The Questionable Future of the Music Industry

Have you ever seen the Tom Hank's movie, "That Thing You Do"? It was about a 1960's pop band of teenagers that came up with a song by that name, and it told about their rise to fame as they were discovered by the major record label, turned into overnight stars, and toured around the country.

In those days a band could be 'discovered' like that and then they would sign up with a record company and suddenly the record label could turn them into stars by arranging promotions, concert tours, advertising, billboards, radio airplay, television spots on the Ed Sullivan show, radio interviews, etc.. They would saturate the advertising channels, send the records out to all the record stores, the artist would become famous, and the record company becomes rich, and in the process the artist would eventually become wealthy. This is how people like Michael Jackson could amass their fortunes of hundreds of millions of dollars. That was how it used to work in those days, and many people who are not involved in the industry might even think it still works that way.

But that was then and this is now. Those days are over.

Those big record companies became increasingly greedy and began writing contracts that completely cheated the artists. They knew that the artists mostly wanted the fame more than the money, and so the record companies essentially took most of the money. They took all the rights to all the music and then paid the artists a pittance and controlled everything. There was an ever-increasing list of things that the artist would have to pay for out of their advance. Promotional copies sent to radio stations, returns, even advertising - which was the whole point of going to a record company in the first place. But because the record companies had a stranglehold on the distribution of CDs to the retailers, they were in a position to leverage that for an ever increasing share of the revenues. Often the artists reached the point where having a hit album might even mean going into debt because of the associated costs - even as the record company was raking in the profits. I did see one accounting sheet for a band based in Seattle which had a complete breakdown of revenues and costs, and the bottom line was that after selling $3 million dollars worth of CDs, the record company was ahead by over $900,000, but the band was $14,000 in debt. They ended up having to work off the debt by touring for the next 4 months. In the end, the bandmembers would up making less than minimum wage for their highly successful album.

The major change element could be summed up as being digital media, the internet, Napster and CD burners. Once music left the analog world and became digitized in handy mp3 format, then the internet connected everybody to everybody else, then Napster and other sites came along to provide a mechanism to share all this music for free, suddenly the fancy restaurant food was free out the kitchen back door, so no one was paying to go in the front door anymore.

Success is defined differently now. In the 70's and 80's, a hit record was one that sold a million copies. Sales of two to five million was quite common. But now, it's been more than a decade of people downloading for free and sharing and burning CD copies for friends, not to mention the iPod (which means they don't even have to burn the copy anymore. The friend just borrows it and loads it into their iPOD and then hands it back.) Buying a CD seems so last century to the kids today. In this current distribution model, 75,000 units actually being sold at retail is considered a success.

Therefore, the profits for record companies have shrivelled to a fraction of what they once were, and with fewer dollars to spend, predictably, the record companies became more and more selective about who they would promote. They have now reached the point where you already have to have become regionally famous on your own with your own recordings, and selling them yourself to a significant volume before they will risk a dime on you. They won't even bother to come see you play unless you already have a following and CD's that are selling well.

Now, for the latest generations of young people, they have come to assume that music is free, like a nursery rhyme, or the Happy Birthday song, or a math equation. "Hey I get the Pythagorean Theorum for free, why shouldn't I get the new Yellowcard CD for free, too?". There is little appreciation for intellectual property of copyrights. There has been lots of resistance to this from the record labels, obviously, because they don't want to see their industry collapse. But they are unable to turn back the hands of time. Time has moved on, and their old business model has been rendered obsolete. And so every month for the past 12 years there have been new horror stories about how profits are crashing in the record industry. Therefore artists have switched over to making their money from touring instead of selling CD's.

Various people have tried different ideas to try and find a way for people to survive and make a living from making music. Apple has come up with iTunes and changed everything. Now they sell songs one at a time for 99 cents each, and this allows people to download them quickly and legally and cheaply. Rather than forcing people to get in their cars, go out to music stores and hunt dow the CD they want and maybe not find it available, AND also have to pay $20 for 12 songs when there is only one on the album that really interests them, iTunes allows them to just buy that one song they like, and they never have to leave their house.

This has sucked the remaining life out of the record companies. They no longer have the money to promote the artists properly anymore, and then they have no means to really make profits from them even if they do. As a result, record labels now demand a percentage of the concert tour revenues as well as 99% of the CD sales. They are struggling to survive.
Everyone is looking for new ways to sell music and keep the industry alive, and keep musicians going.

One idea is to have all the songs sold separately like iTunes, however they are sold for a penny at first, and then as they become popular, the price starts to go up, based on the volume of of sales, until it eventually reaches 99 cents then stays there. So if something is not as popular, it's not as expensive to buy. Since it doesn't cost anything to distribute, this is a possible working model.

