The mighty music business is in free fall — it has lost control of radio; retail outlets like Tower Records have shut down; MTV rarely broadcasts music videos; and the once lucrative album market has been overshadowed by downloaded singles, which mainly benefits Apple. "The music business, as a whole, has lost its faith in content," David Geffen, the legendary music mogul, told me recently. "Only 10 years ago, companies wanted to make records, presumably good records, and see if they sold. But panic has set in, and now it's no longer about making music, it's all about how to sell music. And there's no clear answer about how to fix that problem. But I still believe that the top priority at any record company has to be coming up with great music.
"Rubin continues. The most important thing we have to do now is get the art right. So many of the decisions at these companies have not been about the music. They sign artists for the wrong reasons — because they think somebody else wants them or if they need to have a record out by a certain date. That old way of doing things is obsolete, but luckily, fear is making the record companies less arrogant. They're more open to ideas. So, what's important now is to find music that's timeless. I still believe that if an artist gains the belief of the listener, then anything is possible."
"[In a recent Columbia focus group] the kids all said that a) no one listens to the radio anymore, b) they mostly steal music, but they don't consider it stealing, and c) they get most of their music from iTunes on their iPod. They told us that MySpace is over, it's just not cool anymore; Facebook is still cool, but that might not last much longer; and the biggest thing in their life is word of mouth. That's how they hear about music, bands, everything."
Few of the kids knew that record companies participate only in the profits from records — that they derive no income from a band's merchandising or touring revenues. And they all thought that the Columbia logo stood for something prestigious, except in the hip-hop world. There it was deemed too commercial and corporate, but anywhere else it still represented a kind of impressive imprimatur. "Which was good news," DiDia continued. "It means we still have a brand that commands respect."
His insecurity on this point reflects the trepidation that is consuming the music business. Seemingly overnight, the entire industry is collapsing. Sales figures on top-selling CDs are about 30 percent lower than they were a year ago, and the usual remedies aren't available. Since radio is no longer a place to push a single, record companies have turned to television and movies. "High School Musical," which originated with a Disney Channel television show, was the top-selling album of 2006, and not only has "American Idol," with its 30-million-plus audience, created best-selling singers like Kelly Clarkson and Chris Daughtry, but an appearance on the show can also boost sales. When Jennifer Lopez performed on "American Idol," it was considered worth noting that her album "Como Ama Una Mujer," already out for four weeks, dipped only 7 percent rather than falling by the usual double digits. More impressively, songs that are heard on popular shows like "Grey's Anatomy" become instantly desirable. When the Columbia artist Brandi Carlile's song "The Story" was featured on the ABC show, it posted a 15 percent jump in sales and was downloaded 19,000 times in one week. Before being heard on the show, the song had been available for nearly two months without any notable interest.
Rubin told me over lunch at Hugo's, a health-conscious restaurant in Hollywood, "there were a handful of channels in the music business that the gatekeepers controlled. They were radio, Tower Records, MTV, certain mainstream press like Rolling Stone. That's how people found out about new things. Every record company in the industry was built to work that model. There was a time when if you had something that wasn't so good, through muscle and lack of other choices, you could push that not very good product through those channels. And that's how the music business functioned for 50 years. Well, the world has changed. And the industry has not."
From Napster to the iPod, the music business has been wrong about how much it can dictate to its audience. "Steve Jobs understood Napster better than the record business did," David Geffen told me. "IPods made it easy for people to share music, and Apple took a big percentage of the business that once belonged to the record companies. The subscription model is the only way to save the music business. If music is easily available at a price of five or six dollars a month, then nobody will steal it."
For this model to be effective, all the record companies will have to agree. "It's like getting the heads of the five families together," said Mark DiDia, referencing "The Godfather." "It will be very difficult, but what else are we going to do?"
Rubin sees no other solution. "Either all the record companies will get together or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done," he said. "The future technology companies will either wait for the record companies to smarten up, or they'll let them sink until they can buy them for 10 cents on the dollar and own the whole thing."
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