More Industry Stats...

John Macy · From: Rockport TX/Denver CO

Entertainment - Reuters/Variety Music

Battered Record Execs Set to Face the Music

By Bernhard Warner and Merissa Marr

LONDON (Reuters) - Global recorded music sales look set to fall for the fourth straight year in 2003 thanks to piracy and the economic downturn, and its bosses are desperate for solutions.

Executives gathering for the global music industry conference Midem in southern France this weekend know it's make or break time.

The bruised industry needs a new formula as fans increasingly spend their disposable income on video games and "burn" their own CD compilations while labels desperately seek a new crop of long-lasting stars.

Major music labels have so far responded by slashing jobs, axing B-list artists and trimming back their bloated businesses. However, the industry appears no closer to a long-term solution than last year and talk of consolidation among the big five music companies is growing louder by the day.

"2003 will be the tipping point. The fundamentals continue to deteriorate and consolidation will have to happen," said Michael Nathanson, media analyst at U.S.-based investment research firm Sanford Bernstein.

Forecasts see sales sliding another six percent in 2003 -- a fall felt most by the big five music giants -- Universal, Sony, Warner, EMI and BMG -- which account for 70 percent of sales.

That comes on top of an estimated nine percent fall in 2002, a five percent dip in 2001 and a 1.4 percent fall in 2000.

PIRATES AHOY!

Critics assert the age-old business model of merely selling physical copies of music to the masses is hopelessly out of date in a digital era of track downloads and song-swapping on Internet services like Kazaa and Morpheus.

Music execs, meanwhile, remain cautious about the Net, held back by technological, economic and legal limitations to putting their entire repertoire online.

The fear persists that the popularity of song-swapping services and the ease of CD-copying will give birth to a sort of doomsday scenario -- generations of music fans who refuse to pay. Unsurprisingly, piracy will be a key topic at this year's Midem.

Trade organization International Federation of the Phonographic Industry (IFPI) has gone to battle against the proliferation of music bootlegs, primarily by pouring money and resources into helping police shut down the pirate operations.

The IFPI estimates the market for bootlegged music, whether it be mass-produced in CD-pressing factories or burned onto recordable CDs from a university dorm, was $4.3 billion in 2001 with sales of pirated discs hitting 950 million units.

The toll of Internet song-trading networks is harder to quantify. According to an IFPI study, at any one time, there are five million users on peer-to-peer networks swapping 900 million files.

COOPERATIVE SPIRIT

Over the past year, the majors exhibited a rare piece of co-operative spirit, making available more of their tunes to subscription-based music download services Pressplay and MusicNet, plus to third-party players such as the UK's OD2.

But the industry-backed services, with their relatively meager music selection and downloading limitations, have failed to slow the popularity of the free services.

IFPI chairman and CEO Jay Berman will issue a call to arms in his annual address on Sunday, asking the majors to step up their online activities.

"This is a time when different sectors of the music industry, for all their diverging interests, have one big common interest: namely to develop a new online music business and to fight piracy," Berman told Reuters.

Critics are dubious.

"The politics at the major labels hasn't changed. The guy who puts his neck out on the line could get fired. Whereas the guy who keeps his head down is safe, and he gets to keep his BMW for another year," said Paul Myers, founder of Wippit.com, a subscription download site.

CONSOLIDATION TALK

In the meantime, the five major music companies need to find ways of cutting costs further, but European regulators showed a distaste for further consolidation among the big five in the last attempt in 2000.

However, the subsequent collapse in the industry could encourage them to be more accepting now, observers believe.

Of the five majors, EMI is the only music company that is not part of a bigger conglomerate. EMI, home to ColdPlay and Pink Floyd, has been peppered by merger speculation of late, propelling the stock to a 20 percent gain in the past two weeks as reports of a BMG tie-up surfaced.

As the industry looks for a new business model and possibly new combinations, finding the next chart-topping newcomer, such as last year's teen rocker Avril Lavigne (news), will be key. Still, landing the next big thing isn't likely to draw attention from the industry's dismal business fortunes.

"The outlook is miserable. It's going to take at least two years to get out of this and a lot of people will disappear in the process," one music executive predicted.

Donny Hinson · From: Glen Burnie, Md. U.S.A.

Thanks, John, for keeping us posted on these industry stories! I sometimes think that these companies have never heard of the term "saturation", though. They've been peddlin' the same music, and the same sounds, for about 12 years, now. It seems they are ripe to blame anyone but themselves for the current "doldrum" music is experiencing. Couple this with the fact that all markets turn down occasionally, and you begin to see they really are clueless.

People are just getting tired of the same old stuff. The only thing "new and different" they have really offered (as far as most of the public is concerned), is the Dixie Chicks. Recording companies, however, still insist that these "pirates" (that evidently number in the tens of millions?) are just ruining them. Of all the hundreds of people that I come into contact with on a weekly basis, I only know two that still do the "music-ripping" thing. For most, it was a fad at first, but soon became too much trouble and just takes too much time.

