AS THE BIG FIVE RECORDS LABELS lose money, they’re cutting jobs and cutting acts instead of restructuring their bloated business models. Seeing this, many observers are concerned that we’re in for even less mainstream music diversity (if that seems possible) as the major labels focus exclusively on the big hit-makers that generate most of their income. People who genuinely care about music and culture are urgently asking “How can we save the music industry??” But this question overlooks the root of the diversity problem and how close we are to a solution.
For years, the major labels have been stuck in a vicious cycle: as per album costs increase, the record companies need more and more sales to make back their investment on an album. When a new act doesn’t cover those costs (selling less than 500,000 copies or so), they get dropped. The label then needs to make up that loss with their next artist, so the already absurdly high threshold for “success” rises again, making it even more difficult for a new act to break even. The majors were able to support this habit when sales were increasing every year, but without that growth, something’s got to give. Of course, the majors are taking the most regressive way out, cutting acts.
But, it’s not their only option. If the major labels wanted to progressively adapt to the new technology and business environment, there are several ways to cut costs and restructure. First, they could dramatically reduce recording expenses by taking advantage of the recent order-of-magnitude reductions in the cost of producing professional quality recordings. Second, if they had the guts and will, they could end pay-for-play radio right now, saving millions in promotion ever year. Most significantly, the major labels could slash executive salaries and virtually eliminate their A&R (artist development) operations. The primary reason that CDs are so expensive and artists get so thoroughly shafted is that the Big 5 fail to make back their investment on the vast majority of new acts, pulling the plug after having spent hundreds of thousands of dollars to identify and ‘develop’ them. But the internet creates a number of opportunities for tracking and predicting the popularity of potential new artists, making the current guess-and-fail model unnecessary.
Anything that lowers the major labels’ costs means they can make money with fewer sales per album and can therefore sign more artists and offer more diversity. But, as we said above, the majors are going in the opposite direction: bigger bets on fewer artists, less diversity, less new music. Above all, those of us that care about diversity in pop music need to remember that the major labels artificially created the diversity problem in the first place by paying radio to play their songs, which forces independent music to the margins.
Moving forward doesn’t mean helping the corporate music industry stay alive, it means putting the majors out of their misery as soon as possible. If the major labels continue their downward plunge, in just a year or two we’ll reach a point when they can’t afford to maintain their exclusive control of radio and distribution. The result will be an explosion of diversity in mainstream music as the marketplace finally opens up to independent music. It’s within reach and it’s worth fighting for.
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