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FROM THIS EPISODE

20/20 Hindsight

This is Celia Hirschman with On the Beat for KCRW.

The major label record business is in real crisis. What's needed now is strong realistic leadership, willing to make significant changes. The industry has been in denial, hoping things would be different. The cost of disregarding reality has gotten very expensive, and the consequences dire. When looking at the macro view, one can see how the industry has been incredibly resistance to change.

The best example of this has been digital downloading. Labels and artists were terrified to allow websites to legally download their music on the web. That hesitation cost a lot of revenue. It also significantly fueled peer to peer illegal file sharing. Consumers, frustrated by the lack of content, sought other ways to get the music into their portable hardrives.

And how about the issues at commercial radio?

Everyone in the music business knows most commercial radio airplay comes with a significant cost, whether in the form of promotions, gifts, advertising or artist involvement. It's an old game that has never really gone away, and its kept our commercial airwaves predictable and limited. Though there's consistently new players on the field, it's the same game with different rules.

And let's consider the MTV music video arena. Music videos are extremely expensive, costing up to a million dollars each. Almost as quickly as MTV became popular, it began to change its format, playing less and less music videos and only of certain genres of music. But labels & artists had bought into the MTV dream and continued to make many music videos that would never be seen on the channel. It took labels a very long time to cut the cord and get real with artists about the situation. Now, finally after 10 years, significantly fewer music videos are produced.

Then there's the ever changing retail situation. A whole book could be written about the mistakes made here. Certainly pricing has been one of them. Allowing volume discounters to devalue music and sell full CD's for $5.99 has hurt the business a lot as small retailers can't compete. Now record stores are going out of business every day and it's very sad to watch. In a small but important music market like Athens, GA, the local Walmart will be the only record store standing by the years' end. The longtime independent retailer, School Kids Records, is closing its doors. This same scenario is being repeated in markets around the country.

The industry has now taught the consumer to look for the lowest price CD's, which has led them to buying used CD's. And CD's, unlike vinyl, do not lose quality upon use. As a result, buying used CD's is just like buying a new cd. But here's the critical difference. Used CD's do not generate income for artists, labels, publishers and distributors so the industry suffers again. The used CD market, like filesharing, has increased massively over the past 5 years so this has become a very significant problem.

These are just a few examples of how the business has lost its balance. One person clearly is not going to miraculously change these problems, but hopefully, with good visionary leadership, we won-t get fooled again.

This is Celia Hirschman with On the Beat for KCRW.

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