The music ‘industries’ (Williamson and Cloonan, 2007) have undergone a large number of changes throughout its history, having to cope with the ever changing landscape of music and technology. As technology continues to advance at an exponential rate, the industries have found it harder than ever to maintain profit and relevance. The focus of the music industries has changed exceptionally within the last twenty years, with the advent of web 2.0 (and subsequently, ‘music 2.0’) reshaping the production and distribution of music forever. With this in mind, it has been suggested that the focus of the music industries has shifted towards live music as the primary source of income for both artists and labels. Using the available academia and public records, we shall attempt to uncover the reality of the music industries landscape in the 21st century.
Martin Cloonan states that ‘the UK’s live music scene is of greater economic value than its record industry’ (2011). This can be backed up by The Economist’s Will Page and Chris Carey, who in 2009 estimated that the UK live music industry was valued at 1537 million pounds, next to the record industry’s 1356 million (2010). This trend continues through 2010 and 2011, with 2011 statistics estimating the value of the live music industry at 1624 million pounds next to the recording sector’s 1112 million (Brookes, 2011). From these statistics, it would suggest that the live music sector has not only weathered the technological storm better than the recording sector, but has benefitted significantly from this shift in the music industries. Live music in the UK is stronger than ever, economically speaking, with the recording industry struggling to halt a steep decline.
Not only has the live music industry superseded the recording industry in value, but ‘by 2011 the most important music company in the world was no longer a record label, but Live Nation’ (Morrow, 2013). Live Nation is an events company, and owns the world’s largest ticketing agency, Ticketmaster. The United States Congress discussed the merger in 2009, with Senator Herb Kohl stating, ‘This merger will not only expand Ticketmaster’s control of the ticketing market, but it is also creating an entity that will control an entire chain of the concert business’ (2009). This mirrors the state of the music industries in the UK, as outlined by Page and Carey, as well as Brookes (2009, 2011). The industry world-wide is moving towards the business of live music, with Live Nation exerting the sort of monopolistic power that we associate with the recording industry.
If we consider the statement put forward by Sen. Kohl, we can identify a serious issue within the booming live music sector – a lack of balance throughout the many different tiers of concert promotion. Although live music is now the most valuable asset within the music industries, Page and Carey note that ‘earnings in live music are heavily skewed towards the top’ (in Morrow, 2013). Australia can be seen as a perfect example of this skew, as Coupe posits that:
‘In financial terms, touring Australia does not make much sense; the costs incurred travelling between major metropolitan areas are too high and the fierce competition between the top promoters means that they constantly under-cut one another to secure contracts’ (in Morrow, 2013).
As such, only top tier acts can expect to make a profit touring Australia, and only large events companies like Live Nation can afford to put on these massively expensive tours. So, whilst the live music sector has weathered the technological storm far better than the recording sector, in markets such as Australia, the profit is largely skewed towards top end companies.
this point we might ask how live music continues to be a draw for people where recorded music is not. The technological advancement of the last 20 years, particularly the invention of web 2.0 (and subsequently, P2P file-sharing), has made access to free music easier than ever before, creating a hole which the record industry has been very slow to fill. Young and Collins use an example published in The Economist to illustrate the move away from physical copies of recorded music:
‘In 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. ‘That was the moment we realised the game was completely up,’ says a person who was there’ (2010).
Recorded music, as we can observe, is no longer as desirable as it once was. At least, not in a physical format. The rise of the digital market in music is something that the recording industry has been slow to capitalise on, whilst P2P is almost impossible to police, leaving both artists and labels with lost potential profit.
‘The music industry ascribes heavy losses in sales to file sharing, that is, users illegally download music files through Peer-to-Peer (P2P) networks,’ states Jeong Gicheol and Lee Jongsu, illustrating the recording industry’s inability to restructure itself within the modern music landscape (2010). However, their study of Korean consumers also shows that even with a lowered price point, ‘the estimated WTP [willingness to pay] for downloading one music file is remarkably lower than the actual price of a file’ (Gicheol and Jongsu, 2010). The threat of legal action in this case is not significant enough to offset the cheaper price point of downloading music illegally via P2P sharing networks. As such, the recording sector has struggled to weather the technological storm that has occurred with the emergence of Web 2.0. Live music does not have such an impediment to potential profit as it does not deal in a tangible product that can be shared illegally via the internet.
Whilst technological advancements have hindered the profitability of recorded music, it hasn’t done the same in the live music sector. The technological storm of the 21st century has, however, significantly reshaped the concert-going experience. Punters will still go and see their favourite bands live, but the way in which they consume this live experience has changed with technology. With the invention of smart-phones and the advancement of digital recording equipment, many fans choose to view their favourite bands through the lens of a piece of high-end technology. Lingel and Naaman echo this suggestion, stating:
‘If the enduring image of concert-going in the 1960s was enthusiastic attendees waving their lighters in approval of an acoustic guitar set, in the 2000s, the prevalent view of live music could very well be a sea of music lovers with their mobile phones raised to capture video for rapid uploading to a variety of social media sites.’ (2012)
Lingel and Naaman’s study of a group of concert attendees found that even though they are now recording the concert and uploading it to social media sites, this has not become a replacement for seeing live music. ‘For several interviewees, it was important to point out that watching videos of concerts was not a substitute for physical attendance’, the study finds, quoting one interviewee as saying, ‘there’d be no point of [editing a video] for a show I wasn’t at … it’d just make me sad I wasn’t there’ (Lingel and Naaman, 2012). This study indicates that where technology has provided consumers of recorded music with a much cheaper alternative, it hasn’t replaced the concert-going experience. This explains the continued growth of the live music sector as well as the continued decline of the recording sector. Technology has changed the mode through which we experience live music, but it doesn’t impede on the profitability of live music – ‘a unique experience’ (Morrow, 2013).
