Monday, March 15, 2010

The Digital Music Business FAQ - Making It Big - March 15, 2010

Making It Big

Lindsay Stanger asks:

It seems as though... 30 years ago when a band got signed to a major record label they were bound to at least be a one hit wonder if not a superstar. I have some friends that are either solo artists or in bands that were signed to major record labels and some even received a pretty hefty signing bonus...why is it that nothing ever seems to happen for them after they are signed?? Does the record label give up on them even after originally seeing potential? Is this common?

Hartmann responds:

All size is relative. "Big" is in the mind of the beholder and "making it" is a very nebulous term that has unique connotations to different people. One of the phrases most often used by music fans to describe their favorite artists is to say "they are making it big." But what does that really mean today? For a thing to be described as big something else must be regarded as smaller. The big four record companies have lost their way and the old system is no longer cost effective. The small artist owned and operated record company will emerge as the next big thing in music.

The standards of success in the old music industry paradigm were much more clearly defined than they are in the digital music renaissance. For more than one hundred years the concert business evolved in a symbiotic union with the growth and development of the record business. The technical link that bonded these two businesses together was terrestrial broadcast radio.

From the late eighteen hundreds, into the nineteen twenties and thirties, the antiquarian record business progressed from printed sheet music, to Edison's cylinders to shellac discs vulnerable to breakage. This was the acoustic period for recorded music. The play back systems of the day did not utilize electricity in their drive train or amplification mechanics. Radio receivers came in all shapes and sizes from simple crystal head sets to larger more elaborate pieces of furniture.

Music was forced to compete with comedy and dramatic programming for a share of the limited air time. Local stations operated at most twelve hours a day. Eventually radio replaced singing around the piano as the dominant form of in home entertainment. The "Great" Caruso, Rudy Vallee, Frank Sinatra, Bing Crosby and many of their contemporaries sold millions of records on the strength of radio airplay. This led them to extensive film and personal appearance careers.

The process was rudely interrupted during World War II when the distant sources of shellac were no longer readily accessible. Manufacturing techniques and materials developed during the war enabled huge leaps forward in the analog recording and hardware delivery systems. By the mid fifties the modern record business was born out of the marriage of AM radio and forty-five RPM records. The low cost record player was easily acquired by the baby boomer generation.

Millions of teenagers were engaged in the collection and trading of "singles" as the seven inch, vinyl discs with the doughnut hole in the middle were called. Into this musical sanctuary of the young exploded the dynamic force that would drive the record business to unprecedented heights of popularity. Elvis Presley, The Hillbilly Cat, who would eventually be regarded as the King of Rock & Roll brought charisma, sex appeal and an incredible singing voice to an entire generation.

The infrastructure that was created to service Elvis and his contemporaries provided a vast public platform from which the postmodern record business would emerge. It was technology once again that pushed the envelope and prepared the way for the marriage of FM radio and thirty-three and a third RPM long playing albums. The driving force in this era was The Beatles.

Rock & Roll music eventually consumed more radio air time than all other content combined. The record business infused free recorded music and vast advertising and "payola" dollars into the system. A music hungry public fully engaged their heroes who reached the top of the charts and embraced the artist's records and personal appearances as their primary source of entertainment.

The process was slick and smoothly run. Hundreds of small record companies proliferated with many enjoying critical and financial success. As fame and fortune accrued to a steadily growing coterie of artists the public clamored to see their favorite rock stars in concert. The first to take advantage of this demand were the disk jockeys. Many gained enormous credibility with the radio audience by being the voice of the promotional vehicle and the self appointed arbiters of taste.

A disk jockey out of Cleveland named Alan Freed coined the term Rock & Roll and produced many of the earliest rock concerts and tours. A platter spinner from Philadelphia produced the first major touring events with "Dick Clark's Caravan of Stars" which were bolstered by his enormously popular "American Bandstand" television show. Both were caught up in the "payola" scandals of the fifties. Although no particular guilt was ever established, Freed was destroyed by them and died destitute. Clark went on to dominate music TV for fifty years.

During the last half of the twentieth century the infrastructures of radio, records and concerts became inter dependant and all three activities flourished together. During this time period there was a reasonable expectation that if you could get a record deal, mount a live act and demonstrate a modicum of talent and charisma you could have a productive career in the music industry.

This did not mean that everybody in the game became a superstar, far from it. In fact a core principal developed over time that prevails today. About ten percent of the artists competing at the professional level achieved financial success. This was enough to keep the industry healthy and growing. The remaining ninety percent of the artists failed to make a profit and moved on.

Today digimodernization has imposed a harsh new system on the music industry. Digital distribution of music has decimated the record industry. Low cost production and post Napster file sharing have drastically reduced the number of records purchased, while simultaneously putting more music in play than ever before. Mom and Pop record stores have disappeared along with the major chains. Within a decade ninety percent of recorded music will be acquired on line.

The myriad of record companies have been merged and consolidated down to four primary record groups that dominate the business. With the loss of control over the radio promotion and brick and mortar distribution systems they once dominated these four giants are engaged in a free fall of their own creation. Short sighted executive decisions vainly attempting to preserve the high profit, album oriented CD. The RIAA sued their customers and lost direct access to the fan base.

This accounts for the very small number of new artists achieving extraordinary success in the music renaissance. Only a handful of new acts have reached financial profitability in the past decade. The number of units sold to reach the top of the Billboard magazine charts has plunged from over a million units to slightly more than a hundred thousand. These facts reduce the investment dollars available to promote new acts. The cost of traditional radio promotion has remained the same or increased. Without the potential to sell a large volume of product the game, as we know it, is over.

While the record business struggles to find its digital life preserver, the concert business marches on, and continues to grow at a healthy pace. With all the recorded music ever produced readily available on line without the imposition of economics the fan base is building at an enormously accelerated rate. This new "free" form of promotion has created a global forum for fans to share music on a peer-to-peer basis eliminating the middle man and insuring the demise of the labels.

The next big superstar will be discovered and nurtured through the Internet and the potential for success is greater than ever. As a promotional tool the world-wide-web is infinitely more powerful than AM and FM radio combined. It allows artists and their managers to be proactive and independent about how they expose their music to the public. The musicians and producers can also market their music and branded products through low cost on line systems. More importantly they can capitalize on high profit margins by selling CDs directly to their fan base.


Anonymous said...

Excellent article, but if you still want to hold a vinyl 45rpm single in your hand and spin it on a record player go to to find the best selection on the intenet. Digital through the internet will create greater diversity, but it will not yet produce a pervasive "hit" the way top 10 hits were created in the past. It will just allow a lot more different types of artists to get heard and gather a larger following than they might have otherwise. A new medium within the internet will come along that will revolutionize the way artists are heard and promoted on the internet. What's lying ahead for music distribution through the intenet isn't known yet or imaginable to most people. We can't measure or predict the future by what we know today.

Hartmann said...

Yes, there is something nostalgic, if not romantic, about a big stack of 45s playing the tunes you love. It's true the new paradigm has to be invented. That takes viison and a lot of imagination, but it will come. Probably on the rise of a superstar. Think of the pay day for an artist if evrybody with an iPod bought the song instead of stealing it!