A Year of Music

I’ll keep this brief, because I don’t want this blog to be about my day job, but Rhapsody America (a joint venture between my employers, Real; MTV Networks, a division of Viacom; and Verizon Wireless, a division of, uh, Verizon) and Yahoo! announced this morning that Yahoo! would be discontinuing its subscription music service and moving its users to Rhapsody. The timing of the announcement is a little weird, coming as it does in the middle of the gigantic foofaraw over Microsoft’s bid for Yahoo!, but I think Rhapsody is the best of the subscription music services (naturally), and I think consolidation of the subscription music space is probably necessary. This article from the LA Times lays out why in a concise and easy to understand way. Subscription music services are a good idea but an incredibly tough one to sell to the public at large.

EMI, the smallest of the four major labels, got bought out by a private equity group last year. The new owners have now decided on a massive restructuring that’s going to cut 2,000 jobs and “realize new efficiencies”, which basically means everybody who’s left is going to have to work twice as hard for the same pay, feel stressed out, and probably still not make any money because the major-label end of the music business is in freefall.

“But Forrest,” you say, “why so cynical?”

It’s simple, my good sophont:

But Guy Hands, founder of the Terra Firma venture capital group that bought EMI for £3.2bn last year, vowed to further clip the wings of unprofitable artists by offering them a day rate or salary rather than shelling out huge advances.

leads naturally to this:

…[S]horn of the big advances and trappings of a major label, many artists may prefer to sign with rival independents or put new material out themselves.

Without fat advances and major-label marketing budgets, why would anybody stay on a major label in 2008? Hands’ plans are going to last a year and end in embarrassment followed by another restructuring. Either that or EMI will simply implode. I’d almost bet money on it.

When I was reading Billboard’s article about recent wrangling over publishing deals and digital streaming (an arcane bit of legal business that is far more complicated than it is interesting, unless this stuff is your day job, like it is mine), I also noticed another story about ADA – the Alternative Distribution Alliance – purchasing quasi-independent online record store turned quasi-independent download store Insound (here’s a Tiny Mixtapes summary of the subscription-only Billboard story). The ironies compound faster than I can explain them (starting with ADA’s very name), but the aspect of this deal I bring to your attention is the way the line between label, distributor and store is growing more scribbly and smudged by the day. Amoeba Music recently started its own label. Aquarius (last mention of them today, I promise) basically is a distributor, given the number of things it sells that are so scarce and self-released that they basically don’t exist (not to mention how much of their stock they get through direct deals with various tiny-label owners).

“Independent” distributors (almost all of whom are now owned by the four major labels) still play a vital – and largely unseen – role in mainstream music distribution. They’re how much-hyped indie bands like, say, Clap Your Hands Say Yeah or Wooden Shjips have any chance of getting into Best Buy or Amazon, which is where most people buy their music today. It’ll be interesting to see how they decide to move into the digital sales business themselves, and how that will affect the ever-shifting balance of power between the labels, Apple, subscription music services, and retailers.