The Consumer Imposed Music Business Model Known As “Free”, and its Damaging Domino Effect

I came across a thought provoking article today on MusicThinkTank called The Cost of Free  written by Athena Butler, a student at Berklee College of Music. It’s no surprise to most of us that the music industry has been taking economical gut punches from multiple angles for years. However, it’s highly ironic that those mainly responsible for this decline are among the same group of people that made the music industry so successful to begin with….the music fans. After all, it was the music fans that made the perceived value of music go from around $16.00 per CD to $0.00 practically overnight during the dawn of the piracy age. Some could blame technology, some could blame it on label greed, but the bottom line is that the decision to no longer pay for albums came from the music fans. And it’s that very mindset that is re-shaping the way many artists release music now, along with a little help from iTunes and their pioneering of the single-song business model. Some have argued that the day of the album is dead, and that artists should now focus on releasing singles on a more frequent basis as opposed to releasing entire albums with years between releases. Which is morbidly funny if you think about it. Back in the day, artists were forced to only release singles due to limitations within the recording technology available and now they are being forced to release singles again due to limitations within the desire of the average music fan. Ok, I got a little off-topic there, but the bottom line is that it costs money to give something away for free, and a lot of people tend to forget that.

Below is the copy from the MusicThinkTank article I was referring to:

When it comes to recorded music, today’s consumers enjoy a free ride and seem to have all the answers.  Song sharing is there for the taking and, in any case, the old music sales model is archaic. But if out with the old and in with the new is stylish in music, the same is not true of music recordings.

For the business, it seems, free is good. However, the decline of recorded music sales has been catastrophic since 2001, when piracy became rampant and the single song Apple economy banished the album. Now, hope for the sector requires a giant leap of faith. In the meantime, the tough job of finding new ways to compensate for this loss of profits falls to the record companies. It may appear that artists are gaining more exposure as music changes hands often and easily. But is the moneymaking of old within the reach of the business?

In recent years, the recording industry has endeavored to replace its album-based revenue stream with more panoptical and commercial based income. For instance, it has used 360 degree type deals, whose object is to secure additional revenue for the label by tapping on artists’ live performances, branding, and merchandising. This has been seen by some, including well known trade writer Donald Passman, as the cornerstone of an industry response to the crisis of recordings.

What this means for record companies is total alienation from the traditional business model, and near zero emphasis on recorded music and no money for artist development. The supply chain, and especially talent, has been taking a hit, with the U.S., for example, suffering, by any standards, a catastrophic drop in the value of recordings (from $12 billion in 2001 to about $6 billion today). Moreover, successful  instances of ‘free’ seem exaggerated and are often only suited for top ranking stars who have plenty of access to multimedia and residual bankroll. Radiohead’s attempt at financing a new release with fan donations in 2007 met with poor results; the band, at the time the poster child for the new music economy, has since regretted the move.

In the meantime, subscription and/or ad-based streaming services deliver poorly for artists–which does not help engrain the concept of music recordings as a valuable commodity for investors or the public. In the clamor for ‘free,’ honest, good work, is getting lost in the shuffle, with the business community oddly silent about the time spent by artists honing their craft, writing music, practicing, studying the music of others, performing, and mimicking until they come up with the best possible material they can muster. Music production, one of the leading edges of our culture, seems to be held hostage to a vague and ill-suited business proposition: that marketing reigns supreme.

For sure, artists end up in atypical situations in order to stay alive and relevant. The public is most plugged into entertainment that promotes an escalating shock and awe standard, and this means that writers, producers, and performers must continue to push boundaries in order to keep their jobs and/or remain in the public eye. Stars like Miley Cyrus and Britney Spears stun the public by baring skin on camera, while lyrics, such as Robin Thicke’s “Blurred Lines,” are used ever more provocatively. Similarly, the media will only sign artists with all eyes and ears on them. Therefore, it is not enough for a musician to be noticed; they must pop-up and make an indelible impression by any means.  This was not so when recordings were valuable.

The whiplash of free, in conclusion, may well be the complete erosion of recorded music as a commodity. This is a very steep price to pay for the industry.

See the original article here.



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