Fact #190295

THE CHANGING FACE OF SUCCESS IN THE MUSIC BUSINESS
By Johnny Black (2009)

Once it was simple. If an artist appeared regularly on Top Of The Pops or lodged their releases consistently in the charts, we knew they were popular and, very probably, financially successful.

That’s no longer true. Fame and fortune have never been inseparable companions but in today's music biz they’re frequently not even nodding acquaintances. You may never have heard of, for example, Ingrid Michaelson, but it's entirely possible that she's already banked a bigger pile than high profile X factor winner and chart-topper Leona Lewis.

There are now high-profile hit-making performers who appear regularly on tv, their names and faces known to millions of tabloid media consumers, but who are not necessarily making money. At the same time, there are relatively unknown musicians who, because they know where music industry money really is, are quietly getting rich.

“Certainly, there are artists who appear to be successful because of their exposure, who aren't making a lot of money,” confirms Michael Laskow, founder of the Los Angeles-based independent A + R company Taxi. “Conversely, there are certainly smaller bands that have built a loyal following, have much lower overheads, no label to pay back, and therefore can make more profit.”

Today, consumers are force fed information about that first group – the high-profile music celebrities - but we know virtually nothing about the workings of the industry that creates them, or how big money really gets made in that industry. To find out about the second group – those low-profile independent successes – we must read specialist publications or root around on the net. Thus, distracted by personality trivia, we’ve lost the plot.

One watershed moment in our drift towards losing touch came when Top Of The Pops died in 2006. It had to die because the charts were no longer the reliable barometer of public taste they had once been. At the high water mark of singles sales in the 80s, it required almost a quarter of a million to make No1. By the end of the 90s, 100,000 would do the trick. Come 2006, Orson's No Tomorrow shifted a meagre 17,694 copies to reach the top – the lowest weekly sale for a chart-topper since 1960.

So if the famous are no longer necessarily the rich, how can we hope to know who is really successful?

Coincidentally, 2006 was also the year in which Conor Oberst, leader of American indie ensemble Bright Eyes, and founder of his own record label, told Blender magazine, “I can’t imagine running a label without the Internet … Before, you had to buy into certain institutions to promote your music — radio and MTV and whatever else. Now it’s a total democracy.”

In other words, Bright Eyes successfully sold their music and associated merchandise via the internet. The mathematics of this kind of success is blindingly simple. An artist signed to a major record label is lucky to see 5% of whatever profits their CDs earn. As an internet-marketed indie, even if they sold one twentieth of what they might have done via a major, much more of Bright Eyes’ profit went directly to the band and creative control remained in their hands.

Besides, CD sales, are now just one ingredient in a much bigger pie. Columbia (UK) Label Group MD Mike Smith, who looks after artists including Bruce Springsteen and Bob Dylan, points out that the business model which existed when those superstars started out is no longer universally applicable. “A lot of artists now see a record deal not as an end in itself,” he says, “but as a means to drive everything else.”

Paul Williams, editor of music trade magazine Music Week confirms, “We need to look at a lot more factors to be able to determine who’s really doing well today. Everybody from Britney Spears to Leona Lewis to a guy recording songs in his bedroom – the way their incomes are made up is much more complex. It’s not just about how many records, or even concert tickets, you have sold.”

What Smith and Williams are alluding to is the increasingly lucrative revenue streams artists can tap into from a host of sources - including synchronisation, product endorsements, merchandising, internet streaming, ringtones, cover mounts and broadcasting royalties. Many of us have encountered these terms, but few have grasped the importance of them to performers.

Synchronisation, for example, means getting your music into tv ads, tv series, movies, ringtones and computer games, either for a large one-off fee or for an ongoing royalty payment every time that music is used. Sat Bisla, founder of Musexpo, an annual Los Angeles-based international music and media conference, reckons that, “Aerosmith has probably earned more through royalties in Guitar Hero than they have from selling albums in the past two decades.”

Can this be true? Guitar Hero is, after all, just a computer game which includes some Aerosmith songs. Consider this. The best-selling album of all time, The Eagles Greatest Hits, released in 1976, has to date sold 29m copies. Guitar Hero, since its launch in late 2005, has sold 23m.

In the past there were relatively few synchronisation outlets, but the growth of internet radio, satellite, cable and other new music delivery systems presents many thousands of new opportunities which can work just as well, or even better, for unsigned independents.

“Media companies now realize that a lot of high quality music exists in the indie world,” points out Bob Baker, author of the acclaimed Guerrilla Music Marketing Handbook. “And they can get that good music for less money and with less paperwork than dealing with high-profile acts.”

Unknown songwriter Kimya Dawson, for example, got lucky when a bunch of her songs were used in the Academy Award-winning 2007 movie Juno. Denzyl Feigelson, founding partner of a digital music distribution company called AWAL (Artists Without A Label) cites the case of Ingrid Michaelson who, he says, “has sold over 250,000 albums and over 800,000 digital downloads, completely without a record deal, so she makes in excess of 60% of her iTunes profit.”

