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CMNS 230 Sound Recording A unique medium, integral to all cultures Attali Noise: In music, we catch glimpse of imminent changes in the organisation of labour and creativity Why it is avant garde: generational smaller scale, artisanal roots are never far away Drives adoption/invention of new media technology Why it is fundamental Acts as industry input to all media when incorporated as performance Ancillary role pushes sales: now the most lucrative add on CMNS 230 1 Canadian Music A “success” as a cultural industry Why: Domestic share relatively high A list Canadian artists making it with international labels High level of cultural support: higher in Quebec CMNS 230 2 History of the Medium Straw: It is in the realm of music where we catch an early glimpse of the paradoxical and contradictory ways in which new technologies, shifting markets and changing consumption habits are transforming a cultural industry Music industry crises of the last century or so, always blamed on new technologies: radio, shellac, vinyl, CDs. MP3s DVDs,Internet/bluetooth Cycle busts: 40s, 70s, 90s But critics point to problems in creative supply & changing habits CMNS 230 3 History 2 One of the oldest: Edison: 1877 By the 40s: segmented by genre 50s and 60s: Hollywood Rock and Roll 60s British Invasion 70s Soundtrack/ Albums and North American boom 80s MTV and Specialty music But decade history obscures shorter 5 year market cycles: speeding up CMNS 230 4 Canadian Music History Memory Lane: CBC’s top 50 tracks Before the 50s: Doo Wop Four Lads Jazz: Moe Kaufman, Oscar Peterson Country: Hank Snow 50s-70s- Rock: the Band Ronnie Hawkins 70s Golden Era Canadian Rock April Wine, chilliwack, Crowbar Bruce Allen, agent for BTO Emergence of Rush CMNS 230 5 Canadian History Continued Late 70s Punk Rough Trade, Teenage Head Offset by Murray McLaughlin, McGarrigles, Mitchell 80s Pop Rock Bryan Adams, Tom Cochran, Jane Siberry, Corey Hart Late 80s Blue Rodeo, Jeff Healey, Colin James 90s Barenaked Ladies, Tragically Hip, Morissette, KD Lang 2000 Canadian Women take over the World Twain, Dion, McLaughlin, Furtado CMNS 230 6 The Canadian Brand Wikipedia “ the Barenaked Ladies cleared the way… by the late 90s a whole new Canadian Pop landscape emerged defined by a national pride and self confident distinctiveness never seen before “ CMNS 230 7 The Canadian Brand BUT Bryan Adams excoriated the Can Con quota Guess Who originally called the Expressions to break into radio play disguised as a British mersey beat band Hid Canadian Origins: Songs American Woman, these eyes North American anthems Versus Tragically Hip: can make platinum on Canadian release alone: Unlike Nickelback, not broken into US market CMNS 230 8 An Ode to Music Salient Still more than 15 hours a week on average HIP Disproportionately a youth medium which drives now 34% of the market ( from 45% in 90s) Intertextual An input in many other cultural industries Defining Establishes identity of a period Wide impact on popular culture…only now becoming understood Destabilizing Carries within it the seeds of ‘rebellion/innovation’ CMNS 230 9 Characteristics of the Industry Less Capital Intensive Thus more participation rates in the industry around the world Most musicians and talent in small enterprises More GLOCAL Local audience preference: 68% global share for indigenous music This means MNCs form local affiiliates: record locally, have roster of local artists and acquire local companies Less vertical integration ( except in Quebec) CMNS 230 10 Sizing the Global Industry Global Sales estimated at between 32 and 37 billion Grey Market would represent another third ( +12 b) Top markets; US is first, UK is third Canada represents 2% of global sales-- Ranked 6th CMNS 230 11 Sizing the Canadian Industry 2005 Overall: about a Billion dollars CIRPA data show 54 units sold, with CDs at 49 million Total value $608 million of product 2600 employed in sector: many more musicians and of those, 80% never sign Thus a very small part of the cultural GDP of $15 billion A very small part of the labour force BUT: slightly higher multiplier effect ( 2.2) source: Nordicity 2004 study CMNS 230 12 Sources of Revenue Sales Subscription Micro revenues per download Artists Collect Direct from Label or Consumer or through Royalty Collectives CMNS 230 13 Trade Profile In 2000, Statistics Canada finds sound recording ranks second in export of goods after books ( with $543 million in foreign sales) In