The Music Industry Is A Cancer To Itself
A recent trend (2008 - 2009) in record companies imposing digital downloads or streaming in lieu of actual servicing of music and working an album is again indicative of the sheer suicidal instinct of the music industry. - 25.05.2009
When over 20 years ago the industry imposed a switch from the vinyl format to the digital format it was all about cheaper production and duplication, a more efficient supply chain from shipping to displaying and cost savings for the music industry which was paying the same royalty rate to artists despite pressing cheaper CDs and experiencing lower shipping, distribution and storage costs. Money was saved with digital production as well, but was not passed on.
There was no demand from the buying public for this new format. In fact, many lamented the smaller format, the loss of artwork et al. While the industry saved itself some money it opened the door to the epidemic of downloading and sharing that is today's norm. The music industry was digging its own grave, but to this day can only blame the consumer.
Over a decade ago the general retail industry decided it wants to save money too. The typical 40% - yes forty percent - gross margin of a typical retailer was not enough. It was time to be more 'efficient,' let employees go, automate and then reap the dollars.
To cite one example, gas stations enabled payment at the pump, reduced the number of attendants while simultaneously expanded their merchandise inside from oil and gas to oil, gas, milk, muffins, snacks and, in many cases, a range of grocery items. It didn't work. Why? With customers paying for themselves at the pump (remember: encouraged by gas stations to save on minimum wage jobs) less people were entering the store and were not being exposed to the wonderful combination of gas and orange juice. Worse, with no human interaction due to 'cost savings' there was no one around to ask, "would you like to pick up a litre of milk today?" The efficient machines had reduced the gas stations' sales.
Around the same time, plus a few years, the banks began massive rounds of layoffs. With Automated Teller Machines being installed everywhere the banks were directing customers from the wickets and counters to the self-serve machines. Tens of thousands were laid off at banks as 'cost savings' were realized when employees - who incidentally would need to number in the hundreds to equal the same salary as their genius CEO - were fired, er downsized er right sized, having been replaced by machines that would crash weekly, but would not demand a salary.
As the happy capitalists feted everywhere, once again, something important was missed. The industry was eating itself alive.
Two things happened next. Customers who would be interacting with bank representatives and get personal banking attention were not being sold on insurance, credit card, loans, mortgages and other money-making devices. The screen advertising of the ATM was no substitute for a human asking and discussing the sale of additional services. Many customers ended up obtaining mutual funds, insurance, stocks and other goods and services elsewhere instead of at their bank. The banks' sales for these high-margin services fell. It wasn't long before banks decided to extend their hours, hire more tellers and add customer service staff reversing their own actions and piling on costs training new people.
Worse, the big banks were forced to spend billions purchasing insurance companies, mutual fund firms and brokerages because that was where their customers' money had ended up.
The music industry, however, was busy not learning. Rule number one of marketing is to give customers what they want. It is such a simple rule, yet keeps routinely being missed by the recording industry. From the golden dawn of the compact disc to high music and ticket prices and unto treating its paying customers as thieves or, worse, thugs at shows the music business has been raging a battle against its bread and butter.
Most recently, record companies have substituted servicing albums with a digital download service, following up and promoting with a CD-for-interview mantra, the offering of interview possibilities when the press/radio/media is available with a "band is available at noon your time and that is it" and many more ridiculously counter-productive notions. It is a wonder that there is a single record company standing. On the other hand, this is one golden opportunity for a company to begin offering personalized service, organizing its promotional and publicity activities around its messengers and destroy the competition. Quite simply, the field is wide open.
Metallian has been exposing metal of all kinds since 2002. A quick cursory calculation points at over 3,000,000 (three million) visitors. Refusing to accept advertising or payments of any sorts we have invested time and money building a location for the promotion and spreading the gospel of metal. Thousands of hours of coding, uploading, designing and thousands of dollars of bandwidth, computers and audio equipment were given away or utilized for free on top of the thousands of hours spent reviewing, interviewing, typing and transcribing. There was never a solicitation for advertising.
The response from the thankful record companies? The usual cry that "downloading is killing us", "CDs are available for those who will interview our bands" (apparently reviews are not useful), replaced later by the news that there will be no more CDs, and the import that bands with recent releases are available for interviews only from 10:00 am to 3:00 p.m..
Funny, no media outlet invented the digital format. No consumer demonstrated in front of the record company asking for a CD instead of cassette or vinyl.
One cannot decide on the merit of an interview without having heard the music first. And, apparently unbeknownst to the 'ivory tower', no metal webzine editor manages to get by without working during the day (or night or evening...).
The best scheme, however, was the last. There will be no more albums for the press/radio/critiques. The record labels not only expect a free donation of time, equipment and talent, but also that magazines and their writers spend time and money utilizing bandwidth and purchasing devices to download and burn or play music digitally all for the privilege of granting the labels' products free publicity. The government issued charity status papers of the metal press, writers, magazines and fanzines cannot be far behind!
Never mind that by every rational way of calculation pressing a CD for $1 and mailing it for $2 has to be cheaper than hiring an outside system with costs and charges - never mind that the marketing justification for a transition is non-existent unless one is thinking about the market capitalization or share price of a system like ipool.
The funniest thing about the arrogance is that like those other industries, falling sales will probably hit home the music industry very soon. The current bad times will be remembered as the good old times.
And the aforementioned retail industry didn't even have a free publicity engine that it tried hard to kill like the music business. Imagine if Shell or Bank Of America had a cadre of magazines and web outlets that would take these companies' products and publicize them for free every day of the year, spreading the message to the masses. Even those conglomerates would probably not do their best to make life impossible for their promotional partners.