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Off The Record

Music & Recording Industry News By Dan Daley
Published February 2015

The question for the music industry is no longer ‘will it survive?’ but ‘what happens next?’

If, as Pat Benatar once sang, love is a battlefield, then the music business is total war these days. The main front at the moment is streaming, and it’s a busy one. Taylor Swift is only the latest and most notable of a slew of recording artists who have either withheld or removed their catalogues from Spotify’s service. Others include Black Keys, deadmau5 and Coldplay.

Google, whose subsidiary YouTube is ostensibly the single biggest streaming proposition on earth, essentially flipped the bird to über–mogul Irving Azoff on the eve of the limited launch of their YouTube Music Key streaming service in November by refusing to take down over 20,000 tracks from artists he represents, including the Eagles and Pharrell Williams, or composers represented by his Global Music Rights (GMR) company, who rep about 42 songwriters, including Smokey Robinson and Chris Cornell. The Silicon Valley behemoths believe that their licenses through various performing rights organisations (PROs) like BMI and ASCAP cover it. Azoff, the other behemoth, contends that Google have not properly licensed that content, and are in ‘defiance’ of their letter demanding either removal of the content or documentation proving they have licenses for all the songs.

Writ Large

These are just today’s battles, but they echo earlier barrages of an ongoing war. Several years ago, Eminem sued his label, asserting that the standard 15 percent or so that artists earn from sales doesn’t apply to downloads, which should instead be treated as licenses and as such should provide a 50–percent share of revenues to the artist. He won that one, opening the door for dozens of other artists to do the same, creating a morass of litigation guaranteed to go on for years. More recently, the Turtles, the ‘60s pop band whose frontmen later morphed into Zappa vocalists Flo & Eddie, invoked a quirky US copyright canon, which says that songs recorded before 1972 are not covered by US federal copyright law, and that ownership — and royalties — can be pursued under state laws. A judge agreed that they could proceed with their $100 million class–action suit against Sirius XM Radio, the radio broadcasters who contend that they weren’t compelled to pay royalties for those antediluvian ditties like ‘Happy Together’ and ‘She’d Rather Be With Me’.

War Games

What we’re seeing is thrust and parry, sound and fury, strategy and tactics worthy of a West Point or Sandhurst class, played out in courts and boardrooms, the media, and in the online troll havens. It’s simultaneously fascinating and disheartening, but the reality is that deeply disrupted landscapes like the one music now inhabits often have to have their new boundaries forged by conflict.

The studio business experienced its own version of this, and it wasn’t pretty. Back in the early 1990s, the marketing flyer from a certain Hollywood–area personal recording studio turned up in the lobby of a major commercial recording studio, also in the Hollywood area, precipitating owner of said commercial studio and his allies to commence what would become a kind of class war between two distinct camps: the emerging rubric of home/personal recording studios, and the existing establishment of conventional recording facilities. Code violations were written and, for the most part, duly ignored. The result is before us today: a significantly smaller but relatively stable frontline of major commercial facilities (the original enraged commercial facility owner is still in business, as are many of his contemporaries) and a highly dynamic and uncountable base of all sorts of studios doing all sorts of things, in a music business where barely a 10th of a percent of what’s produced ever gets beyond its own niches.

But the point is that a new landscape was ultimately formed from the old, not by intentional design but rather by the sum of more organic, evolutionary forces, a process that both Charles Darwin and Adam Smith would recognise. The studio and music production businesses were definitively shaped by changes and disruptions to the larger entertainment industry that they support, and there’s no reason to believe that they won’t continue to be affected in the future. When the record business transitioned from CDs to downloads, the reductions in label revenues directly impacted purchase orders from those labels to studios. On the other hand, labels like RCA and Capitol shed some or all of their own recording facilities as part of their consolidations, which created opportunities for the remaining independent ones.

Stream Punks

The shift from downloads to streaming is still playing out — sales of the former fell 13 percent in the first half of 2014 to 593.6 million, while on–demand streaming was up 42 percent over the previous year for the same time period. The current trends may seem dim: industry analyst Mark Mulligan estimates that the most realistic price for music streaming is about $7 per month — well below the $10 to $12 premium that many had eyed even a year ago, and Apple’s new Beats Music may come out as low as $5 per month.

But if lower streaming prices induce more consumers to buy access to music instead of stealing it, that’s a stabilising factor and good news for everyone in the food chain, including studios. Let’s face it: music is a commodities business now, and while unit pricing may be dismal, the upside potential from increased sales volume is very good. So the ride’s far from over. It will continue to be bumpy, but while it may get a bit scarier still, I guarantee you will not be bored.