services, another 200+ million ranking 4th CMNS 230 14 The Value Chain for the Sound Recording Industry Stage Stakeholders Composer/lyricist Composition Music Publisher Artist/Band Sound Recording Artist Management Recording Studio Producer and Engineer Manufacturer Graphics Manufacturing Distributor Retailer On-line distributor Distribution Source: Ference-Weicker & Co. CMNS 230 15 Thesis: Disintermediation Cut out middle man: Labels, wholesalers, retailers Show value chain before and after Case: Puretracks and I-tunes for direct legal downloads CMNS 230 16 Music Segments Recording Publishing( controls copyright) Live performance CMNS 230 17 Associated Synergy Reliant on Print to Chart CM, CMN, Chart, Exclaim, RPM( under) Reliant on Radio to promote CFNY: Casbys. Late emergence black radio/hindi etc. Rock Video Channels: Much Music Music Variety/ shows: Canadian Idol format CMNS 230 18 Sectors of the Industry Talent Includes singers, musicians, songwriters, managers, lyricists, performance and tour cannibalizes Artists and Repertoire Indie producers, agents managers, demo tape location and assessment Production Recording Companies, Studios, do the engineering, sound mixing, publicity, advertising,design, merchandizing CMNS 230 19 Sectors Cont’d Distribution Retail Rack jobbers One stop Direct consumer sales Online retailers Direct Downloads Retail Superstores Specialty like HMV, A&B Sound ( a shrinking share 33%) CMNS 230 20 Corporate Profile 4 major companies combined control 75% of market ( Source: Reuters, Sept 2, 2006) Warner Music Sony Bertelsmann Universal EMI Now 400 indie Canadian companies/labels Churn high: 16% or so since, Like film, companies start up for projects Real core of Canadian independent industry is 37 companies CMNS 230 21 Rate of Production/Releases Annually, about 165 French albums About 1,888 English CMNS 230 22 Canadian Market Share Nielsen Soundscan Of Units: 25%* Of Titles: 21% Note; Nordicity Report disputes this estimate as high Soundscans own data for Canadian Independent labels places share at 18% and even this may be overstated (page 28) CMNS 230 23 By Certified Traffic ( 2004) CRIA ( the Canadian wing of FIPA) Gold ( 50,00 units)= 40 Platinum ( 100,000)= 35 Diamond( I million)=1 Represents: 59 artists and 76 releases. CMNS 230 24 What the Companies Do Artists and Repertoire Sales and Distribution Advertise and Martket Promote Business Publicity Artists Development CMNS 230 25 A Typical Album Costs about a million to produce Lifecycle of release becoming more like a movie: in first weekend Artist Royalties typically enter at around 5- 9% of sales; move to 15 and for A list artists may go as high as 25% See: CMNS 230 26 Dominick, 2006 Costs and Profits of a Typical CD Manufacture Record………0.65 Manuf……… 1.25 Package 1.30 Ad/Prom 2.00 ARTIST R 1.60 Freight 0.09 Trust 0.65 Profit (Manuf) 2.94 Distributors 1.50 Retail/Exp& Profit 5.00 Total 16.98 See profile pp. 193-194. The Dynamics of Mass Communications CMNS 230 27 World Genres In US: rock pop and country took 61% of sales in 1993 Dropped to 44% in 2002 Rap and Hip Hop rose from 9 to 14% World Music, techno rising CMNS 230 28 The Business CMNS 230 29 The Big Picture The creation of distinctively Canadian cultural works fulfills a key element of the Department's strategic priority: to build Confident and Competitive Voice at Home and Abroad. Canadian performing artists have had growing success at home and abroad. Twenty-three percent of records sold in Canada are by Canadians, and Canada's top 21 artists have sold more than $12 billion worth of records around the world, making Canada the second largest source of music talent. Such success did not happen overnight; it is the result of sound policy decisions and timely investments through targeted programs. Continued stable investment in sound recording through the Canada Music Fund is essential to continued growth and success. ( Department of Canadian Heritage, 2004/2005 Budget estimates). CMNS 230 30 Profile of Current Industry Canadian artists' share of the top 200 best selling albums in Canada has increased from 15.1% in 2001 to 27.2% in 2003. If Canadian drama were as popular as Canadian music and literature, up to 8 of the Top 20 shows on Canadian television would be Canadian shows, as opposed to the current 1 in 20.