FOOD FOR THOUGHT: Artists are being dissuaded from…by Anil Prasad

I honestly no longer give a damn who I offend in the music industry, as long as I am telling the truth. So, here’s more truth that is virtually completely unreported. Artists signed to major labels are being dissuaded from encouraging people to buy physical media. Obviously vinyl and CDs still exist and have a “souvenir presence” in what’s left at retail and at the merch stand. What you may not know is executives at all the major labels consider physical media a giant albatross and they cannot wait to get rid of it in its entirety. I have seen major label executives first-hand lecture artists on “getting over” physical media because “It doesn’t matter. All that matters are the streaming numbers.”

“…major labels consider physical media a giant albatross.”

The view is the entire supply chain and distribution system is burdensome. And even at the non-nefarious level, that’s understandable, given the legitimately declining interest, the ongoing issue of returns/credit, and distributors/wholesalers/retailers that are in precarious business situations and sometimes are incapable of meeting financial obligations.

But the physical media element is all coming to an end in the West fairly artificially when you look at the big picture. The labels tell the artists “Your streaming numbers matter, because it’s what lets us justify your market position. It’s what gets big television shows interested in you. It’s what promoters care about to ensure you’ll draw numbers. It’s what gets journalists interested in writing about you (right…).” The truth? It’s being driven more by the major labels’ investment in Spotify, and as stated in the last post, their greed-driven desire to benefit from both the initial IPO investment level and the valuation multipliers on the other side. And if Spotify proves to be a giant dog’s breakfast of a publicly-traded entity as many believe (seriously, you’d have to be a total moron to invest a penny in it), they will still need to prop up streaming/subscriber numbers during any kind of sale of the company, even if it’s to a private equity firm. All of this is to say, this is a largely-manipulated situation. It’s also why you see so many third-parties licensing major label catalogs for vinyl. The major labels are happy to do that, because they don’t have to do deal with the supply chain or risk. It’s mostly in the hands of music-loving indies that absorb that burden.

“The labels tell the artists “Your streaming numbers matter, because it’s what lets us justify your market position.”

One last point to make. I have sat in rooms with billionaire VC executives here in Silicon Valley. When I bring up the topic of streaming companies as an investment, there is uproarious laughter in the room. They consider it a toxic, untouchable structure. Most of them won’t go near any of it, because they see the disaster it is at all levels. They are surprisingly ultra-detailed in their knowledge, understanding the hilarious ironies of the major labels owning part of Spotify, demanding a profitable business model, while also completely getting in the way of it. They also understand the brutality at the artist level, believe it or not. So, they are worried about severe backlash at that level. They see the whole thing as unsustainable. And that’s the view of some of the most cunning business people in the world.

I’m sure there are music industry people that will say I am totally full of shit. In this post-truth world, they can and will do that in private or publicly. All I can tell you is none of this is second-hand information. It’s entirely the result of first-hand dealings and observations with people at the very highest levels of all of this. People who no doubt will never speak to me again. 😉 (Like I care…)

EDITOR’S NOTE: “Established in 1994 by music journalist Anil Prasad, Innerviews is the Web’s first and longest-running music magazine. Innerviewsdelivers in-depth, uncompromising interviews that enable artists to speak at length about topics that matter to them.” – Innerviews.org