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No business like the music business

Tuesday 28th January 2014

The music industry has been in a state of flux for a decade or more now. Physical sales of albums have dropped off, record stores the world over have closed and major record labels have consolidated – there’s only Universal, Sony and Warner left. 2013 was a significant year in that iTunes turned ten, and streaming service Spotify turned five.

For Music 101 last week, Duncan Grieve, a music journalist with a keen eye on the business end of the industry, and Matt Nippert, a business journalist with a keen ear for music joined me to muse on industry moves of the last 12 months.

We began by talking about the health of the local NZ music industry. Matt suggested that Lorde was the local music industry, earning around thirteen times what all other NZ musicians collectively earned in 2012 (going by the last figures available from the NZ Music Commission).

But apart from talent, and great Grammy-winning songs, what has worked for Lorde? Duncan, who has followed her story closely, said she “had the right song at the right time”: “Sometimes a song taps in perfectly to a mood, and ‘Royals’, with its cynicism about Kardashian-style consumer culture tapped into a feeling that the audience had, but hadn’t been able to put a finger on.

“I don’t think this is something you could easily repeat, but I think this will be instructive for the music industry as a whole. This was something that very much deviated from the standard model of very heavily managed artists.”

Matt agreed. “It can be done cheap. It was [Joel] Little and Ella in a little studio – it must have cost them less than five figures to put that album. If you spend judicially, you could plant a lot of seeds like that. You wouldn’t expect them all to succeed, but one in a hundred, and you’d be getting a fantastic return.”

Sales of digital music dipped for the first time in 2013, while streaming by music consumers increased.

While the money most NZ artists are earning from sites like Spotify is modest, if negligible, Duncan said it’s a matter of scale.

“I added up what Stan Walker – a moderately successful artist in a small market – would earn in a year, and ended up with a figure of around $10,000. Spotify has six million paying customers, but in five years time, they may have sixty million paying customers, so it’s not out of this world to imagine a Stan Walker earning ten times what he does now.”

One revenue stream for musicians that has increased in the last decade is live concert revenue, though it’s mostly the megastar and nostalgia acts making the money.

Duncan said, “Consumers are just voting with their feet. Fifty thousand people are willing to part with around $200 to see Beyoncé in Auckland, but if you’re just a local artist playing The Kings Arms you’re going to struggle to get any kind of a crowd. And to an extent that’s just competition – Beyoncé’s probably got a better show than you. And also the more money that Beyoncé takes, the less there is to trickle down to the next level.”

2013 was also a year for creative music marketing – ranging from teased out, cryptic, ubiquitous campaigns by Arcade Fire and Boards of Canada, to the absolutely no-marketing-needed approach of Beyoncé and Bowie. Thoughtcatalog has a good overview of marketing moves of 2013.

As for what 2014 holds – Matt reckons the media will trundle out another ‘vinyl saves the industry’ story. No surprises there. Duncan says that ‘popera’ trio Sol3 Mio will be the big NZ music story of the year, when they do in other territories what they did here at the end of the year – they outsold Lorde’s Pure Heroine in five weeks, when Lorde’s had been out five months.

And my predictions for the music industry for 2014?

• That record label people will be fumbling over themselves to sign a development deal with India Yelich O’Connor – yes, that’s Lorde’s little sister. She released a demo on the Internet this week – a very lo-fi cover of a Christina Aguilera's 'Say Something' – which had the Internet all a flutter. She’s got a good voice, a little ‘pitchy’, but she’s only 14, so give her a couple of years, and it might be GREAT.

• Beats Music – a celebrity-endorsed streaming site – was launched this week. It hasn’t landed in NZ yet, but it’s getting great reviews in the U.S. for its intuitive music discovery features, playlists created for specific activities such as barbequing and punching walls, and its elegant, uncluttered layout. After the initial free week long trial you have to sign up to a $10 a month deal or quit – there’s no free option. Maybe this is the one that will give Spotify a run for their money this year...

• That our latest Introducing guests will be a hit with music bloggers worldwide. They’re called Yumi Zouma, a three-piece from Christchurch, but with one member currently living in Paris, another in New York. Trading files over the internet, the trio created a few songs, which they put up on Bandcamp, sent to a few of their favourite labels and blogs, and within 24 hours had a record contract with Cascine, who will release their debut EP this week.

Kirsten persuaded Concert FM to give her a job filing CDs, switched over to National soon after, and has been at Radio New Zealand ever since. She’s learning to play the banjo.