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Simply put, cloudy accounting is how the music industry hides and shuffles profits, and is why they were so slow to adopt online music (iTunes). The new industry won't be able to claim cocaine as a legitimate expense.

All successful business evolve to meet the demands of their customers, that is except the music industry. I can think of no other industry as abusive to their employees (artists) and as disrespectful of their customers.

With the advent of the internet, it should come as no surprise that this model is failing.

Jan 24, 08 - 12:13 am Comment from: trex67

The demise of the recording industry has been predictable for several years.

Good riddance.

"...10 cents' worth of vinyl selling for $10 - 10,000 per cent profit - the highest mark-up in all of retail marketing."

You know, I'm not exactly the biggest fan of the music industry. But the self-righteous hyperbole quoted above is so obviously overblown and erroneous that it, weakens, rather than strengthens any argument.

So don't buy shares in them, now, while they're cheap.

Jan 24, 08 - 12:35 am Comment from: TowerTone

Maybe a new model would allow for more obscure (and real) talent to be recognized.

Like this

http://www.youtube.com/watch?v=eEAsZa4Qz2Y&feature=related

Good article, but he destroys his credibility very early on with this:

"But outside of the industry, who cares? Pop music has never sounded better or more vibrant, ... "

No one would say that who knows much about music. There is of course always good music around, but one of the most obvious symptoms of the collapse is the fact that the majority of *pop* music today is absolute crap.

Jan 24, 08 - 01:02 am Comment from: TowerTone

"Data Potato". I think I will try to use that in a sentence at least five times tomorrow.

Boss: "What happened? Why is the system down?"
Me: "Looks like too much cheese in the data potato..."

Jan 24, 08 - 01:06 am Comment from: iWill

@ TowerTone

Good on ya! Shades of "La Jetee".
http://www.youtube.com/watch?v=3RvmJan17q8&NR=1

Jan 24, 08 - 01:12 am Comment from: ken1w

The flat-rate all-you-can-eat rental schemes, whether for music or for movies, does not have the best interest of the artists in mind. If a customer "rents" (downloads) 10,000 songs, how is the artist with 10 songs in there somewhere compensated from the $15 monthly fee. Likewise, with flat monthly rate movie rentals, how are the makers of specific movies compensated if the customer squeezes in 20 movies per month. "Bulk rate" distribution of media makes money for the distributors, not the content creators. It's interesting that Apple does not use bulk rate pricing. Whether for music or movie rental, the items are priced per item, which hopefully makes compensating for downloads more straightforward and fair. I don't think Apple will adopt any type of flat-rate content rental scheme for either music or videos.

That would be "careening toward meltdown", yes?

Jan 24, 08 - 01:36 am Comment from: Brau

The sooner the cartels disappear the better for the artists and listeners alike. And they call file sharers thieves.

@Phred:

No, "career" is correct. Career means to move headlong at high speed. Careen means to move sideways or roll over.

Magic Word: passed; as in "I passed English class."

"...10 cents' worth of vinyl selling for $10 - 10,000 per cent profit - the highest mark-up in all of retail marketing."

That's what I heard from my record company back in 80's. Some of the compilation albums where there were no studio time involved and marketing was for the whole set, they really made tons of money.

In some point in the future people will pay a lot of money for some thing as original as a CD, with a download you just pay for the airwaves that are coming from your speakers.

Why do you hate the record industry so much? Couldn't you just as easily single out the oil conglomerates, DeBeers, or any other similarly offensive corporate entities? Big Tobacco? Arms dealers? Why go after the labels every week? I really don't get where your animosity comes from.

Jan 24, 08 - 03:28 am Comment from: Petey

Quite an amazing piece of writing.

This really sums everything up about the music industry.

And even more importantly, the writer is very experienced in the music business AND writes in a factual and non-biased style.

So he is qualified to write this.

Unlike the standard internet 'reporter', who are untrained, unqualified or even have the basic understanding of English grammar to write, let alone the intelligence.

All you unqualified web hacks out there look and learn - THIS is how you write a news article.

Thank god reporters in newspapers and magazines have to professionally qualified and have proven ability to write - unlike 99% of the web 'reporters' who are immature geeks who shouldn't be writing anything let alone one something as powerful and influential as the web.

Jan 24, 08 - 04:20 am Comment from: gzero

Falkirk:
You may not like the quote or the way he writes in general; that is your right. But what he says is a fact, and that's all that counts. Anyone who has ever been signed to a major label will tell you that.

Jeremy:
"No one would say that who knows much about music. There is of course always good music around, but one of the most obvious symptoms of the collapse is the fact that the majority of *pop* music today is absolute crap."

One man's crap is another man's treasure. Most of what you hear on the radio or see on TV could be perceived as crap, but again, that is an opinion. People are consuming music now more than ever before; just fewer are paying for it. The reasons for that are plentiful obvious. There are so many great artists and bands out today that will never get a chance to be heard on a larger scale, for the very reasons Napier-Bell state in his article.

It will take a few years before the transition is complete, but the music industry as we know it is already on its last legs. About time, too.

@gzero,
$10 for 10¢ is 1000% profit by my reckoning.

