The Death and Life of the Music Industry in the Digital Age

Jim Rogers

• Publisher: Bloomsbury Academic
• Year: 2013
• Print ISBN: 9781623560010
• eBook ISBN: 9781780931272
• Edition: 1
• Topic: Social Sciences
• Subtopic: Media Studies
• Index: Social Sciences

The Death and Life of the Music Industry in the Digital Age challenges the conventional wisdom that the internet is 'killing' the music industry. While technological innovations (primarily in the form of peer-to-peer file-sharing) have evolved to threaten the economic health of major transnational music companies, Rogers illustrates how those same companies have themselves formulated highly innovative response strategies to negate the harmful effects of the internet. In short, it documents how the radical transformative potential of the internet is being suppressed by legal and organisational innovations. Grounded in a social shaping perspective, The Death and Life of the Music Industry in the Digital Age contends that the internet has not altered pre-existing power relations in the music industry where a small handful of very large corporations have long since established an oligopolistic dominance. Furthermore, the book contends that widespread acceptance of the idea that online piracy is rampant, and music largely 'free' actually helps these major music companies in their quest to bolster their power. In doing this, the study serves to deflate much of the transformative hype and digital 'deliria' that has accompanied the internet's evolution as a medium for mass communication.

1

Digital deliria and transformative hype

In some ways we are the canary down the mine, the first battle ground, but behind us goes anyone who creates anything that can be turned into data . . .

PETER GABRIEL

Since the 1960s Simon Napier-Bell has worked as a songwriter, record producer and author. However, he is best known as the manager of a number of successful international recording acts including Eric Clapton and the Yardbirds, Marc Bolan and T-Rex, Boney-M, Japan and Wham. In a 2008 newspaper article entitled ‘The Life and Crimes of the Music Biz’, he somewhat gleefully describes the music industry as ‘careering towards meltdown’ (The Observer, Music Monthly, 20 January 2008: 41). Focusing on six key music industry executives from the present and recent past, Napier-Bell dramatically outlines how just four major music companies¹ have usurped almost all rivals and grown to increasingly dominate a business that is ‘distinctly medieval in character: the last form of indentured servitude’ (ibid.). In Napier-Bell’s sensational account, a core group of notorious moguls control and operate these companies and use bullying and thuggery to extract products and performance from their employees and artists. He accuses these companies of being ‘intentionally fraudulent’ and practising ‘systematic thievery’ from their artists (ibid.: 45). However, he now sees each passing week heaping more gloom on these majors who are seeing their record sales plummet, and are consequently losing their grip on the industry as the internet renders the machinery of the music corporation obsolete. The music companies, Napier-Bell concludes, were never the ‘guardians’ of the music industry, rather they were its greedy ‘bouncers’ who have now become irrelevant. The internet has produced, for artists and managers:

the moment to take things into their own hands. Artists no longer need to be held [by a label] for ten years, and they no longer need to sign away ownership of their recorded copyrights. These days, an artist working closely with his manager can ensure that everything is done in the artist’s best interest. (Napier-Bell, 2008: 41)

Napier-Bell’s account is decidedly sensational and we might consider that it reflects the biases he evolved over decades of negotiating and battling with the big industry players. Sensationalism aside, his perspective on the situation of the music industry in an evolving digital environment is illustrative of two commonly held and frequently relayed assumptions on the matter:

1The first is that major music companies – the ‘bad guys’ of the music industry – are facing potential ruin in light of recent and ongoing technological developments primarily centred around the internet.

2The second is that such technological developments, which enable the distribution and promotion of music online, have revolutionized the industry’s core structure by enabling interface between artists and consumers like never before. These developments are thus perceived as diminishing the power of major music companies in acting as intermediaries in artist-consumer relationships.

