Godsmack: Third Down
On February 18, 2007, I predicted the imminent collapse of the Christian record industry.
In that original post, I said that in 18-24 months—the Christian record business will have completely evaporated.
Well, we’re 11 months in and it’s time for a check-up.
An interesting thing about Nashville is that the two primary musical genres that are based here—Country and Christian—are notoriously late compared to other genres.
Their target demographic tends to lag behind the pop culture mainstream.
In country music specifically, they’ve yet to feel the effects of broadband file sharing.
But just wait until Bubba gets high-speed internet in his rural area.
Say what you will—and scream “stars and bars” all you like…
But Bubba won’t pay for music if he doesn’t have to.
And what about Christian music?
Ah, mom! All the kids are doing it!
No moral judgment here...just stating the awful truth.
But it’s really not just about file sharing.
As I outlined previously, the collapses are also occurring at retail…and at radio.
Why do I pick on the Christian music sector?
Because I love it.
And friends don’t let friends drive drunk.
The motherships that own the Christian labels are in even deeper water than they were this time last year.
But I digress. Let’s check in…
In a recent issue of the Economist, I saw this headline…
Last year was terrible for the recorded-music majors. The next few years are likely to be even worse.
A few interesting tidbits from this article:
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.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 ($450,000 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.
And, because sales of CDs are tumbling, big retailers such as Wal-Mart and Target 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.
So let’s re-examine the major players in Christian music:
Word—owned by Warner Bros…72% stock drop…not good.
Provident—owned by Sony/BMG…the in-fighting continues.
EMI Christian Music Group—owned by…you guessed it—EMI!
Oh, and speaking of EMI…just a few days ago they let go of 2000 employees—which is a third of their already shriveled worldwide work force.
Rumor has it that they dropped 85% of the roster. Wow!
I knew it was really hitting home when a former EMI associate of mine here in Nashville wrote me yesterday and asked for a job recommendation.
Am I gloating?
No. Sometimes it sucks to be right.
What’s worse is that it appears that digital distribution bandwagon that I had jumped on is not delivering enough to fill the gaps.
In fact, just after my recent post about how cool I thought the Snocap digital music stores were—I found out that nobody I know has actually been paid by Snocap.
I’ve heard it said that when people find something to do that they love—they’ll do it for free.
As far as the music business goes…we’re about to find out.
Having never made my living off of music, I'm not sure if this is such a big catastrophe. I'm one of the thousands (millions?) of mediocre musicians who have played the covers in hundreds of coffee house's (remember those) churches, outdoor concerts, prisons, etc. Ate a lot of chicken dinners in church basements and stayed in a few peoples homes on our little funky "tours". Maybe it's time to minister to the body instead of yearning for the roar of the crowds.
I haven't heard anyone talk about expanding our market though! What about the rest of the world? In a few years China will jump ahead of us as a consumer market.......and who will sell them music?
Marketing! that's where it's at!
Just a few years ago the local CCM radio station was bought by Disney, a heartbreak to a lot of us. Who would want to listen to that crap? Hmmmmm..... every heard of Hanna Montanna?
Disney created a nation wide market out of nothing and created their own stars out of nothing. (we won't get into the fact that Disney is run by rich gays)
Go to the rest of the world! From a Christian perspective the world is dying to here the Good News.
From a marketing perspective the world is ready to buy! (have you heard chinese music.....yuk!)
Posted by: vanilla swirl | January 22, 2008 at 04:58 AM