Lately, between personal conversations with musicians and music industry types and quotes from musicians in magazines and in blogs, one has to wonder about the music industry and its ability to survive the technology of the day.  Evolution is all about survival of the fittest:  what can adapt to new surroundings and new demands will thrive, while the lacking in variation will perish when faced with new rules and circumstances.  It’s the process by which 8-Tracks gave way to cassettes, which are slowly giving way to CD.  It’s the reason why radio suffered with the youth when music videos came to life.  And now, the internet and the ever-growing number of ways to exchange and procure music are pressing the Big Labels and their chains of 1, 2, and 3-deep labels to either adapt to a new strategy or perish by the demanding downloader’s sword.

But let’s be frank:  the music industry is misleading when it cries about ‘declining sales’ and ‘losing money’ due to the so-called ‘evils’ of downloading free music on peer-to-peer (P2P) services like Limewire and the classic, almost dinosaur-esque Napster.  It cites one set of figures without disclosing the complete picture, which, if analyzed, demonstrates that the Big Labels are profiting still.

Check out this article by Moses Avalon, the writer behind the book Confessions of a Record Producer (which, in and of itself, is a fantastic read for any music fan who wants to understand the logistics of the industry, nevermind indie artists considering a label deal).  As Moses spells out plainly, the actual revenues are not down in any significant way at all.  It’s merely the RIAA’s accounting which makes it so (this is why my old Limewire shared folder, back when I had an account, was called ‘Screw the RIAA’).

Quoting Moses:

WHAT THE RIAA DOESN’T INCLUDE IN “LOST SALES”

— They don’t include CD sales of independent artists, only a decline in sales of titles on major labels. Indie sales make up about as much market share as all of Warner Music Group, which is about 20%.  So they are not including album sales equivalent to all of WMG in their calculations of “lost sales.” […]

— They don’t include the approximately two billion legally paid for downloads from iTunes, Yahoo e-Music and many others. These are not CD’s, technically, so they don’t count them in “reduced sales” even though record companies are getting tens of millions in new revenue from these sales. Also worth noting is that there has been a 71% increase for these types of sales. (2005: 244.2 million, 2006: 418.6 million) […]

— They don’t include the fact that the licensing fees for getting a hit song in a soundtrack has increased 1000% since 1995 (climbing from about $80,000 to about $1,000,000) with no additional hard costs to the label.

— They ignore the 300,000,000 ringtones that have generated about .30 cents each in new revenue (about $90,000,000) for labels in the past three years and due to a new ruling in the copyright office, will increase to about .50 cents each in coming years.

— They are omitting the fact that downloaded music (ringtones, iTunes and subscription-based services) don’t require manufacturing costs nor is there any returned or damaged merchandise (with rare exception) from digital sales. So, in essence, record companies make substantially higher profit margins on newer sales. […]

When all is said and done, the major labels are hardly losing at all.  In fact, they’re doing just fine, and this is furthered by the collapsing of smaller or vanity labels into the majors (or, at least, collapsing them into 2 and 3-deep label levels).  Add to this the reductions in staffing costs (as Moses says, “They are streamlining their staff because you no longer need a team of A&R executives making an average salary of $175,000 a year, with expense accounts for travel to hear a new act. Why bother when you can have three 20 year-olds for $30,000 a piece doing the same job by searching MySpace.[sic]”) and one can hardly support actions like suing unemployed mothers for $200,000 by the RIAA.

There’s also consideration to be given to the fact that the reduction in sales that does exist in concrete album copies (since that’s all the RIAA counts) is centred strictly on the Top 40 market.  Indie sales, which account for 20% of the market, are holding steady in spite of the ‘imminent death of the industry’.  If anything, indie acts have done nothing but benefit from the internet and sharing tools like Limewire or file sharing services like SendSpace.  Local bands with nary a penny to record a demo, let alone release it, can now home record a few tracks and stream them on MySpace, last.fm, the sixtyone.com or release MP3s on their websites for downloading and sharing and suddenly find themselves with a following countries away.  Bands like Boston’s The Dresden Dolls built core followings that could fill venues (and thus justify tours) without leaving their small radius of safety and easy car travel.  Artists like Emilie Autumn, who has yet to hit North American soil, can drum up sales from music fanatics like me in Canada, all through the magic of avid music listeners hitting their favourite sharing forums and communities and saying, “Here!  Try this!” and tossing up a few files for sampling.

Emilie Autumn’s ‘Victorian Industrial’ sound is not found on the radio by any stretch of the imagination.  How else would an artist break through these days, in a market saturated with Rihannas and Mileys?

