Ch..Ch..Changes In The Music Industry

Keeping track of all the changes that are going on in the music industry isn't a one time project. If you are a musician, or someone who works closely with developing musicians, keeping up on the constant changes that are a natural part of any entertainment profession, is an important aspect of your commitment to being involved with the business of music.

There are times however when more changes are in the wind than usual. Now is one of those times. From issues related to establishing your career, and using the Internet as a stepping stone for exposure, to how A&R Reps look for proven talent, and the changes going on in the ownership of labels and media exposure outlets...the music business at the end of the 20th century is redefining itself as I write this article.

Beginning in the latter half of the 1970's a trend began that has slowly evolved over the last twenty years into the natural order of things, when it comes to getting signed to a record label. Those of us who have witnessed the evolution of the DIY movement, have been preaching the gospel of putting out your own record as the best way to learn the business of music as well as the best way to insure that any negotiations for a recording contract weigh more in the artist's favor than ever before.

Let's take a look at some recent signings to see what the following groups have in common.

Before signing to RCA, The Verve Pipe released 2 independent records, that sold over 40,000 copies, and spent over four years touring their behinds off. Mojo Records recording artists Reel Big Fish, built their solid fanbase on playing only all-ages venues, and working up to securing better gigs with bigger name ska bands in Southern California. Ben Folds Five worked the live gig scene as well as courting the underground press, and then releasing their first record on Indie label Caroline, before signing with Sony. From 1986 to 1995 Country artist Michael Peterson traveled the U.S. singing 200 nights a year at clubs and schools, playing any kind of venue that would pay him to perform. He didn't choose to sign with Reprise Records until he felt his act was strong enough, and so he put out Indie recordings to fine-tune his songwriting skills and sold those recordings at all his live gigs. His reputation as a songwriter grew so that he eventually got an offer for a publishing deal with Warner Chappel that led to the Reprise deal.

After releasing their own Indie record 'Fush You Mang' San Francisco Bay Area based Smashmouth got lucky when the song "Walking On The Sun" got to the ears of an L.A. radio station programmer, and the rest is history, as Interscope Records turned that record into a mega hit. The list goes on. Countless artists have accepted the challenge of simply taking the responsibility to establish their own careers. Whether or not all these artists will remain in the public eye is beside the point. What matters is that to have a real shot at success in the late 1990's, taking command of your own career is the name of the game.

Changes in recording contracts reflect the value of following in the footsteps of other DIY'ers.

According to many entertainment law attorneys the deals once given as 'standard' deals to new artists change significantly when a band is being sought by a label, instead of the band knocking on the door of the label with a comment like: "Hey mister, I'm really good, sign me".

The following recording contract issues are more negotiable than ever, if an artist has done some groundbreaking and development of their own:

  • Better royalty rates: A high rate just a few years ago for a new act was 14-16 points whereas 'buzz bands' can get up to several points higher, if they are in demand.
  • Ownership of masters: It can be easier to negotiate a speedier reversion of ownership of an artist's masters if, once again, the artist is wanted by a label.
  • Creative control issues: Many artists are concerned about labels deciding key issues regarding selection of material, producer, graphic images etc. If these issues are important to you, take the time to develop your fanbase, so that a label wants you bad.
  • Non-recoupable issues: 'Buzz Bands' have more say in what a label can claim as automatic recoupable expenses (promotion costs, videos, % of touring budgets etc.)
  • Controlled Composition Clauses: The standard reduction of the full statutory mechanical royalty rate is no longer standard for bands/artists in demand.

These, and other contractual issues are more than enough reason to slow down one's expectations, and take the time to develop a career, so that you are in more of a position of power than a victim of star-crossed naivete.

Not enough can be said about the benefits of using the Internet to establish a music career. We are indeed in the information age. As a music business consultant who has been studying the business of music for over 30 years, never have I been so overwhelmed by the amount of information that is available to aspiring artists. In fact, I am stunned that so much naivete still exists at a time when any and all information any artist needs is available at the click of a mouse.

If you want exposure, information, business resources, or advice...check out the Internet because there truly is no reason for any musician to be ignorant of what the business of music is all about. With MP3 files revolutionizing the way small and large labels can promote and sell songs, the Internet is the direction that music marketing is heading to in the months and years to come.

Talk about a bullet out of a 38 Special the era of downloadable music has exploded on the scene. Compressed audio files in the form of the MP3 phenomenon are with us now, and the business of music will never be the same. There has been turmoil and frenzy over all the issues that downloading near CD quality music has wrought on the industry and the musicians of the world. For starters, from here on out the dynamics of how a musician, an independent label, and/or a major label may choose to use downloadable music files has and will continue to upset the unnatural order of control over the distribution and selling of music. Already, the corporate answer to the free system of MP3 has been challenged by AT&t's a2b system, Liquid Audio's system, as well as other downloadable technologies from Microsoft and Sony waiting in the wings for ways to impose their inventions on the recording industry.

In early 1999, a meeting of the minds in the form of the SDMI (Secure Digital Music Initiative) was born. Gathering together all the significant players and investers who have a stake in making money from music, the initiative is dedicated to finding a solution to such issues as threats to copyright ownership, encryption and watermarking of downloadable music ( so that musicians and labels can prohibit unauthorized usage of the music, as well as being able to trace where an illegally distributed song file came from), and developing realistic policies that protect the record labels, the artists, and the distributors and sellers/traders of music. Look for some kind of attempt at a solution later this year.

