Piracy didn’t kill the music business, the music business killed itself. Filesharing, also known as Peer-to-Peer Networking, has gotten a bad rap by the music business. When I say “music business”, I’m referring to a few people and groups. For one, the “Big Four” record labels, Sony/BGM, Universal Music Group, EMI, and Warner Music Group. Others lumped into the “music business” title include artists (mainly major headlining acts), publishers, advertisers/promoters, A&R departments, and pretty much anyone else involved in the process of releasing a major record.
The reason I say the music business killed itself is because the music business was in a major recession long before anyone had ever heard of “P2P” or Napster.
The Artificial Boom
In the early 90′s the music business was booming. Record sales were through the roof and everyone wanted in on the action. Major corporations took notice, and record labels sold off to the highest bidders. The very same thing that caused the 2000′s dot com crash, the music business over saturated the market. No longer were businesses being operated by the people who loved the business, but now it was being run by men in suits who’s livings were based off profit/loss margins.
In the early 90′s, if you were an artist with a back catalog, you were an overnight millionaire. As the Compact Disc took off, people around the world were forced to go back and re-buy their entire catalog of music. Everyone, in a matter of two years was buying up the music they had been collecting over the previous ten. Buyers soon went back to their normal purchasing routine and caused the start of the downfall.
With national corporations running music, also came budget restraints, annual reports, and shareholders. Unable to meet the growing demands, major labels needed to cut costs. One of the first places to go was Artist Development, and Promotions.
Now instead of having a promotions department which was truly passionate about their product, now we had a bunch of businessmen trying to promote a product they had no relation too. This caused a major disconnect between the product and consumer.
This is when major record labels started depending on one-hit wonders and bubblegum pop to push profits ignoring their own rich history and tradition.
Sell Fast. Disappear Faster.
It’s expensive to develop an artist. It is common knowledge that for every 12 artists signed to a label, 10 lose money, 1 breaks even and 1 makes enough to pay for the development of all the others put together. It’s a really risky business. But, the small independent labels didn’t care because they wanted to discover the next Bob Dylan or Bruce Springsteen. They knew that one major success could make up for a string of costly failures.
Unfortunately, that equation doesn’t work in the corporate environment. You have to justify your budget every year, every quarter. The only way to do that was to release lowest common denominator music that would sell fast but fade just as quickly.
This caused major record labels to forget what got them involved in the first place, “heritage artists.” Tom Petty, Springsteen, Bon Jovi, U2, Metallica, and others were what sustained them over the long haul, not The Backstreet Boys and Britney Spears. Heritage artists were bands and musicians developed over years and they didn’t come cheap, but they made up for it in the long run.
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