Music Industry Woes

[mas]

Latest report from on e of the 'majors'

It doesn't look good for the industry overall, as the slide continues.

.

Digital revenues not enough to counter Warner's slide

February 6, 2008 http://www.betanews.com/article/Digital_revenues_not_enough_to_counter_Warners_slide/1202317230

While digital revenues were up 41
percent from last year, Warner's overall profits dropped 45 percent and
revenues remained stagnant.

Digital music now accounts for 14
percent of Warner Music Group's total revenue, showing the continuing move by
consumers from physical to digital formats. However, this also means the
company is making far less money selling music.

Warner by all measurements is still
quite healthy financially. But Wednesday's results highlight the issues the
labels face as the industry moves further into the digital age. Total revenue
stood at $989 million, up seven percent year over year.

Net loss for the quarter stood at $16
million, versus a $18 million profit a year earlier.

Free cash flow, typically a good
barometer of the overall health of a corporation, also swung negative in the
final quarter of 2007. It posted a $155 million deficit there, versus a $16
million positive number a year ago.

Essentially, what that says is the
company cannot spend on future initiatives without adding to its debt, or
without spending money intended to maintain its currently existing resources.

"2007 was a challenging year for
the recorded music industry," chairman and CEO Edgar Bronfman conceded.
However he highlighted that Warner is leading in album share in the US and
digital vs. physical share, and is near the top in US market share overall.

"We recognize that there remains
much to be accomplished and are working towards translating these gains into
enhanced value for shareholders," he concluded.

In related news, in the overall market physical
sales dropped 9.5 percent in 2007. However, digital music sales increased 45
percent during the same period.

[IndyKlipschFan]

Pop teen Miley Cyrus, the 15-year-old daughter of country

singer Billy Ray Cyrus, announced that she has changed her birth name Destiny

Hope, to Miley Ray Cyrus.

She said Miley fits her more than her real name.

When she was a child she used to be called “Smiley” because she

smiled a lot. From here it turned to “Miley” and that’s how her family and

friends is calling her.

She wanted to keep the name which made her famous and added

as middle name her father’s name, Ray.

She is the star of the Disney Channel Original Series,

Hannah Montana, where she plays Miley Stewart, a high school girl who

transforms on weekends in Hannah Montana, a pop diva. The show premiered on March

24, 2006 and two years later it was broadcasted in almost every

continent in the world.

Her album “Hannah Montana” has sold 3.2 million copies in

the United

States and

more than 4 million worldwide.

Her concert tickets sold out in minutes.

Miley is also going to hit the stores as Wednesday Wal-Mart

Stores will announce the partnership with Disney for over 140 products based on

the Disney Channel's Hannah Montana.

It will set up mini "Hannah Montana Shops" in 750

stores where clothes and accessories will be on display.

On Friday a film on her recent concert tour will be released

in theatres for one week only.

“Hannah Montana

& Miley Cyrus: Best of Both Worlds Concert 3-D” will open on about

700 screens a day later she ends her North American tour in Miami.

Rick Butler, chief operating officer of Fandango, the

nation's largest movie ticketing service said: “This event seems to be tailored

for advance ticket sales on an online service,” USA Today informs.

[seti]

Maybe when making music becomes even less profitable making music will get back into the hands of those that truly love music and not those in it for just a buck. Listening to the radio is almost unbearable in Arkansas so they reap what they sow Actually Warnar even has some decent artists signed with things were a little better for them.

[IndyKlipschFan]

No problem here... Miley is doing amazing!!!!!

We have two kids, A little girl age 6 and a boy 4... This is their music "idol" for now.. hehehehehehehe

The movie was very cool in 3 D too. U2 will have one out this spring I think.. Great technology now... 10++++

Sold out, at 15 dollars a ticket..

She is am amazing money machine.... Good Genes.. her dad is Billy Ray Cyrus too... Mom and Dad and Disney involved in her career.. = Ratings = Home Run. Jonas brothers also on the screen... Good catchy tunes as well.

She is very grounded, and seems to not going to be a "Britney situation/ nightmare".

I wish her well!!

