Monday, June 30, 2003

Industry brief: Music recording III (See also Part I and Part II). Extending shelf life Getting on the shelves of the record stores is not enough. Most music sits around unsold. Even if it has some success, that success can be very short-lived. As a result, the Big Five recording companies seek to guard themselves against the notorious changes in fashion that determine the shelf life of individual titles. Again, they can't really decide in advance what will be a hit, and though they back artists with advertising campaigns and concert tours, public taste is fickle. Take for example the Spice Girls, a meteoric success which crashed and burned, now long as dead as disco. For a few years in the mid-90s swing was in, now it's out. We've seen a series of rappers come and go with one big hit, then nothing. Even Britney Spears and Christina Aguilera are losing altitude. More than ever, stars are moved quickly into and out of the spotlight. Hence the popularity of the VH1 TV shows "Where are They Now?" and "One Hit Wonders." On the other hand, some things are perennial. The Beatles were a few years ago at the top of the charts with a re-release of some of their music. Paul Simon released a hit album after he seemed to be washed up. Billy Joel had a modest hit playing his own "classical-style" music, and they keep selling the Eagles albums. These are great assets for the recording companies, as they don't have to start the hype campaign from scratch. In the case of the backlist, they realize almost pure profit. But there are many ways to prolong the shelf life of any even moderately successful piece or genre of music. The recording companies do this in several ways: First, they can sign a large number of new "artists" in different genres so that a dip in one artist or category is compensated for by wide coverage. Thus they have the bases covered when a new trend breaks out. If they do have a hit, they can prolong its life by intense marketing, promoting radio play, organizing concerts, running displays in stores, arranging television appearances (in some cases, most notably Time-Warner, on their own stations) and so on. All these take the kind of money that's only available from a big, strategic company. They can maintain back lists of the titles that steadily maintain sales - thus Sony which owns the Beatles backlist has the money pouring in still, from newly released recordings, from old standbys, and other uses. The release of a set of thirty-year old Beatles hits (the album "1") became on of the top-selling albums ever, outdistancing the hottest releases from new groups. All of majors have stable of similar, if slightly less productive, cash cows. After all, all the upfront costs have been paid along ago. Companies are also digging out unreleased tapes by older artists like Dylan, even reconstructing recordings sessions or concert tapes that never made it to vinyl. They can switch media - in fact, the replacement of LP collections by CD collections in early 1990s were a major financial boost for the companies in every area from rock to jazz to classical. Now it looks like CDs may give way to DVDs, and mini-disks are a possibility. That's not to mention personal digital recorders (A threat and an opportunity). They can own their own manufacturing companies so that they can reduce costs and improve inventory management, making sure they have just enough copies of each title. In fact, whatever dangers digital music has, for the major music companies, it will certainly make their backlists even more valuable, if they can protect their copyrights. Apple's new song download software has been a bonanza for companies. Selling songs for 99 cents is an uncanny way of recycling the old stuff at no cost in distribution or marketing. It's also like selling cigarettes one at a time for a total price three or four times the cost of the pack. The new digital music economy, whatever its perils, offers the Big Five a chance to prolong the life of their vast library of recorded music, The question is how to do it without having to send thousands to jail, the course the Big Five and the RIAA now seems intent on. 5:29:24 PM

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