Some prople are talking about other schemes and plans. Some think all music should just be free. There are some people who think that you should pay for the service of accessing music, rather than buying a copy. So you pay $xx per month to belong to a service like Rhapsody for example, but then you can download all the music you want as much as you want. The idea here being that they pay the musicians out of the service subscription fees. Some see huge profits for the music industry that way.

But I can see certain problems with that too. How do they decide how much to pay the musicians then? How much do they pay beginners? Who decides who to admit into the paying scheme? Who gets rejected and based on what criteria? Which ones earn more and which ones earn less? Do some artists earn a higher percentage than others, or is it the same percentage, but their income varies based upon volume of downloads? As an artist, how do you promote yourself to get people to download your music? Advertising is extraordinarily expensive. With such minimal returns, where does that invenstment come from? Also, with the barriers to entry lowered as they are today, there are now millions and millions of new recording artists. How many millions of hopeful young budding musicians are out there on Myspace and facebook with websites full of new music? How do you rise above the general noise level of all that is now out there in order to be seen and noticed? How do you become well-known in that kind of industry?

The Power of the Press

I think the media in this country is it's own force. I don't think they are "controlled" by either political party, but both parties do try to manipulate the media to their advantage. Having said that, I really believe that fair, impartial journalism is "dead and gone" as Don Henley sings on the new Eagles tune, "Frail Grasp of the Big Picture". (excellent album, by the way. Their first real studio album with new tunes since The Long Run came out in 1979. And it's a double CD and only $11.99. Best 12 bucks I ever spent.)

I have to say that it does bother me that every news show I hear on the radio or watch on TV seems to be pursuing some sort of agenda. Except for NPR, perhaps.

My friend's wife used to run the TV news for CBS in St. Louis. She hated the fact that they always told her what news to put on and what she couldn't put on. They have a formula for packaging the news. It has to entertain. It has to scare people. It has to sell advertising. And it has to do this while staying consistent with the political goals and ideology of their owners. And they have a precise formulaic way of doing all these things. Also, they have a demographic profile they target.

These days, women buy almost all the consumer goods in our economy. They do the grocery shopping, they buy the clothes for themselves and the kids, and half the clothes for their husbands as well, they buy the furniture, and decorations, and things for the house. They are the ones spending most of the money in the stores and shopping malls. Men may watch a lot of TV as well, but it's the women that make most of the buying decisions for most of the households in America, and this is a consumer-driven economy.

Therefore, that is who the advertisers target with their ads. And those advertisers want the shows they sponsor to attract their target audience. Their demographic. Their potential customers. Therefore, the news is packaged for college educated females between the ages of 20 to 42. That is their core demographic. Anything that doesn't appeal to that group is considered 'risky' in the news business. They've got news to sell.

But statistically, when it comes to politics, women do not necessarily vote overwhelmingly Republican OR Democrat, so the news organizations are free to back one party or the other. Since it doesn't affect their target demographic, and hence their advertisers, when it comes to skewing the news to fit a political agenda or ideology, they will usually back the politics of whichever corporation owns them. So let's take a look at who owns the news in this country.

Fox News is owned by Rupert Murdock, the famously right-wing ultra-conservative media magnate that owns News Corp. He owns countless newspapers including, now, the Wall Street Journal. He makes it very clear what stories to put on the air and what not to. He is known to apply pressure to his executives to skew the news to support his personal views. He donated $2.9 M to George Bush in 2000 through his tobacco company, Phillip Morris.

NBC network is owned over 80% by GE. So GE gets to say what agenda is played out on NBC and CNBC news. And they donated 1.1 million dollars to George Bush's campaign in 2000.

CBS is owned by Westinghouse, whose Chairman of the Board, Frank Carlucci, is an owner and executive of the Carlyle Group - George Bush's family company.

ABC is owned by Disney, who also donated heavily to Bush's 2000 campaign. Robert Iger is the current CEO there and he used to run ABC. Michael Eisner was the former CEO of Disney, is one of the wealthiest men in the world today, and has been very active in politics.

CNN is owned by Time-Warner. In fact they own a mega empire of news and entertainment. The largest subscription in the entire cable industry in this country. Over 13 million households. They donated 1.6m to Bush in 2000.

The fact is that the news media can make or break a candidate. If they say, even in passing, that a given candidate "has no chance of winning the election", then suddenly all the voters that would have voted for that candidate drop him because they don't want to waste their vote. So they choose someone else. They will choose someone their favorite news media told them DOES have a good chance to win.

