Both Sides Now

by Dan Daley
in The Biz
Old-school record stores are a rare sight, yet recorded music and the concert industry are still interrelated.
Old-school record stores are a rare sight, yet recorded music and the concert industry are still interrelated.

Live music rules, but we still need recorded music to be healthy.

Readers of this column know that live music has become the engine of revenue for the music business. Of all the somersaults the industry has gone through in the last two decades, including seeing physical music formats all but disappear (vinyl’s cool but it’s still just a tiny hipster niche), the biggest one of all is how the status of recorded music changed places so completely with live music: the concert ticket that was once viewed as a promotional proposition to sell the LP that the tour was designed to promote has now become the object of desire that the recorded tracks are used to tout.
However, these observations are no cause for gloating. Quite the opposite: in order for live music to continue to be economically meaningful to all involved, recorded music has to maintain a certain level of sustainability. They are two parts of a whole, two bookends of an entire experience. No one knows what the threshold is for one to lose critical mass, but trust me, we don’t want to find out the hard way.

‡‡    Not Better, Just Less Sick
Recorded music isn’t exactly on life support anymore — retail revenue in the first six months of 2017 is estimated by the RIAA at $4 billion, an increase of more than 17 percent over the same period last year, and up from the dismal basement it inhabited in the wake of the traumatic, Napster-driven shift from CDs to virtuality and pirates’ booty. Both Warner and Universal are having bang-up years, both up over 10 percent from last year. However, most of that bump comes from streaming, where the long-term outlook is less rosy.
Here’s the elevator version of Spotify’s financials: the music-streaming company lost just north of $500 million in 2016 on $3 billion in revenue. That was worse than 2015, where they lost just under $250 million on $2 billion in revenue. Don’t expect much improvement when the 2017 financials are released, because even as the streamer grows its subscriber base, it’s beginning to look like that old Economics 101 joke come to life: “We lose money on everything we sell but we make it up in volume!”
As Jimmy Iovine pointed out about Spotify in a widely cited interview in Billboard in November, “…there’s no margins, they’re not making any money.” Spotify’s real competition isn’t Pandora or Tidal; rather, as Iovine put it: “Amazon sells Prime; Apple sells telephones and iPads; Spotify, they’re going to have to figure out a way to get that audience to buy something else.” All Spotify has to sell is access to music. Not even music, just access to it. There was a time when that might have been enough, but not anymore.
Increasingly, live music is recorded music, in the form of hundreds of thousands of hard drives piling up, filled with each night’s shows from thousands of bands recording directly from their FOH consoles. What will eventually become both an aficionado’s dream and a legal quagmire down the road is, in the meantime, creating a surrogate inventory for all the recordings that aren’t being made the conventional way. In fact, the technology for recording live performances, and the technology of the performance itself, have become so sophisticated that it’s harder than ever to tell if it’s live or if it’s Memorex, to invoke that classic and wonderful cassette-tape commercial from the 1980’s. That’s good, because those recordings may become far more commercially and economically important in the not-too-distant future.

‡‡    It’s Complicated
That’s because the business around live music is becoming more complicated and, in the process, risks turning off the consumers who are powering it. For starters, live music increasingly reflects the economic inequality of the world around it: Bigger artists are getting ever-larger slices of the revenue pie, and while ticket sales are not a zero-sum proposition, there is a limit to what consumers will spend annually for entertainment. When a single ticket sells for $300, that may well mean ten $30 club admissions go unspent. And festivals and other large-scale music events are becoming more restrictive when it comes to so-called radius clauses, contractual restrictions that can prohibit artists from performing within fixed time periods and distances from a large event. These prohibitions can put a dent in the earning potential, sidelining them from being able to play anywhere else in a region for an extended period.
Then there’s the issue of ticket availability in the age of billet-buying ‘bots that can empty an arena’s seating in seconds, depriving fans of the ability to buy tickets at a reasonable price. Artists like Adele and Chance The Rapper have tried shaming high-tech scalpers, and even outgoing President Obama signed a federal ban on the use of software that lets resellers snatch up huge blocks of event tickets before fans could have a chance. Good luck on that — it’s like shaming a Russian internet troll: 
These seemingly intractable problems have become structural issues for both sides of the music business. Add to that the inevitability of the loss of some of music-touring’s stalwart acts as they age out of the business, and it’s clear both sides of music’s coin face challenges. All the more reason why they need to create synergies between them to keep the business moving forward.
It’s not reasonable to expect consumers to suddenly start buying records again like they used to, but it’s not unreasonable to start making live recordings more accessible and better annotated. No one is buying concerts on Blu-ray anymore, but the uptick in listening, brought about by streaming and the growing ubiquity of smart speakers, like the Amazon Echo and the Google Home, strongly suggest that music as a purely audio experience, unconnected to video, is making a comeback. And it couldn’t come at a better time.  

Dan Daley is a noted journalist and bon