The Business of Music

UMG has forced YouTube to withdraw one of my favourite videos, Eleftheria Arvanitaki’s Dinata, Dinata. Fewer people outside Greece can now find out about her music, and her record sales will drop accordingly. Listeners, and performer, have been robbed by short sighted and not very clever decisions on UMG’s part that will end up causing a loss also to the company itself. This is not the first time this has happened.

UMG is Universal Music Group, the world’s largest recording company. Its subsidiary is the world’s largest music publisher. UMG owns 25 record labels, and has a website, Vevo, designed as a competitor to YouTube. It controls approximately one third of all recorded music in the world. UMG has been charged with payola, payments to radio stations, and using legal threats to control YouTube content. In 2007 UMG’s revenue was $6.14 billion, from record buyers around the globe. Current CEO is Lucian Grainge. UMG is itself owned by Vivendi, a Parisian communications and media conglomerate with revenue in 2010 of $41.8 billion. CEO is Jean-Bernard Levy. Vivendi has survived near bankruptcy in the recent past, and its future is far from certain. Vivendi’s income, to put it in perspective, is more than the GNI (Gross National Income) of more than twenty countries around the world, including Bolivia ($40.445 billion), Albania ($27.251 billion), Cambodia ($27.191 billion), Bahrain ($26.13 billion), Afghanistan ($25.092 billion), Armenia ($16.671 billion), and Benin ($13.454 billion), according to World Bank statistics. If you want to feel guilty, think about where your money goes when you buy a record, and how many people around the world don’t have enough to eat. American Idol could focus your social consciousness.

The recording industry is in a state of crisis right now. While once, in the 19th century, music publishing generated the largest revenue, and the 20th century saw the spread of recordings and the rise of giant conglomerates such as UMG, in the 21st century there has been a sharp downturn in revenue from recorded music as digital formats, their marketers and their pirates, take over. The recorded music giants, like dinosaurs, were taken unawares, and many only had blanket, non-specific, copyright protection in place (all other rights reserved). As always, enterprising companies who had seen the spread of formats like mp3 coming entered the market and took a sizable part of it while the record companies were fighting a rearguard action, suing private individuals and forcing the closure of internet music services. Computer companies, the same ones that took advantage of IBM’s failure to exploit the PC market, were in the lead in this field also, Microsoft in digital television, Apple in founding what is now the world’s largest music store. Total revenues from sales of recorded music have dropped 30%, to $27.5 billion throughout the globe, helped by rocketing prices: in Australia a CD now can cost as much as $40, almost a 40% increase from the time I used to buy them often. Aggressive legal action against so-called ‘pirate’ mp3 sites, and against individuals, has failed to stop this trend. It is likely that UMG, and Vivendi with it, will slowly lose market share, and be absorbed by other players in the game. While it’s comforting to see UMG, who controls so much of what we hear, and how and where we hear it, slowly disappearing, it is likely the company will become more repressive in limiting listeners’ freedom in the process of losing market share. Other ‘Big Brothers’, waiting in the wings or actively marketing digital formats, are also eager to limit listeners’ freedom. DMR, actively promoted by Apple Corp, is a case in point.

Companies are automats, blindly seeking ‘market share’. Whether it’s UMG, Apple or Google, they will all try to prey on consumers, and control them the better to syphon off their assets. To them, listeners are not people, but consumers. Mere sheep.

Music has always been the solace of poor people. However, it’s unlikely that music enters into any corporate plans. The last thing that Apple, Google or UMG cares about is music. They care about market share. Indications are that while giant companies like UMG (and Vivendi), Apple, and Google (using music broadcasts to generate advertising revenue – so far) are well aware of the huge income music sales can generate, the income from this source is going largely to broadcasters and distributors of the ‘product’, and the musicians who generate it are not seeing an increase in their small share from this source. Let’s not forget the musicians. Internet marketers, millions of them, are eagerly queueing up to be in the Big Brother line, to snare some of this revenue. After all, that’s what music’s for, isn’t it? This business is becoming all about the middleman, and about very little else.

Listening to music without paying is about the biggest sin there is. Allmost as heinous as reading a book and having ideas of your own. Big Brother doesn’t like things like that.

Let’s hope the giant music companies don’t try to control other resources, like flowers. Or laughter. These commodities are still not worth any money, thank god.