Accountants cut off music industry power supply

The concert you'll be hearing about is The Verve going through their bittersweet symphonies in front of 80,000 paying customers at Slane Castle in a week's time. The concert you won't be hearing about is the one where local heroes Ash were supposed to play a massive outdoor concert in their native Co Down but was cancelled when only a paltry 1,000 tickets were pre-sold.

The latter rather than the former characterises the current state of play of an industry which is in crisis. Record sales are down, concert tickets (Slane apart) just aren't selling, festivals are being cancelled and bands are being dropped from their record companies as quick as you can say "recession looming".

While there has always been an ebb and flow in the fortunes of the multibillion pound music industry, this time the crisis threatens the central role of music in the leisure industry. What's more, it's a crisis of the industry's own making - the accountants have taken over the ayslum.

To get to number one in the British album charts two years ago, when "Britpop" was still putting the "cool" into "Brittania", typically a band would have to sell 150,000 records. There were many raised eyebrows and worried looks last month when Welsh band, Catatonia saw their album go to number one after only selling 32,000 copies.

Other warning signs came earlier in the summer when the organisers of the massively popular Reading Festival - always a stalwart on the outdoor festival scene - was cancelled due to poor ticket sales having only sold an estimated 10,000 out of 75,000 tickets. The equally popular Universe festival at Knebworth suffered a similar fate, as did middle-of-the-road artists The Lighthouse Family whose outdoor London concert was shelved.

The fact that all of this has come at the tailend of a phenomenally successful time for the music industry sharpens the contrast. Music sales growth in Britain and Ireland was in double figures in the decade up to 1994 but a report by Credit Lyonnais forecasts a drop in the long-term growth of 7 per cent between 1995 and 2002 to 3.4 per cent for 1996-2003. Sales growth for 1998 is estimated to be as low as 2.8 per cent.

Individual record companies tuned into the decreasing sales patterns are now streamlining their operations - Warner Music Group for example is cutting back its releases by 20 per cent a year according to Business Week magazine.

There are a variety of factors behind the decline, some more plausible than others. The industry argues that sheer demographics are responsible in part in that the number of people under 25 in developed economies is shrinking. This is an indisputable fact, but any industry which wants to turn a profit builds in such socio-cultural phenomena into its planning.

It's also argued now that people have replaced all their vinyl with CD (the hundreds of thousands of babyboomers who bought all The Stones, Dylan and Beatles records for the second time around on the CD format) records sales were bound to dramatically drop. Again this is a foreseeable problem.

The Asian markets are in crisis, they argue - why then have other leisure activities reported an increase in the last year, with only music as the loser? In Britain at least, average crowd attendances at football matches has increased from 27,000 to 30,000 in the last 12 months while the number going to the cinema has increased from 130 million a year to 140 million a year in the last 12 months.

The reasons for the crisis which threatens hundreds of thousands in jobs within the music industry and its ancillary services is a lot closer to home than the industry would have you believe. Three years ago when Oasis and Blur were selling millions upon millions of records, their antics and exploits were covered by News At Ten and moved onto the front pages of the broadsheets. Oasis's last album sold a staggering 700,000 in its first week of release to go to number one (contrast this with 30,000 for Catatonia) and record companies were flush with profits - there had never been such a buzz around the industry since the days of The Beatles.

The industry then went on a spending spree and invested its money in trying to discover identikit Oases and Blurs, hundreds of new bands were signed up but when they didn't deliver after having an average of £150,000 pumped into them for recording and promotion costs, they were swiftly dropped by the companies.

The problem was that the money men had taken over the industry and edged out "the creatives". Typically record companies were run by music fans, people who respected musicians and were willing to make decade-long investments in their artists. As more and more of the smaller record companies were bought out by the major labels and even as the major labels were bought out themselves - as in Canadian drinks giant Seagram buying out Polygram, one of the biggest labels in the world, for $10.6 billion (£76.3 billion) earlier this year, the accountants came to call the shots and the old enemies of art and commerce clashed to the detriment of both. Risks stopped being taken, risks which are integral to the success of the industry.

In today's climate it is debatable if a band like U2 would be signed, such is the music industry's cautious outlook. Even if U2 were signed today, they would probably be dropped by their record company after their first album. U2 didn't go into profit until their third album broke into the US charts and since then they have made more than a £100 million for their record company. The record company invested and continued to invest in U2 for a number of years even when they weren't showing signs of a major breakthrough.

It's no coincidence that U2's label boss, Chris Blackwell is one of the old school type of industry movers - he got into the business out of a love of music and an ear for what would sell. Mr Blackwell believed in and funded "artistic freedom" and since U2 he has gone on to sign Pulp, The Cranberries and Tricky - again all three bands would be considered high-risk entities by the people who run record companies today, particularly in that it took Pulp 10 years to make a commercial breakthrough - these days bands are given just one album to do the business or else they're history.

"There's no room any more for music men in the music industry" Miles Copeland (Sting's manager) told a trade conference last month, "at least not within the major labels. All the mavericks have gone and there are very few of us left who have been in a pressing plant. It's just a different game now, in the old days those impressive individuals would take risks with their own companies and money. But now it's a question of shareholders to answer to. We might not like it but a lot of money has been taken from the stock exchange so we have to pay the piper."

The problem with shareholders or corporate entities with no background in the creative arts shaping the industry can be reduced to the fabled art versus commerce argument. Somebody who knows about both areas is the multi-millionaire boss of Creation Records, Alan McGee, the man who discovered, signed and took a risk on Oasis.

"There is a crisis in the industry and it's so huge that nobody knows it's happening," says Mr McGee. "The corporations who run music now are not investing in talent and taking real risks, they're surviving on back sales of The Beatles and The Stones and Led Zeppelin because it's safer. It's no wonder people aren't buying records, there's nothing to get excited about at the moment."

Mr McGee points out that the money isn't being used properly. "No wonder you get all these bands being dropped a week after their album's out because somebody in a suit had decided they're too expensive to maintain. Nobody makes £40,000 albums any more like we used to, they make £150,000 albums. Video companies want to charge you £30,000 to £100,000 for a video when in the old days you could make a video for £10,000." It's a sobering sign of the times to consider that even though Oasis make millions for Alan McGee's company, he still found himself having to let go five out of his 35 staff this month.

For the jobs to stay in place and for the sheer enjoyment of music to be allowed continue without undue corporate interference, the industry needs to ditch its policy of only funding identikit record styles - as in all the Britpop soundalike bands of two years ago - and invest, over a long term period, in new, adventurous sounds. Today's uncommercial music is tomorrow's mainstream music, as we've seen with The Prodigy.

The core audience of music lovers/buyers (the 15 to 25-year-olds) must somehow be convinced that music can once again be more of a fashion statement than the latest model of Nike runners.

But will the accountants recognise the new Nirvana when they hear them?