[IndyKlipschFan]

To those without kids, your are missing out... The pop music is alive and well... GREAT tune!!

[oldbuckster]

Lowest total CD sales EVER ............... the Industry has killed it self, each year less product sold .... How long before it's over, 5 years, less, more? The end of the road is near ....mp3's, ipods, not my cup of tea !!!!!!!!!! The new and improving world ...yeah right !!!!!!!!

[mas]

Lowest total CD sales EVER ............... the Industry has killed it self, each year less product sold .... How long before it's over, 5 years, less, more? The end of the road is near ....mp3's, ipods, not my cup of tea !!!!!!!!!! The new and improving world ...yeah right !!!!!!!!

I suggest its much more than that.

For our parents it was the radio and livemusic played at dances.

For us it was radio and records and a few concerts, and then there was MTV and CDs and the advent of videos...and then the Internet...

For the current generation its all virtual where they live on Facebook and MySpace, race to accumulate thousands of inauthentic friends based upon whatever persona they create online, text, and are content to watch downloaded Hanna Montana videos, MP3s and TV on an IPod or iPhone.

And the trend continues with an increasing technological convergence towards the ubiquitous online connected virtual culture... In both the personal space and in business models.

The only thing that hasn't changed is us. And seemingly the Industry whose business model was built to cater to us. We are the dinosaurs simply clinging onto what was, as that is with what we are content. And its rather funny, and a bit sad, to watch as so many cannot grasp (or as we resist) the fundamental changes, while we are the ones who have not kept pace - at least not to the degree that we fancy ourselves so hip and with it, as we lament and place blame.

And from that point of view, things are only going to get 'worse'.

Face it, for most, music is a commodity... background noise. Its not lifestyle nor meaning nor purpose. And being able to reproduce 'scratching' or hip hop with the utmost fidelity on speakers the size of an upright freezer is not of paramount importance. Mobility, convenience, & connectedness characterizes the new community - however vacous the new models may be. The Music Industry hasn't killed itself except to the degree that they have stuck their heads in the sand and ignored the social and market changes. And business models had better adapt or those who do not will sink further. One only has to look as far as the new Apple Air - the new model is the network. And hard media is quickly becoming anathema.

And the irony is that the vast majority of us still exist only in our small enclaves...with perhaps the Forum as our only adaptation to the new social model.

At best, what many of us desire may persist as a small niche - an exception. Nothing more. And the talk of the revival of records? Yeah. Right. Any minute now! In your dreams... No more than nostalgic 60's & 70's 'oldies' radio stations dominate the airwaves and PBS specials portend their return. Except as an apostrophe, this will not drive the market to any significant degree.

Oh, things have changed, but to focus on the Music Industry, as if IT is the only aspect that has not changed is to miss the larger significance. You want an industry focused on physical hard copies and high-fidelity systems that are among the largest objects in your home? You are on the same path following right behind the Industry. The irony being that even the Industry is finally waking to the fact that they must finally address the online model.

And that leaves many of us sitting and reminiscing and wishing for the 'good old' days...

[oldbuckster]

I sorta' miss the radio days ... it's amazing how good an old radio, single speaker, and all, can sound. Listening to Kurt Gowdy doing the Red Sox play by play, then all those old Hit 45's on the big stations, Grand Old Opry, Good Radio, FREE radio .... but time marches on, to the present, I realize I live in the present,but Ipods, MP3, this whole techno music playin' store away 666hours of music escapes me. They don't sound so great, just my opinion, I find no clarity to the sound, I don't care for them, but team those players up with the ability to load off a computer, and I do understand what happened to the music industry. Their failure to foresee, and to adjust to the new marketplace, isn't the consumers fault. Whatever reason, sales are down, they have been done, and are projected to hit rock bottom, it may be doomsday, indeed ............

[jacksonbart]

Yeah but the music is still strong.

[theryugobuddy]

Yeah the whole world is going to h*ll! -- not!

Shoot as long as there is a big business behemoth trying to control something there's always an underculture that desires something real or alternative and theres an outlet for satisfying them. And there will always be artists out there trying to be real and be discovered.

