Death of the Pop Music Industry and the decline of Popular Culture

The audience at the Sam Houston Racetrack during day three of the Willie Nelsen Picnic 2008 (July 5th).  this was the biggest crowd of the three shows we did and a significant proportion of the audience were in a much older demographic.

The audience at the Sam Houston Racetrack (Houston, TX) during day three of the Willie Nelsen Picnic 2008 (July 5th). This was the biggest crowd of the three shows I played with multi-Grammy Award winner, Ray Price.  A significant proportion of the audience was comprised of an older demographic than one would find at some Pop Concerts.

John Loken, a former record label marketing exec posted an intriguing blog last February (2011) titled “The Death of Pop Music?” where he talks about the decline of, well, Pop Music.  In particular, the industry “defined as the commercialization of short form songwriting, a historic aberration that lasted for the better part of the 20th century” is what he’s referring to here.  He gives a short run-down of that industry’s history that’s a counterpoint to the history of how the Cost Disease has shaped Pop Music that I outlined in a previous post.

The pop music era started with ragtime and the player piano roll, evolved with composers like Gilbert & Sullivan and George Gershwin, and flourished with the advent of broadcast radio which popularized recording artists during WWII. Pop music reached its creative zenith in the 60s through 80s (a completely subjective analysis, I’ll grant you), and hit its commercial peak in 2000 when the inflated returns from CDs masked the creative stagnation underneath. (Again, ‘stagnation’ may be too strong a term, but I think digital recording tools removed all barriers to entry, effectively diluting the market with mediocre artistry; a separate post, I suppose). Napster’s disintermediation and Apple’s unbundling of the album hastened the collapse of concentrated/controlled music distribution – the engine of economic rents for decades.

He mentions a Wilkofsky Gruen Associates study that concluded that:

showed that between 2000 and 2005, leisure hours spent consuming music dropped a precipitous 37%, while videogame and internet consumption increased 30% and 20%, respectively.

And gives some of his own commentary about this:

The study did not take into account multi-tasking – arguably the prime mode of consumption these days – but what can you say of an art form that is best enjoyed “in the background” while engaging in more compelling activities like posting status updates or slaying digital dragons?

It’s not that there isn’t plenty of great music being made. It just isn’t as central to the culture as it was in 1969. Each artistic movement, be it Gothic cathedrals or American Primitives, has an arc of popularity that eventually diminishes.

He concludes with:

It’s not that we should stop making music – I still sit down at the piano and bang out tunes all the time. But if you want to make money doing something you love, it may be time to find a new muse.

Income from music doesn’t have to come from “fans”

In another post by fellow blogger, Suzanne Lainson, different models of monetizing (or not) music have been placed on a “Five Degrees of Separation of Music Income” continuum.  As Lainson explains:

The reason I want this discussion out in the open is to get us past the idea that today’s musician needs to concentrate on fan purchases for financial support. It’s certainly one way to survive as a musician, but not the only way. If you can find a non-music day job that pays well, it may be far more time and cost-effective to do that than to jump through hoops looking for music-related projects you can do. Don’t assume that being a musician means everything you do for money somehow has to point back to your music.

As I’ve been emphasizing in recent posts that audiences (i.e. fans) aren’t necessarily the bread and butter of entertainment industries (such as pop music and sports) I think her music income continuum is a far more useful way of showing how many diverse revenue streams exist (and she gives some wonderful examples).  As I mentioned in a previous post, Diversification of Skills is a far bet for generating reliable income from music.

Lainson then explains how a musician’s music can be easily “decoupled” from the musician’s income.  While she doesn’t specifically refer to the current Emily White debacle and the current ‘free music culture’ shift this is simply one way amongst many that income from a musical product can be redirected to someone other than the musician.  As she says:

Just as it is possible to couple your music with non-music goods and services to generate income, it is also to possible to decouple your music from non-music sources of income.

And this means that while you can bundle your music with t-shirts or online fan communities, so, too, can non-musicians bundle your music with their t-shirts and communities. (Even if they don’t have an agreement with you, there are multiple ways to tie your music to their stuff, which most musicians like anyway as a way to get extra exposure.)

In other words, there’s no rule that says a musician’s music is going to automatically be linked with the musician’s source of income. They can, and often are, two entirely different worlds. And sometimes it makes financial sense to approach it this way.

Radiohead wouldn’t exist without early major-label funding

As I’d been blogging about the infrastructure that supports entertainment industries and how those are as important, if not more important than the actual fan base.  Mike Doughty has posted a piece following the Emily White/All Songs Considered/David Lowery debacle which discusses this.  Doughty is currently a successful touring solo musician but was a member of Slash/Warner Bros. signed band, Soul Coughing, so talks about the big label business from the inside as a signed act.  In fact, there have been a spate of pieces written by musicians who previously had been signed by big labels who have weighed in on this particular debate–mainly to reiterate how little money is actually made by pop musicians who are signed to labels.

