Wednesday, July 29, 2009

Question of the Day - RECOVERY - July 29, 2009


Ryan Hiss asks:

Is a recovery possible? Will the music business ever recover from its current state? And, If so, how will the industry go about doing it?

Hartmann responds:

Twenty-five percent of all disposable income is spent on entertainment. Those dollars are spread over a wide range of choices; and a shrinking portion is being devoted to the purchase of music. At the same time, their is a renaissance in music appreciation and exploration. MP3 technology and peer-to-peer file sharing enable massive music use at minimal cost to the consumer.

There is more music in play than ever in history. The ability to instantly access thousands of songs, across multiple genres, on demand, is revolutionary. It imposes a revolution in systems and protocols on the record business. Economic recovery does not mean restoration of the CD as a delivery system. The Music Renaissance will require the invention of a new business model.

It is important to draw a distinction between the Record Business and the Concert Business. These are symbiotic entities that, in combination, form the extant Music Industry. The personal appearance tradition was in motion long before record one; and it will continue long after all the records are out of print. The music industry will survive and flourish in the digital age.

The recovery process has already been initiated at the grass roots level. The big four record labels are shrinking their overheads and scrambling for digital solutions. Enormous publishing and recording catalogs, exploited by leaner machinery, will delay their demise. But, A&R will have to glean their new artists from the self-starters that can accrue millions of hits on the Internet.

The new music industry paradigm does not depend on the record business to prevail. It is in the concert arena that the war for supremacy in music is being fought. A new artist must control all the income streams within his own corporate structure. He must create a repertoire, mount a live act, build a booking mechanism and execute a performing, recording and merchandising system.A live attraction that can build a following can generate cash flow.

If an artist can become the dominant musical force within driving distance of his home, he can make a living; and he can evolve his presence in other markets. If he can't build a following in his home town, something is missing. Fix it. Some of the local heroes will survive and compete for a ubiquitous audience.

History dictates that a great star will rise. The Internet insures that we will all know when the avatar arrives at pretty much the same time. Until then, there are thousands of gigs going down every night. The most talented and driven artists will build low overhead, high profit entities that will grow more slowly and last a lot longer. The process will be conducted on the Internet.

The artists will be their own record companies and publishing houses. The best talent may be lured, by lucrative 360 deals, to the big four labels. However, if they succumb, the contracts will be licensing and rental arrangements whereby copyrights and masters are returned to the artist.

The record business was suffering from the digital decline before there was a recession. The thousands of laid off workers did not move vertically into other positions. They are out of work or moving on to greener pastures. The music industry will carry on and prosper; but the recovery won't be regenerated by the record business. The future rests on the economics of the fan base. Fame and fortune will accrue to the act that can demonstrate artistic and business skills.

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