Let me tell you a secret, Big Labels.  Or rather, let me state what you are so in denial over:  if concrete sales, the ones with a higher profit margin, are what worry you, then I can explain why they’re not as high as they used to be.  Gather ’round the fire and let me scare you with the reality:

1. 1. Music listeners who generally like Top 40 music alone are incredibly fickle, get bored easily, and simply do not form the same attachments to artists they once did.  Thus, you will find that producing the same generic fodder will yield the same results:  one big hit = one successful album and tour = sophomore relative flop in most cases = the poor artist suckered into your horrid deals will perpetually be trying to help you ‘recoup’ while never seeing a dime of the money you made off their work.
   2. Avid music listeners, the sort who are devoted, want music that affects them and lingers with them, be it through original melodies, unique lyrics and/or incredible live presence.  Miley isn’t going to cut it for them.  The artists they want are clever enough not to sign for you in many cases, or to at least demand a sounder deal.  However, indie sales are fine, so perhaps it’s not that the music industry is dead;  rather, the market for generic fluff is dead.
   3. Fining and suing fans is only going to make the masses rebel more, in a metaphorical ‘flipping of the bird’.  It will also drive them towards apathy towards music itself.  It’s a plan that displeases many artists for that very reason.  Bills like the one Canada is currently tabling have sent musicians into a frenzy, and not a joyous one.
   4. Copy protection on CDs is a) a joke anyone with know-how gets around if determined; b) unfair, in that it prevents me from legally buying an album (Placebo, I’m looking at your last two discs) and then legally copying them to my own iPod; and c) as a result of b, deters people from bothering to buy an album they cannot rip to the omnipresent MP3 players and thus drives them to illegally download, thereby reducing sales.

Artists are increasingly refusing to play the old reindeer games, turning instead to a more independent approach, ‘pay what you want’ options, and artist self-leaks (Trent Reznor owns this game).  They’re also beginning to buck the demon that is Ticketbastard – err, Ticketmaster – and its increasingly shady dealings with its own brokering service and take their concert sales elsewhere, much to the delight of fans, but that’s a whole other article I’ll get around to eventually.  The major label musicians are beginning to see that the problem lies not with the business itself, but with the model employed by players who, like those extinct dinosaurs, failed to adapt and evolve in order to survive and thrive.  Tori Amos, in parting with Epic/Sony to go indie this year, released the following statement on her website:

This is an exciting time. There will be many ways in the present and in the future for artists to cross what has become the new unchartered Music Frontier. Ways that may seem impossible today but in a months time will seem probable. There are many ways to be involved in a structure. But what kind of structure will it be and what will be the make up of it’s foundation? These are important questions, so important that I’ve been observing many different working templates in the music business for years now. The key word here is the word “working.” In some cases these structures do not work positively for some artists. Only for those who have designed the system to specifically “work” for the corporate few. Artists need not fear structure, we just have to design and partner with expansive ideas. It is time for us as artists to stop being dependent, dependent on any system that has become undependable. Only then can we help to create a new system that propagates and secures independence for each creator.

As more artists begin to understand what Tori has grasped – that the system and structure need to change with the times, and artists can no longer afford to be passive – the music industry will, in my estimation, begin to thrive in ways once dreamed about as remote possibilities.  Indie artists are learning this lesson as well;  the old days of driving and performing small gigs to attempt to drum up fans are no longer profitable, particularly with gas prices and looming recession threats.  It’s a shame, for a live music fan like myself, who enjoys discovering artists while attending the shows of others.  But that’s why I never listen to radio anymore, but instead rely on communities online and friends who say, “Hey!  Check this one out!” and help me continue to nurture my growing variety of music on my laptop, which is wincing from the HD that is half-consumed by music files;  I live to discover music and I, too, have adapted with the times and embraced the new age, as opposed to throwing my toys in my pram and taking my ball home, leaving lawsuit-hungry lawyers in my wake.

Make no mistake:  the RIAA and labels are not fighting for harsher penalties for the benefits of the creators of the music we download.  They’re fighting to line their own pockets further, and fighting to preserve the old system that has done well by them.  If this were truly about ‘protecting the rights of the artist to get paid’, why aren’t the voices of musicians and their (from my stance, very fair) suggestions being heeded?

Is the music industry dead?  No.  Is the industry’s old model dead?  So much so that we’re beating the horse into a bloody pulp instead of simply burying the damn corpse and buying a new foal.  But it’s up to us to demand the business evolve, rather than devolve into a caveman mentality of clubbing innocent downloaders into financial submission and killing desires to attend concerts (where big label artists actually make a few dollars).  Sitting passively behind our monitors while our torrents run is accepting the status quo.  And we – artists and fans alike – can no longer afford to do so.