When the music (which is mostly boring anyway) goes from "too expensive" to "too inconvenient", well...there are better things to do.

Bobby Lee · From: Cloverdale, California, USA

After decades of record companies ripping off teenagers, the teenagers are finally turning the tables. It's hard for me to feel sorry for the record companies.

In the meantime, "small" recording artists are marketing their own music, making more real money per disc on short runs than the majors make on their million-sellers. And this is after decades of record companies ripping off their artists.

I ain't crying over a downturn in CD sales. Music itself is triving like never before. The industry is upset because they can't get away with ripping off artists and customers anymore. Like I care.

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Bobby Lee - email: quasar@b0b.com - gigs - CDs
Sierra Session 12 (E9), Williams 400X (Emaj9, D6), Sierra Olympic 12 (F Diatonic), Sierra Laptop 8 (D13), Fender Stringmaster (E13, A6), Roland Handsonic

Allan Thompson · From: Scotland.

You couldn`t have put it better Bobby.

ajm · From: Los Angeles

I buy very few "new" CDs these days. Probably no more than half a dozen a year. I walk into Tower Records with a wad of bills in my hand desperately wanting to buy something new, and there is NOTHING that interests me. If I buy anything at all it is usually something that is 20-30 years old that I no longer have and want to hear again. Actually, I believe that there is new stuff out there that would interest me, but I NEVER hear any of it on the radio.

I have also been frequenting the used CD stores a lot for this very reason. It's hard for me to find something that I want there as well. But I have noticed that there is a ton of "newer" music that is being recycled there. Hmmmmm, let's see. People buy the older stuff and keep it, people buy the newer stuff and sell it back. I wonder if that's a message for the record companies as to what people want to hear? Nah.

If the record companies would put all of the music on a site and allow you to make up your own "greatest hits" CD, I'd gladly pay a buck a song to get what I wanted. I suspect that this is what a lot of people do when they "rip off" songs on the net. Sure, some people will always rip off what they can, but I would be willing to pay for what I want. Eighteen bucks for a new CD that has maybe 4-5 good songs and the rest being filler? Have you priced blank CDs at the local computer super stores lately? A hundred for $15 bucks with a $15 rebate. THEY'RE FREE!!!!! Let me guess: someone is making a LOT of money somewhere.

There is a rock station out here in LA that has had a feature program every Sunday night for at least the last 20 years. They play anywhere from 5-7 albums each time. They advertise a week in advance what they are going to play, and the order. I don't see how that's much different from a website as far as being able to record music.

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Artie McEwan

Tom Olson · From: Spokane, WA

I agree with the above, and I think it backs up a theory that I've had for a while -- there are only so many notes in a scale, and there's only so many ways to string them together, and most of the good ways have already been figured out

Alvin Blaine · From: Picture Rocks, Arizona, USA

I've givin more money to Bear Family,HighTone,Sugar Hill and Rounder Records in the past year than I have givin to the major labels in the past ten years.

David Pennybaker · From: Conroe, TX USA

Buddy Carter · From: Spring Grove (Chicago), IL

I heard a report about a week ago regarding these same issues with the majors. The story I got was that the labels actually reduced the number of titles released last year by a large number; I think it was 25%. If you reduce production that much, wouldn't it follow that sales would also be drastically reduced?

I keep wondering how long the stranglehold relationship between the majors and the broadcasters will continue and what effect its having. At some point, the economics of record labels spoon feeding the conglomerate broadcasters created by Telecom '96 will likely dry up. Its like heavy manufacturing; high-volume, low margin. When there is a downturn, the margins cease to support the business. So, the business either adjusts and becomes profitable again, or goes under. Large corps. don't like to adjust. Fortunately, that eventually creates opportunities for the indies. Unfortunately, the majors get wind of it and swallow them whole in the name of easy money.

OK, that's about enough out of me...

JB Arnold · From: Longmont,Co,USA (deceased)

Here's 2 major issues the labels don't want to face....

1: Sales suck because their product sucks. Bands are getting signed to major deals based on 1 song. That gets pushed to the max, and nobody much thinks about the fact that Johnny can't really write-in a 5 year period he came up with one good tune. The rest is filler or found by the producer. But the label doesn't care-they just wanted their one hit. Well, that's a problem if you're paying 15 bucks for the CD. It never gets to the critics ahead of time, because expected negative reviews will hurt 1st week sales, and that's all they want-1 week of runaway hype sales before word of mouth gets around that there's only 1 good song on the disc. So of COURSE that gets downloaded-it's one hit wonder! And then everyone is surprised when all these multi platinum bands come out with sophmore efforts that do poorly-I'm never surprised. Most can't write when they have no pressure at all, and when they're under heat from the label to get another disc out, the lack of skill shows. Remember when almost every album that came out had about 10 REAL good tunes on it? Now that's just a pain to burn and much easier to buy. Course that never happens anymore-Avril levigne excepted-there were about 4 hits on that one, and Melissa has the CD-I actually like most of the songs. We'll see if she can deliver on the second one. But that's their first big headache-1 good song in 14 and an inability to keep anyones career going past the first CD-usually because they never had a chance in the first place, because they can't write hit songs. Remember Huey Lewis? he succeeded because after the first LP with about 8 hits on it he had another 30 in his pocket. Those cats went about 10 years before they ran out of gas.

