06 JUNE 02: “The music
industry is becoming the book business (minus the literacy).”
From the June
10, 2002 issue of New York Magazine.
Facing the Music
Rock stars and music-industry
execs once ruled the earth, but now — in terms of size and profit margins
— the music industry is becoming the book business (minus the literacy).
BY MICHAEL WOLFF
Hemingway had rock-star status
(and even impersonators). Steinbeck was Springsteen. Salinger was Kurt
Cobain. Dorothy Parker was Courtney Love. James Jones was David Crosby.
Mailer was Eminem. This is to say — and I understand how hard this is
to appreciate — that novelists were iconic for much of the first half
of the last century. They set the cultural agenda. They made lots of money.
They lived large (and self-medicated). They were the generational voice.
For a long time, anybody with any creative ambition wanted to write the
Great American Novel.
But starting
in the fifties, and then gaining incredible force in the sixties, rock-and-roll
performers eclipsed authors as cultural stars. Rock and roll took over
fiction’s job as the chronicler and romanticizer of American life (that
rock and roll became much bigger than fiction relates, I’d argue, more
to scalability and distribution than to relative influence), and the music
business replaced the book business as the engine of popular culture.
Now,
though, another reversal, of similar commercial and metaphysical magnitude,
is taking place. Not, of course, that the book business is becoming rock
and roll, but that the music industry is becoming, in size and profit margins
and stature, the book business.
n other
words, there’ll still be big hits (Celine Dion is Stephen King), but even
if you’re fairly high up on the music-business ladder, most of your time,
which you’d previously spent with megastars, will be spent with mid-list
stuff. Where before you’d be happy only at gold and platinum levels, soon
you’ll be grateful if you have a release that sells 30,000 or 40,000 units
— that will be your bread and butter. You’ll sweat every sale and dollar.
Other aspects of the business will also contract — most of the perks and
largesse and extravagance will dry up completely. The glamour, the influence,
the youth, the hipness, the hookers, the drugs — gone. Instead, it will
be a low-margin, consolidated, quaintly anachronistic business, catering
to an aging clientele, without much impact on an otherwise thriving culture
awash in music that only incidentally will come from the music industry.
This
glum (if also quite funny) fate is surely the result of compounded management
errors — the know-nothingness and foolishness and acting-out that, for
instance, just recently resulted in what seems to be the final death of
Napster.
But it’s
way larger, too. Management solutions in the music business have, rightly,
given way to a pure, no-exit kind of fatalism.
It’s
all pain. It’s all breakdown. Music-business people, heretofore among the
most self-satisfied and self-absorbed people of the age, are suddenly interesting,
informed, even ennobled, as they become fully engaged in the subject of
their own demise. Producers, musicians, marketing people, agents . . .
they’ll talk you through what’s happened to their business — it’s part
B-school case study and part Pilgrim’s Progress.
Start
with radio.
Radio
and rock and roll have had the most remarkable symbiotic relationship in
media — the synergy that everybody has tried to re-create in media conglomerates.
Radio got free content; music labels got free promotion.
Radio’s
almost effortless cash flow, and mom-and-pop organization (there were once
5,133 owners of U.S. radio stations), made it ripe for consolidation, which
began in the mid-eighties and was mostly completed as soon as Congress
removed virtually all ownership limits in 1996. A handful of companies
now control nearly the entirety of U.S. radio, with Clear Channel and its
more than 1,200 stations being the undisputed Death Star. (Clear Channel
is also one of the nation’s major live promoters, and uses its airtime
leverage to force performers to use its concert services, as Britney Spears
and others have charged.)
Radio,
heretofore ad hoc and eccentric and local, underwent a transformation in
which it became formatted, rational, and centralized. Its single imperative
was to keep people from moving the dial — seamlessness became the science
of radio.
The music
business suddenly had to start producing music according to very stringent
(if unwritten) commercial guidelines (it could have objected or rebelled
— but it rolled over instead; what’s more, in a complicated middleman
strategy of music brokers and independent promoters, labels have, in effect,
been forced to pay to have their boring music aired). Format became law.
Everything had to sound the way it was supposed to sound. Fungibility was
king. Familiarity was the greatest virtue.
Once
Sheryl Crow was an established hit, the music business was compelled to
offer up an endless number of Sheryl Crow imitators. Then when the Sheryl
Crow imitators became a reliable radio genre, Sheryl Crow was compelled
to imitate them. (Entertainment Weekly, without irony, recently praised
the new Moby album for sounding like his last.)
But then,
just as radio playlists become closely regulated, the Internet appears.
“Suddenly
there was another distribution avenue offering far greater product range,”
notes my friend Bob Thiele, who’s been producing, writing, performing,
and doing A&R work in L.A. for twenty years (and whose father was Buddy
Holly’s producer), and who, in my memory, never before talked about avenues
of distribution. “And then, before anyone was quite aware of what was happening,
file-sharing replaced radio as the engine of music culture.”
