Now that Midem has faded into a blizzard of press releases and Carlton bar tabs, we can safely say that the quote of the week belonged to Ianl Hogarth, of Songkick, who called Midem 2011 “a year of transition.” Indeed.
This is a little like describing a person who has fallen off a bridge, but has not yet hit the water, as being in “transition”. It might also be described as plummeting to one’s demise.
In his rather amusing description of Midem’s first official “Hack Day”, an attempt at acknowledging the music business’s new, technology-based innovators, he recounts the challenges of presenting his company’s new developments, along with those of other young music/tech firms, in a final presentation at the Majestic Hotel. Despite being one of the three primary hotels around which Midem is centered, the Majestic was apparently unable to provide WiFi. For a technology demonstration, mind you. On the other hand, if you’d like a $25 glass of orange juice, they’ve got that covered.
I think Midem may be just about done.
Attendance this year at the conference plunged once again, and especially in America, Midem felt almost non-existent. The annual pilgrimage of lawyers and label execs to Cannes has slowed to a trickle—fewer deals are being done there, and the ones that are done there don’t justify three nights at the Majestic. It’s hard to imagine one or two European albums from last year that generated enough money to cover the costs of sending four or five A&R people to Midem. The whole event has become overblown, needlessly expensive, and woefully out of date (coming next year: WiFi!)
It is, I fear, a perfect symbol of the music industry itself. It too is in a state of “transition”, and it looks like 2011 is the year where it may take the final plunge and hit bottom. Sales in 2010 fell by more than 15% for yet another year, and even digital sales have started to flatten out. This can’t go on forever. Here are a couple of predictions that are not exactly going out on a limb:
1. There will not be four major music corporations at the end of this year.
Of course, EMI is the most obvious choice for the chopping block, but now it appears that Warner may be sold as well. Or they may buy EMI. Unless EMI goes bankrupt. Or maybe KKR will buy all of them. Who knows? Someone is going bye-bye and it will mean a major upheaval in terms of A&R staff, artist rosters, new signings, and (I dare to predict) royalty payments. Have you ever watched two elephants mating on one of those television wildlife programs? These mergers are never pretty.
Meanwhile, we can also probably expect to see many of the major label imprints fall by the wayside. Def Jam/Island looks likely to either disappear or to be split apart, Epic is an Amanda ghost of it’s former self, and Virgin may have already shut down (and someone forgot to send the memo).
2. The major label “A&R” executive will officially go on the endangered species list. If you see one, be gentle and if you can, give them a job.
There was a rather ominous letter that came out along with this month’s edition of the A&R Registry that outlined the real scope of the blood-letting in the A&R community over the past several years. Rich Esra at Music Registry has been tracking the massacre for some time now—check out the article below from TJ Chapman which quotes some of Rich’s numbers.
These are not the kind of statistics that you want to trot out for the kids at Career Day.
It’s clear that most of the large companies have realized that the discovery and nurturing of talent is better done in a much more hospitable and economical setting than 550 Madison Avenue or Rockefeller Center. Managers, producers, and “consultants” have become the talent scouts and the record makers. The old-school A&R “star-maker” now exists only on television talent contests.
3. The collection crew for music publishers and songwriters is next on the downsizing list. If you’ve got money in the pipeline, be prepared for some leaks.
Across Europe, the various local societies responsible for collecting income in their respective countries have reached a crisis point. Year after year of drastic income drops, new pressure from the European Union to compete with each other for top writers and catalogs, and the ever-escalating paperwork demands have made it a foregone conclusion that GEMA, SACEM, BUMA/STEMRA, SIAE and the like cannot all survive. Consolidation is inevitable. If you thought it was hard to put two major music corporations together, try a marriage between mechanical rights societies across international borders—with all their language, cultural and copyright differences.
The even scarier thing is that Harry Fox Agency, the primary mechanical rights collection organization in the US, is only slightly more stable than its counterparts across the ocean. If HFA is forced to raise its commission significantly, and it’s hard to see how it can avoid it, sooner or later, one of the major companies is bound to pull out. If that happens, the whole collective enterprise could quickly come tumbling down.
Transitions are a tricky business. With so much tough news, it would be easy to toss in the towel. But the point of a transition is that we are going somewhere—even if the ultimate destination is not yet clear. It’s always easier to predict the impending disasters than pinpoint the new opportunities.
