It's amazing how wrong Bon Jovi and Moses Avalon get this situation.
Originally Posted by Jon Bon Jovi
Kids today have missed the whole experience of putting the headphones on, turning it up to 10, holding the jacket, closing their eyes and getting lost in an album; and the beauty of taking your allowance money and making a decision based on the jacket, not knowing what the record sounded like, and looking at a couple of still pictures and imagining it.
Kids can (and do) still put on headphones, close their eyes, and get lost in the music, be it an album or a playlist. No, they're not "holding the jacket" (as if they'd done so any time since the CD revolution of the '80s), but if their eyes are closed as they lose themselves in the music, what difference does that make? I came up in that "magical time" when you bought an album based on the jacket, and while that sometimes resulted in welcome surprises, it was just as often a sad waste of limited funds.
Now, I have no love for lossy audio compression and louder-is-better disc mastering; if Jon is lamenting the rise of lo-fi, I'm with him on that. I'm even with him on the decline of the album format as an art form (not that Bon Jovi ever contributed anything of note to that). But, here's where we part ways again:
Originally Posted by Jon Bon Jovi
Steve Jobs is personally responsible for killing the music business.
Not exactly, Jon-boy. MP3s—which were not invented by Steve Jobs or Apple—hit the 'net in 1994; iTunes came out in 2001. What Jobs and Apple did was figure out a way to monetize the situation both for itself (mostly by selling iPods) and for the music industry (which had so steadfastly refused to sell MP3s itself that the entire market was given to illegal file sharing).
There is arguably one person who made digital downloads online so easy and attractive that he and his company created a paradigm shift in the way young consumers acquired music. That person is Shawn Fanning; his company, Napster, was launched in 1999. If you need to blame somebody, he's your guy. However, I think iTunes or something like it was inevitable anyway; Napster just accelerated it.
But, hey, Mr. BJ isn't a tech geek, he's a pop star. While I would have hoped he'd have known better than to make such an ill-informed and ill-advised comment—even off-the-cuff—I wouldn't have expected it.
On the other hand, a producer/engineer and artists' rights advocate like Moses Avalon should know better than to post some of what's in his blog:
Originally Posted by Moses Avalon
1) iTunes has not, as some have suggested “saved the record business.” iTunes has made up less than 10% of sales over the years since launch.
This is disingenuous. Yes, if you average out sales from 2001 (when the service and the market for it were both new) until now, that number may be accurate: I'll give Mo the benefit of the doubt there. However, in 2010, iTunes had a 28% market share of all US music sales—more than double its nearest competitor—making it the single largest music retailer. With Amazon and Walmart at 12% each, the top three retailers have over 50% of the market. It's essential to note that none of these companies is a traditional music retailer. Amoeba notwithstanding, the record store is dead.
Online downloads will soon account for half of all music sales. Pre-iTunes, there were millions of downloads, but no sales. Album sales started declining in the Napster years: 1999-2001. Avalon suggests that, without iTunes, CD sales would have grown again, but that's a pipe-dream. By then, there was no shutting Pandora's box. New P2P file sharing services that worked around some of the Napster liability issues were popping up left and right. Apple did what the music industry absolutely needed to do, but would not/could not do for itself: turn the #1 source of loss into the #1 source of revenue. If you needed another name for iTunes, it might be "Hope."
Originally Posted by Moses Avalon
2) Nor did Steve Jobs “invent” a way for artists to get paid from the internet.
From the Internet, no. From MP3 downloads, for all intents and purposes, yes. There was nothing like the iTunes Music Store before Apple launched it.
Originally Posted by Moses Avalon
3) Finally, I believe it was Lawrence Lessig or some fool like him who promised—“If you give people a legal way to buy music they won’t steel it.” Remember that one? Not true: P2P file sharing did not decrease since iTunes went on-line — it actually increased.
File sharing was increasing by leaps and bounds prior to iTunes, and would have continued to do so without it. Once iTunes gave people a legal way to buy music online, there have been over ten billion legal downloads on iTunes alone.
