Break­ing all records

With CD sales fall­ing and mu­si­cians de­sert­ing the big la­bels to make deals with con­cert pro­moter Live Na­tion, it looks like the party is over for the ma­jor record com­pa­nies. Not quite, writes Jim Car­roll

The Irish Times - Friday - The Ticket - - Music -

THE GOOD TIMES en­joyed by record la­bels for many years are over. The prof­its they trousered dur­ing the CD boom are now just a dis­tant me­mory, as la­bels grap­ple with awhole new set of re­al­i­ties brought about the dig­i­tal revo­lu­tion. Il­le­gal down­loads, es­tab­lished acts run­ning off to do 360-deals with the likes of Live Na­tion and a huge re­duc­tion in over­all rev­enue has meant trou­ble for all the ma­jor la­bels and many of the in­de­pen­dent im­prints. An end, of sorts, is nigh.

WHEN DID THE RECORD LA­BEL WOES BE­GIN?

Most ob­servers seem to con­cur that the mid-to-late 1990s marked a turn­ing point in their for­tunes. Un­til then, la­bels were en­joy­ing bumper rev­enues thanks to pun­ters buy­ing CDs of al­bums they al­ready owned on vinyl. There was a con­sid­er­able mark-up on the CD for­mat too, which meant that most record com­pa­nies – es­pe­cially the ma­jors with size­able, valu­able back cat­a­logues – were mak­ing for­tunes.

SO WHAT HAP­PENED?

Tech­nol­ogy hap­pened. The boffins and en­gi­neers (some of whom iron­i­cally worked at Philips, a com­pany which also owned and op­er­ated record la­bels) who first came up with the MP3 for­mat as a means of au­dio com­pres­sion set the ball rolling. From 1995 on­wards, mu­sic fans be­gan to rip MP3s from their CDs, use au­dio play­ers such as WinPlay3, and later Wi­namp, to play them back on their com­put­ers and share their mu­sic with other fans on­line via file-shar­ing net­works.

Sev­eral other file-shar­ing net­works were on the go be­fore Shawn Fan­ning’s Nap­ster came along in 1999. But Nap­ster be­came the poster-boy for peer-to-peer ser­vices be­cause of its user-friendly in­ter­face and the huge vol­ume of mu­sic availa- ble. By Fe­bru­ary 2001, 26.4 mil­lion peo­ple world­wide were us­ing Nap­ster.

THE RECORD LA­BELS, I IMAG­INE, WERE NOT PLEASED?

They were fum­ing. In Oc­to­ber 2000, reps from four of the five ma­jors then in busi­ness sued Nap­ster for copy­right in­fringe­ments and the case was de­cided in their favour, lead­ing to the net­work shut­ting up shop in July 2001.

With Nap­ster out of the way, you’d think that the record la­bels went back to mak­ing mad money.

How­ever, there has been a sig­nif­i­cant shift in the pub­lic’s per­cep­tions about the value of mu­sic. Peo­ple be­gan to feel that they had been pay­ing over the odds for CDs, many of which con­tained only a few de­cent tracks and a lot of filler. Nap­ster users pointed to the fact that they could get their hands on out-of-print al­bums and songs. More peo­ple were happy to down­load and lis­ten to MP3s. A seis­mic change had oc­curred in the mar­ket.

THE RECORD LA­BELS RE­ALISED THAT TOO, DIDN’T THEY?

You’d think so, but many la­bels re­fused to ac­cept that the CD game was up and con­tin­ued to ig­nore reps from tech­nol­ogy and telecom­mu­ni­ca­tions com­pa­nies who wanted to do busi­ness with them. Mean­while, record in­dus­try lobby groups world­wide called in their le­gal ea­gles and in­sti­gated law suits against il­le­gal up­load­ers. Mu­sic fans – and in­deed a lot of acts signed to la­bels – be­gan to won­der if la­bel chiefs ac­tu­ally knew what they were do­ing.

The prob­lem for those run­ning the ma­jor la­bels was that ev­ery­thing they once took as gospel now turned to be wrong. As a re­sult, many stupid de­ci­sions were taken – in­clud­ing giv­ing away free CDs with news­pa­pers, putting all their A&R eggs in the make-a-pop-star-TV- show bas­ket and sign­ing lu­di­crous deals with acts such as Rob­bie Wil­liams – in an at­tempt to shore up cash­flow.

With Ap­ple’s iTunes mu­sic store on the rise and Steve Jobs very much in charge of that re­la­tion­ship, the record la­bels have tried to get al­ter­na­tive dig­i­tal shops off the ground.

THEY DON’T LIKE AP­PLES, DO THEY?

The la­bels want to have op­tions so that they – not Ap­ple – can con­trol pro­ceed­ings. This is why you keep hear­ing about ini­tia­tives such as MyS­pace Mu­sic, where the ma­jors and MyS­pace have come to­gether to kick off a one-stop dig­i­tal down­load fa­cil­ity.

How­ever, Jobs and Ap­ple have the in­dus­try over a bar­rel be­cause of the pop­u­lar­ity of both the iPod and iTunes. Last week, iTunes over­took Wal-Mart as the big­gest mu­sic re­tailer in the United States, while none of the dog-and-pony shows tried out by the ma­jors has worked.

SO, IS EV­ERY­ONE IS TRY­ING TO GET OFF THIS SINK­ING SHIP?

Well, some peo­ple are jump­ing into the fray. Guy Hands and his Terra Firma private eq­uity group, for ex­am­ple, bought EMI Mu­sic for £3.2 bil­lion (¤4 bil­lion) last year and Hands’s bean-coun­ters are cur­rently work­ing out ways to make the num­bers work.

This will in­volve wide­spread job cuts, chang­ing the com­po­si­tion of record deals and as much cat­a­logue pimp­ing as they can get away with.

DOES HANDS KNOW SOME­THING EV­ERY­ONE ELSE DOESN’T?

It’s hard to know. Many of EMI’s acts have com­plained that Hands is not a mu­sic man and wants to treat them as em­ploy­ees rather than artists. That fact that th­ese “artists” are no longer pro­duc­ing mu­sic of com­mer­cial or creative worth may have some­thing to do with how Hands is op­er­at­ing.

IS THE FAT LADY ABOUT TO SING?

There will be room for mid­dle-men over­see­ing that ex­change be­tween the artists who write the songs and the au­di­ence which buys them in some shape or other.

While, his­tor­i­cally, record la­bels have al­ways been the ones to in­vest in and break new acts (note how Live Na­tion and their ilk are just go­ing af­ter es­tab­lished acts; rap­per/mogul Jay-Z is the latest big name to be signed to their ros­ter), they will now have to change the way they op­er­ate, so more cuts and changes can be ex­pected from that quar­ter.

And all the smart, sussed indie mu­si­cians will prob­a­bly join the ranks of XL/Beg­gars, Domino, Merge or Sub Pop in the com­ing years.

Wereckon you’ll be get able to a record­ing on CD (or vinyl) of the fat lady for quite some time to come.

Rap­per/mogul Jay-Z, who has re­port­edly just signed a $150 mil­lion “part­ner­ship” deal with Live Na­tion

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