But if you’re starting your career in music now, or trying to continue it, you don’t have the luxury of waiting until things are more settled. We’re all living our lives in the here and now. So what can you do to manage the change, and maybe even make it work in your favor? If the old order is passing away, what are the new realities to build around? Here’s four pillars to get you started:
1. Small-time is the new big-time. This is now a business of entrepreneurs.
It’s not just that things have down-sized, and big companies have become small. It’s a change in the kind of people that will become the power-brokers of the industry over the next decade. They will not be corporate executives, lawyers or people who worked themselves up through the ranks of the labels’ marketing or radio promotion departments. They will be talent-finders and developers, creators, and start-up guys—producers, managers, songwriters, indie label owners, app and game designers, and others who are willing to invest in their own big idea and sell it to others.
Not good news for those looking for a steady salary and benefits. But it will be a hell of a lot more fun than working in the Alice-in-Wonderland world of the modern major music corporation. To plot a career in the music business of tomorrow (and I’m talking the near-future), you’ll need to be willing to get entrepreneurial.
2. If you’re not entrepreneurial, go work for the phone company.
No, literally. If all things considered, you’d happily opt for the safety of a large company, but still want to be in the business of music, you’d probably be better off at Nokia than at Sony. Because of the growth in mobile entertainment via the phone networks, particularly in difficult to monetize markets like Asia and Eastern Europe, the telephone networks are poised to become some of the most important big players in the music world.
Look at Verizon’s recent purchase of Terremark, a technology company focused on cloud-based services. In many ways, companies like Verizon, Nokia, T-Mobile and others are the new gatekeepers—as alternatives like Pandora and Sirius reduce the power of commercial radio, access to a young, taste-making audience will increasingly flow through the mobile networks. The communications business will be a key breeding ground for the next generation of entertainment executives.
3. There’s a lot of people lolling around in the talent pool. Use ‘em.
With so much consolidation in the industry, there is a wealth of good, experienced, savvy people floating around out there. While no one wants to take advantage of people when they’re down, many extremely talented A&R people, radio promoters, music publishers, lawyers and others would be eager to come in as a consultant or part-time help for an exciting young company that they believed in—at least until they can put the next pieces of their life together. If you’re starting your own company and you’re running into challenges, you can be sure that there are people out there who have seen those problems before. There’s never been a time when expert advice was as plentiful and affordable as it is right now. Take advantage of it.
In the same way, the emergence of the D-I-Y model in the music world has led to thousands of start-up companies offering alternatives for everything from tipsheets to radio promotion to video production. Many of these companies will never turn a profit and will be gone within a few years. But while they’re here, why not use them as much as you can? Watch my Twitter posts at:
I regularly try to highlight new companies that I come across. There should be a couple coming up just this week…
4. When it comes to money, consider an enforcer.
As much of a proponent as I am of the “independent” model, some of the problems on the horizon for collecting and distributing royalties are going to cause real pain to small, songwriter-owned publishing companies. The merging of societies in Europe, and the possible disintegration of HFA could leave money in limbo all over the world, and that’s not an easy challenge for any new start-up venture to surmount.
If you have money being generated by your music now, or if there is going to be money in the “pipeline” in the next 12 months, I might suggest that you explore the possibilities of finding a larger company with whom to partner, at least on an administration or collection basis. It doesn’t need to be a major company (in fact, it probably shouldn’t be). You just need someone who is sufficiently stable and established to be able to fight for your money, and to be part of any settlements or class-action lawsuits that may arise. Happily, there is a reasonably good selection of small and mid-size publishers, some who specialize in administration or collection. Provided you can show that there is significant income out there to be collected, someone will be happy to partner with you and help you get your money. In times like these, it’s sometimes good to have a bigger, stronger friend in your corner.
I had lunch last week with an old friend who reminded me that this is not the first time in our careers that we’ve seen the music business “in transition”. Back in the early 1980’s, when I was first entering the industry, the business was in a shambles— with falling sales, lay-offs, and dire predictions for the end of the world as we know it. All was saved by the advent of the CD, “Thriller” and MTV.
The point of a transition is to pass through it—and that means adapting, and re-adapting as fast as you can. As frightening as they are, even the current challenges can be surmounted. You just have to think strategically. Don’t fall off that bridge. Dive.