There is a commonly held assumption that new information and communication technologies (ICTs) are liberative for artists and that structural change in artist-intermediary-consumer relationships have been a net gain for the artist. Thus, the internet is widely perceived as having severely disrupted the roles and interests of established industry actors, thus producing a ‘new music order’. In short, radical change driven by technology is widely viewed as the order of the day for the music industry in the digital era. Arguments that either celebrate or bemoan the advent of the internet as a medium for the distribution and promotion of music have dominated much commentary on the industry since the mid-1990s. Many column inches have been devoted to commenting on the ethics (or lack of) associated with unauthorized music file-sharing online, and the plights of musicians and music companies as such activities have evolved and spread. The ongoing persistence and topicality of such debates is perhaps best illustrated by the recent levels of coverage given to, and controversy generated by such subjects as the ‘Emily’ case² or the proposed monitoring of network users activities by internet service in the United States in a move aimed at combating online ‘piracy’.³ Such debates around the seemingly existential threats new digital technological innovations (and their uses and misuses) hold for the music industry have been common since the mid-to-late 1990s when unauthorized sharing of music became common on US university campus networks.

Popular music forms the basis of a major international industry that, as Patrik Wikström notes, possesses a nature that is ‘as chaotic and unpredictable as any other complex dynamic system’ (2009: 170). The final decades of the twentieth century saw the music industry (itself a core constituent element of the broader media and cultural industries) significantly increase its importance in economic and employment terms. Since the mid-to-late 1990s, innovations in the realm of digital media technologies have evolved to threaten the medium-to-long-term viability of the record industry – the music industry’s most important economic sector over many decades. The unauthorized use of copyrighted material is undermining the record industry’s ability to make money and has produced a ‘crisis’ for a sector that had grown exponentially on the back of the CD-boom. Equally, the record industry has been contending with the challenge of moving from physical to digital formats. Moreover, if this is the ‘moment’ to strike for independence and for musicians to rid themselves of corporate intermediaries and gatekeepers (as Napier-Bell celebrates), then the established music industry ‘actors’ are indeed navigating turbulent waters.

The music industry, as we shall see, is much more than the record industry. As a whole, it has proved itself to be resilient and innovative in responding to the challenges of digitalization. This book is primarily concerned with examining and understanding how the music industry has negotiated the digital coalface. In the chapters that follow we will consider some of the key problems and challenges facing the music industry since the turn of the millennium, and some of the core response strategies of the industry over that period. We will consider what has changed and what has stayed the same. Ultimately we will seek to draw some conclusions regarding the form and extent of disruption that the ‘digital revolution’ (which is feted and feared in equal measure) has visited upon this cultural industry sector.

Musical dystopia

Since the late 1990s, a few core themes have grown to dominate much commentary and discussion on the music industry. First there is the marked decline in the value of record sales that has raised questions around the long-term viability of the music industry, with online ‘piracy’ seen as the primary factor in this contraction. Also, for the established music labels, the transition to a digital environment has brought with it several problems regarding how they can monetize their content. Besides the issue of piracy, the shift to digital has not been without its setbacks as record companies have sought new revenue streams and new means of distribution in a less than surefooted manner. Against this backdrop, the concept of an industry in crisis has taken hold.

‘Crisis’ is a concept that has become embedded in discourse around the music industry since the late 1990s. For example:

We run the risk of witnessing a genuine destruction of culture . . . The internet must not become a high tech wild west, a lawless zone where outlaws can pillage works with abandon, or worse, trade in them in total impunity. And on whose backs? On artists’ backs. (Nicolas Sarkozy, president of France, 23 November 2007)

Sarkozy’s much publicized comments were delivered in the wake of an agreement struck between French internet service providers (ISPs), the French government and movie and music companies aimed at curbing unauthorized file-sharing on the internet. Subsequently, Paul McGuinness (the manager of U2) did little to modify Sarkozy’s picture of an impending digital Armageddon:

I believe President Sarkozy truly caught the spirit of the age with that statement . . . It is a good rule of thumb that when it is the manager and not the artist getting the headlines, something is out of kilter. Well there is certainly something out of kilter with the music business today . . . The record industry is in crisis. (Paul McGuinness, speech delivered at Music Matters conference, Hong Kong, 4 June 2008)

In the same speech, McGuinness appealed to governments around the world to force ISPs to be proactive in combating online copyright infringement.

