Posted by: nickgerlich | February 6, 2008

Head of the Class

The music industry is in a precarious state. CD album sales are dropping like hailstones in a West Texas sky, heading south toward 500 million units per year in sales. Legal downloads are shooting like a comet across the sky, fueled by iTunes, which has now sold over 3 billion songs. One at a time. At 99 cents each.

But where does this leave the artist? Still trying to make a living. If, on the outside chance, they score a big hit, or perhaps have the good fortune having a music star for a Daddy, most musicians will toil as a labor of love. It is a day job, but one that may very well be augmented by other side gigs just to pay the bills.

In the January issue of Wired Magazine, Talking Heads frontman David Byrne waxes philosophic about the music world and its many artisans. He feels their pain, having been there for years. And while he is one of the lucky ones to score big, he knows the pitfalls and potholes, and how artists are maneuvered by their labels for the benefit of the corporation.

Even the enormous success of iTunes is not necessarily the panacea once hailed. For example, while iTunes is a nice public policy solution to the illegal download problem, Byrne points out that the artist will likely make less money from an iTunes album sales than if they would by selling the tangible CD. But CD sales are down. How could this be? Byrne says that artists make about 14% no matter how the album is sold. An album sells for $9.99 at iTunes, and for an average of $15 in retail stores. Do the math. Fourteen percent of $10 is less than 14% of $15. But if you have bills to pay, and CDs are not selling, better to take the smaller cut, right?

RadioheadTired of all the manipulation and profiteering at the expense of the artist, Radiohead pulled a quickie on the industry last fall when it told its label and everyone else in the industry to take a flying leap. Radiohead put its latest album online at the unheard-of “pay-what-you-want” price per download. It put the burden of payment, as well as the perceived market value of such a purchase, solely on the demand side of the equation. Trust was built in; Radiohead essentially was willing to sacrifice their time and labor for their fans, who, they assumed, would prevail in the end and be the good citizens we always thought they were.

Imagine a world in which we never had to buy anything…we need only make a donation to cover what we thought was a reasonable price for a product or services rendered. No more $100 hotel rooms. Let my family and me spend the night, and I will drop something in the tip jar on the way out. No more $5 Caramel Rocky Road Double Mint half-caf Red Eyes. No sirree, you are working for me now, and I will give you what I think it is worth. And probably not until I have finished consuming my beverage, to be on the safe side.

The Radiohead experiment was noble, and one of six different distribution models Byrne identified in the article (ranging from absolute artist control to absolute record label control). In an era of changing consumption methods and habits, revolution is in the air, so Radiohead felt its faithful fans would do the right thing, and pony up a fair price for their latest music. Regardless of discretionary income, it would all come out in the wash later on, the small givers balanced out by those with more to spend (and supposedly more conscience).

So what happened? Well, good thing Radiohead has sold a lot of CDs in the past, because their giving-it-all-away-for-a-donation scheme landed like another one of those hailstones. In the first three months following release, only 20% of their fans left money behind, for a whopping total of $141,000. Wow. Nice fans, huh? Charity gets slapped in the face by greed. Except this time it was the customers, not the label.

So what’s an artist to do? I don’t know, other than maybe moonlight down at the coffee shop selling those $5 syrupy caffeinated cocktails. But they had better make sure people pay up front. I hear there has been a looting problem lately…looting while the store is open.Dr “Hail Yes” Gerlich

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