13 lies of the modern music industry

You can find the original post here: http://www.digitalmusicnews.com/permalink/2013/09/25/lies

Wednesday, September 25, 2013
by Paul Resnikoff

"It was the future we all wanted so desperately to come true…"

Lie #1: Great music will naturally find its audience.

The Lie: The greatest music and artists will eventually connect with their audiences, naturally, thanks to a perfectly-lubricated, social, and borderless internet.
“Our kids are going to watch exactly what they want to watch, not necessarily what’s marketed to them,” then Topspin CEO Ian Rogers said as recently as 2010, while constantly underscoring that “quality is hyperefficient.”
The Truth: Just like the analog old days, most great music gets left behind and wallows in obscurity if not substantially backed or otherwise supported financially.  In fact, the biggest songs on the planet are often those blasted the loudest on the biggest platforms – and oftentimes, granted the most money from major labels (ie, Katy Perry, Pitbull, Flo Rida, etc.)

Lie #2: Artists will thrive off of ‘Long Tail,’ niche content.

The Lie: The music landscape would be increasingly dominated by smaller and smaller artists, with smaller (but stronger) audiences.  And, they can all make more money through direct fan relationships.
“Forget squeezing millions from a few megahits at the top of the charts,” Chris Anderson famously wrote in his ‘groundbreaking’ Wired article that started a misguided revolution.  ”The future of entertainment is in the millions of niche markets at the shallow end of the bitstream.”
The Truth: Instead of unleashing a torrent of successful niches, the internet has actually made blockbusters bigger than before.  All while starving artists down the tail.
“So, while the tail is very interesting, the vast majority of revenue remains in the head,” Google CEO Eric Schmidt brutally revised just a few years later.  ”And this is a lesson that businesses have to learn.  While you can have a Long Tail strategy, you better have a head, because that’s where all the revenue is.”

Lie #3: The death of the major label will make it easier for artists to succeed.

The Lie: No more major labels to choke the supply!  No one to hold the artist back!
The Truth: Sadly, the avalanche of unfettered, unwashed content was never quite filtered by the music fan.  Instead, it was all mostly tuned out, except by a small number of trusted curators.  Which means, most artists are deluged in all that stuff, and have a hard time gaining traction.
“We’ve had 10-11 years of American Idol, so you’ve had 100 or 110 top ten people, and you can count on your hand the number of careers that have sustained off of that,” Irving Azoff said late last year.  ”So that just tells you that even with the massive exposure of network TV, how hard it is to make it in the music business.” 

Lie #4: There will be a death of the major label.

The Lie: Major labels will die out completely, while unleashing a utopia of contract-free, liberated artists.
The Truth: Majors are weakened but far from dead.  But more importantly, they are still controlling popular music and its consumption, and building and maintaining artist careers.  It’s the reason why Jay-Z is still signed with a major, and why Macklemore did a deal with Warner Music Group.
It’s also the dirty little secret behind Amanda Palmer’s current name brand (you’re welcome, Roadrunner).

Lie #5: Digital formats will produce far greater revenues than physical.

The Lie: The absence of major manufacturing overhead, shipping, and brick-n-mortar retailers will drastically reduce costs and pave the way for greater revenues and income.
The Truth: Digital sales volumes are not only lower, but an era of singles eviscerated marked-up, album bundles.  And the current era of ‘digital dimes’ means that per-track, per-stream, or per-whatever payouts are far lower.
These days, artists that can actually sell physical (like vinyl and CDs) make more money.  The same is true for nations: Japan is now the largest recorded music market in the world, thanks largely to strong CD and physical sales (and even rentals).

Lie #6: “The real money’s in touring”

The Lie: If artists just give away their music for free, and let it be social and free-flowing, they’ll make it up on the road.
The Truth: Fabulously true for artists like Pretty Lights and plenty of EDM artists, but not most other artists.  In fact, most artists are struggling to survive on the road, and even established names have been forced to can tours because the money just doesn’t make sense (see Imogen Heap).

Lie #7: There’s an emerging middle class artist.

The Lie: Internet-powered disintermediation would create a burgeoning ‘middle class’ of artists.  Not the limousine, Bono-style outrageous superstars, but good musicians that could support families and pay their bills.
The Truth: There is no musician middle class.  Instead, the music industry has devolved into a third world country, with a wide gulf between the rich and struggling/starving poor.
And, those ambitious middle-class artists that try to make ends meet by spending 350 days on the road are probably not raising very good families.

Lie #8: Kickstarter can and will build careers.

The Lie: Superfans will come out in droves to support their favorite artist projects, and power their awesome careers.
The Truth: So far, it’s happened for Amanda Palmer, Toad the Wet Sprocket, Murder by Death, and a few other artists.  Which is great for those artists, but most irrelevant for the broader artist community.

Lie #9: Spotify is your friend.

The Lie: Streaming on Spotify will make artists money, if they just wait long enough.
The Truth: Spotify will make Spotify and Wall Street tons of money, if they’re really lucky.  And they’ve already made tons of money for major labels, not artists.
And even superfans rarely stream enough to equal the nice, upfront, transparent royalty offered by an iTunes Store download.

Lie #10: Google and YouTube are your friends.

The Lie: Google and YouTube have anything but their own profit-maximization goals in mind.
The Truth: This is business, not altruism, not matter how it gets spun.  And, the interests of Google and rights owners are diabolically opposed and will continue to be so.  Which also means that anything that is DMCA-compliant is ultimately great for Google, and fantastically bad for content owners.
So if you want exposure, go to YouTube.  If you want a paycheck, find it somewhere else.

Lie #11: If Pandora could just lower royalties, they could then survive, and really help all the artists out there.

The Lie: Sadly, Tim Westergren’s bubble is making him one of the biggest boogeymen of the modern-day music industry.  In an impassioned (but largely deceiving) letter to artists, Westergren asked artists to sign a Congressional petition asking for lower royalty rates for internet radio.
The Truth: What Westergren forgot to mention was that by signing the petition, artists were also supporting their own rate cut, which led to high-profile protests from groups like Pink Floyd.  Meanwhile, Westergren – whose Pandora cashouts now surpass $1 million a month – has devoted endless amounts of time towards both publishing and recording royalties in the courts and Capitol Hill.

Lie #12: T-Shirts!

The Lie: Not only is the money in touring, but artists will make a killing off of merch table sales and t-shirts.
The Truth: Very, very few artists are (a) supporting themselves through touring, and (b) if they are, making tons of money from merch.  Sadly, the greatest merch tables sales came from CDs, that is, up until the early 2000s or so.  It supported tours then, it doesn’t support anything now.

Lie #13: ‘Streaming is the future…’

The Lie: Access will trump everything, and lead to a better, richer music industry for everyone.
The Truth: Let’s see what this green pasture ultimately looks like.  Spotify is hundreds of millions deep in financing without a profit; Rhapsody is laying people off; YouTube has been subsidizing free music access for years.

So here’s your future: YouTube, which has driven the price of recorded music most aggressively towards $0, will be around tomorrow.  Spotify, Rhapsody, Deezer, Rdio, and Pandora may not be so lucky.