WITH JUST 1.18 million units sold across the UK last week, the album is one again looking in a precarious state. To be clear, that’s a depressingly historic figure: the lowest weekly total in 19 years. Some blame can be apportioned to a particularly weak release slate, with only Maroon 5’s universally-panned V troubling the Top 5 of the Official Chart – on a hold-the-champers-let’s-get-some-Brutfrom- Aldi 17,000 sales. (The unimpressive state of the albums market can perhaps best be summed up by the fact that four of this week’s Top 10 have sold less than 10,000 copies. And one of those was a Kate Bush album released in 1986.) Moments of Royal Blood-generated excitement aside, there has been no respite in recent weeks from the depressing slide of annual to-date albums sales in the UK. 2014’s figure currently stands at 37.7 million – a 12.1% drop year-on-year. That sum total includes those albums basically given away. Yep, I’m talking about the 99p wonder deals which are now becoming increasingly prevalent amongst major label catalogue LPs sold via gigantic global online retailers. Last week it was the turn of Prince’s classic 1984 soundtrack, flogged for less than a quid on both Google Play and Amazon. As a result, sales spiked and the LP made its first UK chart appearance for almost 20 years, hitting No.19 and selling 3,270 copies. The basic economics: these albums cost the likes of oogle Play and Amazon around £3 each from the labels – aka the trade price – meaning they’re selling them at something close to a £2 loss per ‘unit’ in a bid to acquire new customers. All very well, the label and the artist get paid as usual, and in the short-term, everyone on the music industry side of the fence is happy.
But I do harbour a very serious concern over all this. It’s not so much about the devaluing of albums themselves – although obviously that’s a very critical discussion while playlists are gobbling up the album format on streaming services.I worry more about that currency of the internet age – data. Sometimes the UK’s record labels seem in a hurry to help entice music fans to give their details en masse to the likes of Google, Apple and Amazon – companies who seek out the nectar of customer acquisition with more fervour than any music company in existence.
What harm does could this do in the future? Well, in the old days of digital content, the idea of Apple, Amazon or Google becoming content owners in their own right was little more than an empty Devil’s Advocate calling card. But you only have to look at the unremitting punishment of proud French book publisher Hachete by Amazon to see just how comfortable the giant online platform is when taking on creative companies. Also, don’t forget, Amazon is already making its own content a la Netflix: the sci-fi thriller Extant, exec produced by Steven Spielberg and starring Halle Berry, is Amazon Prime’s first in-house piece of entertainment media – made in conjunction with CBS. The telly fan in me finds it a jumpy, twisting, clever little thriller that’s worth a watch. The advocate for the future of the music industry? Well, he finds it pretty damn chilling.
New research published today by the Informa Telecoms & Media news service Music & Copyright reveals that global retail sales of rock music increased 2.9% last year, to US$6 million, from US$5.8 million in 2011. Pop may still be the world’s most popular type of music, but retail sales of the genre were down 1%, to US$7.4 million, from US$7.5 million.
The old music industry is dead. We’re standing in the ruins of a business built on private jets, Cristal, $18 CDs and million-dollar recording budgets.
We’re in the midst of the greatest music industry disruption of the past 100 years. A fundamental shift has occurred — a shift that Millennials are driving.
For the first time, record sales aren’t enough to make an artist’s career, and they certainly aren’t enough to ensure success. The old music industry clung desperately to sales to survive, but that model is long gone.
Even superstars have it tough. Pitbull — despite having 50 million Facebook fans and nearly 170 million YouTube plays — has sold less than 10 million albums in his entire career. This is the reality of the new music industry, which is built off of liquid attention, not record sales.
Why? Well, the answer lies with us , the Millennials. We’ve taken over the music industry by controlling the two things that matter most:
1. The Demand
The music industry is just like any other big business: It follows cash. Over the past two decades, music has suffered through the CD bubble, torrents, Napster, iTunes (with Apple taking a 30 percent cut of everything) and now, the ubiquity of streaming services, which reduces sales below the already rock-bottom level.
