The Major Labels Aren't Using Trolls

For years, the major record labels were able to manipulate sales numbers and the sales charts.  Billboard, Cash Box, Record World all charted records.  The numbers were a cumulative score including both radio play and sales.  I worked at Record World as an intern in the early 80's. My job was to call record stores and report units sold.  As you can guess, this is not the most scientific method and until Soundscan came along, it was the way things were done. 

There is a bit of a clamor that the labels are at it again, but this time it involves manipulating YouTube views for their videos.  YouTube began a campaign against falsely inflated views, but it turns out this has nothing to do with the decrease in views on videos by Universal and Sony artists. The sudden drop in views led people to believe the labels had their trolls out inflating the views. 

As TechDirt points out  it turns out that most of the issue was just that the labels had moved their videos from YouTube to Vevo -- the online video site that the labels had started a few years ago (built on top of YouTube technology). As Billboard notes, the "de-spamming" effort did delete about 1.5 million views from Sony and Universal Music videos -- so there may be some funny business, but that's tiny compared to the 2 billion views that disappeared.

YouTube also changed the way they count "dead videos" which would include those videos that have been moving over to Vevo.   Highly viewed videos that were on Universal and Sony's YouTube channels are now at Vevo. As a result, the views that those videos received during their time on the dedicated label channels were taken away in YouTube's latest "clean up" effort.

It's nice to start off the year with a clean slate. 

Record Labels Settle with LimeWire, What Does That Mean For The Artists?

According to the NY Times,  the major record labels won a $105 million settlement against the file-sharing network LimeWire.  The article asks the age old question: What will the artists see?  As most lawyers, managers or artists will tell you, they will see nothing.  Legal fees have to be paid first and I'm sure those are hefty, but what the labels keep and what gets to the artists are two different amounts.  I'd love to hear from any musician who saw money from a record label after his/her label successfully sued a company in a case where money should have gone to the artist. 

$1 Million To Launch A New Recording Artist

According to a report "Investing in Music" from IFPI, it costs a record label at least $1 million to launch the career of a new recording artist. It also states that $5 billion a year is invested in new artists and the "broader sector" of music employees 2 million people.

Looking at A&R as Research & Development, the record labels spend about 16% of their sales revenue on A&R, which far exceeds the R&D budgets of any other industry.

John Kennedy, chairman and chief executive of IFPI, says: "One of the biggest myths about the music industry in the digital age is that artists no longer need record labels. It is simply wrong. The investment, partnership and support that help build artist careers have never been more important than they are today. This report aims to explain why. Investing in Music is about how the music business works. It explains the value that music companies add, helping artists to realise a talent that would typically go unrecognised and get to an audience they would otherwise not reach."

This is definitely true for mainstream pop artists. Jam bands, rock bands and singer/songwriters might not benefit from a major label deal in this climate. Those acts need to tour and connect with fans immediately to be successful. Most labels won't take a chance on that kind of an act without a following. These musicians can be more profitable and sustain a longer career by doing it on their own, especially if they have a fan base. Things may change, but when saddled with $1 million in recoupable expenses before a song is released, they are standing behind the 8 Ball.

The report can be downloaded from their website.

Dave Stewart on Tranparency in Accouting

In Billboard Magazine, Dave Stewart makes a point that managers and artists have been pondering for years. When you buy a shirt with a credit card, you and retailer can see the transaction in 1.6 seconds. Why is it when you sell a record, the record labels do not give the artist access to the accounting (unless you audit them) and there is no transparency? It's a digital world and the labels are still living by that 50 year old structure. It also helps their bottom line, just ask Cher and the estate of Sonny Bono. They are suing for back royalties on Sonny and Cher records due to what they claim is illegal/creative accounting.

Amiercan Idol: The Only Game in Town

Major record labels did listeners a service: they narrowed the playing field. Before the Internet, the labels would be the place for an artist wanting a career in music. They had the time, money and people power for a finite number of acts to promote each year. Acts needed producers and studios to make the records. Radio was king for turning people on to your music. Hearing your favorite band live was (and still is) the ultimate experience. Now anyone can make a record and they do. Most bands write, record and produce their own records. Radio is so narrowly programmed that there isn't much room for a new artist to be heard. American Idol is the only game in town now for massive exposure. I think Ryan Seacrest said that 88 million people voted for the top two spots left in this season. I realize many people vote multiple times, but that is an insane number.

Danny was voted off the show. This is probably the best thing to happen to him. Besides going out on the Idol Tour, he doesn't have to play by their rules and for a rock singer, this is a plus. He got the exposure. People know his name. He'll have no problem getting a record deal. What he does with his career and how he handles it, will determine how successful he is. Daughtry hit the jackpot when America chose Katherine over him. It seemed crazy at the time, but the word Idol is in the shows title. Of the two that are left, either Adam or Kris would make a great Idol. Adam has the androgynous, pop voice and Chris has the adoration of the little girls. The stage is set for a night of massive exposure that used to come only to those who slogged it out on the road, put in their 10,000 hours and had a producer to helm their latest record. Can't see Adam or Kris trashing a hotel room.

Has Anyone Learned From the Downfall of the Recorded Music Indsutry?

While watching Barack Obama talk about the US auto industry crisis on Meet The Press yesterday, it hit home once again that the recorded music industry led the way to the downward spiral and other businesses didn't pay attention and learn from them. About 10 years ago, the music business denied new technology instead of embracing it (Napster). The major label business was based on a model that was over 50 years old, yet no label overhauled the way they did business. The people at the top made a fortune, middle managers were eliminated, leaving highly paid executives and underpaid assistants to do the job. The record labels put out inferior product. They sold an album off one good song. Consumers had to buy the whole album in order to get the song. The song had nothing to do with the rest of the music on the album. Consumers fought back and decided they didn't need the album anymore, they'll just download the song for free.

The US auto industry seems to have done the same things. They continued making cars bigger instead of environmentally efficient. Foreign cars were proving more reliable than domestic. The auto industry is also based on an antiquated model and their CEOs are over compensated whether the company is turning a profit or not.

The sad thing about all of this is the people who are most effected by these downturns:
The songwriter is the one losing out on royalties from free downloads.
The people who supply parts to the car companies will no longer have a business.
Those on the peripheral who depend on these businesses such as writers, restaurants, freelance tech support, video directors and production companies, recording studios, messengers, cleaning services, copier salespeople, the list goes on. It's not just about those CEOs testifying in Washington last week.

The bottom line: give the consumer good quality products, listen to the consumer, make sure you're up on the latest technology and you'll be productive.