Radio Goo Goo

How does one analyze a business model that is sprawled upon shifting sand?   Media pundits and industry insiders are treading with care; there is no longer a magic formula on which to pattern an artist’s career, no roll-out progression guaranteed to rake in enough profit to repay hefty recording advances.     Careful observation and analysis of light-speed trend changes rule in an era of a la carte purchasing.

The internet generation set this shift in motion more than a decade ago with the emergence of MP3 audio encoding.   File sharing services like Napster and Limewire became the distribution vehicle of choice, complete with a storm-cloud threat of a piracy law that seemed to garner little credence.   The record labels threw tantrums in their ivory towers; lawsuits were lobbed at a few unsuspecting Joe Publics, high-profile recording artists tested fan loyalty and the future seemed uncertain.  Then Apple swooped in with an entirely new business model; a virtual store peddling $0.99 cent songs.  It was radical in its simplicity and the dust began to settle as a brave new world was formed.

We live in an age of playlists, lovingly assembled on portable MP3 players and mobile phones.   Space is finite; we choose our songs carefully, based on mood or the call of childhood nostalgia.   We shuffle our songs to break up the monotony of genre or keep us on our toes.   The internet is like a smorgasbord of musical tastes, and we are free to pluck whatever we want from the table.

The conventional industry model, most thoroughly examined in M. William Krasilovksy and Sidney Shemel’s This Business of Music, dictates that an album of 12-13 tracks would retail between $12.98 and $15.98.   The public is titillated by a single – something indicative of the artists brand of “sound”, and catchy enough to earn radio spins.   The bulk of the label’s financial clout is placed behind this single, complete with music video and late-night television performance tour.    However, when expectations have been set to under a dollar per track, few artists can demand an all-or-nothing album purchase from a fickle and ravenous public.    Singles prevail and profits are barely enough to cover the album’s hefty advance.

Gimmick releases (think holiday albums, movie soundtrack compilations, Best-Of collections and cover recordings) are low-risk ventures with relatively high returns.   It is a cut-throat arena for an emerging artist, who must carefully balance between the lure of something new, and the safety of predictable pap.    In the rare instance of an album boasting multiple potential hits, the record label will carefully stagger the release of each new single with the standard publicity blitz each time.   It is expensive and risky; they are largely dependent upon radio (primarily Clear Channel) for embracing each song so that it may slowly accumulate station adds and audience exposure.   It may take months for a song to seep into the public consciousness, at which time album sales may be temporarily buoyed until the next single can be debuted.   It is a delicate and nerve-wracking process that can be only be undertaken by the industry cream like Beyoncé and Lady GaGa.

As a medium, radio allegedly died with the advent of MTV in the 1980’s, so how does it still wield such power in the music industry?   Essentially, people remember music that is experienced with other people; whether in a car, restaurant, nightclub, park, sports stadium, or family room.   Radio is everywhere.  Teenagers used to come home from school with their friends and visually connect with their favorite songs by way of the music video.   When Viacom-owned MTV became a reality television network its mantle was never picked up.  YouTube, now owned by Google, is the modern world’s music video headquarters, but the sensory experience is lonely and cold in front of a computer monitor.   Where is the sense of community that is so intrinsic to music?

It seems we are still trying to figure that out.   According to Wired Magazine, Univeral Music Group, Sony Music and Google are teaming up for the launch of VEVO, a video streaming site that will boast only professional content—think Hulu, but for music videos.  Will it be successful?  Some big name recording artists (Lady GaGa, Adam Lambert) have already signed up for ad campaigns to market the site.   The appeal lies in the exclusivity of its branding.   Again, warmth and approachability seems lacking in this business model.

The next chapter in the transformation of the music industry will, I think, be written in mobile cyberspace. Technological convergence devices such as iPhone bring about the potential for purchasing access to live, streaming concerts in high quality picture and sound from anywhere. Record companies have before them an opportunity to resurrect tour support, a form of promotional subsidy that hasn’t really existed since the 1970’s.

Recorded in high definition, distributed across mobile broadband networks to mobile convergence devices, the marginal income from pay-per-view live streaming of concerts could replace conventional channels of record promotion—e.g. radio—while simultaneously recovering costs of advances paid to the artist on singles released side-by-side on the same internet retail outlets. There is still hope for the album in the form of the iTunes LP, but the success or failure of that product—liner notes, extras and videos packaged with the album tracks—depends in part on whether or not the pricing relative to the value added is attractive enough to sway younger consumers who grew up with the digital single.