Yummy Jelly
Originally uploaded by Muhammed Ali.
The digital revolution hit the music industry the hardest during 2007. Tower records closed its doors. Madonna signed with a tour promoter. Radiohead took control and gave away "In Rainbows". Even the basic commodity, the album, is being eroded by the cherry picking of Itunes and free downloads. People just don't seem to buying CDs and digital sales haven't closed the gap. 20% of online Europeans have downloaded music, but only 2% paid. Music is an industry where content is king and the record labels see copyright as their castle. The walls of Jericho are coming down. Warner experienced a 74% drop in profits during the first quarter of 2006 and they continue to nose dive. A prominent band manager noted in the Wall Street Journal "Sales are so down and so off, as a manager, I look at CD sales as part of the marketing of an artist, more than an income stream." So what does this all mean?
The way people discover and share music has fundamentally changed. The value has shifted from product to the live experience because the recorded product is essentially free. And the film industry is next. One of my oldest friends from university is a global tour promoter. Since becoming a dad, we've seen less of each other. Given this tectonic shift, I thought business must be good, and it would be a good time to do lunch, if only to get back on the guest list. Over spicy noodles at Pho on St.John Street I was surprised by his outlook. Product sales where in a unprecedented collapse, but this meant everyone was now chasing the secondary revenues. From t-shirts to beer cups. Most importantly, without the return from products sales, there was less and less marketing spend to create global music brands. Look at the number of new UK chart acts that tour the states for proof. Diminishing income means that the supply of new mega-bands is disappearing. For his business, there are a dwindling number of acts that are capable of touring globally so he needs to diversify. Although the live experience has become more important, fanship in the future will be far more fragmented and local.
Labels have reacted to this reality by trying to cover all possible revenue streams associated with an act. New artists are faced with deals where they must sell their soul in perpetuity in all formats and mediums known and unknown. Strangely, these '360 branding' contracts resemble the ones I used to have to sign when I worked in the film industry. These 'devil contracts' provide brands with a real opportunity. Why note hire some talent from the army of unemployed music professionals and provide labels to artists that operate on more reasonable terms? It's clearly the wrong strategy to badge venues and name stages when product and service brands can participate and manufacture the actual product. This type of authentic behaviour far better suits the age of social networks. But, its niche and risky, which is perhaps why brands have not started this to date, although some intelligent agencies have.
Over Xmas, I visited another old friend who is the bassist for the Pogues. His daughter was my sons first 'girlfriend' when we shared the same nanny. Whilst the kids played Scalextric and he made spaghetti, I gave him my view on the pogrom facing the music industry. Christmas is a special time for the Pogues. "Fairytale in New York" to a large part, has cemented their annual tour into the fabric of yuletide. Fresh off the tour, Darrel was in good spirits. One of his love songs had been picked up by Hollywood and formed the corner stone to the Hilary Swank romance movie "P.S. I love you". The song is performed by the star, features in the film and is across the credits. As an artist, he was far more upbeat:
"It's like Jelly, mike. There's a bottomless and unending joy and demand for music. It's just shifting and no one knows what shape it will be"
He's probably right. The age of vinyl and 'son of vinyl' CD will very soon been seen as a curious anachronism. The only real victims are the dinosaur labels reliant on these products, and if they become extinct who really cares. Even published music didn't really exist at the turn of last century, and musicians just had to play to earn.
The lesson is that demand will always will be there, but corporate music has been the first fall guy. The result is a far richer, complex tapestry where value is found in experience and hits will be rarer, smaller and more transient. Jelly is the best metaphor I've heard so far. The basic underlying human substance of the experience is the same, but the way business forms around it is changing shape. Who knows what the shape it will be, but largely, the two groups that don't seem very worried are the two most important - those making music and those listening to it.
This thought reminded me of the classic 'mind like water' clip from Bruce Lee. In these times of flux, maybe this is how brands and marketers should think.
