I have been working my way through Michael Wolff’s Autumn of the Moguls and found some of it very predictable. Its obsession with disfunctionality amongst business leaders including Eisner and Messier.One thing that did strike a chord with me was the way technology had moved from saving the record industry from itself to becoming the industry’s kryptonite. Around about 1984 or so, the music industry had hit paydirt as Joe Public moved from their analogue recordings on 8-tracks, cassettes and vinyl on to CDs. Artists of the 1960s and 1970s were the money spinners, reputedly there was one CD factory in Germany that did nothing but make copies of Pink Floyd’s Dark side of the Moon.
Then the internet came along and the record companies were slow to take advantage of this technology so the consumers did. Instead the industry created a huge knee jerk reaction blaming the customer for their own mistakes. From pages 283 and 284:
File sharing replaced radio as the engine of music culture.
It wasn’t just that it was free music – radio offered free music. But whatever you wanted was free, whenever you wanted it. The Internet is music consumerism run amok, resulting not only in billions of dollars in lost sales but in an endless bifurcation of taste. The universe fragmented into subuniverses, and then sub-subuniverses. The music industry, which depends on large numbers of people with similar interests for its profit margins, now had to deal with an ever-growing number of fans with increasingly diverse and eccentric interests.
Not a unique challenge, clothes manufacturers, car companies et cetera all have had to deal with the fragmentation of consumer interests. There is no longer any such thing as the teenager, when do people now get old? These are all similar challenges. The fear isn’t piracy, its the ability of these businesses to manage themselves and adjust to a post modern society.
My own take on this is that the music industry has failed:
- Failed to give customers what they want, more eclectic artists and built a business model about more ‘customised’ sales. I read somewhere that a Volvo car model can have some 48,000 variants. Customers now have a more eclectic musical taste, artists and record companies should build for a business model of selling 40,000 rather than 400,000 of a given record
- Failed to take advantage of their back catalogue of deleted recordings and putting them for sale online to make a better return on slowly decaying master tapes
- Failed to innovate, during the time that record companies may or may not have sold less CDs, depending whose numbers you believe; they signed and supported less acts and off loaded talented but not huge selling artists
- Failed to realise that a fast buck is not always the best buck. In prostituting their recordings for supermarket soundtracks, films and car advertisements the music industry turned music into musak
- Failed to have credibility. Why should people worry about stealing from the music industry when books like Black Vinyl White Powder by Simon Napier-Bell have shown how the music industry stole from its artists
- Failed to grab their own destiny and allowed their product to be dictated to them by the radio stations
- Failed to recognise that a number of customers still wanted analogue recordings, thus allowing niche players to subvert a reasonable revenue stream. Much of the US and European requirement for vinyl is pressed in state-of-the-art factories based in the Czech Republic as the majors exited the market