Okay, math should be relatively objective.

10 cents to 10 dollars is 100 times.
Expressed as a %, that's 10,000% of cost.

Though the profit (calculated as if the raw vinyl is the only cost, and in fact, the printing probably cost more) would be 9.90/10.00 or 99%.

Pure profit is 100% profit. You can't have more than that. Profit is a % of revenue, not of raw material cost.

Can't figure out any calculation that yields 1000% (10 times).

Of course content is the original software industry... the value is the encoded information not the media.

None of this should be construed as a defense of the recording industry of course! Just a math exercise.

Come to think of it, doesn't the music industry sound like a bunch of pimps for the artists?

Lush profits, tons of bling, scant protection, and a predatory relationship with the artists...

I'm waiting for iTunes to outlast these dinosaurs and start becoming a music label in its own right, dealing with the artists directly.

Jan 24, 08 - 08:30 am Comment from: Tergenev

Hey Petey . . .
The exact same forces that are pressuring the recording industry are pressuring professional journalists. Frankly, they both need it. Both are cases where industry insiders have gotten complacent over the years and the result has been crap product. Despite 'gzero's' contention that its all in the eye of the beholder, pop music has seen a steady erosion of quality product over the last 20 years. And don't get me started about professional journalists versus bloggers. For a study case of a 'professional' who screws up regularly versus a blogger who routinely does stunning work, just check out last month's professional dust-up between Glenn Greenwald (the blogger) and Joe Klein (the supposedly 'professional' journalist.)

http://www.salon.com/opinion/greenwald/2008/01/18/klein/index.html

Jan 24, 08 - 08:32 am Comment from: effwerd

In other news: water is wet.

Jan 24, 08 - 08:40 am Comment from: shen

"All successful business evolve to meet the demands of their customers, that is except the music industry. I can think of no other industry as abusive to their employees (artists) and as disrespectful of their customers."

US government.

do i win a prize or something?

re: One man's crap is another man's treasure.

I disagree. It's not "people" that determine the quality of music, it is time. Great pop music (and there is some) is quite rare, but from the vantage point of history, it is pretty evident which is good and which is crap. ie. There are at least 1/2 dozen Lennon McCartney tunes that will live forever, and some Rogers and Hart, etc etc.

Jan 24, 08 - 09:02 am Comment from: Tergenev

Shen,
Yep. You win the 'I can't be Wise, so I'll be Cynical' prize.

I do agree, however, that the line 'all successful business evolve to meet the demands of their customers' is pie-in-the-sky hogwash. Businesses evolve to meet the demands of their CEO's ego, and to the extent that there is any air in the place not taken up by that ego, to meet the demands of the shareholders. Why do you think Apple is such a breath of fresh air to American markets? The CEO's ego seems to be focused on the demands, and more fundamentally, to the unmet and unrealized *desires* of their customers. What a radical concept!

careening instead of careering

Jan 24, 08 - 09:09 am Comment from: Zune Tang®

I like the record industry. The way they get behind a marvelous talent like Britney Spears is awesome. I also like MTV. The way they drum up controversy with manufactured lesbian kisses between artists is super entertaining too. Great job! Another shout out goes to radio. When you put Britney or Fergie in heavy rotation that tells me "Hey, if 'Fergalicious' is on 3 times every hour, I should buy it." What's cool is I don't have to waste time exploring other music when radio tells me what's good. Thanks, radio! BTW the Zune has a radio.

Your potential. Our passion.™

According to the dictionary that ships with OS X, "careen" and "career" have roughly the same meaning. There might be something poetic about that....

Jan 24, 08 - 09:28 am Comment from: Demon

Nothing new there, Indie labels in almost every case is just as bad as the Major labels when it goes to paying the artist. I seen and have copies of recording contracts that date back to 1975 from major labels and indie labels. They all have some common contract scam double talk in them designed to let them seal the artist blind.
Most people that only a handful of artist get any type of monetary credit for digital download sales. And no artist get's any monetary credit for Music Subscripting services. Because the contracts are all based on sells of a physical product.
Evanescence, Paramore, U2, and a few other get royalty monetary credits for digital sales from stores like iTunes but only at a rate lower then the rate paid on physical media. Which makes no senses, until you findout that the artist under contract is paying for the manufacturing cost of that CD plus a health profit.
Is recording label contracts fair? Not even close. The Artist is charged for everything by the label and the label owns the artist's work forever. Does the whole worldwide music industry (i.e. The Labels) need major government oversight and regulation? Perhaps, but, what should happen is the back catalogs of Music, Videos, and recorded performances that they own because of these contracts all need to be turned to the artists' without stings. This should be forced by the WIPO and going forward music labels ownership of an artist's work should be limited to a maximum of 36 months or 36 days if the artist pays the recording and production costs or if the production costs are recovered by the label from the artist in any way. If the label charges the artist a Packaging %, Promotion% or for anything then the artist is entitled to bill that cost back to the label at a rate not to exceed 300% but at not less then 150%. Artists should be entitled to a higher royalty rate for digital downloads as no costs are incurred by the labels, Artists should be entitled to a reoccurring royalty from subscription download services equal to twice that of a normal purchase download.
The Music Labels will be around forever even if they have no new releases as they'll keep making money from the catalogs of recordings that they own. The only group in the world with enough clout to change it is the WIPO. But, as the music industry and movie industry are in deep control of the WIPO I see nothing changing anytime soon.

