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Corporations Holding Music Hostage

DSC02877Brands have taken over the music business. At least that seems to be the impression that has come out of Austin’s South by Southwest Festival. The first victim of commercialism is the festival itself. When the event started, nearly 20 years ago, it was a fairly intimate setting where A&R people would flock to find new unsigned bands. Now it is a huge event where “baby bands” play to empty bars while superstars steal the attention.

That is a whole other story. The more pressing issue is that the music business has become more about various brands using the platform of music to sell their chips, or drinks, or almost anything else. To someone who is a bit of a music purist this is very distressing.

Don’t get me wrong. There was an era at Columbia where you had to be “hip enough” just to get in the room. Big selling acts like Billy Joel, Journey and even Pink Floyd were given a more subservient role in the company and bands like Poi Dog Pondering, Chris Whitely and Jeff Buckley were elevated to elite status. No disrespect to any of these artists, but I recognized that without big selling acts that also sold catalog we would not be able to pay the electric bill. I frequently found myself defending the position that we needed acts like Journey, who among other things had one of the best selling greatest hits collections of all time. Eventually my way of thinking won out, but it was a fight for a while.

Record labels have a well deserved reputation of not being good to artists. The business model allowed the label to consistently underpay artist royalties.You have to be a very successful artist to actually get big checks from you label. One legendary artist told me that he would have to hire an accountant for $25,000 in order to get $100,000 that he was owed by Columbia. Lots of “creative accounting” was always involved. But the one main thing about labels is that most of the people that worked or even still work there, love music. We really can’t say this about the brands that are dominating the industry. For them it is all about money and nothing else.

For these companies it is all about using music to reach potential buyers. They concentrate on the most successful acts, leaving new and upcoming acts at a tremendous disadvantage. It is great for Doritos to jump on Lady Gaga’s back. Is it really that useful for the act? Sure it is money, but at what cost? Proof of the importance of corporations in the music industry is seen in the recent “List of the Top 100 Most Powerful People in the Music Business”. Many corporate execs are on this list, including a marketing person from Citibank who was with the Top 15. I don’t know about you, but when I think about music, I don’t think about my Citicard. But apparently many people do. Citibank has done a great job. The losers are new artists and the public.

Red Bull has a more refreshing approach. They have a record label whose main responsibility is to bring new consumers to their energy drink. They endorse everything from  parachute jumps from the edge of space, to a soccer team, to musical acts. The difference is they spend lots of money developing their acts. Within the last few years they have established a band called AWOL NATION. They have spent millions in developing this once unknown band. There is no way this act would have gotten this attention at a major label. The label may have made money on this band but it has taken years. They have done a tremendous job on behalf of the band and it has also helped the core product, Red Bull. But unfortunately, corporations with this kind of commitment are few and far between.

Awol Nation- “Sail”-nearly 25 million You Tube views

For me it all comes down to this. The rich get richer and everyone else can go to hell. As if the deck has not always been stacked against the “baby band” the recent level of corporate involvement is just another dagger in the heart. I urge these corporations to find ways to help young acts develop. Red Bull has proven it can work. You don’t need to spend the money they have to achieve this goal, but there is a business model that will allow smaller acts to have a significant impact on a product. The public can discover a new band while it finds your product. The brand loyalty that will come from this marriage will be superior to anything involving a major act that the consumer already knows about.

This requires putting people who know something about music in positions at corporations that sell things other than music. People who can identify talent and involve new acts with tremendous potential for a fraction of the cost of signing on a major act. There are a few former industry people that have been brought into non-music corporations. But there are hundreds of very competent music experts that have not found suitable homes for their talents. There have not been many industries willing to recognize that their expertise in music and in marketing would be beneficial to their cause.

It is time for the corporate America to fully take advantage of all the amazingly talented people that could dramatically affect their bottom line. I am not talking about salesman, accountants and product managers, but MUSIC EXPERTS.


