Here’s a half hour radio programme about the music business that aired this morning on BBC Radio 4 (click on the logo).

For the past 15 years we have debated what it all meant. By 2007 it was pretty clear there was no going back, to even the most die-hard big label dinosaurs. The dust has largely settled now and some unambiguous features are emerging from a complex upheaval.

“The Pop Star and the Prophet” passes through many of the key points and is worth a listen although I’m not sure it really arrives at its destination.

Two themes and a reprise

Is this were the Major labels need to go next?

money bagI’m going talk about two long term record industry trends and how they might be heading back to where it all started. It isn’t about the Internet, although that does come into it briefly.

Things don’t happen quickly in society or industry. It took technologists most of the 19th century to get from the principles of recorded sound to a record player in 1895 and another decade to knock out a million seller (Caruso, 1907), then twenty more years before amplified sound in 1925. I’m not going back that far but it’s a good illustration of how progress progresses slowly. A lot of that time—about 90 years—was spent on distractions that went nowhere but that is only obvious with hindsight. Engineers at Edison, working on new phonograph cylinder resins for decades, probably thought they were the cutting edge.

It’s fashionable to say our technological society is moving faster than ever but it isn’t really the case. Someone born in 1905 would have had the passive record player and telephone but by the time they were 20 years old, international air travel, radio broadcasting, amplified music and cinema had arrived, and a world war had taken place. A mere 10 years after that we had TV. Progress only seems slow when we look back, at the time it appears overwhelming but day-to-day changes amount to very little.

So I’m highlighting two trends that are long enough to be real, with early signs they could amount to a new milestone.

Our first trend is independent recorded music, which has a 60 year history of growth. After World War Two a number of things came together: new vinyl formats and multi-track recording became available, and a large number of trained engineers left the armed services. These new resources fed a post-war boom in American recording (Sun, Elektra, etc.) and radio—although BBC radio wouldn’t be challenged until the mid-Sixties. In the following decades independent labels became more common and although they were often bought up by bigger labels, numbers increased. The Sixties pop boom in the UK (Immediate, Charisma, Virgin, etc.), punk in the late Seventies and home recording in the Eighties were all good times for independent labels and by the Nineties (Creation, and others) the independents were firmly established. Now, whether they are one-man DIY operations or multi-national independent groups they are a substantial source of new recorded music.

It’s hard to imagine now that there was a time when a handful of companies owned all the technology and resources for making records and that before 1950 independents were almost non-existent. What’s important about independents is they’re not the same as Major labels. They have a strong connection with artists and audiences the Majors have lost since the post-1970 corporate mergers made investors money rather than making music.

So, our second trend is corporate recorded music, which has a 40 year history peaking around 2000 and declining thereafter. I’m not talking about the original Warner Brother records—which was another kind of corporate—I’m talking about the motley corporations founded around 1970 when Steve Ross’ Kinney cleaning and parking empire bought Warner’s and Elektra. That marked the start of an era when outside investors and shareholders drove Major labels to grow by buying up competitors. They adopted the inevitable trappings of big business: de-risking, repetitive processes, micro-management, limited individual freedom, layers of authorisation, corporate strategy and a mass market mind-set. Their focus was never the artist or the fan.

Whatever age you are and whatever music you’re into you probably know the charts around 1970 were very different from what we have today. There were fewer genres then but a wider range of styles. One week’s top ten albums might include teen pop, soul, heavy rock or blues, prog rock, a stage musical soundtrack, classical, folk and jazz. Fans knew what to expect from the record labels and artists re-invented themselves from album to album. That variety has gone, replaced by safer more predictable output. And whereas 1970’s pop, folk, jazz, musicals and classics sold to all age groups very little of today’s corporate music is marketed to anyone over 35.

The charts matter because that’s where the volume is, and diversity matters because that’s where the audience is.

The reason chart music narrowed is that a smaller number of Major labels now control content. They spend a vast amount marketing their own ideas rather than licensing music, even though innovation is something they don’t do very well. Successful new music is frequently from independent labels and management companies. Narrowing output isn’t just a weakness in the record industry. We see it in cinema, book publishing, radio and TV. Every corporate entertainment giant has the same problem. As Kick Ass says in the independent masterpiece of the same name:

Jesus, doesn’t it bug you? Why do thousands of people want to be Paris Hilton, and nobody wants to be Spiderman?

The corporate record industry has come a long way in the past couple of decades but they still don’t have a strategy for growth—at least not one that shows any sign it’s going to work. As revenues fall year after year UMG’s big idea is that streaming will get thousands of times bigger. In some ways that is wanting to be Spiderman but it’s the wrong fantasy.