Jan 24, 08 - 09:34 am Comment from: Demon

My proof reader in on vacation

The music industry needs Bruce Dickenson to come out of retirement.

"Easy guys, I put my pants on just the like te rest of yous, one leg at a time. Except, once my pants are on, I make Gold records."

Dickenson..." Babies, before we're done here, ya'll be wearing gold plated diapers!"

Jan 24, 08 - 10:05 am Comment from: Grigori

What?? Nothing about the ARTIFICIAL CONSTRUCT, MDN??

Jan 24, 08 - 10:18 am Comment from: silverhawk

Careen was a term used by the 18th century British Navy. They would careen ships: haul them over on their sides to remove barnacles and such. Go to Nelson's Dockyard in Antigua.

Jan 24, 08 - 10:19 am Comment from: Ampar

"One man's crap is another man's treasure."

Maybe. But you sure as hell don't want to invite one of them over for dinner.

Minor point but since someone took issue with me over my "crap" statement above, I would point out that the only band he mentions by name as being "his" is ... Japan!?!

Jan 24, 08 - 10:38 am Comment from: Ampar

" . . . is the fact that the majority of *pop* music today is absolute crap."

And yet, Britney continues to pull in $700,000 A MONTH. Some things will never make sense to me.

Jan 24, 08 - 10:47 am Comment from: Mr. Peabody

@ Gregg Thurman - I can think of one other industry/company that can be as abusive to its employees if you get on the wrong side of it, and definitely disrespects its customers at least as badly as the music industry does - Microsoft.

@ falkirk - I'm also with the spirit of the article, but if time is money then I can tell you from personal experience that the cost of the media is a tiny fraction of all of the real expenses that are actually incurred in a professional recording project, not to mention the cost of managing a person or groups touring schedule which, if you want to sell music, online or in the store, you've got to have some kind of regular touring schedule.

Still the point is made that, given the number units that a record company used to be able to sell versus the amount actually charged per unit to the end user has always been very high. With vinyl recordings, and even more so when CD's came out, this industry could have easily sold their wares for half the cost or less with CD's and still made money for themselves and their artists hand-over-fist.

Jan 24, 08 - 10:59 am Comment from: Ampar

To SpellCheck et al.:

Let's eschew obfuscation and espouse elucidation.

Careering:

verb [ intrans. ]
move swiftly and in an uncontrolled way in a specified direction : the car careered across the road and went through a hedge.

Highly recommended viewing for anyone who's a musician is the following Interview of "the King of the Suft-Guitar" Dick Dale:

http://www.youtube.com/watch?v=8AJxc3Lxn4o

or the tinyurl version:

http://tinyurl.com/24zsr4

Mr. Dale gives absolutely PRICELESS advice on the music industry. This should be required viewing for everyone.

IRONICALLY, the MDM Magic word is: "music"!!!

-- Hano

Jan 24, 08 - 01:04 pm Comment from: Yoko Geri Kekomi

"Careering" is mostly used by the Brits, of whom Mr. Napier-Bell is one. It's used correctly here as has been noted, but most Americans have never heard it used this way.

@ByeTakeCare

"I got a fever, and the prescription is more cowbell." That's what the music biz needs.

@Shen
No, you don't.
The gov't is not a business, despite what right-wing dipshits have tried to do. I work for the Treasury Dept, and we are treated decently, thanks mainly due to our powerful union. And we are more productive and efficient than the privatized fuckers that the republick party has foisted upon us.

Jan 24, 08 - 01:28 pm Comment from: aaplsaur

The record industry should have always been more distinct from the music industry. The music industry is alive and well and always will be for artists that make sweet music. The riff and the raff will keep their day jobs. Record and CD publishers can no longer stand as a costly barrier between talented artists and their audience nor can they continue to foist mediocrity into our music collections. Soon, I hope, they will lose control of the airwaves, too.

I was pleasantly surprised that the writer of the headline knew the less common meaning of "careering" rather than leaning on the oft-misused "careening". A couple of the commenters seem unaware of this difference.

Major record companies almost exclusively blame their falling CD sales on legal and illegal downloads. I think while this may be true to a certain extent, even if downloading did not exist, the CD market would have been headed down.

And it's not solely because the music is bad. There's some pretty good music out there.

No, the problem is that music is no longer the focus of today's generations, no longer the touchstone, if you will, around which their lives revolve.

If you talk about the 60s and 70s, everything revolved around music. The politics, the protests, the social norms, the fashion, the spiritual pursuits - everything was done to a soundtrack.

Today, it would be difficult to find anyone who says his or her life revolves around what Justin Timberlake, Jay Z or even U2 sing or rap about.

Back in the 50s and 60s, people went out to see movies, sports and/or live music. That's about all there was.
In the city, some people went to restaurants, where there was always a piano trio, and sometimes even a floor show.

Those days have gone.