Much commentary and analysis of the music industry in the mainstream press has also centred around such crisis rhetoric in recent years. Arguing that the internet has resulted in the evolution of an ‘everything is free culture’, Willie Kavanagh, (MD of EMI Ireland and chairman of the Irish Recorded Music Association [IRMA]) writes that it is ‘impossible for any business to compete with free’ (The Irish Times, 8 August 2010: 14). Media and journalistic accounts detailing the decline of the music industry have remained commonplace in news stories, features and opinion columns. For example, ‘Piracy continues to cripple the music industry’ (The Guardian, Thursday, 21 January 2010); ‘The music industry . . . knee deep in a downloading crisis’ (The Sunday Business Post, 6 April 2008); ‘Downloads keep going up . . . Music giants lose fortune in 1.2bn song thefts’ (The Times, 17 December 2010); ‘Industry crisis as album sales drop’ (The Irish Independent, 14 January 2008); and ‘Music industry in a flat spin’ (The Sunday Times, 27 January 2008). Internationally, such commentary is replicated: ‘Music labels feel the music pirating pain’ (Sydney Morning Herald, 21 November 2011); The ‘scourge of the illegal copying and downloading of music from the internet’ represents ‘a competition monster for music retailers and distributors’ (Africa News, 12 October 2011); ‘No cure for piracy since the day the music started dying’ (The Australian, 12 September 2011); The ‘illegal downloading of music and videos . . . [is] a problem that robs billion from music and movie businesses’ (New York Times, Sunday, 17 July 2011: 11); ‘Want a snapshot of an industry in crisis? Take a look at the music business right now’ (Globe and Mail, 31 January 2008).

Overall, these notions of change have become common-sense assumptions in much discourse surrounding the recent evolution of the music industry. But such reporting is nothing new. In 2003 the Financial Times reported how the downturn in record sales revenues experienced by the Universal Music Group ‘underlined the severity of the crisis facing the world’s biggest record companies . . . a crisis created by the combination of stagnant sales, internet theft and rampant piracy’ (The Financial Times, 17 June 2003). Even technology periodicals enthusiastically joined the choir. For example, Wired magazine declared 2003 as ‘the year the music dies’ (Mann, 2003).

Furthermore, in 2002 Britney Spears, Eminem and Luciano Pavorotti headed a coalition of 90 recording artists and songwriters that placed full-page advertisements in The New York Times and Los Angeles Times condemning the practice of internet downloading on the grounds that it threatened their careers. In the ad, the Dixie Chicks are quoted as saying: ‘It may seem innocent enough, but every time you illegally download music, a songwriter doesn’t get paid’ (The Associated Press & Wire, 26 September 2002). Subsequently, established international artists such as Metallica and The Corrs have appeared on main evening news bulletins denouncing the use of peer-to-peer file-sharing services and claiming the future of the industry that enables them to pursue their artistic endeavours is under threat, as are their livelihoods and the conditions that facilitate musical creativity and the production of music recordings. Summer 2009 saw English pop singer Lily Allen, supported by counterparts James Blunt and Gary Barlow launch a blog campaigning against internet music ‘piracy’ (idontwanttochangetheworld.blogspot.com). Soundings from industry seminars and trade fairs have consistently echoed similar sentiments.

Perhaps the overall scenario of doom and gloom that has grown to characterize the music industry is most vividly stated by Irish Times journalist Conor Pope who asks:

Has music had its day? . . . Of the all the upheavals wrought by the internet revolution over the last fifteen years, the shake up in the world of music has been amongst the most profound. The consequence of free music downloads could end up destroying not just the shops that used to sell music, but an entire industry. (The Irish Times, Monday, 27 April 2009: 15)

Pope’s language is stark and strident. The terms he employs (‘upheavals wrought’, ‘revolution’, ‘profound’, ‘destroying . . . an entire industry’) imply the most radical disruption to the existing order.