It wasn’t
just that it was free music — radio offered free music. But whatever you
wanted was free (whenever you wanted it). The Internet is music consumerism
run amok, resulting not only in billions of dollars of lost sales but in
an endless bifurcation of taste. The universe fragmented into sub-universes,
and then sub-sub-universes. The music industry, which depends on large
numbers of people with similar interests for its profit margins, now had
to deal with an ever-growing numbers of fans with increasingly diverse
and eccentric interests.
It is
hard to think of a more profound business crisis. You’ve lost control of
the means of distribution, promotion, and manufacturing. You’ve lost quality
control — in some sense, there’s been a quality-control coup. You’ve lost
your basic business model — what you sell has become as free as oxygen.
It’s
a philosophical as well as a business crisis — which compounds the problem,
because the people who run the music business are not exactly philosophers.
“They’re
thugs,” says a former high-ranking music exec of my acquaintance, who is
no shrinking violet himself.
Such
thuggishness, when the business was about courting difficult acts, enforcing
contracts, procuring drugs, paying off everyone who needed to be paid off,
may once have been a key management advantage. But it probably isn’t the
main virtue you’re looking for when you’re in a state of existential crisis.
Being street-smart is not being smart.
In a
situation of such vast uncertainty, with the breakdown of all prior business
and cultural assumptions, you don’t necessarily want to have to depend
upon, say, Tommy Mottola to create a new paradigm.
For a
long while, the management response at the major labels had a weird combination
of denial and foot stamping: putting Napster out of business-then sort-of/sort-of-not
buying Napster — all the while being told by everybody who knows anything
about technology that, no matter what the music industry does, or who it
sues, music will be, inevitably, free. Duh. There is, too, a management
critique — perhaps most succinctly put by Don Henley in his now-famous
post-Grammy letter wherein he quoted Mel Brooks in Blazing Saddles: “Gentlemen,
gentlemen! We’ve got to protect our phony baloney jobs!” — that sees record
labels as generally engaged in the usual practice of ripping off anyone
who can be ripped off while remaining oblivious to the fact that Rome is
burning.
But for
the most part, denial, and even the reflex to just keep squeezing the last
dollar until there is nothing left to squeeze, is passing (labels have
even recently awoken to the problems of dealing with the radio behemoths
and are frantically, and way too late, trying to find reasons to sue the
radio guys and gain back a little leverage).
I had
a very nice sushi lunch in the Sony dining room the other day where I heard
about the generally gallows mood at Sony Music. The recent past was very
bad; the future was likely to be worse. All money earned from here on in
would be harder to earn. This felt like acceptance to me: We simply don’t
know what to do.
The truth
is, there might not be anything much to do.
Here
are the choices:
If you’re
providing free entertainment, which is obviously what the music business
is doing, then you have to figure out some way to sell advertising to the
people who are paying attention to your free music. But nobody seems to
have any idea how that might be done. Or you can provide stuff that’s free,
and use the free stuff to promote something else of more value that people,
you hope, will buy — now called the “legitimate alternative.” (Putting
video on the CD is one of those ideas — though, of course, you can file-share
video too.) Or sell the CD at a level that makes it cheap enough to compete
with free (free, after all, has its own costs for the consumer).
It’s
a spreadsheet solution. There will continue to be a market for selling
music, however diminished — but it will have to be cheaper music. Margins
will shrink even more. Accordingly, costs will have to shrink. Spending
a few million to launch an act will shortly be a thing of the past. (The
formal catalyst of the beginning of the end of big development costs may
be the Wall Street Journal’s story a few months
ago that precisely accounted for the $2.2 million launch costs of a singer
named Carly Hennessy, who went on to sell 378 CDs.) A&R
guys making half a million are also history (in the future, they’ll start
at $40,000 and max out at $150,000). And no more parties.
And then
there is the CD theory. This theory is widely accepted — with great pride,
in fact — in the music industry. It represents the ultimate music-biz
hustle. But its implications are seldom played out.
The CD
theory holds that the music business actually died about twenty years ago.
It was revived without anyone knowing it had actually died because compact-disc
technology came along and everybody had to replace what they’d bought for
the twenty years prior to the advent of the CD.
The music
business, this theory acknowledges, is about selling technology as much
as music. From mono to stereo to Walkman. It just happens that the next
stage of technological development in the music business has largely excluded
the music business itself.
The further
implication, though, might be the more interesting and painful one: You
can’t depend on just the music.
Rock
and roll is just an anomaly. While for a generation or two it created a
go-go industry — the youthquake — it is unreasonable to expect that anything
so transforming can remain a permanent condition. To a large degree, the
music industry is, then, a fluke. A bubble. Finally the bubble burst.
But not
with a pop. It’s an almost imperceptible, but highly meaningful, alteration
in context. Alanis Morissette becomes Grace Paley. Bono becomes John Hersey.
Fiona Apple is Joyce Carol Oates. Moby is Martin Amis.
This
is not so bad.
And best
of all, our children — all right, our grandchildren — won’t want to become
rock stars.
Arthur Magazine 