Markets in hardly anything any more?

by on December 14, 2008 at 6:09 am in Music | Permalink

The remaining 3 “major” labels – Universal, Sony and
EMI – will be out of the classical business within 2 years. They will
create no more than a handful of additional classical CDs. With the
possible exception of a few “crossover” artists the labels will drop
all of their classical artists. The majors will focus on trying to
salvage their pop business and will abandon classical because it is
more trouble than it is worth. The 20th century recording industry and
business model is obsolete. It will soon be gone.

The
remaining viable classical label will be Naxos. Their costs are
dramatically lower and their business model allows them to operate
profitably in a smaller industry and with much lower sales numbers. A
primary contributor to Naxos’ lower costs is the fact that they don’t
pay any residuals to the performers. There is no income potential for performers in the Naxos model! They will profitably produce CDs for several years longer than the majors.

There
will be a small number of “vanity” labels left but their volume will be
microscopic and they will operate on the same financial model as Naxos.
They will ultimately disappear as well.

Virtually
the entire recorded history of classical music will vanish from the
world. None of the pre-2000 material had digital rights cleared when it
was recorded and the cost of clearing these rights now dwarfs any
income that could result. There is no commercially viable model for
reviving this material.

Here is more, interesting throughout and the comments are excellent.  The author does suggest that live concerts still will be broadcast over the web and in some other ways marketed.  An alternative is that governments assign the digital rights unilaterally or the whole model goes grey/illegal as people dump their CD content onto web sites.  Furthermore I don’t think recorded classical music will disappear, as the independent labels continue to issue releases, the demise of recording has been forecast for a long time, and my copy of Fanfare (classic music reviews) is much thicker now than two years ago. 

US December 14, 2008 at 8:06 am

From the post: “Living in the past can assure that classical music shares the fate of the US auto industry.”

So if they don’t adapt, Universal, Sony and EMI can expect to receive a multi-billion dollar bailout as well?

Vincent Clement December 14, 2008 at 8:51 am

US: Universal, Sony and EMI already receive indirect bailouts in the form of extended copyright protection, the DMCA and, in the future, ACTA.

It appears that the “recorded history of classical music will vanish from the world because of copyright law. Just free the content from copyright and watch it flourish. The record companies would have to cede control and make less money. But that is a good thing.

soapy smith December 14, 2008 at 10:21 am

I love classical music and I am glad to hear this. It means that this music will be widely and freely distributed through the shadow peer to peer distribution system. I was really fond of late 20th Century avant garde classical; I had some on vinyl. Then it pretty much ceased being available. Now I can get it again, largely because no gains from stopping its free distribution. Creative Commons licensing makes sense. Pop music promotion, A&R, distribution, don’t. Frankly, all artists need to produce and distribute media.

Anonymous December 14, 2008 at 11:24 am

Tyler, I’d encourage you to follow up more on your last paragraph. Indeed, the demise of classical music recordings has been forecast for a long time. Not only is Fanfare bigger, but it’s more than additional recordings of pieces I already own; I also have access to music that has never been recorded before. It’s really quite ironic to be hearing claims like that while we have access to the deepest and broadest classical music collection that anyone has ever had access to.

There’s too much emphasis on the big labels. Naxos, Hyperion, ASV, and their peers have changed the industry. Maybe the author is from the US and overweights the domestic US experience, because it’s true that the future of classical music seems to be with the European producers.

John Thacker December 14, 2008 at 12:28 pm

Part of the reason why the demise of classical music recording has continually been forecast is that, well, most of the canon has been recorded on CD. Once there are really good versions of most of the pieces on CD, it’s unclear how much of a market there is for many different performances of the same pieces.

Sol December 14, 2008 at 12:33 pm

(And checking something rather more obscure, I see Donald Erb’s “Five Red Hot Duets For Two Contrabassoons” is available in MP3 in the recording I bought on CD back in 1995 or so.)

