How the Credit Crunch bit the Music Industry

Music – a financial history.

• Rock'n'roll was born out of the 1950s economic boom, when a generation of affluent teenagers suddenly found they could purchase their own distinctive identity (and the records to fuel it!)

• Punk exploded in an era of chronic economic gloom, as much a reaction against the financially impoverished 70s as it was against Pink Floyd.

Thatcherism

• In 1981, Britain was in a state of crisis: the government was as unpopular as any since the war, new unemployment figures showed a rise from 1.5m to 2.5m in 12 months: unemployment among ethnic minorities had risen 82% in the same period.

• Into this turbulent mix, the Specials released their doom-laden, highly political single, Ghost Town.

The Specials

• Formed in Coventry in the late 70s

• Slow, ska rhythms and sparse musical composition reflected the decay they saw around them

• Video shows the band driving around London following the race riots of the early 80s.

The Noughties• Hailed by many critics as a period of

stagnation in terms of output.– when indie guitar music reverted to a strictly

retrograde style and has sounded pretty much the same since

– Coldplay ünter alles. – It brings to mind the Orsen Wells remark in

The Third Man about 400 years of democracy and peace in Switzerland and all they produced was the cuckoo clock.

– David Stubbs in the Guardian’s music blog, Sept 2008.

Making money during the credit crunch

• People buy music for escapism and a (comparatively) cheap means of entertainment.

• Pop music, arguably the industry’s biggest short-term earner, has grown increasingly brash and over the top in the past few years.

Recession and the Music Industry

• The music industry has been in financial decline for the past seven years, especially in the US and Japan.

• The UK has bucked this trend, but whilst album sales have held steady, profits have seen a slight drop.

• In 2007, the year before the crunch, album sales in the UK dropped by over 10% – (BPI - 138.1million albums sold in the UK in

2007, compared with 154.7 million in 2006.)

Downloads

• Downloading offers a cheaper and in many cases easier way to consume your escapist pop music.

• Physical single sales are in freefall, but…– 2008 - singles sales grew by 33%, helped by

downloads. For singles it was, the BPI says, "the biggest sales year on record in unit terms.“

Quotes

• Ian Dutt –director of PIAS UK – biggest indie distributor– Singles will probably disappear entirely from

the High Street in 2009. But with physical products continuing to make up 90% of the albums market they will be around for a bit longer.

• Steven Godfrey – Director of Rough Trade Retail; a music only Indie retailer.– The decline in CD sales is a natural result of

the commoditisation of music since the arrival of e-commerce.

• Nick Bubb – Retailing Analyst for Pali International stockbrokers.– HMV is just about the last man standing in the

High Street selling music, and even there you have to battle past all the DVDs and gaming racks to get to the CDs.

• Mark Collen – Spent 20 years in senior management roles at EMI. – Smart labels understand that people can and

do buy CDs and download tracks and bundles, often of the same tracks, depending on where they want to consume their music.

Quotes

• To what extent is the credit crunch simply speeding up the next natural development of the music industry?

– Mention case studies, specific examples and facts wherever you can

– Analyse and evaluate the impact of these influences (real and foreseeable) on industry as a whole.