Music industry struggling to adjust

The music industry has been in denial for some time now.

The current incarnation of its business model is rapidly becoming obsolete, following seemingly every model based in the offline world. But look at what happened to Ford, General Motors and Chrysler when they stuck their fingers in their ears and kept churning out cars; analogical thinking says Universal and Capitol Records may be asking for a bailout soon.

It’s safe to say the industry is hurting in this economy ““ it’s a safe thing to say about almost anyone ““ but the damage done by consumers locking up the last of their savings is hard to separate from the music business’ steady disintegration of the last few years. Last month, Rolling Stone quoted some devastating statistics describing the state of the musical union: Virgin Megastore will close all of its six locations by summer, and Circuit City has closed its remaining 567 stores. The recession may have pushed those retailers over the edge, but Nielsen SoundScan reported that album sales have dropped 45 percent since 2000 ““ well before the economy went south.

On March 31, a leading entertainment market research firm, the NPD Group, released the results of their tracking survey that perfectly illustrated the two-front war being waged on the music industry. Apparently, teen consumers purchased 19 percent less music in 2008 than in the previous year, and while a quarter of those surveyed attributed the cutback to a lack of funds, CD sales took twice as big of a hit as paid digital downloads.

There may not be much the industry can do about the recession except wait it out, but the additional burden makes it so much more crucial that anyone who wants to stay afloat address the long-term problems. It has been apparent for some time that although consumers are transitioning to digital ““ Rolling Stone reports that iTunes is the nation’s leading retailer ““ the model is nowhere near as profitable as CD sales. If the record companies don’t work seriously toward making digital work for them, they may be doomed to wither and die.

Another possibility, though, is a kind of populist coup d’etat. While the industry’s major players run the old system into the ground, there are signs that other forces are working to pull the rug from beneath their feet.

Fourth-year political science and communication studies student Jarell Perry is a solo artist and the frontman of JP and the Ambassadors, and he sees a potential turning point for the industry. He promotes his music through social networking and free digital downloads, and he’s not the only one.

“Giving away free downloads and even whole albums is quickly becoming the norm, because for new artists, the exposure is always more valuable than the money,” he said.

It seems counterintuitive to hand out music for free at a time like this, but Perry finds himself in good company. There are, of course, the precedents set by Radiohead and Nine Inch Nails, both of which have made albums available for free digital download, but bands of such stature have a lot of room to experiment. More promising is the list of artists such as Lily Allen, who attracted major label attention through online promotion. Giving away free music won’t make for a profitable career, but it may be the best way to get one.

This is all part of a broader theme of artists pursuing their careers in more creative ways. Amoeba Music in Hollywood, one of the few record stores still in relatively good shape, has seen firsthand the resurgence of vinyl record sales in the past year according to Jim Henderson, Amoeba’s general manager. It may just be a fad, but it reinforces the image of an industry in limbo. The record label executives can sit back and watch CD sales dwindle into nothing, but it appears that artists and consumers are growing restless enough to try different approaches. They might not all work, but there’s a good chance we have fallen into a situation desperate enough to generate the next great idea for music consumption.

According to UCLA professor Anthony Seeger, who teaches a course on the music industry, we’ve seen this all before. Not only has the business gone through cycles of revolutionary change in the past, it even happened the last time our economy looked this dismal.

“The spread of jukeboxes of the 1930s, which saved the recording industry during the Great Depression, put a lot of live performers and small bands out of work,” he said.

Clearly the jukeboxes didn’t put the nail in the coffin, though, and the overhaul the industry faces now is unlikely to be the last one. The decline in CD sales is indeed steep, but the music industry isn’t dying; it’s adjusting, and artists like Jarell Perry have the opportunity to catalyze that adjustment.

“For those bold enough to push through the hard economic times, it’s an opportunity,” Perry said. “For others, it’s a burden.”

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