"Nearly half of the folks with money think it's just fine to download music from the Net, regardless of copyright issues." — Chris Nelson & Steve Jones, Boston Globe
Real fans will support real musicians like Ani DiFranco. Photo by Michael Goldberg

InsiderOne - The Drama You've Been Craving

Monday Jan. 29, 2001

End Of The Corporate Music Biz

Why the suits should be freakin' out

By Michael Goldberg

The big music corporations are in trouble — and I, for one, could care less. If you've been paying attention, you know that while those five monoliths (Sony, UMG, BMG, AOL-Time Warner and EMI) may account for 80% or more of the CDs sold, at least in the U.S., they probably release less than 15% of the good albums. Those are released by an ever-growing group of indie labels.

So I'm not bothered by the coming decline of the corporate music business in the face of Napster-like file-sharing and CD copying (Hewlett-Packard just introduced a computer for under $800 that includes both a normal CD drive and a recordable CD drive).

The likelihood of failure for music subscription services like the one Napster is planning to launch (with $50 million from BMG, which is apparently planning to make its entire catalog available to Napster users for $4.95 monthly) doesn't bother me either.

Yuppies Don't Think Stealing Is Stealing

In an Op/Ed piece that ran in the Jan. 16 Boston Globe, writers Chris Nelson and Steve Jones report: "According to research from the Pew Internet & American Life Project, the industry will likely have to put in some overtime, because the BMG-Napster plan won't work. The Pew survey, conducted last year before the BMG deal was announced, queried 2,109 adults age 18 and over. Of those, 238 had downloaded music from Napster, the similar Gnutella, MP3.com, or another source.

"Among the intriguing findings is this relationship: As income rises, the belief that downloading music without permission is theft falls. Specifically, only 37 percent of those with household incomes below $30,000 think downloading is not stealing. But when income tops $75,000, that number who have no qualms with downloading jumps up to 47 percent.

"In other words," Nelson and Jones wrote, "the Pew data tell us that nearly half of the folks with money think it's just fine to download music from the Net, regardless of copyright issues. So the very people who can most easily afford to pay for CDs are the ones who are fine with taking it for free online."

Why Real Musicians Will Survive

I now think that it will all come down to the fan-musician relationship. Real musicians will come out OK. Sure, there will be many "casual" listeners with no emotional attachment to an artist who will take the music without paying if they can. But new artists who develop solid fanbases by touring the clubs and small halls, and established artists such as Ani DiFranco or Fugazi, are not going to be ripped off by their fans.

Fans will be happy to pay for a Sonic Youth or R. L. Burnside CD, if they are confident that most of the money will go to the artist, not some suit or mega-billion dollar corporation, and allow the artist to earn a decent living.

Perhaps the day of the Big 5, along with a handful of artists, collecting billions in royalties is over. "In this business, a very limited number of artists are very successful, and a great majority are not successful at all," Jenny Toomey, executive director of the Future of Music Coalition, told a New York Times reporter during a two-day conference on music and technology the coalition sponsored at Georgetown University recently. During the early-to-late '90s Toomey was in an indie band, Tsunami, and ran an indie label, Simple Machines.

In that same Times article, Kristin Hersh said, "I'm so frustrated with the paradigm that the music business has created. You have the pressure of being either a success or a failure. There should be no such thing as that. There should only be the next song."

The Next Song, Not The Next Hit

I imagine a future that will allow many more artists to focus on "the next song," rather than on creating a hit. An Ani DiFranco, who we know can sell about 200,000 copies of an album, could take in a million dollars (at a $5 fee for downloading an album). Even if, say, $2 of that went to third-party virtual record stores, that would still leave $600,000. If she can record, manufacture and promote an album for $150,000, that would leave her $450,000 before taxes — she'd clear over $200,000. And that doesn't include touring revenue, or sales of older releases.

What this says to me is that there is a model in the future for truly indie artists to make a living with their music, if they are able to build and sustain a following. I also think there will be virtual indie labels or indie biz types who will make a living from providing the biz expertise to new as well as more established artists such as a Juliana Hatfield or an Elliott Smith.

The trend in recent years has been for many artists to leave the majors and go to small labels. John Hiatt, Aimee Mann and Spoon, for example, have done just that — and then created some of their best work!

Michael Goldberg is the president of insiderone.net. He founded Addicted To Noise in 1994.

© 2000, 2001 Michael Goldberg. All rights reserved.