Urban Garlic December 14, 2008 at 2:01 pm

I’m surprised to see this whole topic go by with no mention of Deutsche Grammophon — it doesn’t appear to just be America-centrism, so maybe they’re more “niche” than I thought. Anyways, they sell DRM-free mp3s worldwide from their web store, and they’re currently my “go to” source for replacements or enhancements of my classical music collection. This, along with iTunes and Amazon downloads, seems to me like the low-overhead future for this genre.
I think the referenced article is correct about the model changing and the CD being dead, but is needlessly hysterical about the disappearing legacy.

Anonymous December 14, 2008 at 3:01 pm

Richard Caves has carefully reflected on all of this in “Creative Industries.” Classical performers (more than many artists) overvalue artistic exposure and sign bad recording contracts, there *is* a cost disease (pace Tyler Cowen), and old repertory crowds the field. It’s the first point– artists signing bad contracts– which sets terrible precedents and contributes to a moribund industry. You would think that would favor record labels, but the classical field has such tiny revenue it’s easy to just ignore it.

Most master recordings created under recording agreements will be subject to work-made-for-hire scrutiny in the next decade as they become eligible for termination of copyright transfers. This will redound to classical musicians as much as pop musicians.

Brian Slesinsky December 14, 2008 at 4:02 pm

I don’t think listeners have anything to worry about. The amount of good music available via iTunes, Amazon, and the rest will only get bigger, not smaller. If supply can only increase and the cost of distribution only decreases, it’s hard to see how we can run out of good music to listen to. New music may decline but “new to me” can be a pretty good substitute, and the territory to explore is vast.

New music should also survive to some extent so long as people like to cheer on their contemporaries. But on the other hand, given the popularity of American Idol, it seems that quality makes little difference; many people enjoy cheering on a bad musician just as much as a good one. That can be frustrating to the better performer, of course.

Ben Kalafut December 14, 2008 at 10:22 pm

Telarc and Deutsche Grammophon don’t count as “major” in the classical music biz?

jasha December 16, 2008 at 7:26 am

The developement in recent years is actually a nice for something that is great for consumers but not at all good for the industry.

I have to say a dream has become true for me in recent years. I remember 15 years or so I was wondering how great it would be if I had enough money to just by every classical CD available and to be able to listen to it whenever I was just in the mood. But even if I had been very rich and able to actually afford this there would still have been the problem of actually not beíng able take them with me (and finding a specific record within a relative fast time in my storage room ).
Now with recent developments the storage and transport problem basically ceased to exist.
For 25 Dollars or so a month you can stream more than 20000 CDs from Naxos Music library in CD-quality. You get tons of music almost for free without even doing anything illegal. The really great thing is that you can also use it in your office or in a hotel. If there is really something they don’t have in one (decent) recording (they have not only Naxos CDs there but also high price labels like BIS and you will find many different good recording of almost any standard piece) you can still check out some other download sides and try to find it there and as a last option you can nowadays order CDs online so you don’t have to bother to make an annoying trip to a shop somewhere that probably also does not have the CD in store.

I never understand how given such developements any one can seriously believe the middle class was actually not better off than 20 years ago. Modern technology makes life so much better for everybody actually uising it. This all does not show up in any real income measure.

In addition nowadays it is relatively easy to find out something about the quality of a recording respectively what the best recordings of a work are by just findinng out what people for example at Amazon think about it.

Maybe there is the one or other recording becoming unavailable that I would have been interested in. I suppose even in that case I would find a way to get it for example from a used record shop, but even if not please nobody tell me I am nowadays not much better off as a consumer with respect to classical music than I was 15 years ago and there is little reason to assume that it will get worse in future.

FluffyBunny March 2, 2011 at 11:59 am

I think that every business in the world should have a marketing scheme that makes it profitable, but also accessible to a large pool of customers. For example, I admire the Easy Saver business model. It is based on offering discounts to a wide range of products and also accessible to a large pool of customers. That is perfect!

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