And the media chooses which stories to air, and how to skew them and how to cast a light on each one. If they like a candidate, then when the person gets into trouble, (as they all seem to at some point), they make him look like the underdog trying to survive against all the cruel and unfounded accusations of the other party. When they want to crucify him, they show every detail that supports the accusations, and show how the evidence is overwhelmingly clear, or else bring up enough veiled accusations, that even if they don't directly accuse him of something, we somehow become convinced that he must be guilty of at least SOME of the things linked to him. And aren't we glad we found out this guy was a homosexual pedophile taking bribes, cheating little old ladies out of their savings, and funneling money and weapons to terrorists - before we made the mistake of voting him into power?.....

The process of getting elected to office in this country has become a process not of promoting a candidate's plans, or even empty promisses for the future - but rather it is simply a take-down of his opponents. The goal is to make yourself look good simply by making everybody else look bad. One political expert pundit that was debating on the radio last year during the election campaign for the Senate said, "The Democrats are too disorganized - they need a plan. They need to show that they have a detailed plan for what they will do if they succeed in getting elected....... no wait a minute... what am I saying? That's not how it works. If they put forward a plan, then all they will be doing is giving the Republicans a clear target to shoot at. No, nevermind what I said. They don't need a plan. They just need to criticize the Republicans and do what their opponents are doing. If they can do enough damage to knock the other guy out of the race, and they get into office, THEN they can bring out their plan. That's how the game is played these days." Very true words, unfortunately.

There is now an entire industry that does nothing but dig up dirt on political opponents. These are teams of researchers that will look into the past of a candidate and they will find SOME sort of dirt somewhere. If they say in their campaign that they are against abortion, then these people will find out that when he was 16 years old he got his girlfriend pregnant and she had an abortion. If he says he is against communism, they will find some comment somewhere attributed to him when he was 12 years old saying that he thought that socialized systems make sense for some countries. They will dredge the lake looking for dead bodies. They will search every closet of every person that ever talked to him looking for skeletons. No one is completely clean. Everyone has dirt somewhere. And if they don't, then these people will find people who will make things up, and then without attributing any direct authority or credibility to them, they will put them on the air anyway - just to raise doubts about the candidate. It's an evil business.

And the whole battle is carried out on the battlefield of the media. They set the rules and they play favorites. The days of the fair, impartial journalist are long gone. These days everyone has an axe to grind. Everyone has an agenda to push, and journalists have even come to think that it's a GOOD thing for them to have an opinion and to promote it at every opportunity. Apparently, the audience is not to be trusted to form their own opinion when presented with the facts. Hey, we can't have that! people making up their own minds?! What if they get it wrong?

The media have the biggest real power here in this country, but the ones who pull their strings are not the politicians, but rather the corporate parents noted above. And there is nobody higher up to pull their strings. They are not accountable to anybody. They are the top of the food chain in this world at this point. That is who really runs this country, because they determine who gets elected, and then once elected, they can influence policies and decisions at any level because they have the power to make that person look stupid, lame, evil, or a hero.

The president, (whomever it is), serves at the pleasure of a handful of powerful elite. Namely, these are people like Rupert Murdoch, Ted Turner, Frank Carlucci, Michael Eisner, Robert Iger, etc. It is they who will decide who you vote for president next year. They tell you who to vote for as congressmen and senators. You have no real choice. You THINK you have a choice, but you don't, really.

Why? Because YOU are not on-site in Iraq, or in Afghanistan, or on Wall Street, or in North Korea, or inside the beltway in D.C. You cannot be in all the places where things are happening. And even if you were onsite in Iraq as a soldier on the ground, for instance, you could only physically be in one place at one time. You could not be in every battle in every town and in every riot, and in the political meetings all at the same time. But a few thousand reporters can be in all those places at once. So you rely upon them to tell you what is happening. and they will tell you what they want you to hear to twist your opinions to their purposes. You think whatever you are told to think. You might judge things completely differently if you knew different facts. But you don't because they didn't tell you different facts.

It's alarming to think that everything you think you know right now about what is going on across the country and around the world is all based on information you got from them. But that is the uncomfortable truth of it. They have fed you most of your strongly held beliefs on these kinds of subjects.

The one thing that seems to get around this virtual monopoly on information and agenda-driven propaganda is the web. It is our way to connect to hundreds of millions of other people at all levels in all countries around the world. It is a way to gain information and perspective that is not engineered by these organizations and the handful of people that really run them all. Pragmatically speaking, the other content you read on the web may not all be real, or true and factual. It may be incomplete and unsupported. It may be personal opinion, and hearsay, and it may serve the agendas of THOSE people writing in their blogs, etc. But it is the bigger picture. it is a light in the dark. It is another voice in the din of media voices telling you THEIR stories. Somewhere in the mix of all these versions and stories and agendas is the truth. It gives me hope.