music industry

How The Music Industry Garnered Record Profits in 2008

December 5, 2008 by Jim Connelly

With Chinese Democracy topping 1.5 million in CD sales and downloads in its second week — for a two-week total of 5 million, the best ever — it is now official: the American Music Industry has never been healthier. Even in what is easily the most crippling recession most of us have seen in our lifetimes, people are buying music at a record pace.

How have they done it? According to Frederick Stamphammer, the RIAA’s Vice-President of Digitization — and the man seen by most insiders as the key figure behind the transformation of the music industry into a virtual profit machine — it was by seizing the opportunity afforded by the internet nearly 10 years ago.

Why Gene Simmons Hates You

June 23, 2008 by Jim Connelly

You know what, music fans? You suck. You know how I know that? Because Gene Simmons thinks that you killed the record industry.

Look, when I was your age, a band like KISS would come out with an album, and it would get played on the radio, and then you would ride my bike down to Tower Records and buy the album.

Multiply that action by millions of kids — an army! — and boom! the guys in KISS were zillionaires. Just like that. It was all so simple. It didn’t even matter of those albums were mostly singles and filler, because that’s how the game was played.

And nobody ever played it better than KISS, who were — all things considered — an OK hard rock pop band with a handful of undeniable songs, but not all-time-greats. Not musically.

As marketers, however, they were the best ever. Not even Madonna comes close to the sheer marketing chops that KISS showed from day one. Until, that is, the market changed.

Fools Go Forth: Digital Distribution And Artist Compensation

July 13, 2006 by Kassia Krozser

It is no secret that most entertainment companies are inefficient businesses — they spend far too much and save far too little. Nothing exposes this inefficiency like digital distribution. Even better — nothing exposes the inequities in artist compensation like digital distribution.

Artist royalties are calculated based on a contractual formula. Depending on your agreement, you might get a percentage of net revenue that takes the sales price less returns, bad debt that sort of thing. Or a percentage of net revenue that factors in certain costs like product manufacturing, mastering, freight, whatnot. The deals differ across industries, but, interestingly, when you look at how book royalties, music royalties, and home entertainment, formerly video, royalties are calculated, they are remarkably similar. Motion picture participations (video royalties are a subset of this) have additional complexities that I won’t cover here.

The Universal Plan To Save CD Sales

July 6, 2006 by Kassia Krozser

Sometimes, you hear a story and think, “Hmm, good column material.” Sometimes you hear a story and think, “They’ve got to be kidding. Hmm, good column material.” And sometimes you hear a story and think, “What? They’ve got to be kidding me. Hmm, good column material.” Case in point: Universal’s big plans overhaul their CD packaging.

The proposed scheme was all over the news yesterday — such is the luck of those who live in Los Angeles — and goes something like this. Universal will offer snazzy new packaging with higher prices on new releases and no-frills packaging with lower prices on catalog product. See, ’cause it’s the jewel boxes that will drive consumers to the stores.

This Lawsuit Isn’t Just A Cheap Trick

April 28, 2006 by Kassia Krozser

Way back in the early eighties, a revolution happened. Giddy with the power of new technology, motion picture studios rushed to release their back catalogs on the new-fangled videocassettes (and some on laser discs, but that’s a story for another day). They knew full well that this was a foolhardy decision, but with dollar signs in their eyes, how could they resist this new revenue stream?

Why foolhardy? Because the existing agreements with talent, from a participations and residuals perspective, didn’t cover this new distribution channel. With residuals, somehow the studios won and were allowed to continue to calculate payments as a percentage of a 20% royalty calculation. As I noted earlier this week, the guilds aren’t likely to take this forever.

How The Single Will Rule The World

April 14, 2006 by Kassia Krozser

I have this theory: either you’re a singles person or an album person. Sure, you can do both, but your heart tends to lie with one or the other. I’m a singles person. With one notable exception, I don’t listen to many albums straight through or front-to-back (depending on the era of my listening). I like compilations, a bit of randomness, and that frisson of joy that comes when two unrelated songs form a connection in my mind.

Number 3 With A Pound Key

April 11, 2006 by Jim Connelly

In what is nearly the polar opposite of U.S. record labels trying to goose album sales by not releasing singles for downloads, the U.K. music industry is releasing a cell-phone only single.

That’s right: a cell-phone only single. “Stop Me,” by Planet Funk. Can anybody say “Publicity Stunt”??

Piracy, Perks, and DRM

March 31, 2006 by Kirk Biglione

The RIAA tells us that piracy hurts artists, so we all try to be good little consumers who acquire music legally whenever possible. Who wants to hurt an artist? It’s like hurting a kitten.

Fortunately, in the 21st century there are quite a few ways to acquire music legally. Thanks to iTunes it’s possible to build your music collection while draining your bank account in 99 cent increments.

If you’re “of a certain age”, you probably still buy quite a few CD’s to round out your music collection. And, if you are a serious music collector, you probably buy a fair number of used CD’s. Serious music collectors have to buy used CD’s because new CD’s are priced for people who like to acquire music in small doses.

Now I’m going to tell you something you probably don’t want to hear: Buying used CD’s hurts artists.