The bilious stew of the music business at the turn of the millennium – and hope for deliverance (III)

Some estimate that the record companies spend more than twice as much on promotion as they do on actual recording costs. That recording costs have remained static for the last two decades has put the recording studios’ balls into a vise. Squeezing from one side are the rising costs of competitive technology – 96- and 120-track consoles and “studio quality” digital recording systems. Squeezing from the other side is the falling cost of competing technology, the computer-based home digital recording studio. Turning the handle is the falling revenue of the record companies.

It all boils down to this: the record business reached a tipping point, probably somewhere in the 1980s. It became just too large to support itself, but also too large to realize how close it was to collapsing in on itself like a black hole. The CD saved it from having to face this realization for another decade and a half. However, it seems slowly to have arrived at a place where expectations exceed reality, where an album that sells 10 million copies isn’t regarded as an anomaly but a benchmark, and everything else the artist does subsequently needs to reflect it.

So when an artist that sells 14 million of one album “only” sells two or three million of the next, the record business is disappointed, at best. At worst, the company has geared up with the anticipation of huge sales that didn’t happen. That record causes massive layoffs, and other artists suffer from lack of resources due to the marketing and promotional priority given to the star.

The record industry’s current problems started with consolidation and corporatization. At one time, radio, retail, and even, to a certain extent, the record companies themselves were mom-and-pop operations. Chess Records passed from father to son; Atlantic was started by a pair of music-loving brothers; Vee-Jay was owned by a husband and wife who got the name from the initials of their first names – Vivian and James.

Similarly, before the ownership rules were all but removed, many radio stations and even small chains of radio stations were family owned. As corporations consolidated ownership, they consolidated programming methods and even content. The stakes became too high for the possible eccentricities of individual programmers (i.e. DJs) giving way to programming by computer. Some stations – internet, cable, satellite, and even broadcast – have given up on on-the-air talent (formerly known as the disc jockey) altogether.

The mom-and-pop independent record store still exists, but more as the exception than the rule, a business that has discovered a way to draw consumers that the big stores or chains don’t – by specializing in a particular genre, or used and out-of-print records. Even many of these stores, like show-music specialist Footlight Records, have decided they can better serve their audience and themselves by giving up their physical space for cyberspace.

As the record business got sucked into the vortex of larger and larger companies, as, more and more, a certain level of commercial performance became expected and mandated, it ultimately reached the point of diminishing returns. Reflecting the way contemporary society as a whole reacts in times of stress, the industry took no responsibility for these diminishing returns, preferring to blame its customers. When it came to people taping their records for use elsewhere, or even for friends, the record companies started a campaign about home taping killing the record business. People laughed.

Then came file sharing, and lawsuits, and suddenly no one was laughing anymore. To date, the record industry, via the RIAA, has sued over 16,000 customers – some say they might be (or might have been) their best customers – for trading songs online. So far 3,000 people have settled the suits for in the neighborhood of $5,000 each. One New York woman has spent $22,000 in legal fees; she’s one of the few people actively challenging the deep legal pockets of the RIAA. “The recording industry,” said a staff lawyer with the Electronic Frontier Foundation, “has basically been able to run this operation like a shakedown.”

The RIAA has compared the practice of downloading songs “without permission” to shoplifting, but whose permission do the downloaders need? Many artists, including stars like Courtney Love and Pete Townshend, are happy to have people downloading songs if only to keep people listening – to use downloads, as Wharton School of Business’s David Faber described it, the way the movie business uses film trailers: as a preview of and promotion of their music.