( Stursberg speech 2005) 90% of Canadians consider Canadian music is just as good as other countries 50% of the nominees for Geminis benefited from the CMF ( Canadian Music Fund) In 2004, 1500 new Canadian recordings CMNS 230 31 Profile Cont’d Royalties paid to Canadian songwriters for performance of their works abroad reached $47 million in 2003 ( up 7%) Source: Departmental Performance Report,2003- 2004. Department of Canadian Heritage. In fact, 2002 and 2003 are the first years in SOCAN's history that royalties revenues from international sources have exceeded royalties paid out to foreign songwriters, composers and publishers. Majority of sales are generated from releases of foreign artists (84% of releases in 2000) And market share of Canadian artists is sharply cyclical: in 2003, top 50 albums included 4 of top 10 (Avril,Shania and Celine with a compilation) plus 10 others CMNS 230 32 Methodological Problem: Determining Share By artist ( Straw) By label By sales By downloads By sales and downloads By survey data on favorite artist CMNS 230 33 Big Five Now Four =75% Global Sales Vivendi/Universal Music 25.9% Sony Music 14.1% Warner Music 11.9% EMI 12% BMG 11.1% All Indies: 25%**** * note EU blocked merger of EMI and Warner/Bertelsmann MAJOR MERGER: SONY AND BMG Source: IFPI cited in Ference Weicker But, in Canada, indies account for 10-12% of the Canadian retail music market, thus half of the global share for indies… ie indies less developed in Canada CMNS 230 34 Other Fast Music Facts The US is the largest producer and market for sound recordings (1/3 of sales) Sound recording outnumbers revs from music publishing 5 to 1 ( $32b versus 6) CMNS 230 35 Music Around the World Mid 80s to late 90s an unmitigated boom IFPI: 1999 saw $39 billion US in revs Why: shift to CD; broadening distribution channels, growth to emerging markets A correction in 2000 ( many reasons) British Study found 80-90% micro business ( employing less than 9) CMNS 230 36 The Music Business Models A. The Big Label What: signs artists, produces masters, builds libraries and promote their music through films, mags and a number of sister media in conglomerates. High margin ( in 80s 30%... Now „realigning; to 10 or so) Price fixing? Universal drops its prices. B. Brokers Distribute indie masters C. Self Publishers Market on the Internet ( source: Straw) D. Compilers EG: dance music teams CMNS 230 37 What Differs in the Models Extent to which firm will be involved with talent, production, distribution or marketing As tastes become increasingly specialised, they have encouraged a wider range of structures Straw argues the old artist and repertoire functions of the labels no longer needed in this business environment ( point to compilations) CMNS 230 38 The Shift in Distribution From specialty stores to Wal Mart and Future Shop…(Starbucks, Canadian Tire, Eddie Bauer) Latter top 20 only or special compilations Makes it harder for new artists to break in Retailers are trying to shift risk onto distributors…incur ad costs, provide just in time delivery CMNS 230 39 Canadian Music Industries From 2000 to 2003 inclusive, CRIA tracks a downturn ( some 3- 6% per year) Definitive source of stats: Nielsen Soundscan ( see Straw) Canadian downturn echoes US, and also marks fewer blockbusters Lifecycles of albums now looking more like movies: sales in the first weekend of release are important predictors. Question: is downturn attibuted to P2P 2001– demise of last Canadian trade mag the Record Bankruptcy of Song Corporation, and Attic Records Bankrupcy of Sam the Record Man ( distributors: Virgin /foreign Why downturn? Business analysts attributed it to failure of Canada to adapt to urban genres: music stores shifting to DVDs and other products CMNS 230 40 The Canadian Indie Labels Quebec Audiogram( fully integrated house) survived where Song failed See Insert CMNS 230 41 Associations CRIA ( claims to represent 95% of sound recordings manufactured in Canada) SoCan Foundation ( supprts education, residencies, competitions, foreign tours) Factor ( Musicaction) ( a private non profit organisation to assist artists and songwriters in having their material produced, videos created,tour internationally. Also support labels, distributors,producers, engineers and directors– all those facets which grow the industry. Videofact( offers non recoupable grants for production of Canadian music videos ( grew out of Much) Radio Starmaker Fund ( CAB since 2000) backs those with proven track record who want to get to the next level CMNS 230 42 Marketing Structure CBC New Music P2P websites for new artists Much Music Alt music on radio/indie channels Juno and other regional awards No industry trade mag () Straw: