Wednesday, July 30, 2008

The Impending Doom of Big Music, and Why It's Their Fault

I was forced to undergo a painful reminder of the price of piracy prevention last week, as I tried to alter the format of an episode of The Wire bought in good faith from the iTunes Store. After hours of frustration, I traced the problem back to the copy protection software implanted in the file to prevent "unauthorized" viewing or alteration of the material. In part because I'm in the midst of a 2-year hiatus from new music, I've never bought anything from iTunes before and so this is my first personal experience with restrictive DRM. Well, let me tell you: it was absolutely infuriating. I am never patronizing the iTunes Store again. I want those 5 hours of my life back.

I believe – strongly – that artists deserve support and reward for their work, and that we have a particular responsibility to support work that we find to be of high quality. But restricting the ability of the customer to use the product that they have purchased is not only totally unacceptable, it's terrible business practice. Restrictive DRM makes no sense in a competitive environment: who in their right minds will pay for an inferior product, when a better version is available for a lower price? Especially when that price is nothing at all, aside from the occasional check sent directly to the artist in question.

So you can understand my interest when I stumbled upon this fantastic analysis of the record industry’s self-built demise by Houston-based musician Jeff Balke. Tracing the history of the industry over the last 30+ years, Balke places large corporations' more recent blunders into the overarching pattern of an ill-conceived and unsustainable approach to music. The short of it: they've been fucking themselves for decades by trying to eke out every last drop of profit, and internet piracy was just the most recent trend.

Belke identifies four primary mistakes:

1. CD sales are not the same as record sales.

...In much the same way "dot com" start ups managed to convince venture capitalists to back questionable opportunities, independent labels began to entertain offers to sell themselves to the highest bidder. Corporations saw this as a long-term money making venture that would be great for their portfolio and their shareholders.

What they failed to realize is that the CD gravy train would soon come to an end as people finally replenished their collections and went back to their normal buying routines. The years of off the chart sales came to an abrupt end and corporations were stuck with bloated record divisions and they had no clue what to do - the end result when you replace creative minds seeking talent with bean counters seeking profit.

2. Longevity trumps the flavor of the week.

Because labels were feeling the pinch and because they were now subject to corporate budget constraints, annual reports and shareholders, they began to look for ways to cut costs. One of the first places they looked was artist development and promotion...

Instead of trimming corporate expense accounts and the bloated salaries of their higher ups, they decided to rely on things like cross promotion, radio, television and other forms of media to do the legwork their promoters had done previously...

[Music is] 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. If the only way to do that was to release lowest common denominator music that would sell fast but fade just as quickly, you did it.

3. Destroying the chain of distribution is death.

[O]nce again, the big corporations saw an opportunity to cut costs by making independent deals with big box retailers like Wal-Mart, Target and Best Buy... This may have seemed like a smart financial decision, but they got it wrong again.

What the suits failed to realize was that the chain of people working on selling music for them was key to making sales. Even now in the age of blogs, people still listen to what others suggest when it comes to buying music. Prior to the internet, those people included DJ's (we'll get to them in a second) and record store employees. After your friends, these were the people you trusted to know music.

Even worse, retailers like Target only put about 300 titles per year on shelves out of 3000 or more possible releases, honing it down to ONLY the most salable (according to them) artists and records. A good record store could not only steer you towards a great alt rock record, but also to a blues record that influenced that alt rock band you like so much.

4. Killing the DJ

DJ's took chances and, as a result, broke artists for labels and made them an awful lot of money. There was always corruption and undue influence exerted on DJ's, but a large percentage were in it for the music.

When the Telecommunications Act of 1996 was signed into law, large corporate radio empires like Clear Channel destroyed the listener-DJ relationship by flooding markets with stations owned by a single entity with programming decisions made at a regional level, far removed from the DJ and his/her show. DJ's were replaced with "on-air personalities" more about selling ad revenue than "spinning hot wax" as they used to say...

[And] once that relationship was destroyed and stations began playing the same narrow play list, people began to abandon radio in droves.

Now, I'm squarely on the "consumer" side of the music business, and can't speak to any of this personally. Nevertheless, Balke's interpretation sure does a good job of laying out why the large-scale music industry is totally fucked, and why its their own damn fault.

And the problem is, the stupidity hasn't ended. I'm not alone when I say that I'd so much rather pay for my music and receive it from standard channels than pirate it – but they're really not making it easy for us. Without knowing that we'll have control over what we buy, how can we be expected to give them money? I, for one, can't commit to the price of the album and the time out of my life it takes to put the work into the formats I use.


  1. Thanks so much for posting your comments about my blog. Even though I'm a musician, I'm a consumer too, so I feel your pain. All the best.

  2. Great Post and Jeff Balke's blog looks pretty damn awesome, so it's cool that he took the time and stopped by our place.

    I'm in the process of debating whether dvds of the wire would be a good investment or not... I have the shows but this is one show where I'd love to have interviews, extra scenes and commentary.

  3. yeah this post was really incredible. i'd like to think that if i wasn't so painfully broke, i would do the right thing and still pay money for music, but illegal downloading is so easy that i'm not 100% sure.

    cool breakdown of how, why and in what ways the music industry became increasingly corrupt and watered-down.