In the seventies, the music industry and radio tried to push "Afternoon Delight" and "You Light Up My Life" dreck as the music to listen to -- but there was plenty of good stuff to be found too -- if anything its easier to access music, and you could never sample music before you bought it then. Can't tell you how many crappy LPs I bought because I thought it might be good, yet I knew within a few songs listening that I might not ever listen to it again. Now at least almost all artists new and old can be sampled.

I admit if you're not computer savvy you're out of luck, but its better buying music now than when we were kids. Its changed alot and the music industry has not followed fast enough -- in corporate America its survival of the fittest, and to me they should have saved some of the fat profits they got out of us for so long or invested better. I'm not sad to see them go if they go.

Greed and drastic change killed them -- but there will always be music. And I'll bet you'll always be able to get rock and roll. Classical has survived for hundreds of years -- why not everything else thats good?

[mas]

Its hard to figure out where folks on this forum are coming from with rregards to this issue. On one hand you have at least one who claims both hard copy CD and DVD sales are up, while every other source cited says the exact opposite. Some claim that it is $18.99 CDs, but I have yet to ever buy one at that price, and few (and NO domestic titles) above $11.99-$14.99. And if you do not have to have a DVD movie the first week of release, few cost more than $12, with many available between $6 and $10. Yup, simply obscene...[*-)]

Yet I don't hear anyone whining about beer or stero prices. Let' see...let's compare the price of a record album in 1975 and their price now with a pair of LaScalas. Or Levis. Or a VW. Heck, packs of gum used to be 5 cents. Now they are...(allot more than 15 cents!)...yet no rioting in the streets nor a flourishing black market...Suddenly the price of a CD or DVD doesn't sound bad at all.

Even the minimum wage (whether you support the concept or not) which everyone must agree has not kept pace with the cost of living (that's simple math, not politics) has gone from about $2.00 in 1974 to $7.25, an ~ 350% increase, is commensurate with the increase in album/CD prices which have gone from $8.95 to $18.95 - an increase of only ~210%. And if the minimum wage is behind the curve, how are CDs ahead of the curve - and that is for LIST prices!!!

Why do I get the feeling that the mantra that the music industry is "greedy" is complete nonsense. CD list prices, let alone street prices, haven't even kept pace with the rrate of increase in the minimum wage. So they are hardly at the leading edge of what is driving inflation! But then its easy to cry "greed" as you sit at Starbucks downing your $4 coffee that went for .10-.20 cents back in the day.

We need a new mantra.

And greed is not what is indicated by the following article.

The fact is, music does not occupy the same role in today's society as it did when we were growing up.

And it seems the only ones that have not figured that out are both the music industry and the ones blaming "greed". But then, maybe the real "greed" is being embodied by those who feel entitled to free music and who, I suspect, would complain no matter what the price for a CD.

From The Economist 1.12.08

The music industry

From major to minor

Jan 10th 2008
From The Economist print edition

Last year was terrible for the recorded-music majors. The next few years are likely to be even worse

Illustration by Claudio Munoz

IN 2006 EMI, the world's fourth-biggest
recorded-music company, invited some teenagers into its headquarters in
London to talk to its top managers about their listening habits. At the
end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

In public, of course, music executives continued to talk a good
game: recovery was just around the corner, they argued, and digital
downloads would rescue the music business. But the results from 2007
confirm what EMI's focus group showed: that the record industry's main product, the CD,
which in 2006 accounted for over 80% of total global sales, is rapidly
fading away. In America, according to Nielsen SoundScan, the volume of
physical albums sold dropped by 19% in 2007 from the year before—faster
than anyone had expected. For the first half of 2007, sales of music on
CD and other physical formats fell by 6% in
Britain, by 9% in Japan, France and Spain, by 12% in Italy, 14% in
Australia and 21% in Canada. (Sales were flat in Germany.) Paid digital
downloads grew rapidly, but did not begin to make up for the loss of
revenue from CDs. More worryingly for the industry, the growth of digital downloads appears to be slowing.

