Dear Music Industry: Go DiePart II: How Does it Feel to be Sam Walton's Bitch?

[Yesterday: Part I: Cleanup on Aisle 7]

The industry’s allegiance to Wal-Mart has been the case since the 1990s, when Wal-Mart and its ilk began selling music at prices music retailers (indie or not) could not compete with. It remained the case in this decade when, as the Rolling Stone article details, the industry had the opportunity to make a deal with Napster but capitulated to its top retailers instead:

It all could have been different: Seven years ago, the music industry’s top executives gathered for secret talks with Napster CEO Hank Barry. At a July 15th, 2000, meeting, the execs—including the CEO of Universal’s parent company, Edgar Bronfman Jr.; Sony Corp. head Nobuyuki Idei; and Bertelsmann chief Thomas Middelhof—sat in a hotel in Sun Valley, Idaho, with Barry and told him that they wanted to strike licensing deals with Napster. “Mr. Idei started the meeting,” recalls Barry, now a director in the law firm Howard Rice. “He was talking about how Napster was something the customers wanted.”

The idea was to let Napster’s 38 million users keep downloading for a monthly subscription fee—roughly $10—with revenues split between the service and the labels. But ultimately, despite a public offer of $1 billion from Napster, the companies never reached a settlement. “The record companies needed to jump off a cliff, and they couldn’t bring themselves to jump,” says Hilary Rosen, who was then CEO of the Recording Industry Association of America. “A lot of people say, ‘The labels were dinosaurs and idiots, and what was the matter with them?’ But they had retailers telling them, ‘You better not sell anything online cheaper than in a store,’ and they had artists saying, ‘Don’t screw up my Wal-Mart sales.’”

It’s worth noting this. The record labels were ready to embrace the technology and “their retailers” said “you better not sell anything online cheaper than in a store.” Now, which “retailers” do you think said that? Was it Tower, where a CD cost on average $15.99, or was it Wal-Mart, where the same CD cost half that? This was Tower’s (and, of course, the indies’) own lament years ago when Wal-Mart first decided to start selling music. The record stores ability to compete was impinged upon because the corporate labels saw dollars via quantities of CD-sales-as-impulse-buys. Now that the same threat—vast quantities of impulse buys—faced Wal-Mart, the industry should have stuck to what it knew how to do: screwing over the people and businesses that do well for it. But it bowed to almighty Wal-Mart. Why did it bow this time but not when record stores made the same threat regarding Wal-Mart in the 1990s? Because Wal-Mart doesn't need the music industry, and the industry knows it. Major labels have become the bitch of grocery chains.  And when Napster was destroyed, like a mama spider it laid millions of little illegal downloading sites that the labels had no hope of getting a handle on.

Keep in mind the chronology here, and the choices the majors made. First it tried to make peace with Napster, but the big boxes shouted it down. Then the majors sued its own customers. Bask in the power of Wal-Mart.

So now the industry is wringing its hands over filesharing like never before. A few years ago everyone was filesharing in one place—but the industry sent them scattering and now have little hope of stamping them out. I was talking about this with my brilliant wife and she had great insight on this angle. During the whole boy band era—roughly 1997–2003—the industry was pumping out singles-based artists by the truckload, but it wasn’t economically feasible to buy a CD single—one song and a couple b-sides for $6.99 vs. the entire album for only a few more dollars (depending on where you bought it—great deals at Best Buy!). So album sales went up while CD singles went down. Bully for the majors, since the production costs were essentially the same but the markup was higher for full-lengths. Plus you had the industry cash cow Now That’s What I Call Music—this little piece of plastic that you could throw your best-selling singles on and just make that much more money without having to cultivate new artists. The NOW series was charting at #1 at its peak. Mind you, these are tweens and teens buying these comps—the very kids that today are freely downloading whatever they want. When Napster came along it was a no-brainer; the industry had already bred its audience to prefer the singles and eschew the filler. And now the record industry is bemoaning the dearth of album sales? It’s their own fault for not cultivating artists who knew how to make albums.

Rosen offers her take:

“That’s when we lost the users,” Rosen says. “Peer-to-peer took hold. That’s when we went from music having real value in people’s minds to music having no economic value, just emotional value.”

The gall of that quote. The gall! Rosen is equating “real value” with “economic value,” and that it’s a shame for us all that music only has emotional value. Yeah, pity. The music industry, by their unmitigated support for grocery stores over record stores as their preferred retail venue, has implicitly devalued the emotional worth of music. They are not concerned with the notion of a trip to the record store as sacred pilgrimage. To them it’s an errand. Drop off dry cleaning; buy milk; pick up Fergie CD.

What Rosen and the industry at large are obsessing over is the fact that the “casual listener” has stopped valuing music economically. But that’s what you get when you value the retailer that sells your music two aisles down from Charmin Ultra and contact lens solution above the retailer that cares about music, that hires knowledgeable staff to sell you albums you’ve never heard before and, perhaps, turn you into a fan. But those aren’t the stores the industry supports any more—they left bona fide record stores to wither and die years ago.

