The Wrap.com recently published a list of “5 Ways to Save the Music Industry [1].” Hey, we’re always happy to hear of any wise perspective, but a few of the recommendations slightly missed the mark, or were unnecessarily pessimistic. So, in the spirit of the column and a friendly debate, here are five reasons for optimism:
1. Our product, music, remains as popular as ever. While other businesses may scrap to generate consumer interest in their product, music remains as popular as ever, according to our surveys, and is an economic catalyst for many other industries. Think about some of the news in recent weeks: leading technology company Apple rolls out a new line of its phenomenally popular music-listening gadgets as well as a major upgrade of the iTunes music store. Videogame developers Harmonix and MTV Games introduce a seminal version of its Rock Band franchise featuring the iconic Beatles.
Meanwhile, two of the most popular television programs, "American Idol" and "Dancing With the Stars," are about music. And music is an essential, distinctive part of many hit shows like "Grey's Anatomy" and “Gossip Girl.” Last spring ABC even launched an online “Music Lounge” for fans to locate and purchase music played on its most popular programs. The common thread is that all are platforms for music. We no doubt continue to confront serious challenges to fully monetizing the value of music, but the fundamental relevance of music to the human experience remains as powerful as ever.
2. Long live the album. The album’s demise is exaggerated. CD sales may continue to decline (though the success of the Beatles’ remastered catalogue demonstrates an enduring appetite for compelling music in physical form), but so far in 2009, growth in digital album sales is again outpacing digital singles (17.5 percent vs. 11.7 percent). Digital music is still a maturing marketplace, and fans are becoming increasingly comfortable buying not just the latest single online, but the entire album. Throw in the recent iTunes LP initiative from Apple and the major record companies and the album’s unparalleled significance is taken to the next level.
3. But it’s more than just the album. Too often, observers assess the health and vitality of the music business simply by comparing year-over-year unit sales. But that narrow analysis of yesterday’s music business fails to capture the whole story. The modern music company is an increasingly diversified, full-service entertainment firm deriving revenues from a variety of different streams.
The success of a new album is not simply based on unit sales, but the cumulative revenues earned from album and single track downloads, online music videos, ringtones and other mobile phone content, digital radio performance royalties, video games downloads and licensing fees, background music to television shows and films, audio streaming sites, and countless other ancillary revenue streams. One example? Revenues from digital platforms like satellite and online radio grew more than 70 percent in 2008 and should experience continuing significant growth this year and beyond.
4. Record labels make or break the day. A handful of well-known bands have elected to distribute their latest albums without the help of a record label. More power to them. But, interestingly and tellingly, what connects the few oft-cited examples is that virtually all are established acts, with a devoted fan base and an established brand. That notoriety and fan support exists in the first place because of the unique marketing and promotional expertise of a record label.
Digital technologies have indeed made it easier for an artist to “DIY.” But more often than not, it is the music label that can uniquely help the artist cross the bridge between anonymity and artistic and commercial success. There were more than 100,000 different albums released in 2008 alone, yet only 950 of them sold more than 25,000 copies. There are more than 2 million hip hop artists on MySpace and more than 1.8 million rock acts. It’s a sure bet that most of these acts are hoping that a label will pluck them from the mass of aspiring, unsigned artists online and take their careers to the next level.
Breaking through, developing and cultivating an audience, working with the most talented musicians and top notch equipment, leveraging opportunities in a cluttered multi-platform digital media world -- all are the invaluable and irreplaceable functions of a modern record label.
5. Great music. TheWrap rightly plugged Jack White’s phenomenal musicianship. He’s worthy of the accolades, but he’s hardly alone. This fall, fans will hear another great slate of albums from the world’s most talented bands and artists, including Alicia Keys, Nelly Furtado, Pearl Jam, Norah Jones, Bon Jovi, KISS, Leona Lewis, Tim McGraw, Shakira, Rod Stewart, Carrie Underwood and countless others. This is yet another encouraging sign of a music business that is energized, vital, relevant and here to stay.