A Small New Future

Meanwhile, as the majors are hurting or merging, small yet familiar indie labels like Sub Pop and Matador have been basking in a series of increasingly unlikely successes. Other, less brand-conscious indies like Domino, Or and Enjoy have discovered and had phenomenal achievements with artists such as Franz Ferdinand, Los Lonely Boys and Jack Johnson — looking upon majors as distribution partners to take them to the next level. Best of all, these indie labels are entrepreneurial ventures. They were founded by music freaks, oftentimes by music industry outsiders, or music industry insiders who decided to try their hand with artists that didn’t fit the cheesy major-label model. By dint of their origins and shielding from public markets, they are able to focus their obsessive vision on music rather than quarterly earnings reports. None of these indies are subject to the Wall Street profit pressures that cause most major-label “product” to be so milquetoast. The remaining majors have each created indie distribution arms to aid these upstreaming efforts — Warners with ADA (Alternative Distribution Alliance), BMG-Sony with Red, EMI with Caroline and, soon, Universal with Fontana.

Festivals like ATP are the best PR for the increasingly successful business model of selling eclectic music made by and for people who actually like it. There are a host of like-minded events targeted to the dedicated fan of niche sounds. The Coachella festival of Indio, California, has become a pilgrimage for followers of cult favorites and rising international acts. Bonnaroo of Manchester, Tennessee, has roots in the jam-band scene but an open-ended vision. Each of these festivals is far larger than ATP, gathering tens of thousands of hardcore music fans who are quickly outgrowing their niches. Where else but Bonnaroo could you see Yo La Tengo, Steve Winwood and the Dead in a three-day span? While Lollapalooza’s aborted rebirth indicates that this idea is not quite ready for prime time, it’s clear evidence that the changes in the music industry go beyond digital distribution and corporate structure to touch upon the aesthetics of what people are listening to and buying.

These are but a few of the signs that the record business is coming to grips with a small new future. That doesn’t mean the industry’s overall revenues will shrink, nor that record sales will go down. Right now, record sales are plainly rising (see “3 Myths About Today’s Record Business Debunked”). They’re just not rising in the ways we’ve become accustomed to — the biggest, most famous artists are no longer posting ever more impressive sales figures. Suddenly, there are more and more records selling 10,000 to 500,000 copies each year, and less and less selling 1 million to 10 million. To put it simply, the patterns that used to govern sales no longer work. The industry’s biggest successes are now small ones.

Industry insiders are just as confused by the good news as they are by the bad. Here are the kinds of questions they’ve been asking themselves: Why doesn’t Eminem break out on the order of the Beatles and sell 10 million copies of every release? Why can’t Britney, Whitney, Madonna and Mariah make hits like they used to? Why can’t the Strokes break through to the mainstream, stymied at 500,000 units shifted? Conversely, they wonder how a one-off Sub Pop release like the Postal Service’s Give Up — a mash-up of the niche genres of bedroom electronica and emo-punk — has sold well over 250,000 copies. How could Matador sell a half-million copies of the debut by an unheralded New York band like Interpol? Why are bands like Modest Mouse, the Shins, the Yeah Yeah Yeahs and Wilco selling hundreds of thousands of records, where a few years ago they would have — optimistically — sold 50 thousand?

1999: The year the music industry broke

With the benefit of hindsight, it’s evident that 1999 is the year that set the stage for the changes in the biz. 1999 was the year Goldenvoice founded Coachella and the year British concert promoters Barry Hogan and Helen Cottage inaugurated All Tomorrow’s Parties as an alternative to corporate music events like the Sprite Liquid Mix tour, the Vans Warped tour and, yes, various Tommy Hilfiger productions. It was the year the RIAA invented the Diamond, a term for albums that sell over 10 million copies. And 1999 was Year Zero for the file-sharing phenomenon, otherwise known as the birth of Napster.

These are snapshots anyone might note when reviewing that year in music. Together, they form a larger picture. The Diamond offers a window into the corporate record industry’s hubristic faith in endless growth. All Tomorrow’s Parties was an early indicator of the underground’s more modest vision of music as a curatorial exercise. And Napster was the catalyst with the power to set corporate America’s overzealous hopes and indie rock’s half-baked dreams on the odd collision course playing out today.

This is what happened: 1) By making “popular” synonymous with “piracy,” Napster almost single-handedly eliminated the possibility of 10-million sellers. (Basically, it’s far easier to find and steal tracks by Eminem online than it is an obscure indie band.) 2) Napster opened a back-door distribution channel to any band with good songs, a unique sound and access to a computer, solving niche pop’s eternal problem of distribution and access. For a band with buzz or good ideas but no access to typical gatekeepers — commercial radio, distribution through Wal-Mart — there was now a radically streamlined infrastructure for getting heard. 3) Napster allowed people to hear what they are going to buy before they buy it. The result is that good indie records are selling more copies, and bad major-label records are selling less.