So where is the new milestone coming from? Let’s rewind to 1895 for moment. When Berlinner launched his genius spiral track flat disc start-up he didn’t have time to dream up the content as well. His record producers pulled in musicians from music halls, concert halls and dance halls. The art of selling recorded music was making and distributing it, not designing the content. He didn’t have to make his artists popular he just signed artists that were already popular. You might think that approach would be impossible today—if a record company only distributed music how could it make money? Well, the Columbia imprint is 125 years old and now part of Major label Sony—one of its best selling artists is Adele. Adele is not a Columbia act, she’s signed to independent XL. The biggest selling artist of the past few years isn’t a Major label act, so it’s not really far fetched to imagine the Majors could return to their roots.

The upside for Sony would be considerable. Adele came through the door with content and all the other stuff taken care of, all Sony had to do was distribute a licensed package.  Licensing from independents would eliminate a lot of risk—something corporate music doesn’t like—and a lot of overheads. They could jettison large numbers of costly A&R and artist management staff, and cut 100% of the losses on their homegrown flops. Most of the acts launched by Major labels flop apart from the TV show celebrities, and I can’t see the indies fighting to sign them.

The downside is that Adele’s contract is with XL, so Sony couldn’t take 80% of the profits but let’s be clear, the golden age of the record industry is never coming back, this is about survival. Another significant drawback for the Majors is they would no longer own any of the masters for licensing, but most of their licensing is not this year’s model so that wouldn’t be an immediate problem. Of course, demystifying the business would make it hard for the multi-million dollar superstar CEOs and their million dollar minions to justify their pay but you can’t make an omelette without breaking some eggs.

All your © are belong to us

The new law and the music cottage industry

The UK government (IPO) has announced it will legalise opt-out collective licensing. MCPS, PRS and PPL currently operate opt-in collective licensing.  Andrew Orlowski of The Register explains more here.

(Thanks also to @Copyrightgirl and @SaskiaWalzel on Twitter for detailed background information.)

Under this new law collection societies may license categories of content without the permission of creators. So if you fall into any category as a songwriter or record label they will license (i.e. own the rights to) your stuff unless you say no. I would guess existing societies will take advantage of these changes but that remains to be seen.

The IPO web site says:

Whether you’re an inventor, an artist, or an entrepreneur, our site can help you find the right protection for your intellectual property.

As they propose to abolish ownership and impose blanket licenses by default I have no idea what they mean by that.

Consumer Focus congratulates the IPO on their proposals although they offer no examples of consumers calling for easier access to privately managed material which is not currently part of a collective public license. (Speaking as a consumer I would say it’s a heck of a lot easier to get at non-members’ material on Bandcamp than some members’ back catalogue.)

This legislation presents new complications for the many songwriters and performers working in the ubiquitous music cottage industry.

Here is your license

Any collection society that takes up extended licensing will operate blanket licenses. Unless they opt out non-members will become members and be bound by the terms of these licenses. Their copyrights may then be used in a way they don’t like and didn’t agree to. Everyone who previously didn’t opt in because they don’t like PPL or PRS blanket license terms must now scramble to opt out.

There goes your money

There will undoubtedly be a de minimis payout for each distribution (as there is for traditional collective licensing) so small acts may never see any royalties while societies accumulate unpaid amounts and give them to Robbie Williams.

Who are you?

Societies lay down rules for identification and they may ask for proof of copyright ownership which is fair enough, if somewhat arduous. It’s not unknown for them to delay or refuse membership. That was one thing when it was an opt-in system, now it’s an opt-out system the identification bureaucracy will extend to everyone if only to allow them to leave and keep a record of it. Will every writer—in or out, or potentially in or out—now have a CAE? And who will pay the PRS fees of default opt-ins?

Your call is important to us

Collection society errors and hurdles have always been simply far worse for small acts than big ones. The little guy is often at the wrong end of PPL or PRS mistakes and finds it impossible to get them fixed. (I was recently talking to yet another artist who cannot get her PPL and MCPS repertoire registered correctly after numerous phone calls.) On top of this every composer I know—regardless of income—has persistent errors in their PRS. Everyone will now be opted into an error prone system which is to known to deal poorly with the very copyrights it will hoover up.

Goodbye international © cooperation

To opt-out, small artists must identify all their content (including text and images) and notify it to the collective licensing body or bodies. This runs counter to WIPO (the international copyright treaty) although the UK and USA have tried to sideline conventional IP rights before. I’m not an international copyright lawyer but it looks like the moderately complex, sort-of-working system we had is about to become really chaotic and the small artist will be trampled underfoot.

Territory-by-territory opt outs?

International copyright management will become more complex. Many artists tailor their international society memberships to optimise collection for their own needs. This sometimes means they are purposefully not members of one or more domestic societies. The new body may assume they are unlicensed and subsequently opt them in—this will interfere with exclusivity or planned non-memberships.

Thoughts are still occurring to me now I’ve finished so it’s likely I’ll update this blog in coming days.

The tyranny of sameness

The mainstream is all about lots of people liking the same thing. People who like other things are just as curious and commercially active, probably even more so, but they are less easy for the mass media to serve.