  • It has finally happened.  The prices of tickets for concerts and sporting events have gone through the roof and it is finally beginning to affect the attendance.  This problem came to the forefront during the American League Championship Series at Yankee Stadium.  For the first time in recent memory there were empty seats available for a Yankee Playoff game.  The NFL is also very concerned about this trend as even their most storied franchises have empty seats for regular season games. Smart concert goers are waiting until the last minute to buy their tickets for concerts in the secondary market.  Typically, most shows don't sell out.  Tickets a few days before the show are often half price, or you can get two tickets for the price of one.  There is no incentive go out and buy tickets the day they go on sale anymore.  There will be tickets left in the secondary market and they will be cheaper in most cases. As a result concert promoters are struggling.  The acts still want to get paid top dollar, even though the promoter is having trouble selling tickets.  That is why the price of concert tickets is so high.  Also, a lot of younger, affluent people, who may not have gone to many concerts when they were younger, are now just discovering the Rolling Stones and other classic rock bands.  It has become the thing to do.  Rent a limo, go to an expensive dinner and go see a show.  That is if you are willing to drop a thousand or two on a night out on the town. In sports the reason is essentially two-fold. The two most obvious ones are price and the advancement in technology...specifically HDTV.  In baseball, tickets in the outfield or upper deck for the Yankee  ALDS games were $100 each.  If you bring your two kids and your wife, you were spending at least $600 to see a game that you could see on TV for free.  The view on TV would be better and the food would be better and you could take a nap if you wanted to.  Why bother going to the game?I don't know about you, but I would rather sit in my TV room, with my wife and watch the game.  I can see better.  I don't have to hassle with traffic and the money I saved could be used to spend a night or two at a great hotel on vacation.  We are just seeing the tip of the iceberg.  Locally the Giants and the Jets are not selling out for the first time in decades.  They have instituted PSLs (Personal Seat Licenses) for most seats at Metlife Stadium.  This means you are forking up anywhere between $5,000 to $20,000 a seat, just for the privilege of being able to buy tickets for up to $1,000 a game. Unless your company or business is paying for the tickets, does it really make sense?  Even then, how much is it worth to take a client to a game.  $4,000, plus a piece of the PSL?  It better be a great client.There will be a tipping point.  More and more people  will stay home and watch sporting events on their big screens. It has already started.  There will be several consequences.  Only the wealthiest people will be at sporting events. The players salaries will have to be scaled back. Perhaps the final alternative may be the dreaded Pay-Per-View for even the most mundane sporting event...say the Yanks vs KC on a Wednesday night at the stadium. I know the Twins tried this years ago and it was a disaster.  Imagine PAYING money to sleep through a Twins game!!  Hopefully the fact that most of the best franchises in baseball at least own their own networks.  The Dodgers recently were sold.  The team was worth far less than the television network.  The money raised by the network allowed the Dodgers to go out and buy superstars to fill up their lineup.  By the way, the Dodgers were probably the most superstar laden team NOT to make the playoffs in a long time.The NHL is struggling with their players.  There are several NHL franchises that lose money.  Despite the fact that the revenues for the league were up significantly last year the owners want to change the deal they have with the players.  Right now the players share in 57% of the revenues of the league.  The owners want to scale that back to 50%.  Don Fehr, one of the most feared union leaders, has been brought in by the NHLPA (Players Union).  At this point the first month of the season has been lost and the sides are far apart.  There is a fair chance that there once again will not be a hockey season.Just as technology has changed the financial paradigm of the music business and the publishing business.  It is about to do the same to sports.  The motion picture industry is holding its collective breath as well.  Thousands of industry jobs have been lost in the music business.  All but the most elite artists make less money than they did five or ten years ago.  Executives make far less than they did at the end of the millennium.  Newspapers and publishers are going out of business right and left.  Sooner or later professional athletes and team owners will have to face the facts.  They can't defeat technology.  They must be prepared to make the changes.  Scale back player's salaries and ticket prices or the fans will stop showing up. It is just like Global Warming.  Everyone knows it is coming, but not enough people are willing to change.  The ending to both scenarios will not be good.

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