Jim Carroll

Music, Life and everything else

Size matters as record industry faces squeeze

The man who makes those snazzy “the end is nigh” sandwich-boards must be working overtime at the moment, as the major-label record industry wonders where its next tax-deductible meal is going to come from. With EMI preparing to sell the …

Fri, Jun 1, 2007, 12:42

   

The man who makes those snazzy “the end is nigh” sandwich-boards must be working overtime at the moment, as the major-label record industry wonders where its next tax-deductible meal is going to come from.

With EMI preparing to sell the farm to the Terra Firma private equity group (although a number of rival suitors arrived on the scene this week clutching bouquets and large novelty chequebooks), those other big beasts still in the record releasing game are beginning to panic a little.

Global blockbuster CD sales are now officially a thing of the past. Yes, there are bright sparks in some local markets, but not enough to change the bigger picture. Some genres are particularly troubled, most notably hip-hop, which had a 21 per cent slump in sales in 2006.

The big problem in boardrooms worldwide is that download sales are not taking up this revenue slack. Most analysts are pinning this chiefly on Apple’s price intransigence, which makes many consumers unwilling to commit to the legal route. Yet the record labels are a mite shy when it comes to asking Steve Jobs to budge on this. Their fear is that Jobs could pack up his iTunes store and where would they be then?

Such uncertainty about future revenue streams is leading to a lot of diversification amongst labels. While future recording contracts will inevitably see labels making rights grabs for tickets, T-shirts and traction, there are also some interesting buy-outs and mergers to come.

This week, for instance, Universal Music paid $2 billion for music publisher BMG Music. If CD sales are down, money will still be earned when songs are used in TV commercials, video games and episodes of Grey’s Anatomy.

Then there are the big indies who have worked diligently for their share of the pie and don’t want to see any slippage, so they’re quietly super-sizing themselves. The Beggar’s Banquet group is thought to be currently talking with Rough Trade Records about adding that label to a roster that currently includes such imprints as XL and 4AD and acts such as The White Stripes, Dizzee Rascal, Basement Jaxx, The National and Beirut.

To use the catchphrase of Election 2007, the squeeze is on and major record companies are learning that getting squeezed is something that doesn’t just happen to smaller parties in Irish elections.

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