weakens data base monitoring industry See: Have not been the Same, Making Music ( historical compilations) Gian Gomeshi ( CBC): top 50 Canadian albums of all time…on line ballots CMNS 230 43 Strengths of the Sector Strong Demand Growth exceeds rest of economy Robust Canadian share Global stars Isolated label winners: Nettwerk and innovation with new business model Like Britain, healthy signs of rise of musical underground CMNS 230 44 Weaknesses Traditional business model does not work Very weak financial performance: low margins for Canadian independents Loss of revenues means reducing risk: downsizine, signing fewer new artists Will Straw: The problem for English Canadian Music Cos is that successful integration can no longer be accomplished through joining together music only CMNS 230 45 Challenges Fragmentation of market Hyper inflation of promotion costs Flight of artists ( Twain: Switzerland, Dionne:Vegas) Weak access to capital for Canadian Firms CMNS 230 46 Innovations New niches: ethnic, older audiences Diversifying revenue streams: Canadian firms now 33% of their revenues from non recording market sources Make strategic alliances up or downstream Is the new business model integrated DVD production: Vancouver may be leader CMNS 230 47 Opportunities Digital Retailing Micropayments through individual downloads Forrester predicts this will grow to one third of the US market, 20% of European market Canadian experment: Puretracks ( Bell Investment) versus I tunes which has 70% share Copyright from New Media Videogames, Internet Radio Integrated DVD audio-visual production Nordicity found this at 6% of income and rising in 2004 Signs; MySpace is moving into digital movie business, as of September 2006 signed 3 million indie bands they claim for a distribution fee and allows bands to set their own price CMNS 230 48 The Policy/ Regulatory Structure Before 1970 none 1970 Introduce Can Con Quota on Radio at 30% First beneficiaries Anne Murray‟s Snow Bird and Guess Who 1971 Introduce Junos 1986 Sound Recording Development Program Copyright (1998) Neighbouring Rights: radio cos must pay artists and companies not only songwriters and publishers 2001 Set up Industry Council and Fold SRDP into the Canadian Music Fund CMNS 230 49 Canadian Content Quota One of the first in the world Set at 30% To qualify: MAPL CMNS 230 50 Canadian Music Fund Goal to ensure that Canadian music artists and entrepreneurs have the skills, know how and tools to succeed in a global and digital environment To enhance Canadians‟ access to a diverse range of Canadian music choices To increase opportunities available for Canadian Music Artists and cultural entrepreneurs to make a significant and lasting contribution to Canadian cultural expression CMNS 230 51 The Canadian Music Fund (about C$30 million per annum) Creators Assistance Program………about $1m Canadian Musical Diversity Program….$1.5 m with Canada Council New Musical Works Program ( with Factor)…10.5 m Music Entrepreneur Program ( with Telefilm) 9 m Support to Sector Associations Program (500,000) Collective Initiatives Program (with Factor) 1.8 m Canadian Music Memories Program (200,000) Policy Monitoring Program (1m) CMNS 230 52 The BC Report See: An Industry in Transition: the Sound Recording Industry in BC ( January 2004) a Report Prepared for the Ministry of Community, Aboriginal and Women‟s Services, Canadian Heritage and Western Diversification by Ference Weicker and Company 41 cos 34 m in revenues in 2000 Employ 2000 Retail $150 m annually Music publishing revenues: aobut 20m Live performances 90 m 34% of BC radio revs in programming Input in film production ( 1.2b annually) CMNS 230 53 Recs for BC Policy 1. Build Export Capacity of BC artists and companies. Help audience intelligence building, finance trade exhibitions MIDEM etc. TRADEROUTES, and money on foreign marketing 2. Improve the live peformance environment Venues and link to tourism and trade Promote in public places: ferries, transit, airpoprts, malls, and establish a BC tour circuit 3. Target Tax Incentives Tax credit for sound recording like BC Film Tax Credit Revise PST on rentals to level playing field with Ontario and LA 4. Support the Development of MUSIC BC Need to bring the players together in a strong industry association with a common goal of building the industry BUT: CURRENTLY NO PROVINDIAL GOVT PROGRAMS TARGETED SPECIFICALLY FOR SOUND RECORDING… VIDEOGAMES SAYING THIS IS THE NEXT GENERATION OF DEVELOPMENT CHALLENGE, AND BC UNDERPREPARED BC