That seemed like a rhetorical question to me when I first read it. But after reading the rest of the article, I’ve changed my mind. The music industry is alive and well, and in fact is thriving — it’s just the existing music labels, with their extremely wasteful business models, that are suffering:
EMI, recently acquired by private equity firm Terra Nova, was appalled by some aspects of the business it had acquired. In a recent interview with the Financial Times, new EMI boss Guy Hands asked rhetorically, “Can you imagine what would happen if most consumer industries over-shipped by 20 per cent? Can you imagine any consumer industry having 10 per cent of employees as middle management? Can you imagine only 6 per cent of staff in production?” Things are so bad that EMI has been spending $50 million a year just to destroy CDs it couldn’t sell, and has announced plans to lay off as many as 2,000 employees.
The equation is simple: offer people something they want and they’re happy to pay a reasonable price for it. Do that and structure your business efficiently, and you’ve got a sure-fire money-maker on your hands.
American car companies have never been able to admit, even to themselves, that the reason they lost out to Japanese competitors is because American cars, unlike Japanese ones, have a well-deserved reputation for being crap that’s designed to wear out every couple years. As soon as an alternative came along, a company that was willing to give people what they wanted — a well-made car that would last and was worth the price charged for it — people abandoned the American car companies in droves (pun completely intentional). Our Toyota Corolla is twelve years old and we’ve had no trouble out of it; the Pontiac that I had previously was plagued by problems, major and minor, and had to be scrapped at half that age. Literally scrapped — it was undriveable.
It looks like the major music labels have a similar problem. They can’t force-feed everyone overpriced albums that contain only a single song that people want anymore, and they’re running around like the proverbial headless chickens because their entire business was based on that and a few other predatory tricks. People aren’t sheep for the shearing; they can think for themselves, and they don’t like being milked for every penny you can squeeze out of them. Irritate them long enough, and they’ll find a way around you, even if you think you have a monopoly. That happened to Ma Bell (long-distance phone calls cost less than a twentieth of what they did when I was a kid, and the phone companies are still making a profit!), and Ford and other American car companies. It’s happening now in dozens of other industries, such as US legal case law — one or two publishing companies have had a monopolistic death-grip on it for decades, but their product is actually public-domain information, and they’re dying because that information is now readily available to anyone over the Internet.
No, the music industry is fine. Decent musicians are doing at least as well now as they’ve ever done in the past, and are often doing better. It’s just the ever-more-superfluous middlemen who are facing a long-overdue reckoning. It’s probably going to be fatal to several of them. And I say it’s about time.