Is there still piracy? Sure there is. Do you want to know what the piracy figures are for physical media (e.g., CDs)? Roughly 40% of all sales worldwide. I suppose that by eliminating commercial CDs we would do away with all CD piracy, but that's not a viable business model. The point is, if people want something, and you offer it for sale, many of them will buy it. If you don't sell it, they will have no recourse but to steal (not "steel") it.
Originally Posted by Moses Avalon
What iTunes did that sucks most for music is it destabilized the “album model.” Yeah, yeah, I know, many of you think that that is good for the consumer, but it’s really not in the long run. Not if you’re a true music fan.
iTunes did not "destabilize the 'album model'"; arguably, the MP3 did. It did so because younger consumers were sick of paying for albums with one or two good songs and a lot of crappy filler. Why were there so many albums with one or two desirable tracks? Because much of the the industry and audience was focusing on single-oriented musical styles and artists. I would say that this shift in musical style was just as responsible as technology in killing the album model.
A third factor is that, at $14/ea., CDs were too expensive if the whole album wasn't good. Because (as Avalon later notes) there is little difference in the cost of producing and marketing physical singles vs. albums, CD singles could never be produced inexpensively enough to make much sense for record companies, nor sold cheaply enough to satisfy consumers. Then along came the MP3, perfectly filling the role left vacant by the demise of the 45 (and failure of the CD single) well before Apple got into the game. Apple simply turned it into a legit business.
Originally Posted by Moses Avalon
It costs more to make less, which means less risks will be taken on new acts.
If you remove the 80 cents or so that songwriters used to receive for each album sale and replace is with the 9 cents they get for a single, you don’t have to be a math genius to see that you need to sell about seven times more units to break even on a promotion that costs $1,000,000 whether you release an album or a single; or, a production costing about $10,000/song to produce if you do an album, but $25,000/song is you go single-for-single.
This is mixing apples and oranges. Yes, fewer mechanical royalties are paid to writers and publishers for a single than for an album. However, this has little to do with what the record company makes, which is strictly a matter of unit sales. It only affects them by reducing their per-unit overhead—unless, of course, the label is also the publishing company, which is often the case because labels typically force artists to sign over half or more of their publishing.
If the artist is also the songwriter, then, yes, the artist takes a hit on writer's royalties earned per unit sold. Otherwise, the professional songwriting community takes the hit because fewer songs get placed. It doesn't take a math genius to see why. However, it does take someone who knows a little bit about the record business to know that writing and publishing royalties are not recoupable. That means that writers and publishers get paid from unit one. It's the artist royalties that don't get paid until all expenses are recouped. For artists, the primary value of a hit single is that it ups the value and attendance of their live shows, where they make the real money.
Record companies have long been risk-averse. The contracts they offer new artists are usurous, and they rarely spend what it would take to break an artist; only a small percentage of signed artists get serious promotion once the record is completed. This is probably just as well, as record companies have a horrendous track record when it comes to picking winners: the percentage of records that are profitable, much less hits, is so small that the most successful record company on a per product basis would be the laughing stock of almost any other industry. But I digress.
With an MP3, the record label eliminates packaging, manufacturing, and distribution costs. Apple gets about a third off the top, and out of the remaining 65¢ the label pays about 9¢ to the publisher (which may be itself), recoups its expenses out of another 18¢ or so (depending on the contract), and pockets the rest. Yes, that's a lot less than a CD, but hardly cause to weep for record companies.
The cost to actually produce the track is not terribly significant compared to the cost of promoting it, but record companies can easily keep it down. Now more than ever they're buying finished tracks from artists and producers, not paying anything until they've approved the track and putting a ceiling on what they'll pay to anyone without a track record regardless of their costs. Once they've decided an artist is hot enough to provide a budget up-front, they'll cut enough racks to bring the price down, even if they're only going to issue them one at a time.