6 Areas in the Music Business with Potential for Growth

The production side of the music business has grown remarkably in the past decade, approaching a point of saturation. Meanwhile, other aspects of the industry have yet to catch up. Read on to discover which key areas still have room for meaningful growth.

The Flaming Lips experiment with new forms of tangible packaging.

If you want to build a recording studio, you’re in luck. Great tools and great information are available at lower prices than ever before, meaning that you could make a compelling argument that the 21st century is the best time in history to build a new room.

It’s such a great time in fact, that everyone seems to be doing it. To some, that looks like more of a problem than an opportunity. If everyone can do it, is it really possible for your production space to be special?

I think so. It’s fantastic that so many people are able to record and share their music. Music was never meant to be a playground for an elite sliver of our society, where the wealthiest create and the rest of us to mindlessly consume.

But the naysayers have a point. Perhaps we’ve overdeveloped one side of our musical economy.

Sure, there are a ton of great studios, but what about musicians? And where is the infrastructure that makes professional music profitable while giving consumers what they want? What about about reliable outlets that help would-be music fans navigate a glut of new releases? And who will connect the new generation of media creators with the new music they need to complete their productions?

Today, we’ll take a closer look at 6 weak links in the music industry where a little time, capital, and ingenuity may yield tremendous dividends in revenue, and more importantly, leave a lasting mark on the industry.

Although I love recording studios, you’ll notice that they didn’t make the list. If you have a large and growing client-base that makes opening or expanding a studio a smart decision, go for it! (An economic downturn can be the best time to expand an already profitable venture – Just ask Andrew Carnegie.) But if you’re just getting started, there may be better ideas.

If you really want to make an impact, consider this. For far less money than building a reasonably equipped studio, you could instead:

I – Start, or Invest in, a Record Label

Many engineers work longer hours on lower budgets today than they did 20 years ago.

This is largely because the number of studios has grown considerably while innovation and investment at labels has shrunk. In economics, that’s what’s they call an imbalance.

How did that happen? Well, Metallica probably set back the anti-piracy cause by a decade or more by being such tools about the whole thing, but in hindsight we have to admit the guys had a point. Unfettered file-sharing has undeniably led to significant losses of revenue for both musicians and labels. This was proved quickly in 2009 when record sales in Sweden immediately jumped as soon as the nation began to crack down on music piracy.

But just blaming consumers is business suicide. In an interview with The Guardian, Jim Killock of the Open Rights Group spoke out against enacting unreasonably high penalties against file-sharers. “Filesharing is not the root of the problem,” Killock says. “It’s a symptom not a cause. It’s a symptom of a lack of relevant services.”

There’s a lot of truth there. The major labels  failed in the court of public opinion by pursuing multi-million dollar lawsuits against everyday Americans, and still have yet to recover. But in addition to that, the major labels’ biggest shortcoming has been their failure to keep up with evolving technology and consumer demands.

Today, independent labels have a unique opportunity to help create new models of distribution and revenue generation. And the cost of entry is lower than ever. Those of you who have some taste, insight, and creativity might just find a few new ways of making music profitable again.

Could you keep your music off of Spotify and out of the music stores, letting listeners subscribe to your entire catalog of artists for an annual fee instead? Could they sign up for membership packages that include T-Shirts and backstage passes? Could you create innovative and exciting tangible delivery options like the Flaming Lips did with their latest release? Might you release multi-track media specially designed for home recordists to remix? Could you join forces with other labels to create a whole new distribution network – A challenger to other streaming media outlets that would marry the best aspects of Spotify and Rhapsody while paying musicians a reasonable rate?

There’s no guarantee that you’ll make money by creating a humble indie label or an ambitious distribution platform. But even if you fail to turn a profit, you’ll have made a positive impact in the lives of scores of musicians. You’ll have also exposed the world to incredible music that you personally believe in. Isn’t that better than an equal chance of failure at making a profit from just another roomful of toys?

If you do succeed, you could very well have created the next Daptone, Sub Pop, Sun, Motown, Stax, Blue Note, or SST. And you’ll have helped shape the history of music in a way that no Lord-Alge ever will.

II – Start, or Invest in, a Music Publication

Of all the complaints I hear about the industry today, the most common is that the landscape has become overwhelming. To millions of would-be listeners, the world of music is now daunting sea of new releases, giving rise to tsunami-like wall of noise that stands between them and music appreciation.

While some of my colleagues point to home recording as the source of the problem, I don’t think that argument holds up. A recording industry that’s against home recording is makes about as much sense as a concert pianist who’s against home pianos.

The real problem is that as we made the switch to online media consumption and lowered the cost-of-entry into the marketplace, our best filters and curators of music failed to keep up. Like the old record labels, the old print media had a terrible time adapting to new technology.

Some potential investors point to waning print journalism as a reason to avoid new journalistic enterprises altogether. I wonder if those people have ever read a history textbook! A failing buggy-whip industry doesn’t mean that we should stop investing in cars. The growth potential in new journalism is huge, and for advertisers the audience is more targeted, engaged, and measurable than ever before.

Case in point: As a reader, I’m not a huge fan of the music review website Pitchfork. But as an analyst I have tremendous respect for their achievements. In a few short years, they’ve managed to create web traffic and revenue that has greatly outpaced their old-guard competitors. And they filled a sliver of that massive void with a skeleton crew and shoestring budget.