“In 2007 it became clear that the recorded-music industry is
contracting and that it will be a very different beast from what it was
in the 20th century,” says Mark Mulligan, an analyst at
JupiterResearch. Last year several big-name artists bypassed the record
labels altogether. Madonna left Warner Music to strike a deal with Live
Nation, a concert promoter, and the Eagles distributed a bestselling
album in America without any help from a record label. Radiohead, a
British band, deserted EMI to release an
album over the internet. These were isolated, unusual deals, by artists
whose careers had already brought years of profits to the big music
companies. But they made the labels look irrelevant and will no doubt
prompt other artists to think about leaving them too.

The smallest major labels, EMI and Warner Music, are struggling most visibly. Warner Music's share price has fallen to $4.75, 72% lower than its IPO price in 2005, and it is weighed down by debt. EMI's new private-equity owner, Terra Firma, paid a high price for the business in August 2007. Now, having got rid of most of EMI's
senior managers and revealed embarrassing details of their spending
habits (£200,000 a year went on sundries euphemistically referred to in
the music business as “fruit and flowers”), Terra Firma is due to
produce a new strategy later this month. But many observers reckon the
private-equity men are out of their depth.

The two biggest majors—Universal, which is owned by Vivendi, a French conglomerate, and Sony BMG,
a joint venture between Sony and Bertelsmann, a German media
firm—derive some protection from their parent companies. Universal is
the strongest and is gaining market share. But people speculate that
Bertelsmann may want to sell out to Sony next year.

Three vicious circles have now set in for the recorded-music firms. First, because sales of CDs
are tumbling, big retailers such as Wal-Mart are cutting the amount of
shelf-space they give to music, which in turn accelerates the decline.
Richard Greenfield of Pali Research, an independent research firm,
reckons that retail floor-space devoted to CDs in America will be cut by 30% or more in 2008. The pattern is likely to repeat itself elsewhere as sales fall.

Circular arguments

Second, because the majors are cutting costs severely, particularly at EMI
and Warner Music, artists are receiving far less marketing and
promotional support than before, which could prompt them to seek
alternatives. “They've cut out the guts of middle managers and there
are fewer people on the ground to promote records,” says Peter Mensch,
manager of the Red Hot Chili Peppers and Shania Twain.

Third, record companies face such hostile conditions that their
backers, whether private equity or corporations, are loth to spend the
sums required to move into the bits of the music industry that are
thriving, such as touring and merchandising. The majors are trying to
strike “360-degree” deals with artists that grant them a share of these
earnings. But even if artists agree to such deals, they will not hand
over new rights unless they get better terms on recorded music, so the
majors may not see much benefit overall. Tim Renner, a former boss of
Universal Music in Germany, says the majors should have acted years
ago. “Then they had the money and could have built the competence by
buying concert agencies and merchandise companies,” he says. Now it may
be too late.

By mid-2007, when the majors realised that digital downloads were
not growing as quickly as they had hoped, they landed on a more
adventurous digital strategy. They now want to move beyond Apple's
iTunes and its paid-for downloads. The direction of most of their
recent digital deals, such as with Imeem, a social network that offers
advertising-supported streamed music, is to offer music free at the
point of delivery to consumers. Perhaps the most important experiment
of all is a deal Universal struck in December with Nokia, the biggest
mobile-phone maker, to supply its music for new handsets that will go
on sale later this year. These “Comes With Music” phones will allow
customers to download all the music they want to their phones and PCs
and keep it—even if they change handsets when their year's subscription
ends. Instead of charging consumers directly, Universal will take a cut
of the price of each phone. The other majors are expected to strike
similar deals.

“‘Comes with Music' is a recognition that music has to be given away
for free, or close to free, on the internet,” says Mr Mulligan.
Paid-for download services will continue and ad-supported music will
become more widespread, but subsidised services where people do not pay
directly for music will become by far the most popular, he says. For
the recorded-music industry this is a leap into the unknown. Universal
and its fellow majors may never earn anything like as much from
partnership with device-makers as they did from physical formats. Some
among their number, indeed, may not survive.

