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Last week Warner Music Group reported more losses and announced write-downs of its investments in music tech startups imeem and lala. RealNetworks announced wider losses than analysts expected, and concert giant Live Nation said that tickets sales are down 22.6%. Only EMI reported that things were looking up, but most of their gains came from cost cutting rather than new initiatives that are admittedly in their early stages.

In recent weeks, shutdowns mounted from Seeqpod to Spiral Frog. Others like imeem are struggling to survive and the venture capital to save them or to fund new companies is disappearing faster than free beer on Bourbon Street. Mix in several years of sales declines plus a troubled global economy and you see just how deep the music industry’s problems are

Despite all of this, perhaps even because of it, I’m optimistic about the music industry.

They say it is often the darkest before the dawn; and just as an addict has to hit bottom before committing to recovery, the music industry needed to be shocked into facing the new realities. Certainly, there are many holdouts and others who talk the talk, but don’t really walk the walk. There are however, many hopeful signs.

More and more smart men and women with vision are being hired at the major labels, particularly in digital and marketing.; and some are being elevated to positions of real influence. I also see more music tech startups emerging from unlikely places that understand the power of launching lean

But my greatest source of optimism for the music industry comes from the rising musical middle class – a middle class not just of artists who from Jill Sobule to Corey Smith and other artists are finding success on their own terms – but also of indie labels like Asthmatic Kitty, Park The Van, Suburban Home and ABB who are finding success by nurturing great music music and embracing music 2.0 instead of swimming against the rising tide. They are the future.

Despite all of the real gloom and doom; the sky is not falling on the music industry. Gone are the helicopter rides from Cannes to Monaco for lunch; and MIDEM may have to start running buses from the train station instead of just from the airport. But this was always about the music. Some of us just let the money get in the way.


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5 Comments

  1. I’m also optimistic about the Music Industry’s future. However, not being addressed here is the SOURCE of the problem – what’s being commented on are SYMPTOMS. I sense the underlying viewpoint in this article that I hear from those not fully educated in the sometimes seemingly antiquated subjects of “right and wrong” and “common sense” and “character” and “work ethic” and “honesty.” in actual fact, these subjects are alive and well and applied by the majority of people. There are a minority of people, like the founder of Napster, who, single-handedly (because no one stood up and acted upon the source of a problem but rather addressed the symptoms created) caused a mass shut-down of record stores in 1999-2000, which only got worse from that point on. by the year 2000, 12 months after Napster, over 200 record stores shut down in the U.S.
    The music industry is declining because no one has stood up and offered and executed a plan that will stop thieves. Plain and simple – stealing is wrong. I hear a few (who spread this to the many) arguing about how BAD corporations are and how BAD large companies are and how these corporations and large companies are “ripping off” the public. Look at the pot calling the kettle black! I invite your attention to the fact that the complainer is guilty of his complaint. Large corporations are not “evil empires” that can be stolen from. But it’s a nice excuse and justification for stealing by a few rotten apples who then spread their insidious ways to the weak and meek around them. Stand up people! I’ve got a plan and am about to go into the strategic planning stages of how to boost not only music industry finances, but the world economy. And it’s based on, oh no, the sometimes seemingly antiquated subjects of “right and wrong” and “common sense” and “character” and “work ethic” and “honesty.”
    If no one stands up to a bully, the bully will follow the path of least resistance and spread his damage and confusion. STAND UP PEOPLE. If you download illegally yourself. STOP IT. If you believe in Karma or reciprocating actions of life, you will be robbed if you continue to steal. In some way in life, you will be robbed. Then reach out and ensure others are not stealing. This will require a certain amount of policing action. I’ve had it with the passive “everyone else is doing it” attitude of thieves in our ethically watered down society. Stay tuned for an international solution to the blighting of economic growth in the Music Industry.

  2. Very interesting comment, Gary. But I am confused with the conclusion, something is missing, please elaborate.

  3. That’s a great read Bruce, thanks for posting!
    I have always held hope and looked at the positives. The biggest thing for me is that more people are consuming more music in more ways than ever before! Musicians that want to be heard and share their work will not fail if they embrace the new technologies and opportunities. Just because a few execs lost their chopper rides (as you say), doesn’t mean the music industry is dying.
    I share advice for independent artists and small business where I can (http://leejarvis.blogspot.com/) and it’s nice to hear someone else re-iterate my thoughts.
    Best,
    Lee.

  4. Sherri Riley on

    I read Houghton’s article about his optimism about the music industry and I couldn’t help but think the music giants are getting what they deserve. Their narrow thinking and exclusion of most of its customers, forced many to look for alternate ways of obtaining new music. I can recall how they lost my support. Personally, I had to resort to internet distributed music and internet radio just to have access to the music that I prefer. I got tired of hearing the same artists played over and over on the radio. As I got older, it was harder to find diverse music. I found myself missing AM radio from the seventies where you got to hear all genres of music. Blacks listened to white music and vice versa -their was less market targeting. I do not support piracy, but I do support indie music, and I love websites that support new music. I go out of my way to support things supported by indie artists. I read labels now and will choose not to buy a CD manufactured by a major label. I will buy a CD from an indie artist without even hearing it because I want to support their effort and music. Somewhere I lost interest in buying music. I use to spend hours going through bins at record stores. Major labels forgot that their record buyers age and grew up buying music. Concert tickets are so expensive, that the average working person or couple can not afford to attend the concert. We want our children to have that same access to concert memories that we had, but we can’t afford to take them to these concerts. Artists and record companies have to take responsibility for producing concerts that exclude the majority of its fans. Youtube, iTunes, Rhapsody and the early innovators of internet music media, made it accessible to the average person. I can not afford to pay $100+ per ticket to go see my favorite artists, but I can sit for hours and look at concert excerpts on Youtube. I think it is great that commonly overlooked musicians were smart enough to self-produce and self-distribute their music on the internet. We use to exhaust our hard earned money and time trying to get the majors to pay attention to our talents, and to look beyond our looks and age. The internet gave us access to other listeners, consumers, and genuine music lovers. I think the old institutions that represent greed, exclusion, and promoted mediocrity should fade away, and make way for new, fresher ideas.

  5. Gary
    While I would love to share your optimism, I know deep in my heart that technology alone will not shift the fundamentals of our culture and economy. We are at a very interesting time, where many things are possible, but unfortunately what is most probable is an inevitable reshuffling back to the status quo. Albeit with a new face. Google/Apple instead of EMI/Sony Meet the new boss, same as the old boss.
    Wealth and power are too consolidated for any new system to truly emerge on a mass scale. Try accessing forbidden web sites in China if you doubt it.
    Still one must strive to shake off the complacency within and without us.
    XXOO
    Bobo
    http://bobobuabalisky.blogspot.com/
    http://govangogh.net

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