Pretty depressing reading for sure and in keeping with the vibe and general consensus within the music press and industry in recent years.
Iv been to several seminar type thingy’s of late and listened to various speakers ranging from the very optimistic (and inspiring) Andrew Ferris at Smalltown America Records to the extremely pessimistic Ossie Kilkenny.
So whats the answer to this conundrum?

Fucked if I know but I do know for certain that I will be involved in helping to release records this year.
Its only money after all, right?

Bren – while i think Tom Silverman’s views do make for gloomy reading, part of me is optimistic enough to think that there will always be a demand/market for labels, especially ones who act as a filter. That said, if a label is serious about staying in business and it isn’t hitting the 10k mark as above, it may get tougher and tougher

Ian – Hasn’t this already been happening for a number of years?

Of course it is – that’s why I said “more and more”. And yes, of course, it also applies to big indies buying into acts who’ve been fostered and developed by micro labels (which is also something which has happened to some extent before now). It’s just going to become more the norm than the exception.

An interesting article – more so for what the data reveals than for his vision of the future, which was still a bit vague and inconclusive.

Some random thoughts:

1) He says that singles outsell albums 3:1 – I’d be surprised if that were the case. It’s more likely that single songs outsell albums 3:1. Why wouldn’t they – they’re a tenth of the price. If the revenue from singles was three times the revenue from albums that would be noteworthy (maybe that’s what he meant).

2) Hard to see how a label can gain a competitive advantage by waiting for a band becomes established before signing them – isn’t there a constant danger that a rival label will get there first?

3) The idea that bands wil be writing on tour and churning out fresh songs every three months just to keep their myspace pages updated seems unrealistic as a long-term prospect. Touring is a mind-numbingly boring and uncreative experience – hard to see how a repetitive itinerant lifestyle is compatible with the stimulation and variety of experience needed to come up with ideas. On a small scale, the musical rooms blog shows how important it is for bands to have a safe hidey hole for their creativity.

4) The basic business model for bands has always been barking mad. The label acts as venture capitalist for a huge number of acts in the hope that one will succeeed against sperm-like odds and cross-subsidise the losses of the rest. In return the band takes on huge debt which it hopes to repay by the tiny trickle of money that makes it back to them from sales after all the middlemen have taken their cut.

5) A lot of the discussion on music has focussed on the revenue side, without looking at the cost side. The budgets for recording and promotion must have a huge amount of fat in them. Letting a band write its album in a recording studio is madness. Why buy lots of ads in a music magazine when they’re already covering your acts in news features and interviews (leaving aside the corruption where only the acts that buy advertising get coverage). Billboard ads are a big waste of money and belong in the stone age.

6) If I were in a full-time band I’d sell my album first on the tour (where you get to keep 100% of the CD revenue) before releasing is through the shops. As the article says, fewer people are buying based on airplay so it’s less important to hit the charts in order to get on the radio.

MDR – regarding (2), the competitive advantage lies in that they’ve already done the heavy lifting in that the act is known, established and already has a fanbase. Major labels are totally useless at breaking bands – totally useless – but once an act is rolling, majors are fantastic at getting behind them and pushing them from the high end of the lowest sale tier to mid sales and above

(3) A lot of commentators fall into this trap – Bob Leftez is always on about this as well. Most musicians would agree with you – touring is not where the writing happens. Maybe it should be but stick the commentator on the road for 3 months and see what happens

(4) The problem then arises when that VC is no longer there. This is something I have banged on about here again and again and again – for all their faults, labels have shown amazing patience in funding acts over the years in the hope that their investment pays off. Now that labels no longer can or are willing to spend that sort of seed capital, who do we turn to? Live promoters? Name me a live promoter who has spent cash successfully breaking a band. Can’t think of any? Well, there’s a reason for that, isn’t there? Plus, again as pointed out here again and again, every single one of the new music business models are only feasible if the act in question already have an established fanbase (one they built using the patience, largesse and skills of a major label, no doubt). We will only realise what we had with labels when they’re gone.