[LoudnClear]

I'm starting to get a sense of what's going on. I'm willing to pay $15+ for a CD, preferably in advanced resolution 24/96 or better. At the same time I have a strong aversion to buying a song for $1 electronically. Part of that aversion comes from the disdain for crappy sounding low bitrate material available. But I also have a mindset associated with using a computer that "So much information is available for free on the internet, its hard to pay for electronic data". Its not hard for me to pay good money to amazon for a book or a cable, but I feel like I'm paying for something I shouldn't be when I pay for information/data. Online music is just data to me, I think I feel that way mostly because its low rez formats don't fit my needs.

I know that most people not getting onboard the online music purchase bandwagon are not holding out due to crappy quality, they mostly don't even know what bitrate means. Years of free music harvest back during the Napster years didn't help setup people to pay for downloaded music either.

I have to believe that people who love making music and do it for their own enjoyment will still be able to get their material out to the people in a quality format. It may be harder to get in the years to come, but it will still be available.

Kimball

[oldbuckster]

two quick points ............... Album downloads for $7.98, gee, you can't buy CD's for that, not brand new releases !!! Stereo prices, I think Dollar for Dollar stereo prices are less expensive now than ever, considering what moneys worth these days !!!

[mas]

two quick points ............... Album downloads for $7.98, gee, you can't buy CD's for that, not brand new releases !!! Stereo prices, I think Dollar for Dollar stereo prices are less expensive now than ever, considering what moneys worth these days !!!

Buc

I agree (except for high end audio which has become a boutique cottage industry). And even retail prices (who buys ANYTHING at list?????...and if you do, don't complain to me!) for CDs are less expensive now than ever.(adjusted for inflation, blah, blah, blah) (

And to jump around a bit on a few previous topics...

And in the light of the historical price for media, I think all the previous talk of "greed" is nonsense especially as the cost of doing business has steadily increased. Heck, just the transportation and shipping costs have increased more than the list prices alone!

(And for any knee jerk respondants out there about to complain about the RIAA - I certainly don't fault anyone for trying to protect their interests against the wholesale distribution of copyrighted material via P2P networks! Nor do I make excuses for idiots who feel entitled to wantonly redistribute this material! And yes, that being said, I also make a big distinction between making a couple of individual copies and the wholesale redistribution of material! I do not support someone essentially setting up shop to make 1000+s of copies for redistribution which P2P networks essentially are! ...And I know the law needs clarification and reform regarding this - so don't mention the RIAA to me in some dysfunctional misinterpretation... Of course, I don't give a flip about MP3s - except that I need to figure out the best way to digitize some large audio files for file transfer to China and Romania.....;-)

I think the real problem for most of us is a lack of music that stimulates our attention. And the interest in previously unreleased material reinforces this.

And that being said, I sure wish Capitol would finally issue Steve Miller's Recall the Beginning - A Journey from Eden on CD!

[gaspr]

have to believe that people who love making music and do it for their own enjoyment will still be able to get their material out to the people in a quality format. It may be harder to get in the years to come, but it will still be available.

I like your thinking Kimball...I actually believe that good to excellent quality music will become more easily available, via downloads, in years to come. The hard part for some new artists will be that they may need the services of a "record label" to provide the quality recording studios and engineering that great music needs. Marketing is the other service provided by labels that still may be a necessity. But who knows...lots of good tunes coming out of indie labels these days....and good music has a way of marketing itself via the internet.

I still believe that if there are artists out there with a strong desire to provide quality products, that somehow a way will be found to get that product out to those of us who are actively seeking it. In fact it is probably getting easier all the time.

[jheis]

IMHO the recording industry shot itself in the head by continuing to charge outrageous prices for CDs that cost next to nothing to reproduce. When cheaper alternatives became available, people jumped on it. Now they're trying to stuff the genie back in the bottle by suing their customers. Too late for that.

James

[oldbuckster]

I think the Music Business is in good shape ...... it's the Recording Industry that's in trouble !!!!!!

There will always be MUSIC, that is up to US !!!!!!!!!!

[IndyKlipschFan]

Mas said, "I think the real problem for most of us is a lack of music that
stimulates our attention."

