How hard times will affect the music biz

As I was reading through this Advertising Age article about how the recession is going to hit local publications, an unsettling thought occurred me besides the very frightening fact that my retirement fund was quickly disappearing.  It’s obvious that this economic downturn is going to have a terrible impact on the music industry, which already hasn’t been seeing a lot of rosy days lately.

- MUSIC SALES
Already, the trend was that while CD sales were slumping, digital sales were rising but not enough to take up the slack.  That’s been the big thing hurting the majors other than their short-sighted digital strategies (which kind of goes hand in hand actually).  Obviously with people having less money to spend on music, in CD or MP3 format, what do you think’s gonna happen to sales?  Yep, they’re going to sink… even more. 

What that means is that people will buy less and may migrate even more to the unauthorized download services to get their music when they want it.  Even Apple won’t be immune- less money flowing means less money for iPods, which is where they’d ideally be cashing in.  It may also mean that the big retailers who sell almost as much physical product at their stores will cut back on CD’s even further with less demand.  It may also signal even more music stores (big and small) closing down which were already suffering from the digital competition.  It’s especially bad timing for MySpace who just opened their digital store and were hoping to become an even bigger player in the music marketplace- at least they can blame their crappy sales on the economy as opposed to their flawed business model (which gives them pennies for songs which they have to overpay for sale).

For the big labels themselves, even after all the bloodletting that they’ve done in recent years, they’re going to have to go into overdrive printing out pink slips- cutting even more and more staff to keep their masters on Wall Street happy.  Needless to say, they’re gonna become even MORE selective about who they sign now- it’s getting to be a smaller and smaller number and having to shrink that even more is gonna make it even harder to squeeze more money out of less artists.

One solution?  Even if Apple isn’t happy about flexible pricing, artists and labels may fiddle with the idea until they find the right balance that gets them some money at least and keeps the fans buying something.  Also, going with singles or EPs for now and spacing out more the time between albums might be a good idea unless you wanna experiment with the pricing for the later.

- MERCHANDISE SALES aka Merch
Yep, this is going to sink too, as fans will have to decide how much they need a shirt or poster or special edition thingy compared to paying for gas, bills and the other vital things of life.  This is especially bad for bands who are relying more and more on these kinds of sales as album sales plummet.  Because many of these kind of items are designed and ordered in advance, these groups are going to be stuck with a mountain of merch that they probably can’t sell or be forced to try to push them at cut prices, which might mean a good bargain for consumers, but tougher times for musicians.  Another idea might be to start selling some more modest, cheaper items that are easier for fans to shell out for- buttons, wristbands, frameable photos, pendants, voodoo dolls, etc..

- CONCERTS- TICKET SALES
Ouch again.  There was already a shake-up coming with Live Nation breaking away from Ticketmaster but with fans having less money to spend on shows, every player here is going to hurt.  Pity any stadium band about to launch a big tour now and finding that fans can’t dish out $100 for the cheap seats anymore. 

Fans are going to be more picky about who they’re going to see, which might actually hurt smaller bands worse- if a consumer has to chose between an old favorite and a newer band that they’re going to take a chance on, most people are gonna probably go for the ol’ faves.  But that’s also going to be a problem if more than one big act is touring at once with similar fan bases, making fans having to chose which one to see instead of going to both shows.

One solution might be package tours which give fans more bang for the buck (sorry, I hate that phrase too).  A great recent example was Kanye West who toured with Rhianna & N.E.R.D. & Lupe Fiasco- any one of them would have been headliners otherwise in most venues but having them all together for one night was an amazing package that’s hard to resist.  There’s also ‘house concerts’ (aka private shows) that a group of fans might be willing to dish out for and there’s also a neat widget at MySpace that allows people in a certain area to vote if they’d come out to see you (if you have a lot of people giving the nod in a certain town, then maybe you should be booking there).

- SONG PLACEMENTS- TV & MOVIES
Less money = smaller budgets and less money to spend on music for films and shows.  Bad news, right?  Maybe not.  Entertainment on the big and small screen needs to have tunes but less money for it might benefit small, less known bands who don’t have to command big advances for their music.  Nevertheless, as money dries up, producers looking to tighten belts will also have to decide on using less music for their projects, which will mean less opportunities out there for bands to make money this way and get their name out there.

- ADVERTISING OPPORTUNITIES
Less profits of course mean less money for advertising, which again means less budgets for ads and less money to spend on music for ads.  But again, this might benefit the li’l bands that don’t ask for a big advance to have their songs included in ads.  It may also mean less money for them when their songs are used in ads and also less opportunities once again.

- SO WHAT’S A BAND TO DO?
It’s obvious- you should break up and join a more lucrative business immediately, if there’s any left.

OK, let’s be a little more positive here… I tried to outline a few silver linings and opportunities but it’s obviously gonna get harder and harder.  The most important thing you might be able to do now as a performer is to be practical and realistic.  You’re not gonna sell as many albums or shirts or tickets as you did before so you’re gonna have to scale back.  That doesn’t mean that you should take down your MySpace page or take your songs off of iTunes or withdraw from imeem, last.fm or elsewhere.  You’ll have to scale back on costs such as production or the amount of touring you do (instead targeting areas that you’re comfortable with) and what you offer for sale.  You’ll also keep your eyes and ears open for other opportunities that come up online or offline as technology is still marching ahead with new ideas.

Most of all, don’t throw in the towel.  In bad times like this, we need good music more than ever.  And for you consumers, try to support bands as you can and when you can.  You’ll miss ‘em and you’ll need ‘em, trust me.

—Jason Gross