In short, the very existence of a recorded music industry in the short-to medium-term future is commonly perceived as hanging in the balance with artists, record companies and retailers all facing the prospect of economic destruction. Media commentary and analyses critiquing these accounts of crisis and the extent of the claims made by the music industry regarding its collapse have been extremely rare, although not unheard of. For example, ‘The big question: Is the crisis facing the music industry as bad as the big record labels claim?’ (The Independent, 14 February 2007).

Beyond the perceived effects of online copyright infringement on music industry revenue streams, other media accounts point to internet platforms as effectively rendering obsolete the artist and repertoire (A&R) and marketing and promotion functions traditionally associated with major music companies. Sites such as Bandcamp, ReverbNation, MySpace and Soundcloud have all evolved as platforms for the promotion of artists and recordings. Aside from cyberspaces such as these and other ‘mass-user’ sites like Facebook and YouTube, a wave of other ‘niche’ music social networking sites are increasingly regarded as rendering redundant the machinery of the major media corporation in mediating the relationship between artist and music end-user. As Irish Times columnist Brian Boyd tells us, music’s ‘digital revolution isn’t discriminatory’ with music journalists the latest casualties of technological innovation (The Irish Times, Friday, 4 February 2011: 32). In this account, Boyd outlines how he perceives the role of the professional music critic being diminished and replaced by online social networks. Technology, he argues, has made music journalism ‘redundant’. For Boyd, music journalists are left ‘clinging to the wreckage . . . playing catch-up with a technological revolution’ in an environment where music enthusiasts increasingly rely on each other for recommendations and reviews (ibid.).

Musical utopia

The promise and potential of the internet to destroy pre-existing industrial structures and transfer power into the hands of the individual has been soundly celebrated. The transformative hype surrounding digital technologies is perhaps best exemplified by Nicholas Negroponte, one of the founders of the MIT Media Lab and a celebrated guru of the information age. For Negroponte, social and economic structures would be revolutionized by digital technological innovations. Writing in high-tech publication Wired.com in February 1995, he argued that transfer to digital would lead copyright to ‘disintegrate’, with everything that was capable of being digitized being potentially ‘up for grabs’. If Negroponte’s claims were to be realized, then such developments would hold serious ramifications for the music industry as we know it. In such an environment, traditional power structures could potentially collapse. But with the demise of the major labels would come the promise of liberation for artists. Kevin Kelly, the associate editor of Wired magazine, argued that:

The recording industry as we know it is history . . . [with] digital file-sharing technologies . . . undermining the established economics of music’. (New York Times Magazine, 17 March 2002: 19–21).

While digital technologies would serve to dismantle the power of the major record companies, Kelly equally points to those same technologies empowering individual recording artists to act independently like never before. In the evolving digital world, those ‘musicians with the highest status are those who have a 24-hour net channel devoted to streaming their music’ (ibid.).

Equally, while Boyd (2011) laments the role of online social networks in heralding the demise of music journalism, other accounts point more positively to such developments. For example, David Haynes, the founder of Soundcloud (a music-based social networking site) states that:

In the past, there were just a few gatekeepers . . . and you had a powerful network of labels, A&R, radio and TV executives and magazines who decided what you should be listening to. Now it’s so much easier to find out . . . what other people . . . on the other side of the world are recommending. (David Haynes cited in The Guardian, 5 September 2010)

In the same article, journalist Alexandra Topping points to such online platforms transferring power into the hands of music fans regarding the discovery of new music.

The purpose and structure of this book

The sum of the above accounts is that the music industry is experiencing radical upheaval in the wake of the digital ‘re...

Table of contents

• Cover
• Title
• 1 Digital deliria and transformative hype
• 2 Death by digital?
• 3 Response strategies of the music industry
• 4 Developments beyond the digital realm
• 5 New rules for the new music economy? [Part one]
• 6 New rules for the new music economy? [Part two]
• 7 Evolution, not revolution . . .
• Appendix: Interviewee biographies
• Bibliography
• Index