Most of us... and the younger generation too. We live in a right here, right now, world. We have the internet, so we have instant access to the bands and the marketed story... (Or the fake story written up by someone that hates the band..LOL) We can youtube or download that one cool song and be done with it. MTV is about reality shows and countless BS that has nothing to do with the music at all. Sirrius Radio allows us to run like cattle to "comfort music" without stretching our horizons anymore.

We have more options ever than we EVER had before... and no one cares! Gimmie my iPod. If it is a cool enough song, I will add it to my Facebook with my 714,269 closest friends... Oh PLEASE!!

Mas you are right on, on this one... Sad but true..

[seti]

IMHO the music industry shot itself in the head by continuing to charge outrageous prices for CDs that cost next to nothing to reproduce. When cheaper alternatives became available, people jumped on it. Now they're trying to stuff the genie back in the bottle. Too late for that.

James

I agree if the price were lower more people would by. The average price for a CD that I would buy is $20 and if it is an import $20 - $50. Lower the price and we will buy more music

[mas]

Still we persist in the same old thinking as if nothing has changed but the price...

The price are lower now then they were 'back in the day' adjusted for inflation.

And the price of the average CD you buy is $20!? That is certainly not mainstream... Where in the heck do you buy your music???????? You need to do a bit more comparison shopping!

And you obviously did not read the Economist article where they tried to give the CDs away but couldn't.

Price is the least of the problems.

Here is one point of view from those in the recording studio biz...originally appearing in Mix Magazine. You know, the guys in the few studios left that are going out of business left and right. Even Muscle Shoals is now history...

http://www.arnold-ficquette.com/quality_article.pdf

Quality in
the Age of Good Enough

By Blair Jackson May 1, 2005

It was the late, great Nashville
engineer Denny Purcell who, in a moment of frustration

and resignation, opined about
the audio industry, “We live in the age of ‘good enough.’”

Indeed,
many people today argue that despite the better efforts of so many

throughout
our industry, there has been a decline in the quality of recordings, of

equipment
and of the overall music business climate. Music listeners are settling for

mediocrity
instead of insisting on excellence. Convenience always seems to trump

fidelity.

As with the music industry
doomsday scenarios of two years ago, the carping and

kvetching about quality is not
without some justification — but neither is it a true crisis,

nor even a radical departure
from historical precedent.

One reason things look so bleak
to so many in our field is that to a large degree, much of

what we do is an adjunct to the
record business, and that industry has been going through

strange and depressing times for
at least a decade, with no end in sight. As the major

labels have become consolidated
as part of larger corporate entities unconcerned about

the “art” of music, instead
interested only in generating profits for über-companies'

stockholders, label rosters have
been decimated, recording budgets have been

dramatically slashed and there
has been a serious negative trickle-down effect that has

eaten away at recording studio
profits and, by extension, audio equipment manufacturers.

The lengthy studio lockout is
virtually a thing of the past; indeed, rare is the project now

that is fully recorded and mixed
in a single facility. Record companies know that studios

are struggling to find business
and are forcing recording rates to go lower and demanding

that projects be completed more
quickly, quality be damned. Indie labels have taken up

some of the slack, but they are
in no position to be the sort of free-spenders that the

majors were from the late 1960s
until the early '90s.

Recently, I called up an old
record biz colleague of mine, Howie Klein, to ask him about

the deterioration of the record
business. A one-time music journalist, Klein's industry

credentials include founding the
fine San Francisco Bay Area-based new-wave label 415

records (Romeo Void, Translator,
et al) and stints as president of both Warner/Sire and

Reprise Records. Now, he's
semi-retired, teaching occasionally at McGill University and

still working with young bands
when the inspiration strikes. What, I asked him, is the

cause of the record industry's
malaise?

“In one word, corporatization. I
don't believe the corporate form of organizing business

can work with art. It was just a
matter of time before the entrepreneurs who got the

modern record business going —
Mo Ostin and Ahmet Ertegun and others — were going

to be superseded for one reason
or another — and age was a certainly a factor — by

people who weren't music-loving
visionaries but who were basically corporate hacks.

