commentary Musicians aren't merchants.
We certainly learned that through Radiohead and Trent Reznor's separate experiments with choose-your-price album promotions.
But they also illustrated that the music business is probably better left in the hands of businessmen. Musicians are not the new labels. Artists need someone to provide financial support and business acumen. If we end up ridding the world of labels, we'll only have to re-create them -- in some other, probably more nimble form.
Last week, I interviewed Reznor about the online promotion of rapper Saul William's album The Inevitable Rise and Liberation of NiggyTardust. In that interview, Reznor said he was disappointed that only 18 percent of the more than 150,000 people who downloaded the album paid for it. He and Williams offered two options: pay nothing or obtain a higher-quality audio version for US$5.
By backing Williams with his money, name, and know-how, Reznor essentially thrust himself into the role of a music label. That is, a music label with a lot to learn. The first lesson was that you don't always back a winner. A music company's fortunes can often rest on its ability to discover superstars. Profits generated by a few marquee acts have always kept the companies going while all the other performers break even or lose money.
EMI said this week that only five percent of its acts are profitable. This kind of prospecting requires a huge investment.
Reznor said he didn't get involved with Williams to profit, but acknowledged that he spent too much making the album and said he hasn't yet recouped his money. A record company can afford to make bad bets once in a while, said Chris Castle, a music industry insider who has worked as a vice president for both Sony Music and A&M Records. Musicians, even successful ones like Reznor, probably can't.
"Trent thinks that (150,000 downloads) is bad?" Castle asked. "I'll tell you bad. Bad is zero. Bad is when you spend $100,000 on marketing and tour support and you got nothing. Do you know how hard it is to go from a cold start and just get 1,000 people to listen to an album? Welcome to the music business, Trent."
Does that mean, gasp, that record labels aren't entirely evil? Well, maybe. Charges of musician exploitation and plain old bad taste aside, they certainly have a purpose. The music business is primarily about promotion, Castle said. You build name recognition through all sorts of methods: radio play, getting write-ups in music magazines, making sure a CD is prominently promoted in record stores. That takes money. Castle offered this example.
"Finding music at record stores has always been tough," Castle said. "If you go into a store knowing what you want, or you're a music aficionado, it's easy. For the superficial buyer it's harder. Those are the people that are going to be influenced by displays at end caps of aisles or the stuff that's featured at listening posts. You don't get that spot because you're a nice person. All that stuff is paid for."
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