The title to his post is pessimistic, while the actual content is cautiously optimistic: Radiohead wouldn’t exist without early major-label funding. The future won’t bring new Radioheads. All I want to say here, truly, is: let’s get used to it.  Nothing he says in the piece is particularly controversial regarding the finances and economics of touring–anyone who’s toured knows the ins-and-outs of what he’s describing.  But a few select quotes may illustrate things better than my condensed verbiage:

Think of successful rock bands from the 90s, and imagine that they lacked the funds to circle North America and Europe four or five times within a couple of years. Without that funding, without the essential groundwork of developing an audience, most of the successful 90s bands just wouldn’t be around.

A song on the radio will not pack clubs instantly—and packed clubs, even theaters, are unlikely to be enough to tour without taking tour support from a label. Bands with hit songs still have to circle the country for a couple of years to build an audience, and, from there, a real career. Some people come because they love the single, and, if the show’s great, a live fanbase develops.

Summary: be solo, or a duo, because a full band is financially untenable; work much, much harder, under much more stressful conditions, than bands of earlier generations had to. Be very young, or have the ability to take the broke-ness, the physical and emotional knock-around, that very young people can.

Without the financial backing of a big label, most touring pop artists wouldn’t have survived.  Without that initial tour support it’s also likely the big pop Superstars wouldn’t have gotten to the point of being a big pop Superstar.

 Five New Ways That Hollywood Is Making Money

Given that audiences, or a “fan base” if that is a better phrase, isn’t the lifeblood of revenue for large organizations (and as I’ve been blogging about, for the smaller artists as well) what exactly does generate revenue?  We have three industries–Pop Music, Sports, and Classical Music–that all have a similar ratio of performance income (i.e. income earned from ticket sales/audiences) to total income and I’ve blogged a bit about the licensing, donor support, and merchandising which makes up the lions’ share of revenue.  A recent piece by Edward Jay Epstein discusses ways that the Hollywood industry mitigates the  performance income gap.

It’s all about diversified income streams.  At the same time, it might be surprising to note No. 4 in this list:

4. Studios have reduced production costs by paying stars only a fraction of their official “quote” or asking fee. In exchange for having them sign a “side letter” in which they agree to the cut, studios allow them to claim they got their full fee in the contract. For example, a big name star may have a quote of $10 million, which is inserted in the contract, but he or she will be paid only $2 million. The $8 million vanished through a side letter which the star simultaneously signed relinquishing part of the sum in the contract. Since side letters are kept secret by studios, the star can pretend to receive far more than he does. Stars accept these drastic cuts because they (and their agents and business managers) would rather make a fraction of their quote than no money at all, as long as the world does not find out. For studios, these side letters substantially decrease the cost of making movies.

So by increasing foreign yields, and expanding into other media markets through licensing and video on demand (VOD) and television, big movie studios are paying actors far less than they are claiming to pay.  Cutting costs on what is almost invariably the biggest expense in any performing industry–namely the performers’ salaries–isn’t something foreign to a huge industry that seems to be, on the whole, doing fairly well.  All this while, as Epstein states, headlines

screamed in early 2012: “Movie attendance falls to 16-year low,” “Hollywood in turmoil as DVD sales drop,” and “John Carter Financial Disaster For Disney.”

The disconnect between actual revenue against performance revenue (from ticket or DVD sales) shows how diversified revenue streams have more to do with Entertainment industries’ success than the actual “fan-base.”

Why the obsession with building audiences then?

So the big question for anyone in the performing or entertainment business is: Why do we obsess about building audiences if this kind of initiative has little to do with economic prosperity and sustainability?

Especially given the rise of the “free music” culture, having evolved in part due to changing technology as well as a more participatory ethos.  Lainson, in another post titled ‘The Recession and “Amateur” Talent‘, discusses some of the [5]  issues:

1. Live shows often seem to be a way for fans to highlight themselves (via sending text messages about the concert to their friends, taking photos and emailing them to friends or posting them online, videotaping to upload on YouTube, etc.). So I see live music being as much or more about the fans wanting to be the center of attention than it is about listening to the music.

2. Economic trends. If people are becoming permanently more frugal, they may not spend a lot on music-related items. If they can get some satisfaction by hanging out with friends at backyard jams, they may go for it.

3. Technology is allowing more people to play with the musical process. YouTube, music video games, music iPhone applications. These are all ways for people to get involved, often with little or no skill. As technology gets better, it can do even more to produce music for people. It isn’t so much that they will create great music. It will be enough that they feel they have done something worth sharing.

4. Crowdsourcing. The Internet is allowing more people to collaborate. Therefore they are learning about participatory culture. I think the idea of being passive fans is going to be less appealing to them.

