Thursday, December 3, 2015

Why Adele's Record Sales Cannot Halt The Revolution In The Music Business

Written by Roger Trapp — This week’s not exactly unexpected news that British pop singer Adele has set a record for album sales in the U.S. is yet the latest sign of the confused and confusing state of the international music industry. Adele’s decision to refuse to allow her record, 25, to be streamed has been described by one industry observer as “dumb”. But it could be that by exploiting her status as one of a small group of artists whose work is eagerly awaited – the album is only the third in a career stretching back several years and was ahead of release being touted as the potential savior of an industry that continues to be hard hit by technology – she is in fact being rather smart. By adopting a strategy of only allowing the record to be sold as a CD or paid download before releasing it to streaming services such as Spotify she has helped ensure sales of more than 2.4 million units in a week. With Christmas approaching, she is likely to delay streaming for a while. After all, as another industry analyst pointed out, she would be unlikely to be setting sales records if the music was freely available.

The debate is indicative of the mess in which the industry finds itself. Having initially waged war on internet-delivered music, the business has increasingly come to rely on streaming to the extent that it is its fastest-growing source of revenues. However, many artists complain about the low royalty rates they receive from streaming. Instead, they see live performance as the crucial source of income – one reason that some musicians appear to be permanently on the road. Although she has just announced her first tour in five years, Adele has tended to avoid live performance – hence her focus on maximizing sales.

Not that this means that there is a straightforward split between the two approaches. Adele herself – or at least her advisers – demonstrated a certain pragmatism by making the album’s first single available for streaming so as to drive up interest in the album. And this was bolstered by primetime appearances on BBC television in the U.K. and on the Saturday Night Live comedy show in the U.S.. But it is unclear whether this could be a way ahead or just an anomaly created by the enormous popularity of a singer who is seen as something of a throwback and appeals to older music buyers, who are apparently more likely to purchase CDs than to stream or even download.

What is clear, though, is that the conventional music industry – with or without Adele’s sales – is in trouble. Industry statistics show that in the U.S. sales of CDs fell from 767 million in 2004 to 141 million in 2014. Sales of albums via digital download have increased markedly over the same period, from 4.6 million to 117.6 million. Even allowing for the growing popularity of downloading individual tracks rather than whole albums, that is still a huge shortfall. No wonder there has been so much consolidation among the providers – to little apparent effect.

With the prospects looking so unpromising, it is perhaps surprising that any new businesses emerge. But they do. And, who knows, this may be one sector where being small and agile can really pay off. One company that is giving it a shot is the jazz, classical and electronic music label Edition Records, run from the English countryside by keyboards player Dave Stapleton. A keen student of business and a man whose interests extend beyond music, Stapleton has drawn an analogy between the music business and developments in the U.K. transport infrastructure. Canals were built to move around the products of the Industrial Revolution. But they soon gave way to railways, even though they were used to transport the materials used to build the rail network, and the rail system was then superseded by roads. However, many canals continue to be used, mainly for pleasure, while rail and roads continue to compete with each other. The music industry, having started with vinyl (currently enjoying something of a revival) then moved into CDs before reaching the current situation with streaming. A business like Edition, which he set up in 2008, is, he argues, “small enough and flexible enough” to adapt to these changes and to embrace the new technologies and social environment. Where it suffers is in a lack of resources for marketing. As such, it is a world away from Adele. While she and her managers talk in terms of sales of millions, Stapleton and his artists – he has a core group of 14 and there are just 60 albums in the catalogue – regard selling 1,000 units as a success.

The result is that, like many other entrepreneurs in other sectors, he has to think more creatively. Thanks to technology, the costs of making a record are relatively low. The internet has also made it possible for less mainstream music, such as jazz and what has been termed Americana, for example, to find an audience. But there is still a challenge in getting it heard and, in particular, in an age where free music is the norm, persuading people to buy it. A key part of the answer to this is live performance – Stapleton and a number of his artists played at the just-completed London Jazz Festival. But just appearing is not enough, he says. To sell records, artists have to engage with their audiences. To this end, he is increasingly likely to work with musicians who he believes can make the necessary connection with the people who pay to see them perform. Again, he goes beyond the confines of music and cites “pride and humility” – the qualities associated with the All Blacks, recent winners of the Rugby World Cup, as being highly important in this quest. The implication is clear – superstars might be able to get away with appearing late, opting for idiosyncratic set lists and even, as with Adele, deciding which medium you are going to use, but musicians playing in small clubs have to adopt a different attitude. As the label’s website says, “Edition aims to provide the vital link and trust with their fans to expose their music far and wide, one fan at a time.”

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