“I’m feeling this depression,” said Montreal and New York-based musician Martha Wainwright in December, before embarking on a Canadian tour.
“No one’s buying records anymore; we’ll have to go back to the life of a touring artist in the ’30s, where they’d sleep upright on a school bus and go from town to town.”
While Wainwright might be joking about the school bus, she’s dead serious about the pain the recession is causing her, and the entire music industry in general. CD sales have been dropping for years now — Canadian physical sales declined 8.5 per cent in 2008 — but with more and more music fans tightening their belts, this economic downturn could spell the end of the traditional music industry as we know it.
“The recession will accelerate the demise of physical retail and it may increase peer-to-peer traffic,” says New York-based analyst Aram Sinnreich. “File sharing is for people who have more time than money.”
“Unfortunately, you’ll see a lot more economic decisions as opposed to artistic decisions,” adds Graham Stairs, vice-president of Toronto’s Finkelstein Management.
That means many bands will be left in the lurch as major labels choose to go after the sure economic bet. Stairs says one way the big labels will try to stay afloat is by reissuing albums and encouraging their already successful bands to stick to their tried and true formulas.
Another way the majors will attempt to get the most bang for their bucks is by signing artists to “360 deals,” a contract which gives the label a portion of CD and ticket sales, merchandise, and whatever else makes a band money.
“The legacy businesses are going to have to reorganize around the new reality,” says Sinnreich. “They’ll focus on business-to-business models, converting legacy contracts to 360 deals coordinating between distribution, marketing, tech, and legal to a degree they haven’t in the past.”
Indie labels don’t have the resources to sign artists to multi-million deals, but what they do have is an entrepreneurial spirit that’s key in any economic downturn. Stairs says many Canadian labels have had to be “mean and lean” in pre-recession days, so they’re already prepared to operate on a thin budget.
Sinnreich agrees that indies are well positioned to survive a recession. “They’re not stuck inside of a blockbuster economy, spending millions to make millions,” he says.
Still, indie bands and labels are suffering. Stairs says that he recently had a deal fall through for one of his artists after the U.S. label president told him, “I’m taking the deal off because of the economy.”
In the U.K., Pinnacle, one of the country’s largest independent distributors, went out of business in December, which could force many British indie labels out of business.
“The new economic reality is certainly going to weed out the weaker indie labels who don’t have a firm grasp on their business model,” says Stairs, adding we might see more independent company’s merge or engage in joint ventures with other, non-music, industries.