5. Music consumption changes. Compare classical music audiences to rock concert audiences. As times change, people change how they listen to music.

In summation, just as MP3s were a disruptive technology for the music business of the 2000s, I think technologies that allow everyone to be a music creator/producer/promoter will be disruptive technologies in the future.

We have gone from major labels selling millions of copies, to independent artists selling or giving away thousands of copies, to perhaps millions of people sharing music with 10 to 100 of their closest friends.

If some of my visions of the future are correct, then the music business has to change some more. More people making money; less money, on average, going to each artist.

Music consumption and the audiences that drive it is fragmenting.  Not just in the variety of available genres but also in level of participation in them.  While audiences may not necessarily matter so much in some sense, this is where it can.  Fragmentation simply means fewer audience members even for what used to be considered a “mass media” in the past.

Just looking at the Nielsen ratings for top television shows from the 50s till today shows the precipitous decline in the popularity of any particular series.  And even being the top rated show on the air matters little if the demographic for that show (or station) isn’t in the coveted 18-49 one which is increasingly being shown to be nowhere near as profitable a demographic to cater to given the relative buying power of other [older] demographics as well as specific audience segments.

Blogger, Fire & Air, had some humorous things to say regarding the aversion we have to an older demographic:

The entirety of Western culture hates old people. And classical music thinks it’s being revolutionary by trying to go along with this. Just what we need — one more cultural entertainment arena that disdains anything and anyone with grey hair and acts like you might as well crawl into the grave when you’re 40.

I have to say it — I wonder how much of this total detestation of the older audience isn’t an expression of the insecure midlife crises of the music professors in today’s colleges who are desperate to appear “with-it” to their teenaged and 20-something undergraduate students.

While also bringing up a neglected audience segment:

If they really wanted to attract the new generation, they’d take a page from the anthropologists and attract mothers … When you get something into a culture via the mothers, it percolates down to the kids. Pique mommy’s interest, and the family will follow.

And if the media licensing that is the “bread and butter” of revenue providing the economic infrastructure for certain types of “Popular Entertainment” falters, then so does the infrastructure that supported other related endeavors which benefited from externalities created by that infrastructure.  We’re at the long tail now, and only the very few will benefit from the older structures as they still have the economic resources to capitalize on them.

Focusing too much on audience development yields decreasing returns today just as it did in the past–it’s just that in the past the audience was less fragmented so there was more of a buffer before hitting the line of decreasing returns.  For the independent musician in an increasingly fragmented culture, that line isn’t too far from home.

________________
Many thanks to Suzanne Lainson for pointing out all the pieces and blogs referenced above.

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5 thoughts on “Death of the Pop Music Industry and the decline of Popular Culture

  1. I just stumbled upon this. Thanks for the mentions. My goal in many of my posts was to open up the conversation beyond the usual rehash of topics we hear so much in music industry discussions.

  2. Late to this post, but this pull quote that you grabbed jumped out at me: “If you can find a non-music day job that pays well, it may be far more time and cost-effective to do that than to jump through hoops looking for music-related projects you can do.” I can’t agree enough with this. I have a day job — more than a day job, a day career, and a good one that pays well with people I like. Health insurance, stable income, a car that works, a nice apartment … Why the hell would I want to give any of that up? Sure it’s frustrating not to be able to write music 24/7, but I’m not sure that’s a specifically artistic angst. Everyone wants to hit the lottery and not (really) work for a living. It’s just that that guy over there might want to play video games and online poker all day, and I’d like to write music and plonk around on the piano all day. My desire to write and play music 24/7 isn’t any more of artistic than his desire to play games. It’s just what I’d rather be doing with my time, and artists too often I think use “I can make a living from my work” as the excuse to tell themselves that it’s feasible.

    And for someone like me, I really do like financial stability insofar as it ever exists. The fact that I have no fear associated with my music is part of what enables me to make it. I can take my time with it. It moves more slowly yes, and that’s frustrating. But it moves. The free time I would get from quitting my job and “going for it” would be far outweighed by the creativity-crushing terror of not knowing if I were going to make rent or not. There is a LOT to be said for having a separate career from one’s art. Not all artists need to have the sort of personality that becomes more creative from sleeping on other people’s couches and living on Ramen. I think most don’t.

    • There’s something to be said about having stability and a job that has next to nothing to do with your art. Einstein wrote his three seminal revolutionary papers that inaugurated paradigm shift from Classical Mechanics to Relativity and QM all while working as a patent clerk. Some argue that his having an academic position stymied his creativity!

      That’s why I advocate multiple income streams for any musician who wants to do that full time–unless you’re in the minority of being a superstar or tenured member of a full time ensemble like Orchestras and Broadcast network bands, then you’re not likely to make “big money” doing one thing.

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