I never liked the mainstream much. I grew up with pirate radio during secondary school. At break we would head up the field with our transistors and catch a couple of tracks, just half a dozen of us. We rarely liked the same thing with the same passion, instead we shared our enthusiasm for different things.

So the mainstream has always baffled me. There are some benefits in making, storing, promoting, and selling several million of one CD rather than “only” 50,000 of 60 others. And traditional radio and TV finds it easier to feature a few acts rather than many. But all that is for the convenience of middlemen, not artists or consumers.

We are encouraged through charts and so-called talent shows to pick winners. Winners, of course, are also easy for mass media to mass market, it’s much harder to promote diversity and difference. It’s impossible to feature everything people like and pick winners at the same time.

That’s why even BBC 6Music (the UK national “new music” station) conforms to the post-pirate popular radio template: label-driven playlists and prime time personality presenters, with eclectic music shows relegated to off-peak hours. When the BBC launched Radio One in 1967 it didn’t just make pop radio legal it also made it safe for the masses.

Under its charter the BBC should be “distinctive”, but it isn’t. A distinctive new music radio station would be manned round the clock by music DJs reflecting the true diversity of world (and indeed World) music.

Instead the mass audience has the comfort of experiencing and buying the same stuff as everybody else, and record labels—even though the benefits of mass producing a limited number of titles are much diminished with digital—still sell a very small range. What we don’t know is how many of that mass audience will buy more when they can see and hear it, but it’s my guess we’ll find out in our lifetime.

History repeats… a bit

There was a gold rush in new music media—new startups appeared almost weekly and patent disputes broke out. Even though the new kid in town spent more time in court than developing the product buyers couldn’t get enough music players and content. This was before World War One—the flat disc was replacing the recordable cylinder.

Berlinner accumulated many patents but history suggests his success was down to ease of manufacture (stamping), flat storage, and louder playback without amplification. (Amplification didn’t hit the mainstream until 1925, the disc was launched 30 years earlier.)

The current music format upheaval is different and although history doesn’t repeat exactly it probably has something to tell us. When Berlinner launched the disc in 1895 he laid the foundations for today’s record industry and defeated the incumbent. Edison made his cylinders until 1929 but never came close to retaking the recorded music industry he had started. Perhaps he hoped amplification would redress the balance but in the 1930s half of all American record production went into jukeboxes where once again discs ruled. However, there is a more important winner in this story—the customer.

The cylinder was perhaps more capable than the early disc, it was recordable and Edison had the resources, a killer brand and marketing power. Nevertheless customers chose the disc, decisively. It’s futile to second-guess the customer, they choose what they want.

In the late 1990s, faced with a new format (MP3) they didn’t control, Berlinner’s descendants made a series of attempts to regain the upper hand. But customers didn’t like what was offered. DRM on downloads, DRM on CDs, Major label web stores, subscription streaming… the verdict of the public has been decisive. Music distribution today can be summed up under 4  headings—CD sales, download sales, file sharing and radio. Overwhelmingly that’s what people want. Of the 2 billion online we know around 1 billion will be music customers. 900 million of them don’t use a big label streaming service and of the 100 million who do less than a quarter pay.

The evangelists of music streaming commerce—who have flogged this particular horse for over a decade—have made little headway. They tell us people “prefer access to ownership”, but quite clearly they don’t. We are told it’s early days but it isn’t—it was early days in 1995 when MP3 became available to everyone with a telephone line. There must be a point when it’s obvious streaming doesn’t sell. For me it was iTunes outselling all the streaming services overnight… in 2003. The Major labels will catch up one day, maybe.

You will not be a social media star

The Web 2.0 blinkers were firmly in place on this SXSW panel: How to Create Video Hits With Social Media.

“The rapper [eXquire], a panelist at Wednesday’s “Importance of Online Video and Social Media” discussion, transfomed himself from a security guard at a parking lot to the star of a video with 400,000-plus views … in under six months, almost entirely based on his social media prowess and tireless work ethic.”

Not the content? People spread the word and watched because of “his social media prowess”? How about the videos? I’m no rap fan but nobody ever got 400,000 views because they have great Twitter and Facebook skills.

“It’s arguably more important now to have a social media schedule than to have a touring schedule,” said Biery [Tom Biery, Collective Sounds], emphasizing how YouTube starlets Megan and Liz built a career based on songs created in their bedrooms using social media and near-constant fan engagement.

The old bedroom myth again. More important to use social media than tour? Ridiculous.

And Mills [Matthew Mills, executive producer/director, SpaceStation] agreed, saying that having a consistent YouTube presence helps build crowds while touring — and that the analytics from YouTube, Facebook, and sales can help artists target regions for touring and building audiences.

That’s more like it. Video is important online and social media is useful but without great content and an audience the chances of remaining invisible are extremely good. Nobody ever built a music career based on social media skills.