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the future of the music industry
With all the flux in the current music scene, how will the future shake out? Here are the views of Jay Boberg, former president of MCA Records; David Codikow, Velvet Revolver's manager; Leonard J. Beer, editor of Hits Magazine, Danny Goldberg, chairman and CEO of Artemis Records; and Jeff Leeds, reporter for the Los Angeles Times, offer different scenarios of what's ahead for the music industry.

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Jay boberg
Former president, MCA Records

I think that this is an incredibly vital time in the music industry where the chips are just being reassigned. It's going to just be a different layout.

I think musically, this may end up being an incredibly vital time because of the fact that people are making music for themselves. They're not making it to get a record deal. I mean, I think there was a point where maybe three, four years ago where even on a grassroots level, everything was aiming towards getting a major record deal.

I now talk to many musicians out there who have no interest in a major record label deal. What they have an interest in is trying to make their music. They do want to get paid, they want to find out a way that they can actually make a career of it, but they're much more hands-on. They're much more willing to understand the process themselves of what's involved in doing it and to find out a way of doing it where they're not as dependent on other people.

Now, do I think record companies are going to go away? No, I don't. I think a great value is added by a great record company -- or at least the people at a record [company], because record companies are not entities, it's the people in them. And, you know, what is a record company supposed to do? They're supposed to recognize exceptional talent, they're supposed to help develop that talent -- whether it be their imaging, whether it be introducing them to people who can help them in a recording process or a songwriting process, or in any of the aspects that sort of gets their music ready to be out there and be presented. They're supposed to have relationships to help them market themselves in terms of touring or presentation.

They're supposed to, in many ways, provide a certain amount of financial capital to at least get the ball started and rolling. And it doesn't have to be a lot of capital. In some cases it is, but many examples would have been very modest expenditures.

And then they're supposed to have an expertise of knowing where in the marketplace that particular art that this musician is creating might resonate and be able to target that market to see if it does resonate. And thus then spread it from there and try to pull it into the greater marketplace and the greater population.

Those are skill sets. Those skill sets are still going to be needed. The question is can the artist do some of that, more of that, themselves? Will it be a manager who does more of that themselves? Will there be independent companies that will be doing more of that that used to be done by the majors? Or will the majors adapt and create different types of companies that are staffed differently to provide different services that are more attuned? I think the answer is a little bit of all the above, but it'll be very different.

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David codikow
Manager, Velvet Revolver

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My opinion is record labels will become sort of -- I mean they are to some extent venture capitalists, in the way that they invest in a piece of talent. But they only have the rights to derive income from the record sales.

I believe that the future's going to be if a record company invests in breaking in artists -- which a record company does spend time, energy, effort, [in] marketing, promotion, distribution, sales, and numerous other ways to help break an artist -- they're going to want a piece of the publishing, the merchandising, the touring. I mean some of that has started on some level, and that's how it used to be years ago. But I think record companies are going to go that way again.

Or die.

Or die, yeah. I mean I don't think they're going to die in the relative future, and the relative future is the next five or 10 years. Again, it's really complicated, and it's way beyond the scope of what I can say at this moment, but brick and mortar retail sells 99 or 98 percent of all records sold. It's really hard to, quote "overnight" have the people that sell 99 percent of your product go out of business. That doesn't happen overnight. But it happens over time with the Internet, and the sophistication, the technology growing. You know, that's how it works.

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Leonard J. beer
Editor-in-Chief, Hits Magazine

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[C]an you imagine a world where everybody [has high-speed Internet access]? And you could put up an ad in the newspaper tomorrow that the new Eminem single is available at nine o'clock tonight. Wherever you are in the world, the way you hook up, you can have that song. Can you imagine how many records you would sell? Or how many whatever it is you're going to call it's you're going to sell? How many songs you're going to sell?

But see you're starting about a real revolution. What you're talking about is the idea that the record companies owned by Bertelsmann and water companies in France are no longer marketing and distribution companies because that's probably going to be Apple. What they really are, what you would ask them to be is artist development companies?

There, bingo.

Who would prepare the music to hand it over to Steve Jobs.