That's not to say that everyone
in the music business is a corporate hack. But at the very

minimum, the power to make
decisions has gotten into the hands of people who are just

corporate hacks.” In other
words, he says, the power migrated from the divisional level of

the record companies when giant
corporations bought those companies. “The power was

gradually taken over by the
corporate owners. It was disastrous for the artists, the

employees, music in general.
Aside from a few guys at the top who made tens to

hundreds of millions of dollars,
everyone else was the loser.”

How does the corporate climate
filter down to the labels? Klein says that at least in rock

music, he believes the most
successful model is to find artists whose musical vision you

believe in and to support them. “They
don't break on the first album. Occasionally they

do — you find an Alanis
Morrisette who comes along and sells 23 million copies of her

first record. Much more common
would be something like Depeche Mode or Barenaked

Ladies, two bands I worked with,
where it takes five records before they break.” Klein

notes that in the case of those
two bands, their eventual success led to Platinum sales for

earlier albums that had not been
successful, but in the current climate, the only thing that

matters is breaking bands
immediately to improve quarterly profits.

“The other more insidious thing
that's happening is that the music people are slowly

disappearing and being replaced
by business people,” he continues. “When I was chosen

to be president [of Sire], I was
chosen because I was thought of as an artist's guy, but then

once I was president, my job had
nothing to do with that. I was supposed to figure out

budgets; I was like an
accountant. They would ask me, ‘Okay, how many copies are we

going to sell of the next
Ministry album?’ ‘How the f*** do I know? The band didn't

even write the songs yet!’ But
they literally based everything on how many they're going

to sell. With Alanis and Jagged
Little Pill,
we figured she was going to sell 25,000 and

she sold 23 million. Doesn't
that tell you the system is idiotic? When I felt it reached a

point where it was irrevocable,
I retired.”

From a sonic standpoint, the
development that has audio-conscious types fretting is the

continued proliferation —
explosion, really — of MP3s as the medium of choice for so

many music lovers. It was bad
enough when x-thousand people were downloading

“shared” MP3 files for free
through pirate sites all over the Internet. But with the success

of Apple's iTunes and iPod (AAC
encoding), and similar ventures by other companies,

the supposedly inferior
technology (as compared to CD) has been embraced and

legitimized by the music
industry. Add into the equation that many people are listening to

MP3s on either tiny “ear buds”
or inferior computer speakers, and it's easy to understand

why audio engineers and others
sometimes wonder, “Why am I slaving long hours in the

studio trying to make pristine
recordings?”

But step back for a second and
take the long view. As Crosby, Stills & Nash sang in

“Déjà Vu,” “We have all been
here before.” I hold in my hand, exhibit A. This quaint

piece of plastic casing with
some flimsy tape on small spools is called a cassette. There

was a time not so long ago when
engineers complained about the comparatively horrible

sound of cassettes;
unquestionably, they were inferior to LPs. Some even argue that the

quality drop-off between LPs and
cassettes was greater than from CD to MP3.

Eventually, cassette sales
eclipsed album sales, even though everyone knew they
didn't

sound as good. Why? Convenience,
of course. Cassettes gave us music on-the-go — for

cars, Walkmen (okay, “personal
stereos”) and large and small boom boxes.

But you know what? It didn't
change the music one iota. There isn't a single engineer who

settled for inferior recordings
because the ultimate destination for many music listeners

was going to be a
shitty-sounding cassette played through mediocre car speakers or a $49

“blaster.”

The sad fact is, beyond the
issue of cassette quality, most people did not have very good

home hi-fi systems to listen to
LPs either. In the '70s, I had audiophile aspirations but not

the budget to match, so I lugged
a decent Garrard turntable, KLH bookshelf speakers and

a Panasonic amp around to my
many domiciles. Most people I knew had worse systems

than I did, but we all actually
cared about music and spent hours sitting around intently

listening to albums — an
increasingly rare practice. In a way, CDs leveled the playing

field somewhat — they sounded
better on mediocre systems than LPs did — and today,

even the worst low-budget setups
are much better than comparable ones from the LP age.

Still, if iTunes and CDs through
computer speakers is “good enough,” it is in part

because the majority of the
population don't own top-quality equipment, and they don't

listen to music that seriously
to begin with. However, one could argue that the iTunes

experience may help listeners to
care more
about
quality because listening to music alone

on buds or 'phones is an
intimate act that bonds the musician and listener.

