Reflections on the Music Biz 2007

So the final numbers aren’t tallied, but it looks like another bad year for the music business. After all, we’ve had yet another year of double-digit sales skids without any real savior in sight. However, this year has finally produced some changes worth building upon, despite the voice in my head saying “too little, but hopefully not too late.” In this entry, I’d like to pick out a few notable events and how they might shape 2008’s music business.

Apple Inc. has continued to dominate online sales this year, earning the scorn of the entertainment business for their staunch control over iTunes and iPods. Labels, unhappy with the revenue totals derived by per-song downloads, began airing their displeasure in public late last year. Apple CEO Steve Jobs didn’t earn too many music industry friends when he responded in an open letter rant against DRM. But shortly after, EMI introduced DRM free songs on iTunes. This ultimately drove Universal to test the waters announcing DRM free MP3 files through Amazon.com, snubbing Apple and restricting Mac support to full album downloads only in the process.

Though the transition continues to be lethargic and bumpy, this year will be remembered as the first time unrestricted digital files were legally available from major labels. To me this is a huge acknowledgment that we will start to appreciate in the coming years. The loss of control over digital files is a scary step for the music execs but ultimately it’s a realization that we need to be more customer focused in order to survive.

The continuing problems at the labels has also resulted in notable artist forays into distribution and sales. Prince gave away his latest disc in the Daily Mail newspaper, Eagles partnered with Wal-Mart to exclusively sell their latest album, Madonna signed a $100+ million deal with a concert promoter Live Nation, and of course Radiohead went direct to fans with a name-your-price plan. Then there’s the continuation of Trent Reznor’s critique of the label system, but one clear result emerges: top-line artists used the disarray of 2007 to good financial and PR advantage.

But two things strike me about this exodus: only the brand name artists are succeeding in the new world and they are leaving labels because they see how we’ve failed them most acutely. If you’re not a well known entity, however, you still need some help. And even if the recorded music business stinks, the labels still have power in getting you good tour billings, A&R development, and promotion. These advantages are borne out by BigChampagne’s charts showing a lot of similarity to traditional charting. So another observation I will note is that we have a problem in sales, but signs of health in other areas.

This is a big problem to conquer, of course, but as I’ve said in other posts, our pulse is still intact. And as the sales declines accelerate, the sales/distribution problems will have a higher sense of urgency to resolve. To me the good news is that 2008 looks like it will be a year where experimentation will be cultivated and this will help in righting the course of the music business.

It should be exciting…

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~ by Som on December 19, 2007.

One Response to “Reflections on the Music Biz 2007”

  1. Cool article…As an “indie” artist myself it sucks to not have that promotion behind you to reach mass audience and it’s a funny contradiction to see some “big name artists” dumping labels and going about their own path. The differene is the labels already got them to where they need to be.

    Steve

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