But...the big BUT. MP3 has a huge head start in all this discussion. There are multi-millions of downloads of unprotected songs being traded and exchanged over the internet. The cat is already out of the bag. For all practical purposes if you do not care about owning a plastic box with some paper containing artwork on it, and just want to build a collection of past, present, and future music, there is no reason to buy a record anymore. All you need is a computer with a good sound card, speakers, an MP3 player, and a large hard drive...and you can (as people by the droves are doing) have a free collection of music without having paid a dime for any of it.

It would be adviseable for anyone seriously involved with creating, marketing, promoting, and/or selling music to keep on top of this developing story...there is much to be learned and discussed concerning how you will have to deal with this issue, and what plans you have to embrace this new technology now.

As for the industry itself, the Internet is a new tool for A&R Reps when they are looking for talent to sign. So, what do they want? Here is a list of MUST-HAVE's that should be on your own web pages according to A&R reps:

  • Biography/Fact Sheet Information about artist
  • Gig/Tour dates information
  • Photos and/or Video clips of artist
  • Sound samples (make them short-:30 seconds to 60 seconds) and fast loading
  • Lyrics
  • Fan feedback page (FAQ's etc.)
  • Email address link
  • Product for sale information (CDs, Tapes, Videos, Merchandise)
  • Any other fun/fact services you can think of to make people want to come back

Once an artist gets plugged into the music industry, more changes and challenges await them as we approach the 21st century. The famous publicist Howard Bloom once said this about getting signed: "Once a label has signed an artist, they will put every obstacle to success in front of that artist". In the past that could mean that the other artists on the label were an obstacle, and that still holds true today. Just because you get signed doesn't mean the label will be behind you all the way. Once again, enterprising and hungry bands/artists will have to compete for attention at their labels with all the other talent signed to that label. But now, the 'obstacles' to success take on new meaning.

For a couple of decades now the major labels, the Big Six, have had control of about 80% of all the record sold in America. But we live in the era of corporate buyouts, and the big six just became what I call 'The Fat Cat Five', as the Seagrams Co. just purchased Polygram Records and all it's affiliated labels, adding to Seagram's existing ownership of Universal Music. The government is looking into the question of monopoly (I wonder why?) but it seems likely that the deal will go through. The deal will give them the largest share of the record pie, once dominated by WEA, and shared by BMG, SONY, and EMD (Capitol et al). But at what a price. Such legendary labels as Geffen, A&M, and Mercury Records no longer exist. 2,500 people lose their jobs, and over 250 artists get dropped from their labels. How would you like to be in any of these peoples shoes?

This disturbing trend of major conglomerates buying out other major conglomerates is not relegated only to record labels. The radio station ownership trend continues to narrow, as more and more big media companies continue to buy up more radio properties.

In Seattle for example, if we go back just 5 or 6 years, there were around 25 commercial radio station general managers in town. Today, in 1999, there are 6. Companies like Entercom and Chancellor are now owners of up to 7 FM/AM stations in most radio markets in the U.S.

This affects the aspiring musician, because the stations that once were in competition with each other and perhaps more open to playing a certain band or artist, now are owned by one company, and the music and program directors at these stations work together to decide what artist or song is right for their stations as a whole. In the old days you could play one competing station off another, that is now no longer true.

Add to this problem a new kid on the radio block...Pay For Play...and you can see that the chances of getting your music on commercial radio are getting slimmer by the hour. Pay For Play is the ultimate Radio Station General Manager's dream come true. The Sales Department can now play a significant role in determining what gets played on a station, because now record labels can legally buy the airtime to have a song played for a certain number of times, or pay for announcements right after the airplay of a song. Chancellor stations just announced signing over $25,000,000 in such contracts. Break into your piggybanks aspiring musicians!

The buyout syndrome has also infected the live performance industry. SFX Entertainment has recently sold its radio station holdings to get into the concert venue ownership business. They now have control of over 50 of the largest regional concert promotion companies (PACE, Delsner/Slater, Bill Graham Presents etc. As one industry pundit put it: " We are now dealing with the Wal-Mart of the concert business". So, wanna open up for some touring major act in your hometown? Sit back and take a deep breath. Or, how about getting a tour once you are signed to a label. Will your booking agent and manager be walking arm in arm with SFX? If not, what could happen to that national tour you were hoping to get?

In the marketing of music department, there are a lot of dots finally being connected regarding who buys music and how to reach them. It has taken the better part of one hundred years for the industry to realize that a person who reads a book might also enjoy music, and visa versa. When Borders Books and Music connected that dot several years ago it has unleashed a waterfall of creative thinking about where to sell music. Today you can buy music at sporting good stores, coffee/espresso shops, grocery stores, clothing stores, airports, hospital gift shops, alternative health care provider locations, shoe stores, and just about any other retail type store you can imagine. I just heard about a radio station in the midwest that opened its own record's that for connecting a BIG DOT!

Lifestyle marketing has arrived as a way of life for any competitive label. Knowing who your customer is can reap an incredible harvest of ideas and new opportunities for the enterprising marketer of music. What unique partnerings can you think of to get your music in front of a potential fan? Open up your imagination musicians...there are still countless ways to expose, promote, play, and sell your music.As I said at the beginning of this article, keeping tabs on all these changes is an important new consideration for any musician wishing to make some money with their music.

Stay tuned....the career you save may be your own.

Throughout his fprty year career in the music business, FourFront Media & Music's Christopher Knab has shared his experience at many industry conventions and conferences, including the New Music Seminar and the Northwest Area Music Business Conference.

Knab was owner of a San Francisco music store, co-owner of the 415 Records label, and station manager at KCMU Radio in Seattle.

He currently provides a unique consultation and education service for independent musicians and record labels. His new book is entitled "Music Is Your Business".

Christopher Knab