The Economics Of The Music Industry: A Band Has To Work Hard To Get Its Part

Say That Again

from the i-gotta-get-mine,-you-gotta-get-yours dept

richw alerts us to a fascinating essay from a member of the band Fucked Up (different, apparently, than the band we recently wrote about going by the name Holy Fuck) explaining the economics of SXSW for bands. Actually, though, it’s much more than that. It explains the economics of the music industry, with a single point underlined: as a band, you need to figure out how to get money, and stop waiting for others to just give it to you. The key point is made somewhere in the middle:

You may have heard that the music industry is sort of falling apart. It isn’t really a matter of there being less money in the pool – just that the money people have to spend on entertainment (which will always be somewhat of a constant) is just being diverted away from where it historically has gone (record labels and managers). The music industry is by definition an operation invented to divert money spent on music away from actual musicians – the problems that the music industry is currently facing have specifically to do with the fact that the money that would usually flow directly to the bigger economic actors is now going somewhere else.

This is such a succinct and accurate example of what we’ve been talking about for over a decade, it’s worth repeating. As we’ve seen over and over again in numerous studies, the amount of money being spent on the music industry (remember: that’s more than just selling records) hasn’t gone down at all, and, in fact appears to have gone up over the last decade. The “issue” is that it’s going to many other players in the market, rather than the record labels. In the past, the record labels did their best to keep that money from ever going to musicians. These days, a lot of that money is up for grabs — and the record labels are upset that they’re not getting more of it. Instead, it may be going to others, such as Apple or an ISP or someone else entirely. But, really, it’s up for grabs — and that’s why we see a lot of smart musicians figuring out how to take advantage and get their share. But it is a scramble. And if you want to succeed in the music business these days, you need to figure out how to get your share:

Sxsw should be an example of where some of that money is going. While labels are trying to figure out how they can get their piece back, the question sxsw should leave for bands is how to get theirs, or to at least not throw it directly at hospitality and energy conglomerates in order to get to Austin and see your fans money go straight down the throats of Mountain Dew incorporated instead of into your pocket. And again, just to re-iterate – it’s not like these companies are inherently evil or vicious. I kind of like Mountain Dew. It’s just that they are way better than you at figuring out how to get peoples money, and while your job as an artists should mostly be about making great art, it should also be a little bit about how to be smart at if not making money, then at least not throwing an undue amount away just so someone else can make money at your expense. This is the crux of the matter – there is a big pool of money out there that everyone is trying to get – the music industry is panicking because a lot of the money that used to go from music consumers right to them, is now going to companies that are posted just on the periphery of music, letting bands and labels spend money making music, and then swooping in with music related marketing strategies aimed at getting some of that relatively free money.

The realization is key: basically, there’s a pool of money that people are fighting for, and you need to figure out how to get your share, not whine about others who are doing a better job of figuring out how to get their share. It’s a recognition that you’re in business, and business means competition. In this case, the band appears to have worked out a deal with a clothing company to help fund its performance at SXSW, as part of an effort to show that it could be done, rather than having to lose money and hope that someone at SXSW decides to just give you a big check.

And that’s, effectively, all we’ve been talking about here for more than a decade. It’s about recognizing that the market has shifted, no one is automatically owed a living, but in this period of dynamic change, there really are a tremendous number of new opportunities. In the past, if you wanted to be a success, you were much more limited, because you had to wait for one of the big gatekeepers to anoint you. Today, your fate is in your own hands. It doesn’t mean that everyone will succeed. Just as in any industry, many will fail along the way. But sitting around demanding money isn’t going to work. As Dave Allen put it last year, it’s time for musicians to start “being brilliant” from the business model side or to just get out of the way.

Filed Under: business models, fucked up, music, sxsw