(5) I interviewed Daniel Lanois back in ‘08 and he was on about this point – less revenue means reduced costs means reduced recording budgets. Sometimes, this is good – a lot of bands dont need swish recording studios – but it does mean an assault on the art of a record. Then again, given how people now listen to music, will this be missed? I had a really interesting conversation at the weekend at Eurosonic with a radio dude about this very point. As for ads and the like, niche is king – why spend money on ads when you can use your fanbase to do the selling for you?

(6) Which makes merch sales at gigs all the more important and this leads to the question – how many gigs do you go to where the band do NOT sell their CDs or teeshirts afterwards? I know visiting bands do this but what about Irish acts?

Ger – Silverman was talking about artist albums only because he was talking about breaking new acts. Compilations are really just catalogue-pimping by the majors because the legwork (recording, mastering etc) has already been done.

Colly – Aren’t there are some glaringly obvious instances in which record companies can use technology to their advantage, using Myspace and the likes to guage an artists appeal.

That used to be the thinking – “wow, they have billions of friends and billions of views” – but that view was quickly altered after Tila Tequila and friends.

The real return on acts able “to sell music based on an their ability to beyond own their circle of friends” is down to the oldfashioned approach – a band touring, building an audience in different cities and countries, a band with a groundswell of fans, a band who can sell 10k records off their own back. A band who can show that they are willing to put in the hard work, the 10,000 hours, to go beyond their hometown. Remember that MySpace, Facebook, Twitter, LinkedIn, YouTube etc are really just tools – yes, you need to use them all, but one or all of them is not alone in itself.

Well for every Tila Tequila story there’s a First Aid Kit one.

Which is a case in point. While all the story is about YouTube clicks for FAK, the real story began at Eurosonic in Groningen last January. The band ended up with a rake of festival bookings on the back of that which brought them to the attention of even more people. AND they’d signed to Brille/Rabid/Wichita at that stage too. It’s not one or the other but BOTH.

My point is that these are tools for both artists AND record companies, and i believe the industry can benefit from the potential such tools offer, if they engage with them in a clever and measured manner.

Absolutely.

I’m talking about the initial phase and, in particular, the ‘THE DAYS OF LABELS TAKING A CHANCE ON ARTISTS ARE OVER AND YOU’LL ALL BE SORRY BECAUSE THE INTERNET HAS RUINED IT FOR EVERYONE’ line of thought

But Colly it’s not the internet which has ruined it fort the labels – it’s a failure to engage with what the internet has to offer, a failure to take advantage of the tools which the internet presents as you pointed out above. The labels may think the internet has ruined it for them but it hasn’t. If anything, the internet, if they’d properly engaged with the techies back in the late 1990s, would have meanyt huge cost savings and allowed them to avail of massive economies of scale.

What I was refering to was the seed capital and patience it takes to develop a multi-million selling band. Look at Coldplay for example or Kings Of Leon. Now you may despise both bands – well, I do – but they have built huge audiences not on their first or even second albums. It takes time and money to stick with a band while they do that and, in the future, the money will certainly not be there to do that. Of course, you could argue that we don’t need blockbuster bands – and there may be a point in that from the undeground way of looking at things or a sheer musical one – but it is the bigger acts (or watching an act grow bigger) which provide a lot of the narrative and some of the excitement.

I for one will not be sorry to see the back of expensive record company gambles gone wrong, clueless talentless clowns who are given the major label marketing works on the whim of some equally clueless record company exec.

And for every “clueless talentless clown”, you have a dozen people working at labels who actually care about and love music as much as anyone looking on from the outside. You can’t tar them all with the same brush. Well, unless you’re in a band who have tried for years to get a deal from some “equally clueless record company exec” without any success.

I don’t find anything depressing about record companies struggling to survive. As was mentioned earlier, MySpace, Facebook, YouTube etc are all modern tools to help get your music out there. Record companies are tools too. Except their bulky infrastructure and lack of flexibility will render them obsolete in the years to come.