What’s even more impressive is that they leave millions of passionate US music fans woefully under-served. There are potentially dozens of new markets in online music journalism just waiting to be claimed. Digital media is finding new ways to be profitable. Are you going to be part of it, or are you going to miss out?

People like to talk about the death of the written word. What if I told you that you just read 1300 of them in  few short minutes?

III – Get Involved in Booking and Concert Promotions

We desperately need you. We need people who can recognize and book actual, sustainable talent from across genres and help cultivate their performing careers. For a good example of how to do this on a smaller scale, see Bowery Presents. Here are some simple, easy-to-follow do’s and don’ts:

Do not book entire evenings comprised of artists who rarely rehearse or perform together.

Do book only jaw-droppingly amazing artists between the hours of 8pm and 10pm.

-Do not forget to give artists who do not regularly perform a chance to become good. They should be sprinkled into the show at time slots such at 6pm and 12am. If you really believe in them, 7pm and 11pm.

Do make sure that the jaw-droppingly amazing artists you book between 8pm and 10pm are well-compensated so that they keep putting effort and innovation into their performances.

Do not forget to make sure you help promote the show.

Do go ahead and give your best talent a guarantee each and every time they play. If the show doesn’t make money, it’s your fault for not doing your homework.

Bonus Tip: If you engage in pay-to-play schemes, not only are you a troll, you’re also terrible at business. For a case study, see The Playground Festival

Since great booking and concert promotion is such a rare skill, it’s very valuable. It’s not easy to break in from out of nowhere, but if you’re keyed into a musical community and you’re smart, passionate, shrewd, and fair, you can go far.

IV – Become a Patron of The Arts

Profit isn’t the only kind of meaningful growth in the economy. If you believe that is, I’ll get you a spot at the bridge table with Mr. Potter on Christmas Day.

Charlie Parker, Leonardo DaVinci, Shakespeare, Bach, Mozart, and The Velvet Underground would not have been possible if it was for arts patronage. Simply put, that word means support of the arts for non-commercial purposes.

Case in point: After a year and a half on hiatus due to lack of funding, The Brooklyn Philharmonic has relaunched, and are better than ever. They’ve become inventive and relevant once again, and in large part it’s thanks to their patrons. If you’re able to save the kind of money it takes to build a recording studio, you have the kind of money it takes to have a serious impact in the arts. Think a patron’s opinions don’t matter? Think again.

Even if you’re not ridiculously wealthy, you can still afford concert tickets and perhaps a membership to a cultural institution like this one. Studies show that spending money on experiences, not things, leads to happiness. Think about that the next time you’re wondering whether you should save up for yet another microphone.

If you’ve been a hobbyist recording engineer for a little while, you may have forgotten just how amazing a group of finely honed musicians can sound. Do yourself a favor and go see a great show.

If you really like something, please become a supporter. It takes an engaged and impassioned audience to make any art truly worthwhile. In this sense, amateurs are just as valuable as professionals. Maybe more so. Anyone who tells you otherwise deserves a bop in the nose.

V – Music Licensing

Not only are more records being made than ever before, there are also more movies, television shows, web series, plays, documentaries, you name it. There’s also a ton of opportunity. It’s your job to bring those two worlds together to great aesthetic effect, and make everyone money in the process.

If you get involved in this end of the industry, you don’t have to comp a single vocal take or stress over a single attack-and-release setting. And you don’t have to listen to much music that you don’t like. Look for an article about opportunities and the changing face of licensing in a future issue.

VI – Play Music

For real. Play it for a living, play it just for fun. Best of all, play it because you have to.

You don’t have to be ambitious. I try to play the piano for 30 minutes every morning before I do anything else. I’m an engineer and a writer first and foremost, so I don’t take my playing very seriously. You don’t have to either. But it keeps me obsessed with music, and that’s what I need to keep going.

If you think that deep inside you lives a uniquely talented and disciplined artist, then run, don’t walk away from recording and mixing music as a career or a hobby. These are two separate disciplines. Right now we don’t really need more audio engineers and recording studios – Trust me, the world has more than enough microphones. What we need is more of you.

Epilogue: For some, music can keep you going in a another way. The US Bureau Of Labor Statistics cites 300,000 Americans who make a respectable full or part-time income as musicians. And unlike sound and broadcast engineering, the BLS projects a level of growth for musicians that’s on-par with the rest of the job market.

If you’re dead-set on turning music into a sustainable middle-class income, rest assured that while it won’t be easy, it is possible. Check out the website Musician’s Wages for some well-supported breakdowns of how the numbers can work in the real world.

Update 07/08/11: Ben Sisario of The New York Times published an article about the industry at the same time as ours. It includes a fantastic quote that adds substance to our take on past failures and new potential at labels:

“All the major label heads spent years mistakenly trying things they thought would change consumer behavior,” said Fred Goldring, a former music lawyer who now invests in media and technology companies. “Their attitude was, ‘We’re not going to let anybody take our content and create new businesses that we’re not getting enriched by.’ But as a result they stifled innovation.”

We think Goldring has the right idea. And he’s putting his money where his mouth is.

This entry was posted in All Stories, Industry Trends, Most Popular, November 2011, Rants and Raves. Bookmark the permalink. Both comments and trackbacks are currently closed.
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