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Too late, the industry discovered that all those CDs it's been selling for the past 15-plus years are digital masters, easily converted into MP3 files to be shared around the world.



Alanis Morissette, at Plug.In, calmly counted off all that is wrong with the corporate music business. Digital photograph by Michael Goldberg


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peruse archival

the drama you've been craving

by Michael Goldberg

Monday July 30, 2001

Last Gasps Of A Dying Beast

At the Plug.In digital music conference, you could feel the desperation.

The day after the Plug.In digital music conference, which I'd come to New York to attend, I got this communiqué from Neumu contributing editor Philip Sherburne (who very smartly didn't attend the conference):

"Given your column today (I think it was today), I figured you'd get a kick out of this little factoid, courtesy the [Industry] Standard's Metrics Report: 'HEARING THE MUSIC: Americans will spend more than $6 billion online for music in 2006, up from $1 billion this year, Jupiter Media Metrix predicts. Digital sales of music, including paid downloads and music-subscription services, will account for just 3 percent of online music buys this year but will represent 30 percent of such sales in 2006.' I've always wondered where the hell they come up with crap like that. Might make for an interesting inclusion if you revisit the topic (which somehow seems likely!). Cheers, Philip"

In case you didn't read my "Daily Report" (on neumu.net), the column Philip was referring to — headlined "Told You So!" — found me laughing my ass off because Jupiter Media Metrix (which tracks visits to Web pages, stages a zillion conferences including Plug.In, and provides "expert" quotes to the media on demand) reported that millions of former Napster users were now embracing the latest file-swapping programs so that they could continue to get the music they want at their favorite price.

A couple of years ago, the New York Times Magazine ran a lengthy story about analysts such as Jupiter Media Metrix; the bottom line on the whole thing was that their predictions were simply informed guesses, and that in fact it's anybody's guess whether the online music business will have grown to a six-billion-dollar business or become a zero-billion-dollar business by 2006. And you know what? If I were to bet (which I'm not going to do), I'd bet on the latter.

'Found Money' In the Music Biz

For too many years now, a handful of companies accounted for the lion's share of CDs sold in the U.S. Through acquisitions that began in the '70s, five companies have come to dominate the recorded music business, earning many billions of dollars in the process.

In the past, the business has been into format changes, which can generate lots and lots of what you might call "found money." Back in the '80s, when the record companies phased out vinyl in favor of the CD, they managed to sell CD versions of albums to many of the same people who had originally bought them on vinyl. Sometimes twice — the early CD versions generally weren't remastered, so when a better-quality version was released, suckers like me who'd bought the first version on CD would go out and scoop it up again. Since CDs sold for double what vinyl albums went for, it was like the majors had stumbled onto a diamond mine.

Until the winter of 1999, the majors were firmly in control. Sure, the rise of the Web was something of an irritant, but for the music-industry aristocracy, a handful of label presidents who for the most part had run things their way for years, it was business as usual.

That Was Then, This Is Now

It is no longer business as usual. While Napster happened to be the piece of software that triggered a revolution, I believe it was fairly inevitable that the combination of the Internet and the digitization of recorded music would be a combustible one.

Too late, the industry discovered that all those CDs it's been selling for the past 15-plus years are digital masters, easily converted into MP3 files to be shared around the world.

Last year sales of recorded music were down. The Recording Industry Association of America (RIAA) blames Napster. (Some people think the focus on lame, lowest-common-denominator recordings may have something to do with it as well, but that's for another column.) I wouldn't be at all surprised if sales continue to drop.

The music industry "has to do a lot to save itself," said Vivendi Universal executive vice chairman Edgar Bronfman, Jr. during a "keynote interview" during last week's Plug.In conference. Vivendi Universal is the parent company of the Universal Music Group, the biggest recorded music company in the world.

Will the industry manage to save itself? Who knows? I for one hope it dies a horrible, protracted death — it already looks very, very sick to me. I have come to truly hate entering those big record stores jammed with all the crap the majors are trying to convince us to buy. (Sure there's good stuff on every major — I mean, The Strokes' awesome debut is coming out on BMG. But for every decent artist, there are dozens of pretenders.)

As far as I can tell, there was only one artist in attendance at Plug.In — Alanis Morissette, who showed up, delivered an excellent speech that basically condemned the major-label business, radio, music television and most other aspects of the corporate music business, and then left. Hey, guys, get the idea that musicians aren't exactly in your camp?

Desperate Times For The Old Guard

At Plug.In, it felt even more desperate than it did at Webnoize this past March, and that was damn desperate. Digital music companies like MP3.com, Emusic and Launch have been bought up by the majors, while others have gone out of business. All of which makes it look like the corporate music business is winning. It's not. And the race is far from over. I think of Ani DiFranco, going about her business, making great music and a nice living on her own terms. Someday, I hope the list of artists doing it their way, and doing just fine, will be so long that just running the names would take up this entire column many times over.

Back in '95 and '96, I used to write about a revolution that would surely take place. Cheap technology meant artists would make their own albums; the Net meant they would deliver them to music fans. That's already happening, of course, but not on a scale that allows a lot of musicians to make a living with their art. Now I think, more than ever, that some version of that will eventually occur, and that the clever artists will be able to do it on their own, or in collaboration with others, with no corporate interference.

At Plug.In, Bronfman admitted that the established music business is in deep trouble. That in attempting to protect their huge music catalogues, the majors can't really compete — certainly not against file-swapping programs that give music fans everything they want for free. "It's very easy to be innovative," he said, "when you have nothing to protect.... Those people who have nothing to protect and everything to gain can be more innovative [than those of us who have a business to protect]."

Actually, it's not very easy to be innovative. The established music business hasn't shown any real capability for innovation in decades. This gives me faith that the indie underdogs will, in the end, be triumphant.

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