The tools to create, record and market your own music are available to everyone. You may need to get more experienced folk involved, but if sanely planned and executed, these costs can be kept at a reasonable rate. More often than not, the innovative and creative folks come cheap, as they try and find new ways to achieve things on a budget. Ok, you don’t have the radio/TV/advertising network that the established record companies have, but you can still reach me, as a listener, just as easy….and if you’re good, then I’ll listen some more, tell some friends, and maybe we’ll all head out to see your gig.

If record companies disappeared tomorrow, would I be without access to good music?
No.

What ever happened to “We just make music for ourselves and if other people like it, that’s a bonus…”?

Also, Cian’s comment reminds me to post a reminder Jim; tomorrow night is Brian Eno night on BBC4. New Arena docu “Another Green World” where he “engages with fellow influential minds, including Richard Dawkins, Malcolm Gladwell, David Whittaker and Steve Lillywhite, in a series of conversations on science, art, systems analysis, producing and cybernetics.”

Followed by Paul Morley exploring Eno’s best music work; The Roxy Music Story and then the Eno-scored “For All Mankind” Nasa doc.

I’m not sure Eno is right. Recorded music has been undamaged by developments in the industry – if anything it is thriving and more music is being recorded than ever. It’s the physical format that carries the recording that is struggling. CDs may go the way of sheet music but I can’t see live performance replacing recorded music: they are two different and (I would have thought) complementary entities.

In these discussions about change, there is always a tendancy to overlook what has remained the same. People are still writing short songs about the same old subjects and recording them or playing them for the enjoyment of the general public. It’s not like we’re all eating futuristic music pills instead whistling while we do the dishes.

Even those who get paid handsomely for music would probably do it for free, and the general public is still interested in listening to music as a pasttime, so the basic balance of the universe is the same as far as I can see.

Nice points everyone and thanks for contributing to the discussion.

colly @ 12 – it was always the case that labels only scored hits on a certain precentage of acts signed/releases. The problem with the bands you mention above (ie Humanzi/The Departure/Hope of the State) is that we will never know if – and I stress if – they would have devlivered with second or subsequent albums for the major. The rampant short-termism which has been the case in the record industry this past decade means if you dont score hits on round one, you don’t get to round two. Back in the day, there was always more patience with this – I just got the reissue of the Power of Dreams album and that reminds me that they at least got two albums on Polydor before a parting of the ways.

Beanstalk – good point about the infrastructure, though I would say there will always be a place for a record label as a filter – see such sussed micro or botique imprints as True Panther, Captured Tracks, Mexican Summer, Neon Gold, No Pain In Pop, Transparent and On the Record (coming soon)

Cian – that’s an interesting quote. When I interviewed Eno back in ‘04 about the record business, he was expressing much the same belief.

Ivor – well, IPC are reviving Melody Maker

Fiona – Mills does know the market and the fact is XL/Beggars are increasingly seen as the cool indie overlords. Also, if you look at their signing policy, there are very few chances taken and I’d bet costs on those acts are v realistic (ie they know a 10k seller as opposed to a 100k seller when they see it).

MDR – I’ve been using this example for years: the act sitting in a corner playing his or her tunes will not change; the audience standing opposite that corner who want to hear that act will not change; what WILL change is the middle ground, the people/method of brokering that exchange. We’re definitely in that gamechange mode.

bren – it used to always always always annoy me when people said everyone working at a record label was a tosser – or everyone at a major especially. Having worked for a bunch of labels over the years, I’ve always come across people who were and are huge music fans. Sure, there were wankers and careerists but even some of them were music fans! And I’ve also come across the same level (often more so) of wankerism at indies as opposed to majors. Plus if acts think some major contracts are restrictive, remember indies can be and have been just as bolloxheaded when it comes to contracts to screw the artist.

By basing his arguments on Neilsen Soundscan numbers Tommy Silverman underscores how the recorded music business is no longer understood by the old guard.

Recorded sales of independently recorded music have never been accurately tracked by Neilsen. And, today, the great majority of indie acts are not registering.

So, Silverman’s stats are meaningless for telling us about the big picture. They do clearly illustrate that it’s time the mainstream media understand that Neilsen is no longer the measure of what’s happening.