2: CD's just haven't got the Cachet of LP's. Man, LP's were like works of art that happened to have music in them. Cover art was great-all kinds of cool stuff came with LP's that added to the value. CD's are so small you have to squint to read the lyrics, which is ok as they're usually drivel anyway, and what pictures fit are small as well. I remember there being countdowns to when a release was due from a major artist like the stones or the beatles. We'd line up to buy them. You could spend hours with the cover of Sgt Pepper, or Beggars Banquet-or Blows against the Empire. Now it's just a plastic package that gets pitched immediately. No value there.

OK, make it three things...

3: MTV has killed the radio star, just like the song said. What's that Charlie Daniels said about Elvin Bishop? "He ain't good lookin', but he shore can play" Well, now you gotta be a model first and musician second. Better yet, forget the musician part-just look good, the rest will take care of itself. A by product of this has been the Death of the Guitar Stud band. A friend of mine plays in a newer style band, and solos are forbidden. "They're too dull man". So everything sounds the same. Thinking on it-who was the last REAL guitarslinger? Probably Van Halen. Maybe Richie Sambora. Slash didn't last long enough. There's no personalities to hang your hat on anymore-at least on the male side of the spectrum. No front men who have any personality at all-they just look good. It's a little different for the girls-there are at least a dozen female artists who look like they're gonna make a difference for a while-but they don't sell as much in a male dominated market. Except Shania-and what's she got the others don't?

14 killer songs per CD, that's what. Betcha she doesn't have a downloading problem eating into her sales-it's easier to buy it than try to download all those songs. And isn't it odd that She and Mutt are one of the few with real control over what gets pressed? Seems like the artists with their OWN butts on the line are more productive than the ones being run by the suits.

Perhaps signing some folks with real skills and a following would work better than signing a bunch of good looking strangers with "attitude" and trying to make something of them.

Whew!

They brought this on themselves. The art of finding talent has been ignored and come home to roost. Find some people who can write and play. The buyers will catch up....

JB

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Fulawka D-10 9&5
Mullen Royal Precision D-10 8 & 5
"All in all, looking back, I'd have to say the best advice anyone ever gave me was 'Hands Up, Don't Move!"
www.johnbarnold.com/pedalsteel
www.buddycage.net

http://www.nrpsmusic.com/index.html

[This message was edited by JB Arnold on 25 January 2003 at 11:04 PM.]

Dave Birkett · From: Oxnard, CA, USA

The only ones pirating music are kids. Since the record companies only put out music for kids, they lose money. If they put out more stuff for us boomers, they might make some money. But then a radio station would have to play it for us to know it's out there and they would lose their preferred demographic. We're doomed.

JB Arnold · From: Longmont,Co,USA (deceased)

It's no diferent than cassette tapes back in the day. If your album only had one good song, we'd kill you by taping it. Who wants all that filler? If your album had a bunch of good songs, we bought it. You'll find the same thing today. Ripping tunes is a pain-it takes all day to make a CD with 14 songs you like on it. You'd only do it when there's only 1 good song on any particular CD. There's a lot of kids hanging around here all the time-all from affluent families, and they have all the latest gear and they rarely download stuff.

The labels are trying to polish a turd. It won't work. Good writing and good musicianship will sell. Crap won't. And do something about the price. It costs less to make a CD than a tape, but they sell for more. Get that price down to around ten bucks. That'll help too.

JB

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Fulawka D-10 9&5
Mullen Royal Precision D-10 8 & 5
"All in all, looking back, I'd have to say the best advice anyone ever gave me was 'Hands Up, Don't Move!"
www.johnbarnold.com/pedalsteel
www.buddycage.net

http://www.nrpsmusic.com/index.html

Steve Hinson · From: Hendersonville Tn USA

Album cost-1970-$3.98
CD cost-2003-$18.99
...inflation...plus CD's usually have more songs...I agree with you about the packaging,though...I miss big,colorful album packaging with READABLE liner notes...of course,cars,houses,everything is smaller nowadays...Steve

[This message was edited by Steve Hinson on 26 January 2003 at 01:18 PM.]

David Pennybaker · From: Conroe, TX USA

Donny Hinson · From: Glen Burnie, Md. U.S.A.

Chip Fossa · From: Monson, MA, USA (deceased)

There will arise from the ashes of the new phoenix, a new and grander order. I'm a computer man. Yeah! I'm computer. Whoa!
Whoa!

THE PERSONAL COMPUTER, WHILE SCORNED FOR BEING INVASIVE AND PREDATORY, HAS ACTUALLY
LEVELED THE PLAYING FIELD OF GOOD AND BAD.

HEY!......I just love this. YUP! I gloat.

UNABASHEDLY..

"Ye shall reap what ye has sown"

Ship of Fools

chas smith R.I.P. · From: Encino, CA, USA