MBU1110 Fall 2017 lecture #1

MUSIC BUSINESS SURVEY
Lecture #1: Overview of the Music
Business
MBU 1110 FALL 2017 - Eric M. Griffin

What is the Music Business?
•The ”Music Business” is what occurs at the intersection
of ART & COMMERCE. Once you add the commercial
element to your music, everything changes.
•The “music business” includes all business sectors and
business models that in some way, provide a good or
service in connection with commercially exploited
music.
•This course is about the business of music. Our musical
preferences take a back seat to the facts of how the
business works.
•The song and artist examples are given to make
specific points about topics in class.
After serving sentences in two
different State Penitentiaries
(Texas & Louisiana), Leadbelly’s
unorthodox entry into the music
business still stands as one of
the greatest success stories. He
is credited as an influence to
classic artists such as Muddy
Waters, Jimi Hendrix, Led
Zeppelin and Bob Dylan.

State of the Industry: The Good, The
Bad & The Ugly
Exhibit A:The Artists

State of the Industry: The Good, The Bad & The Ugly
U2 for example…
*The Good: U2 will go down in history as one of the biggest rock
bands in the world.The band’s career spans from 1978 to the present
with all original members alive and still in the band.
*The Bad:The band had serious infighting and almostbroke up for
good after their 1987 hit album “The JoshuaTree”.Their 90’s hit song
“One” alludes to their struggle to keep it together.
*The Ugly:The iTunes automatic download gaff of their 2014 album
“Songs of Innocence” angered and alienated both fans and non-fans
alike. Many saw it as an ill attempt to “stay relevant”.
*The Rub:You will get old.You will make mistakes.You will lose touch
with a younger generation. Even so, if you can keep a band together
and build a legacy – that’s success beyond measure.

…speaking of legacy –The Beatles.
*The Good: Possibly the greatest band ever.
*The Bad: Just about every band has a “Yoko”. Unless they’re actually
in the band, significant others shouldn’t step into band matters.
*The Ugly:Watch out for managers with an “Allen Klein” style.
*Read Stan Soocher’s book “BabyYou’re A Rich Man” and
Fred Goodman’s “Allen Klein” for a well-rounded education on Klein
andThe Beatles legal problems..

Exhibit A:The Artists -THE INDEPENDENTS
The Good:Thousands of indie artists are out there making a living
from their music and the barriers to entry are low.
The Bad: It’s harder than ever to set yourself apart. Music inventory
and the choices available to find it are the highest in history.
The Ugly: Family and a sense of normalcy are hard to come by for
many. Some indie artists are deep in debt and struggle to manage
their personal lives.
*The Key: Define for yourself, what “making it” is. SET GOALSAND
UNDERSTANDTHE NECESSARY SACRIFICESTO MEETTHEM. SET
YOUR “BOUNDRIES”AHEAD OFTIMETO AVOID DANGEROUS
COMPROMISE.
“Making it” today means being
able to make a living from music.
If you can earn a decent living,
$35,000 to $70,000 a year
from music – you’ve made it!
There is a growing musical
middle class, both artists and
business people.

Exhibit B: Recorded Music
*The Good: U.S. recorded music will always be a major worldwide export of
goods and services. And up until about a decade ago - the U.S. recorded music
business was always profitable.
*The Bad:The lack of foresight, vision, planning and attention to technological
advancements by industry leaders led to a scrambling together of plans and
hasty actions to meet sweeping changes in the industry. Record company
consolidation is a continuous reality.
*The Ugly: Recorded music has lost over 50% of it’s business since 1998 BUT
the major label streaming battle is paying off. The major record co.’s have equity
interest in Spotify, which is contractually
“unallocated” income to their artists.
The KEY: Record companies that once only sold sound recordings to remain
profitable, are now diversifying their business models to include various other
services via “360 deals”.At the end of the day, there will always be major stars
signed at major labels because of the marketing and money.

30Years of Recorded Music
by Digital Music News

MBU 1110 FALL 2017 - Eric M. Griffi
Estimated retail revenues from recorded music in the United States grew
11.4% in 2016 to $7.7 billion.The primary driver of that growth was a doubling
of paid streaming music subscriptions which helped the American music
business experience its biggest gain since 1998.At wholesale values, the
industry was up 9.3% to $5.3 billion.Although our 2016 revenue report
catalogues substantial overall improvement for the industry, revenues are still
only about half what they were in 1999, and revenues from more traditional
unit-based sales (physical products and digital downloads) continued to
decline signicantly. - RIAA

In 2016, for the first time ever, streaming music platforms generated the majority of the U.S. music industry’s
revenues.The streaming category includes revenues from subscription services (such as paid versions of Spotify,
TIDAL, andApple Music, among others), streaming radio services including those revenues distributed by
SoundExchange (like Pandora, SiriusXM, and other Internet radio), and ad-supported on- demand streaming
services (such asYouTube,Vevo, and ad-supported Spotify).

Total revenues from streaming platforms were up 68% to $3.9 billion. Streaming grew from just 9% of
the market in 2011 to 51% of total industry revenues in 2016. Revenues grew across all the categories
of streaming (paid subscriptions, SoundExchange distributions, and on- demand ad-supported
streams).

Exhibit C: Music Publishing & Songwriters
*The Good: Music publishing will always remain a good income source. Strong
licensing programs, successful song exploitation and “evergreens” can potentially
pay out huge dividends.You can’t have music, without a song!You can’t have a
music business without music publishing.
*The Bad:The current new media licensing climate is a huge drain of publishing
resources and licensing income. (Google/YouTube, Spotify,Amazon,Yahoo!,
Rhapsody,TouchTunes, etc…). Consolidation of publishing companies often
results in a disservice to employees and songwriters alike.
*The Ugly: Some government regulations in music publishing don’t allow for
“free market” rates and negotiating. Recent copyright infringement legal battles
are making for a very “cautious” creative environment.
*The Key: Music publishing will remain a cornerstone of the music business, it’s
just in a transition period. Many companies are diversifying their business models
to generate new revenue and remain competitive. Potential legal changes remain
on the horizon that could drastically effect the music publishing industry.

Exhibit D:Touring & Concert Business
*The Good: There will always be talented acts people will
pay to see live. It’s especially good for Nashville. May artists homebase in Nashille
and tour around the city. Here in town, venues likeThe Ryman, Bridgestone
Arena,Ascend Ampitheatre,The Grand Ol’ Opry, Marathon MusicWorks,The High
Watt, Exit/In and many others compete for tourist and local music dollars.
*The Bad: Some say it’s the economy or corporate takeovers, regardless business
is down. More people than ever are listening to music, but they are going out to
concerts less as competition for the entertainment dollar grows.
*The Ugly: The consolidation of the huge promoters and corporations have cost
jobs for many and caused prices to rise – likely contributing towards the low
attendance records. Price of gas, food, travel, insurance, etc. makes it very hard to
tour without extensive capital or going into debt.
*The Key: Live music entertainment is built into the fabric ofWestern society.
Most artists and local economies depend on this income to make a living - so the
question becomes one of music quality, audience demand and price structures the
markets can bear.

MBU1110 Fall 2017 lecture #1

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MBU1110 Fall 2017 lecture #1