The music industry has been rocked by new trends and over the past few years, has succumbed to a state of near free-fall. It’s clutching whatever few straws are left in an attempt to salvage profit from the remains of its broken business models.
As music becomes more and more entrenched in the digital realm, Millennials have emerged as the dominant consumers. More importantly, we dominate the most promising emerging market for music: mobile devices. We use music, media and entertainment apps more than 75 percent more and social sharing apps about 20 percent more frequently than any other age group.
In a nutshell, Millennials consume the most music and tell the greatest number of people about it. While it’s obvious that consumption is important, why is it so important that we share what we listen to?
The old music industry had a banner metric of artist success: album sales. For years, album sales have been declining and the growth of singles and streaming services have accelerated the trend.
As we’ve transitioned into a digital music economy, new measures of success have emerged. A new generation of artists has hit the scene and they thrive on attention rather than units of music they sell.
The attention has become just as valuable as our likelihood to purchase, as it leads to festival and performance attendance, merchandising sales and other sources of revenue. However, we still won’t buy your music.
Brands know this, too. Companies like GUESS, Red Bull and Steve Madden will pour more than $1.34 billion into sponsoring music venues, festivals and tours this year.
Over a billion dollars will be spent for the opportunity to build customer relationships and brand equity with digital natives. In contrast, the top 10 highest-earning electronic artists last year cumulatively made just over $240 million — less than 20 percent of what brands will spend in 2014 to capture Millennials’ attention.
What brands understand is that music is an important part of Millennials’ identity. It’s more than entertainment for us. The music we listen to can be as important as how we dress and influences who our friends are.
Going to festivals and shows is an expression of identity. Brands know that if they can identify with a DJ like Skrillex and his dedicated fan base, they’ll have more than just the consumer’s brief attention. The brand will become part of the fans’ lifestyle.
The end result is that the music industry and the big brands are both chasing the new generation of artists; artists who can capture, retain and monetize attention — instead of album sales — and who can keep Millennials interested.
2. The Supply
All that’s required to make a modern record is a computer and a piece of affordable recording software. One of the most powerful professional DAWs (a digital audio workstation, used to produce music) is Logic Pro from Apple, which costs only $200.
Inside the DAW are virtual instruments like pianos, synthesizers and drums, as well as all the necessary tools to edit and produce audio.
Most of the equipment required to create music has been absorbed into the DAW, while the software continues to get easier and easier to use. The end result is that artists can create music more quickly, more efficiently and less expensively than at any other time in history.
Gotye created his song “Somebody That I Used to Know” in his parents’ house near Melbourne, Australia. The self-produced track reached number one on more than 23 national charts and charted inside the top 10 in more than 30 countries around the world. By the end of 2012, the song became the best-selling song of that year with 11.8 million copies sold, ranking it among the best-selling digital singles of all time.
A young Dutch producer named Martin Garrix reached the top of the charts in more than 10 countries with his smash hit, “Animals,” which he produced and released at 17 years old. The song hit number one on Beatport, making Garrix the youngest person ever to receive the honor.
Millennials, who can simply record after class or work, are mostly familiar with this technology, but our open-source attitude toward learning is much more important.
Search “How to use Logic Pro” in YouTube and you’ll find thousands of free tutorials. Sites like Reddit have entire communities with tens of thousands of members who are dedicated to learning about music production.
Technology is cheap and high-quality learning resources are free. As the result, artists have massively successful records without having set foot in a recording studio.
3. Music Discovery Is At An All-time High
It goes without saying that music discovery and music production go hand in hand. However, just as technology has enabled easy music production for young, emerging artists, it has also provided them with a way to reach fans all over the world.
There are the classic success stories like Justin Bieber and Lana Del Rey, of course, but below the YouTube empire rests an entire culture of Millennials who are discovering music online.
Platforms like SoundCloud have more than 250 million active users each month and Millennials discover their music predominately through these digital platforms. Incidentally, when digital natives produce new music, they release it first on the digital platforms.
This is how Millennials are playing both sides of the field: They’re creating more music than ever and releasing it onto platforms where their peers go to discover music.