How did Michaelson, whose name I’d certainly never heard until Feigelson mentioned her, do it? She was lucky enough to have one of her songs synchronised in the tv series Grey’s Anatomy. Having made that connection, one song became five, led to three more in One Tree Hill, one in an Old Navy sweater commercial and a string of tv chat show appearances. The exposure brought 90,000 hits a day to her MySpace and she was on the way to bigtime success without bigtime contractual entanglements.

Obviously this can’t happen to every struggling indie act but the point is that what was once the exclusive preserve of artists signed to major labels is now up for grabs to anybody with a decent tune to sell.

The industry is now re-structuring itself to accommodate the requirements of artists who either are, or are seeking to become, independent. Consider, for example, the phenomenon of the virtual record label. Henry Semmence is the MD of one, the ten year old London-based company Absolute Marketing, which he says, “has all the skill-sets – press, tv, radio, marketing – that record companies have, except we don’t make records.”

Absolute’s skill-sets are most frequently employed by artists with a big profile, from Dame Shirley Bassey to McFly, who are now pursuing the independent route, but Absolute can clearly also work for emerging acts who want marketing muscle plus the lion’s share of any profits.

But, with or without allying themselves to a company like Absolute, canny artists like Oberst, Michaelson and Dawson can use MySpace, YouTube and downloads from their website and other modern marketing strategies to make them not just viable but financially successful. Nevetheless, a snap poll of UK music consumers would almost certainly reveal that only a tiny minority had ever heard of Bright Eyes. They would, however, recognise the names of X Factor contestants like Shayne Ward or Leona Lewis and would, no doubt, consider them successful by the traditional yardsticks – high visibility on tv and in the charts.

But are they really successful? Or are we (and they) being dazzled by the ol’ showbiz razzamatazz? Understandably, the people who fund an artist’s early career – be they record labels, impresarios, tv barons or whatever – want to see a profit on the hundreds of thousands of pounds they have invested. They can do this, perfectly legally, by contractually securing a sizeable share of the artist’s profits for themselves, sometimes for the entirety of the artist’s career. It can be years before an artist of this sort turns a significant profit and, for the most part, their careers don’t last that long.

The picture gets muddier still when we take into account the fact that a performer who is also a songwriter, can rake in lucrative publishing royalties. So, again, a relatively obscure indie songwriter can benefit from revenue streams that aren’t available to high-profile pop singers who tend not to write their own songs.

So who’s really successful, Ingrid Michaelson or Leona Lewis? Without access to their bank statements, we can’t know for sure, but the rub is that the old measures of success – the ones that told us Macca and Madonna and U2 were in the money – don’t apply to musicians of the internet age. Today, as music consumers, we simply don’t know whether the artists we devour on our iPods are rolling in it or drowning in it.

“I coined the phrase “musician middle class” several years ago,” says Taxi’s Laskow. “because I think it's inevitable that more musicians will be making some money with their music. In the past, you grabbed the gold ring or nothing at all. It's easier now for an artist to make tens of thousands or even hundreds of thousands of dollars using the online tools that are out there.”

Re-assuring as this new status quo might be for musicians, it leaves us, the public, in the dark about which musicians are really popular and even about how success – financial rather than creative - can be defined in a post-internet world.

All of these changes are taking place in the context of a wider debate about how the internet has distanced popularity from financial success in an even more radical way. Worldwide in 2006, 509m song downloads were purchased legitimately online, but an estimated 5bn, (38,000 years worth of music) were illegally swapped for free on a peer-to-peer basis. Ethical implications aside, what this means is that some artists can receive a massive boost in popularity without reaping a penny more in profits. Until, that is, they go on tour, at which point their live shows attract more fans who buy merchandise, making touring a more profitable exercise.
Eric Garland, whose California-based company Big Champagne monitors worldwide online file-sharing activities, both legitimate and illegal, says, “A generation of artists is redefining success in very different terms. They’re looking at those traditional major label opportunities and performing real cost-benefit analyses. They’re saying, well, a major label deal will put money in my pocket today and get me out of my day job but there are ten other paths where I might have a meaningful chance of building a small business, growing it slowly on my own. Twenty years from now, I might not have my own Lear jet – but I’ll still be earning from it. I don’t think those paths were available to an artist before the means of production and distribution were handed down to the masses.”
Those who lament the passing of the music business have got it wrong. Music is healthier than it has ever been. The business of selling physical products will shrink but those major companies smart enough to adapt to the new digital models will survive, alongside a much larger body of independent artists who define success in a very different way than Madonna did.

For consumers, this is a veritable golden age, with more artists recording more music in more styles than ever before. Better yet, where once we were dictated to by tv chart shows and sales statistics, we’re now free to make up our own minds about which artists we like.