The good news is that equipment
manufacturers and engineers are constantly striving to

make better-sounding gear and
discs. Millions of dollars (or pounds or yen) have been

poured into R&D and
marketing, and the result is a constantly evolving technological

landscape. Multimillion-dollar
busts have occurred along the way — remember DCC, the

ill-fated digital cassette? — as
well as important trends that changed the way people

worked and permanently altered
the economics of the industry. Those ADATs you have

in the closet probably aren't
getting much use now that you've got your Pro Tools rig, but

they might have kept you afloat
during tough times, and they served as a bridge to today's

digital workstation ubiquity.

Now the buzz — and the R&D
money — are going to high bit rate and surround formats.

Engineers and producers and
record companies are psyched. But the public is confused.

SACD or DVD-A? DVD-V?
Dual-layer? Surround for hi-def television? 5.1? 6.0? What

the hell is 7.1? Those of us in
the industry are in a rarified position, having been

indoctrinated to this exciting
new wave of products and approaches through the years.

I've often thought that if every
person in America had the chance to sit in the sweet spot

in a first-rate control room and
listen to the surround version of The Eagles' “Seven

Bridges Road,” surround would
catch on in a week! But the reality is that MP3 is “good

enough” for the casual music fan
and besides, “Where the hell am I going to put the rear

speakers, center channel and
subwoofer of the 5.1 system in my tiny apartment?”

“I think people are a little
wary of the new formats,” comments mastering legend Bernie

Grundman. “At this point, I'm
mainly hoping that people will still support normal CDs

because the quality is so much
better than [MP3]. I would hope that when people sit

down and really give a serious
listen to something, they would expect higher quality, but

that may not be the case.”
Grundman is afraid that new, high-res formats won't survive.

“They're popular with the
audiophiles, but that's probably not going to be enough,” he

says. “So far, for whatever
reason, the public doesn't seem to be going for a high resolution

audio-only disc. It seems as
though people want video, too, so the DVD-V is

more likely to stick around.
Unfortunately, quality does not always win out.”

Grundman works with every kind
of recording imaginable, and while he believes that “a

lot of effort is going into
improving equipment all the time,” other considerations affect

the quality of the music. “One
of the gross areas is level,” he says. “To get their records

noticed, people want them to be
louder than the next guy's, and to get level, there's a lot

of processing that goes on. The
by-product of that is a form of distortion. It usually isn't

blatant [distortion], but it
doesn't sound natural and it sounds less musical; it sounds

almost mechanical.

“In pop music especially, it's
gone to a mid-fi kind of sound. I'm finding that a lot of the

newer engineers are kind of
intoxicated with technology; they're not as aware of the

actual quality of the sound as
they are in how they can manipulate it in the computers

with all the plug-ins.
Sometimes, their judgment gets thrown off because they've bought

into the notion that in the digital
domain, you can do a lot of manipulation and you won't

degrade the sound, which is
entirely wrong. My rule of thumb is, anything you do to the

signal, any plug-in you put in,
you're degrading the signal somewhat. So then the

question becomes, what really
needs to be part of this track? By adding this and this, are

you gaining more than you're
losing? I have my own preferences, but on a pop or rap

track, maybe those plug-ins and
gimmicks are what the track needs to get attention. So

then it's more a matter of
marketing than music, maybe, but who's to say one is better

than the other? Obviously,
there's no single answer to what ‘quality’ is in a recording.”

The “quality” question spills
over into every area of audio, from the training that up-andcoming

engineers are getting in
schools, to the products that are being promoted by retail

stores and e-commerce sites, to
the impact of diminishing recording budgets and

concomitant rise of personal
recording spaces. How has the live sound industry been

affected by these factors? Are
engineers being asked to do more with less? Have

“prosumer” and “professional”
merged for good? Join Mix's editors for an in-depth look

at these issues and how the best
in our industry are dealing with them in this era of

lowered expectations and
revenues the only way they know how — by refusing to give in

to complacency and continuing to
raise “quality” ever higher.