The music industry middleman has been cut out and a back-and-forth conversation replaced it. Of course, huge stars like Katy Perry still dominate sales, but Millennials are eroding that model with a new, grassroots discovery model.
4. Millennials Are Forming Dominant Musical Teams
Powerhouse songwriting and production teams back dominant artists like Rihanna, Taylor Swift and Katy Perry. These production teams are one of the main drivers that keep the superstar artists on top. Working in teams allows these writers to churn out tons of highly listenable pop tracks.
Now, Millennials are breaking down this final barrier, too.
Services like FindMySong are connecting independent musicians so they can form their own dominant songwriting and production teams. The FindMySong model takes advantage of the fact that there are more independent musicians than ever before who want a piece of the major artist success without the major label strings.
With cheap recording technology and an effective way to distribute the music, these independents team up online to rival major labels.
You have the power now. What are you going to do with it? For the first time in its long history, the American music business is firmly in the hands of the artists and the consumers. You have the ability to lead the industry wherever you want it to go.
The London School of Economics and Political Science has released a new policy brief urging the UK Government to look beyond the lobbying efforts of the entertainment industry when it comes to future copyright policy. According to the report there is ample evidence that file-sharing is helping, rather than hurting the creative industries. The scholars call on the Government to look at more objective data when deciding on future copyright enforcement policies.
Over the past years there have been ample research reports showing that file-sharing can have positive effects on the entertainment industries.
Industry lobbyists are often quick to dismiss these findings as incidents or weak research, and counter them with expensive studies they have commissioned themselves.
The London School of Economics and Political Science (LSE) jumps into the discussion this week with a media policy brief urging the UK Government to look beyond the reports lobbyists hand to them. Their report concludes that the entertainment industry isn’t devastated by piracy, and that sharing of culture has several benefits.
“Contrary to the industry claims, the music industry is not in terminal decline, but still holding ground and showing healthy profits. Revenues from digital sales, subscription services, streaming and live performances compensate for the decline in revenues from the sale of CDs or records,” says Bart Cammaerts, LSE Senior Lecturer and one of the report’s authors.
The report shows that the entertainment industries are actually doing quite well. The digital gaming industry is thriving, the publishing sector is stable, and the U.S. film industry is breaking record after record.
“Despite the Motion Picture Association of America’s (MPAA) claim that online piracy is devastating the movie industry, Hollywood achieved record-breaking global box office revenues of $35 billion in 2012, a 6% increase over 2011,” the report reads.
Even the music industry is doing relatively well. Revenue from concerts, publishing and digital sales has increased significantly since the early 2000s and while recorded music revenues show a decline, there is little evidence that piracy is the lead cause.
“The music industry may be stagnating, but the drastic decline in revenues warned of by the lobby associations of record labels is not in evidence,” the report concludes.
Music industry revenue
The authors further argue that file-sharing can actually benefit the creative industries in various ways.
The report mentions the success of the SoundCloud service where artists can share their work for free through Creative Commons licenses, the promotional effect of YouTube where copyrighted songs are shared to promote sales, and the fact that research shows that file-sharers actually spend more money on entertainment than those who don’t share.
“Within the creative industries there is a variety of views on the best way to benefit from online sharing practices, and how to innovate to generate revenue streams in ways that do not fit within the existing copyright enforcement regime,” the authors write.
Finally, the report shows that punitive enforcement strategies such as the three strikes law in France are not as effective as the entertainment industries claim.
The researchers hope that the U.K. Government will review the Digital Economy Act in this light, and make sure that it will take into account the interests of both the public and copyright holders.
This means expanding fair use and private copying exceptions for citizens, while targeting enforcement on businesses rather than individuals.
“We recommend a review of the DEA and related legislation that strikes a healthy balance among the interests of a range of stakeholders including those in the creative industries, Internet Service Providers and internet users.”
“When both [the creative industries and citizens] can exploit the full potential of the internet, this will maximize innovative content creation for the benefit of all stakeholders,” the authors write.
80 percent of the population in Germany is satisfied with the legal music sites on the Internet. For 56 percent, there is even the “perfect” legal offer.