The “casual listeners” who no longer value music economically are the same listeners who preferred a NOW comp because the last time they bought an actual full-length is was all sketches and dogs. Half-baked albums by artists that were encouraged by their labels to make a minimum number of radio hits—"we'll only pay for three Neptunes-produced tracks"—this is the shit that the companies are pouring millions of dollars into. That’s millions and millions of dollars spent on maybe a hundred artists who keep the behemoth afloat. These are the artists who are suffering. Again, Rolling Stone:

In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million.

It's a myopic view to only look at the top ten, or even top 100. Because all signs are pointing to an indie music scene that has never been more thriving. Indie bands are appearing in the top forty with more and more regularity, and a band like Clap Your Hands Say Yeah isn’t even on a label at all. I would wager that there are more musicians making an honest living than ever before.  Their ability to survive is not being impinged upon; the people who are hurting are the select few who are expecting millions of dollars on their bottom line. Those artists, and the machine that supports them, are by and large not responsible for the best music (I’ll grant that there are exceptions to that rule, but not enough to change my point), so if the apparatus that supports them goes under, so be it. But I really don’t think the New Pornographers or Jason Molina are going call it quits because too many people are filesharing. The people with passion, whether they be buyers or sellers, will remain. Maybe I’m just being too idealistic about the whole damn thing, but art has never suffered for wont of luxury.

The real malaise of the corporate industry is its slow realization that it is mere middleman. Artists can publicize themselves, can sell their own music, and manage themselves. Even if CYHSY is a brilliant exception to the rule, it remains the case that a smaller label with less overhead can still support a band to a satisfactory degree. The lower the operations costs, the wider the profit margin. The more streamlined behind the scenes, the more financially stable musicians; the more music.

Comments

[Richard]

Yeah, the constant scrambling to always appeal to the "casual" listener (or reader, or viewer) is the problem. You know what? Fuck the casual listener. Not that there aren't things I only dabble in, so am into only casually by definition, they shouldn't be watered down to appeal to me. Same goes with everything else.

[Cara dB]

These are great rants, thank you.

[Jeremy]

The data is pretty clear that overall record sales (including legal downloads) are way down. There can be almost no doubt that that is, at least in some part, due to illegal downloading. That's the data cited constantly by the majors.

But you make the point that maybe that data only shows half the picture. Maybe the overall sales decline just represents a decline in major artists, and that, really, more total artists are able to make a living wage.

I don't mean to be challenging, just curious, but do you know if there is any data to support that? I honestly don't know. I'd be very interested though to see whether smaller labels and smaller bands are selling more albums, or if they're suffering like the majors. (Did Neon Bible's sales suffer from the effects of downloading? Maybe even more on point, did the new CYHSY?) Seems like the indies would have to be doing better if, truly, more artists are making a living wage despite the clear overall sales decline.

[pgwp]

I don't mean to ignore illegal downloading altogether - selling 200 million less albums over seven years has to be chalked up to something beyond the labels' lack of love for music.

My main objective is to show that choices made by the majors--which ultimately boils down to devaluing artistry--has forced them into this corner. They're beholden to big box stores, which is crippling their ability to find their place within the internet.

Regarding Neon Bible, I've heard second-hand that it's the best-selling album Matador has ever released. So downloading certainly didn't negatively effect sales there. I haven't seen an actual article that quotes someone from the label on that point, however. As for CYHSY, again I don't know if there is any data on the effect of downloading vs that album's sales; but on the other hand there are virtually no middlemen where that band is concerned, so their business model should withstand illegal downloads better than anyone else's. That's just me pontificating, however.

I also admit that my impression of a larger number of working-class bands making an honest living is just that--an impression. I think it's worth investigating (though I'm no journalist). If anyone knows of an article that has done that, pipe up! I'd love to know.

[Jeremy]

I'd love to see those kinds of stats as well.

Also, I totally agree that the labels have backed themselves into the corner they're in. Your best point, in my opinion, is that they've deliberately fostered this anti-album culture, and this lack of devotion to artists. After having an entire generation molded to buy singles and then forget the next month who the artists even are, illegal downloading (to whatever extent is plays a role) came right in to find perfect conditions for its growth.

[sroden]

some of the blame should also fall on the bigger artists... a band like smashing pumpkin should demand the special version of their cd be sold only in small indie stores, and the generic version at wall mart. they could've done this, they are powerful enough. and jeez, even bob friggin dylan depressed the hell out of me by making a rare live cd only available at starbucks... going electric was nothing compared to buying into crappy coffee for inflated prices... these are folks who should know better. these are the people with power to do more. to me it says a lot about how little the artists themselves care about the record buying culture and their real fans (who most likely frequent neighborhood coffee shops and smaller record stores, and not walmart and starbucks)... and even more depressingly, how little they are interested in changing things. it's like the whole ticketmaster thing made everyone afraid to go against the grain... you shouldn't expect different from record companies, since the 80's they've only been about the bottom line; but powerful artists can and should do more than get into bed with this crap. there's a great short interview with michael tolkin who wrote the novel "the player" that became the altman film, in the recent bookforum. he talks about deciding not to option his next two books and why and what it cost him financially and careerwise, and you don't hear about anyone in music talking this way or willig to go out on a limb. it's funny, anyone will make negative political comments but no one will take a stance on issues that might cost them money.... ugh!