Arts Council ( Ontario has a 20% tax credit) CMNS 230 54 BC Winners Daavid Foster: multiple Grammy Award winning producer, performer and label exec Sarah McLachlan Bruce Allen Michael Buble, Diana Krall, Nickelback, Nelly Furtado, Swollen Members… Strong Managers: Nettwerk Management Etc. Mint Records, 604 Records, Maximum Jazz,Troubadour, Battle Axe Export of Bhangra…Surrey Biggest constraint seen as access to financing ( Ference Weicker); lack of profile in BC, lack of a star system CMNS 230 55 Peer to Peer (P2P) CMNS 230 56 P2P ‘culture’ of file sharing Trade and download Chat Merit around preferences, ideas, trends Signs of self selected communities of taste IN MARKETING: WORD OF MOUTH OR VIRAL MARKETING (Garofalo, 2003 in Laba). CMNS 230 57 The Gray/Play/Free Cultural Economy IFPI found that illegal sales outstrip legal in 21 countries Between 99 and 2002… about $1.8 billion illegal to $3 bn legal…ie. About 40% CMNS 230 58 The Numbers Game Has there been harm to revenues or Not? CRIA, RIAA say yes…and at the individual level, firms are taking hits… eg. EMI But Overholzer and Strumpf study… says not… They interpolate Neilson Soundscan and downloads… Found little, possibly negative effect… Other surveys found peole still purchased CDS Actual Revenues and Profits have recently undergone a recovery But, no denying a 20% downturn in the 3 years 2000-2003 A number of bankruptcies Mergers & retrenchment Consumer distrust: price fixing In Canada, where margins precarious, downloads a bigger hit: but Nordicity study does not find same defensiveness as majors CMNS 230 59 The Struggle for a New Business Model Move to per unit download costs.( sub services) Must: reduce price, provide product bonuses, educate and undertake legal action CANNOT ignore global decline of 17% between 98 and 2002 to 32b US; 21% in terms of units MAJOR ERRORS IN FORECASTS:2004 Ference Weicker study predicted „no obvious carrier technology that is projected to drive sales over the next years‟ Multiple platforms( Xbox etc can play CDs) Convergence, film, music, ads, interactive content CMNS 230 60 Future Business Model Aside from on line distribution: major potential distribution technologies: Electronic distribution to retailer Digital audio broadcasts RING TONES: CELL PHONES "The success digital music distribution will ultimately depend on the depth of content, flexibility of content rights and reasonableness of pricing. Service must be outstanding if the industry hopes to convince people to pay," said Mr Bosiljevac. ( Australian Music Recording Society, 2004) CMNS 230 61 CBC www.newmusiccanada.com Podcasting: The Subhumans Fidgital Relaunch for Fall 2005 CMNS 230 62 CBC New Music Radio 3's podcast is truly unique: it's full of amazing, 100% Canadian music from new and emerging artists. It's great news for music fans and it's even better news for independent Canadian musicians. We are extremely excited about the potential for exposing Canadian artists to a wider international audience with this new technology." To access the podcasts, just insert the following URL in your podcasting client: http://www.cbcradio3.com/podcast/ CMNS 230 63 Podcast Cont‟d Are You An Independent Musician Who Wants to Get Involved In Radio 3 Podcasts? If you're already a member of NewMusicCanada, log on to your member page and agree to our new podcasting waiver. When you first signed up with NMC there was no such thing as podcasting, and therefore, no mention of it in the original waiver you agreed to. In order for us to include your music in this exciting new programming initiative and keep everyone protected, we've created an addendum to the NMC waiver which grants us permission to include your tracks. If you're not yet a member of NewMusicCanada, head over to http://www.newmusiccanada.com/submit/submit.cfm and sign up! If you have any comments, questions, or concerns regarding our move into podcasting, please don't hesitate to drop us an email or contact CBC Audience Relations. Thanks for your support of Canadian music and hope you enjoy the new podcasts! CMNS 230 64 Sources on Canada http://www.music.gc.ca/flash/enreg_index_e.asp `http://www.telefilm.gc.ca/document/en/01/17/NordicityMusicRepo rt.pdf#search=%22sound%20recording%20industry%20in%20ca nada%22 Wikipedia: Music of Canada Encyclopedia of Music in Canada Canada Music Centre Canadian Recording Industry Association ( CRIA)_ Canadian Independent Recording Producers‟ Association ( CIRPA) Nielsen Soundscan CMNS 230 65
"CMNS 230 Sound Recording"