Only about a third of Germans find it easy to distinguish when it is a legal or an illegal music offering on the network. The greatest uncertainty in the under 20 – and over 50-year-olds.
Nine out of ten Germans would welcome a seal of approval for online media services, in which the consumer at first glance recognizes whether it is a licensed service, where the creatives and their partners are remunerated.
The support of the creative ranks next to the legal security of the strongest arguments for a legal use of media services in the Internet.
It has always been difficult to earn a living in music — whether as a musician, manager or composer — unless you are extraordinarily talented or extremely lucky. In the past, financial stability depended on getting gigs or a recording contract. But in our more economically sophisticated world, managers and artists seek out start-up capital to launch themselves. And the industry is complaining that it is almost impossible for a start up music company to access development money. Despite the existence of various government-backed schemes, banks are just not lending.
One can sympathise with the banks; music is an incredibly risky business. Most bank managers do not believe that they can access the commercial viability of a band or record label which comes to them for money, so they exercise caution.
To me it seems, the problem lies in the nature of music funding. Traditionally the performing arts have been self funding or have attracted sponsorship. The majority of public funding for music is channelled through the Arts Council or National Lottery but the pot is not large and the pool of talented artists and management is great.
It is nobody’s fault that the music industry now needs to seek funding through a commercial route, it is an economic reality. But somebody in the Department of Culture, Media and Sport needs to recognise that bank funding is not going to work and that more innovative funding and finance routes are required.
The music industry contributes £5bn to the national economy each year. It could contribute much more, both in terms of sales and new jobs created, if it was funded properly. The challenge for the industry, and for the government, is to decide whether we see music as an industry that is deserving of public investment. At the moment, the evidence suggests we do not.
New research published today by Informa’s “Music & Copyright” reveals that global retail sales of pop music increased 2.3% last year, to US$7.5 billion. Pop ended 2011 as the world’s favorite music genre, accounting for 31.9% of global music sales. Total retail sales slipped 3.7% last year, to US$23.3 billion, so the growth of pop sales was all the more impressive.
The second biggest genre in 2011 was rock, accounting for a quarter of the world’s music sales. Sales of rock were down 5.7%, to US$5.8 million. Pop and rock have dominated music sales for years. In 2000, Pop had a global sales share of 27.8% with Rock at 22.7%.
Aside from pop, all other genres suffered a fall in sales last year. However, the bigger fall in rap, R&B and hip-hop sales allowed country to become the world’s third most popular music genre with a 6.2% share.
According to Simon Dyson, editor of Music & Copyright, “massive sales of Adele’s album “21” clearly boosted pop sales last year. The unstoppable rise in the popularity of Justin Bieber, Michael Buble and Lady Gaga also made sure pop’s bubble didn’t burst. Despite lower viewing figures for the music-based reality TV show, artists and groups created by those shows, such as One Direction, Susan Boyle and Olly Murs, just keep on selling.”
In contrast to previous years, which have seen retail sales of some of the smaller genres such as classical music and jazz fall the fastest, the reverse was the case in 2011. Sales of classical music and jazz were only marginally down last year. Smaller genres have suffered more than most in recent years from retailers giving less floor space to slow-selling, low-margin genres in favor of better-selling items, such as DVDs, video games and consumer electronics.
Note to editors
The classification of any artists’ music into a single genre is fairly arbitrary and can differ between record company, music retailer and national trade association. Categorizing music within a genre can often have multiple influencing factors such as musical technique, style, context, target audience and geographical origin. Moreover, many genres have sub-genres that can often overlap others. For the purposes of this study, “Music & Copyright” has limited itself to the most commonly used genre categories by most national trade associations when presenting a breakdown of sales by genre. Country music, for example, is included, because it is more popular in the world’s biggest market, the US. Despite much-lower retail sales of country music elsewhere in the world, the high level in the US resulted in a global share of 6.2% in 2011. In contrast, religious and Latin genres – such as Musica Popular Brasileira, which itself incorporate subgenres such as samba and samba-cancao – sell well in many Latin American countries. But because Latin American countries account for a much lower share of global retail sales, these genres have been grouped as part of “other.”