Or hand it into the system of distribution. They've always done that. They handed it to Tower Records for the last 30 years, right? But all of a sudden when the digital revolution came, they thought that they could control distribution also. They really thought people were going to buy their music from sony.com. They thought they were going to care about labels, that they would buy Sony music because the Sony site was cool.

Well, the public doesn't care about labels, they care about songs. They either like it or they don't like it. And if they like it they want to buy it at the most easy, accessible instant gratification way, and they can't. They want to buy what they want, and they can't. You hear a great song by the Beatles, and you want to buy that song. You can't buy that song. You have to buy the whole album. And you can't get it quickly, because it's not accessible.

You've got to drive to the store and go to Tower Records and see some kid with 47 piercings on his face and ask him if he has the new Barry Manilow album. And the kid's going to look at you like you're from Mars or something, OK? The system is broken.

But if you could do it and just push a button and get Barry Manilow in your house, or whoever you want, whether it's cool or uncool, whether it's classical or rock or theater music or whatever music -- if you could do that without anybody judging you, and by getting instant gratification, then the system will work again.

But nobody's trying to really fix the system because they're all trying to wring out that corporate profit. Wring it out, squeeze a little bit of profit now instead of really fixing the system.

To fix the system it has to be a revolution, and things have to really change. Well, the guys at the top are trying to make quarterly profits. And Thomas Lee and partners, who just bought Time Warner, they don't want to hear about eating two years of losses to fix the system. "Well what can we do? How many more secretaries can we fire? How many more local promotion guys can we fire? How many more sales guys can we fire, so that we can make a little bit of profit, so that we can turn this thing in three to five, and make money for our investor?" They're not trying to fix the system, they're just trying to wring out the last morsels from the system.

At some point the system's going to change, we all know that. Is it five years? Is it 10 years? Is it 20 years? It's going to change. People are going to get what they want. …

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Danny goldberg
Chairman and CEO, Artemis Records

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There's been some experiments of packaging a DVD and a t-shirt and a CD together that have gone pretty well. I think that the thing you're going to see a lot of in the next six to 12 months is a hybrid CD-DVD. Because although DVDs also can be downloaded and copied, it's harder to do so. And on the other hand the technology is there to include a DVD and a CD onto one disc. That the cost of producing visual material has gone down with digital camcorders and digital editing. So I think that's going to be a common product. You're going to see more and more audio/visual products. You know, audio/visual albums.

I think that the one most logical connectivity, which would be between the concert business and the record business, is culturally a very hard connection to make. That's going to take more years, because the touring business has been a completely separate business, with agents and managers involved in that who are not record company people. It's just a different culture and to connect those two businesses is easy on paper but hard in practice.

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Jeff leeds
Reporter, Los Angeles Times

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There's a couple of different ways that things could go. On the one hand, there is an upside for the record companies, which is that right now they're spending whatever it is that they're spending to make the video, to make the album, to promote the single at radio stations and so forth. And if they can hold the line and kind of keep CD sales roughly what they are, and they can get some kind of new influx of people through Apple and other services on the Internet, then essentially they've got two income streams from the same recording. Right? They've only spent the money once to make that album and to start promoting it. And now you've got some number of people that are still buying CDs in stores. And now you've got maybe an additional number of people who might not have bought the CD, but who are going to give you money for at least some of that album.

There's a school of thought that says, "This is going to be great, because if we can just hold on to where we are with CDs and gradually build up the digital sales, then we'll have two incomes onto the same report, or off the same expenses.

Yeah, it's also possible that people will be able to say, "Well, if you like this single, then you should buy more of them." But what the Internet allows you to do is sample those things and make up your own mind before you really do. And I'm not so sure that it's always been that easy to do that with CDs. In the last couple of years stores have become better about having listening stations and making it possible for you to try things out before you buy them. And I think that's been a positive thing for the consumers.

So, sure, their hope is that if they can get you to buy one, that you'll want to buy the others. And there are people who admit to downloading music on the Internet who say that they buy more music than they used to because their world has been opened to so much more music. They've been able to try things they never really knew existed. And then they've liked it, and they've bought the album.

But, by the same token, you know there are people out there who just don't buy albums anymore.


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posted may 27, 2004

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