In response to technological advancement, record labels have had to significantly reshape the structure of their contracts with recording artists. No longer feeling they can turn a significant profit from record sales, labels have turned to what is commonly referred to as the ‘360 deal’. The 360 deal means ‘the record label participates in and receives income from a range of musical activities beyond the sales of recordings’ (Marshall, 2012). This entails taking a share of the profits in merchandising, sponsorship, live music, and broadcast, which is bargained for in exchange for larger royalty shares and advances. It has become the new standard for recording contracts, in a bid for record labels to maintain profitability on a long term basis through a myriad of revenue streams rather than solely through record sales.
The origins of the 360 deal can be found through EMI, who signed Robbie Williams in 2002; although not technically a 360 deal, ‘it was an innovative deal that garnered much media attention and offers a significant precursor to deals later in the decade’ (Marshall, 2012). Functioning as two separate deals, it was the second which illustrated a shift in record contracts towards a wider pool of revenue streams. Marshall states that, ‘Williams agreed to share some of the income generated by his activities outside of recordings,’ which set the groundwork for what would become the 360 deal (2012). Although EMI would be absorbed into the Warner Music Group in 2012, Wordsworth suggests that this deal was successful, as it ‘went into profit for EMI pretty quickly’ (in Marshall, 2012).
Here we have seen how the record label EMI has tried to combat the declining sales of physical music. This particular deal might be considered a success, but it is worthy of note that its success was not due to an increase in record sales, but a restructuring towards other sectors of the music industries, most notably being live music. This is a testament to the resilience of the live sector that labels must now rely on live revenue to make profit. However, although these deals might be considered legal, record labels must combat the continued insistence from artists that claim 360 deals are still unfair. Bouton states that:
‘…even if 360 deals are deemed to be legal, as long as the perception is that they are unfair and unconscionable, the record labels will have to think of new strategies to keep high profile clients and stay afloat as the music industry faces tough economic times’ (2009).
As we can observe from this statement, 360 deals may not prove to be the silver bullet the record industry is hoping for, as it struggles to cope with the technological advancement of the 21st century. The live music sector once again proves to be the main source of revenue within the music industries.
Where we have dealt with the effects of the technological storm of the 21st century on record labels and events companies, it worth also considering the impact this has had on the artist. Whilst events companies such as Live Nation continue to dominate the world stage in music production, the practices of the industries still remain entrenched in the culture of the 50s and the 60s; distorting artists for as much profit as possible. Indeed, Cloonan notes in his essay on policy implications that ‘at many gigs bands will not even be paid (often they will be told that any gig is good for their profile and publicity’ (2011). This outlines the reality that lower and mid-tier acts are constantly cut short by events companies, and struggle to break even. Whilst Live Nation is dealing in highly profitable international acts, such as Madonna and Jay-Z, who have the sway to ensure payment, smaller promoters will often distort expenses in order to make a profit.
We can use the case study of Boy & Bear conducted by Julian Morrow, former artist-manager for the band, to highlight the risks involved with entering live music at the low and mid-level tiers in Australia. As Australia is a ‘relatively small territory (in terms of population) with arguably more promoters per-capita than anywhere else’, artists will often be cut short in the race to procure a band for a tour (Morrow, 2013). Boy & Bear illustrate the ways in which technology can be used to combat unsavoury business practice, with the involvement of companies such as Music Glue, who provide ‘online marketing and e-commerce solutions for artists, managers, promoters and venues’ (Morrow, 2013). They do this by ‘providing the tools that enable direct artist-fan engagement’, which enables bands to exchange music for email addresses, allowing them to cheaply promote future tours. Music Glue claims that this service is ‘demanded by an increasingly tech aware and empowered customer base’ (Morrow, 2013).
As we are dealing in an increasingly tech-savvy market, it would be pertinent also address the ways in which artists have used technology to their advantage in the recording sector, albeit at the exclusion of record labels. Morrow illustrates an example of this, stating: ‘British rock band Radiohead released their seventh album In Rainbows as a digital download for which consumers chose their own price’ (2009). Although no official figures have been released, the exercise might be consider a success, as Morrow notes, ‘it directed a large amount of traffic to their website from which consumers could purchase concert tickets…merchandise…and had the potential to increase the sale of their back-catalogue’ (2009). However, it must be noted that a large portion of the success found by Radiohead is due to their experience within the old system, having previously been bound by a major label contract with EMI. This successful use of technology in the recording sector cannot hope to be emulated by every upstart band in saturated market.
We must therefore conclude that the live music sector has easily weathered the technological storm of the 21st century much better than that of the recording sector. With Live Nation becoming the largest music organisation in the world, and record labels continuing to lose the fight against P2P file-sharing, it is clear that record labels are no longer the driving force in the music industry they once were. The implementation of the 360 deal by record labels has proved to be moderately successful, albeit only through tapping into revenue streams outside of record sales. There is also a continued distrust of labels as being unfair towards the artist. The live music sector is therefore still the most profitable aspect of the music industries, despite the disparity between smaller and larger acts. Artists have been able to combat this disparity through the emergence of companies such as Music Glue, which enable them to market directly to their fan-base through the internet. The recording sector is still unable to find a in a tech-savvy society, where the experience of a live show will continue to remain irreplaceable.
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