Industry analyst Michael Gubbins examines the lessons the film industry should be learning from the music business.
“We’re out in front of the creative industries getting wiped out, like the first wave on the beach in Saving Private Ryan,” said a senior label executive, looking plaintively out over Cannes harbour during the music industry’s annual Cote d’Azur get-together.
The film industry has pledged to learn from a decade of retail collapse, uncontrolled piracy and failing business models, that has turned the music business upside down. And, on the 10th anniversary of the iPod, this seems like a good time to ask whether film has absorbed the lessons.
It is only fair to start with the observation that much of the music industry now accepts that it failed to draw the right conclusions from the upheaval. (Also, we should be careful in concluding there is a single entity called the music industry; like film, it is made up largely of fragmented, specialised small- and medium-sized businesses, dominated by a few major labels: Sony, Universal, Warner Bros, and the UK’s EMI, which has recently been acquired by major creditor Citibank.)
There are, of course, significant differences between music and film that should not be underestimated. The biggest of these may be how it is consumed; film requires an investment in time compared to music, whose ephemeral nature has been dramatically increased by the iPod shuffle. But we should not be dismissive of great common links. Much of what has divided the experience of film and music in recent years has been the technical issue of file sizes; it has taken hours to download a film but seconds for a song. Broadband speeds, compression technology and instant streaming will change this imbalance. The two are increasingly lumped together under the dangerously impersonal branding of ‘content’, suggesting that, despite a rich cultural heritage, the future will be about filling the schedules of the technology, telecoms and television businesses, who see themselves as the masters of on demand. The progress of music then offers pointers to the evolution of film.
Polarisation
The music industry has become increasingly unbalanced, with the top-heavy majors dominating through a mixture of acquisition and exploitation of economies of scale, to support international advances and shore up under-pressure parts of the business model.
Although the majors were badly mauled by the changes at the turn of the century, they still have the muscle to influence developments. At the other end of the scale, the indies have little defence against the winds of change, forced into niches that offer few chances to break out. This has a direct impact on the development of innovative new acts.
New ideas have been the lifeblood of music, with the ability to shock and surprise a huge part of the appeal. There is not necessarily a shortage of talent but the economics of novelty have dramatically changed. In the days when music was all about vinyl and DVD sold through stores, it was possible to build a momentum behind an act, with limited choice accentuating the shock of the new. In a world of total access to any piece of music, making an impact from scratch is considerably harder and the economics of novelty have shifted alarmingly.
This is an era of greater homogenisation, with big names ever more dominant thanks to heavy marketing muscle and global recognition. Established acts can increase their grip, as proved by the release of The Beatles catalogue on iTunes. Smaller acts can create a fan base, but they are competing with each other, the majors and the back catalogue, in selling albums and singles. Sales generally have fallen for individual songs, with consumer spending dissipated across millions of tracks. On-demand services such as Spotify and Pandora ask questions about how far track sales will matter to a digital generation.
Some artists break out of these limitations—Lady Gaga, for example, shows a gift for cross-media invention and smart marketing—but for most the chances of breaking out of a niche with reasonable financial returns are slim.
This closely mirrors the experience of film, where there has been a polarisation of the global blockbusters at one hand and ever-smaller art-house releases at the other. A fine film with critical acclaim can still struggle to find any traction in the market. The independent sector will struggle with the critical mass of sales to create a business model, and an on-demand world of easy access to the whole history of film at the push of a button looks likely to make life tougher—if not impossible—for a significant proportion of independent producers.
The ‘Experience’ Business
One of the ironies of this era of ubiquitous access has been the increased emphasis on those areas of the business that were supposed to be killed off by it. For music, the growth area has been live performance. Estimates suggest that easily the largest proportion of those who work in the music industry are working in festivals and concerts. It is also the area which is continuing to attract significant private equity, bringing impressive returns on investment.
Live is not a direct equivalent of theatrical; the cinema is tending to act in recent years as the marketing platform for the profit centres of DVD. But it does suggest that in a world of instant perfect copies available on demand, there is increased want for the exclusive and authentic. In music, this is not just about live performance, but about merchandising and memorabilia.
Film has some of these same opportunities, not just in cinema but in much of the under-exploited metadata of production that may have value to consumers. These rely on a direct relationship with audiences and the retention—or at least a bigger interest—in rights, particularly given that the European Commission seems increasingly against territorial rights and licensing based on national borders.
It also suggests the need to reassess the windows of exploitation; two of the music majors and many independents have closed the gap between radio play, CD and download release with considerable early success. Top of the list of pioneers in this new thinking is Radiohead, who launched their new album, The King of Limbs, in February. The ‘pay-what-you-want’ tactic employed for 2007’s In Rainbowswas largely abandoned, but the album’s unexpected launch bypassed the traditional retail route, rather being made available on its own bespoke website. This approach, however, works in large part because the group had already established itself through the conventional label approach with a string of hit albums.
As with film, there are some signs of success in skipping the industry process through crowd-sourcing or Creative Commons, but this has tended to be in genre film (Iron Sky) or political activist cinema (Age of Stupid), where there is an established audience. With the rapid development of new tools and services, maturing social networks and new routes to audiences, maybe film has opportunities to ensure that it can build on success in music, rather than repeat its mistakes.
The experience of other creative industries ought to be thoroughly and systematically explored because one way or another, we are all facing the music together.
