re seeing increases in iPod sales and technology. You can’t escape it. On some levels, the more iPods you sell the more people are going to be conditioned to download it ... You see how often people use their cell phones for music now, the ringtones sell a lot. It’s changing, so the actual business model has to change so you have to gauge it on different things.
Outside of the country, I’ve pretty much been sold out in every venue I’ve been in: The awareness isn’t changing. The actual record sales may be changing but people are actually getting the material the best way they can and coming out to see the show. This is why the music business is exploring creating a new deal system that allows them to create a 360-deal that allows them to be a part of an artist’s touring and merchandising at the same time. I think it’s the only way you can have a major company interested in providing the marketing dollars to create superstars. I don’t think it’s possible for you reach the point (without it) — even with the best material, without the right presentation, I don’t think the public will embrace it. When you have a record that doesn’t connect right away, if the company doesn’t have a passion behind an actual artist and feel like this kid is an actual star and support it, it’s just going to whither away.
Michael McDonald, co-founder of ATO Records and manager of artists including John Mayer and Ray LaMontagneThe bottom line is if anyone had a simple answer, it would be in motion already. In my opinion the role of management is becoming more crucial than it ever has been. Just because of downsizing, et cetera, the labels can’t physically provide the level of service that they once did. So managers can either accept it or start building on their end, building the infrastructure to provide the artists with the level of marketing promotional services that were offered.
In terms of sales, I don’t know that it will ever rebound to the days of old, but I do think music is as relevant and there’s more music out there than ever before. The focus on revenue streams is what’s going to shift which leaves the majors in a difficult spot.
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Celebrity Sightings
I think the idea of genuine partnership is something that’s going to have to really sink in, because up until now, from the deal perspective, the major-label artist relationship has not been based on partnership. I always equate it to paying off your mortgage and then the bank still owning your house. I think that fundamental part of the relationship has to change. Everyone is looking for a solution, but the solution does not look like the music business has looked for the last 30 years.
I think the big opportunities aren’t always coming throughout the label anymore, it’s flowing much through management, and sometimes directly through the artists. There was a day when the majors were unequivocally the gatekeepers ... (now) people on both sides are reaching out directly to one another, to the point of sometimes reaching out directly to the artists.
Mark Cuban, owner of the Dallas Mavericks (and “Dancing with The Stars” alumni)
“They have to reinvent themselves as music companies rather than CD sales organizations. They sell music and they need to be everywhere and anywhere music generates revenue. From merchandise to concerts to licensing and more. This isn’t new information to them, but their ultimate solution may be in reducing the price of CDs to under $5 across the board and building artists in order to monetize everywhere else.”