There-s a whole lotta shakin' going on.
Following years of disregarding the issues facing the music business, the industry is finally starting to wake up. To start with, music retailers are changing the way they do business. Instead of following the label-s advice of buying a 10-week supply of a new CD, major retailers are now only buying two-week-s worth, to see how it will sell. They understand that smart inventory control is the name of the game and have adjusted their business model, to stay in business.
And the changes are not just happening at music retail. The whole major label system is starting to get a well deserved overhaul. Warner Music (who represents many of the major labels) announced they will be cutting artists on their rosters, who have not met sales expectations. In a related move, Warner Bros. also asked senior executives to take salary cuts of as much as 30 percent.
News of this kind is difficult to deliver. But I admire Warner Music for having the guts to make these tough decisions. Major labels have a high economic bar to reach every quarter, to stay in business. Fifteen years ago, no one wanted to talk about that reality, but now it-s part of the everyday vernacular. And 15 years ago, the salaries were over the top. I grew up in the era of the great executive pay day and it wasn-t surprising to see senior staff members earning half a million dollars a year. And that-s not including bonuses and very generous expense accounts. Given the changes that have faced the business in the last 3 years, it would seem only right to review all overhead issues and adjust accordingly.
These announcements got to me think about what else needs to be adjusted in the major label music business.
How music gets programmed on commercial radio remains one of the great injustices of the business. In the last few years, the ownership of radio stations has become far more focused on selling advertising than ever before. Music is programmed specifically to keep audiences listening with familiar hits. Very little new music is heard on the air, and if programmed, plays late at night when audiences are scarce. But record labels live on the life blood of new music, so without a lot of exposure, labels are hurting. And they aren-t the only ones hurting. Listeners have been complaining so much about this problem that the FCC has organized public hearings on the use of commercial radio airwaves. The next open hearing is Monday, July 19th in Monterey, California.
Another important area that needs to change for the majors is the cost of ticket prices. Venue production costs at theaters, stadiums and arenas have skyrocketed. With high costs come high ticket prices. And fewer consumers willing to pay. Never is that more evident that in the cancellation of the Lollapalooza tour.
Since commercial radio airplay and touring continue to be the most relevant ways artists sell records, these two problems are of high signifigance. If retail is willing to make changes, and labels are willing to make changes, it-s time to look what else needs to be adjusted in the new peridime of the music business.
This is Celia Hirschman with On the Beat for KCRW.