The End Of The World As We Know It

"It’s absolutely apocalyptic. The reality is that the record industry is completely fucked up." So says entertainment industry accountant and financial adviser Ossie Kilkenny. His message? That the reign of the major record labels is at an end – and that the power in the global music industry now lies in the hands of concert promoters like Live Nation and AEG.

Not that Ossie (or anyone in the audience) was shedding many tears at the demise of old-style A&R thinking, as they debated the proposition that ‘Record Companies Still Have The Best Talent Scouts’ at The Music Show, in Dublin. Kilkenny’s fellow panellist, Nick Seymour, bassist with Crowded House, recalled a time in the late ‘80s when A&R executives would roll up to his gigs in limos and make a point of flashing the cash in front of the band, offering them all sorts of expensive ‘accoutrements’ – all paid for, he argued, with money that Crowded House themselves had generated.
In what was one of the more explosive discussions of a fascinating weekend’s debate at the Music Show, Kilkenny argued that the spread of internet file-sharing was having a disastrous impact, with sales plunging. Far from ushering in a glorious new age of free music, Kilkenny believes that the cash drain is going to have a major impact on the quality of the songs coming through the record company system.
“Record company revenues are down from €38 billion globally in 1999, to €26 billion today,” Kilkenny said. “What does that mean? They’re earning less revenue. If they’re earning less revenue, we’d assume they’re earning less profit. If they’re earning less profit there’s less money going into A&R. If there’s less money going into A&R, there’s less talent coming through.”
In addition, Kilkenny believes that the trend of the last two decades towards take-overs and mergers – whereby the big record companies have gobbled up their smaller rivals – has taken the recording industry out of the hands of people who really care about music.
“In 1990 there were 19 labels of significance in the world. Most of the ones that are gone, that have been subsumed into the four remaining major labels, are the ones that were run by people that had a passion for music,” said Kilkenny, citing the likes of Island and A&M, both now owned by Universal. He wasn’t pulling any punches as he carried on in the same vein....
“The trouble is you’ve four major record labels left – EMI, Sony Music, Universal and Warners – who haven’t a clue or any interest in talent. The only people who’ve any interest in talent are the people who are peddling tickets to a live audience.
“It’s the guy who takes an interest in concert promotion... they’re the only people who matter anymore. The independent labels, which were driven by real talent and real passion for music, are dead, it’s all over. I don’t know what comes next, but I’m damn sure it’s going to be around live music,” he predicted.
Last year, CD sales in America fell by 15%.
“What does the record industry say? It’s the recession,” Kilkenny stated. “The recession my arse. They’ve been going down every year and they will continue to go down. They’ll tell you that digital sales are now going up. You can go up by 50% from nothing every day you want. But you won’t go up by 50% from 20 billion.”
Kilkenny’s prognosis isn’t encouraging for the business as a whole – with artists being the ones most likely to lose out. The failure of the labels, he argued, will leave a void which the internet has not yet demonstrated that it can fill: that void is in sales and marketing.
“The internet doesn’t work,” he insisted. “It’s all bullshit. You show me one artist that has broken on the internet, worldwide. It’s actually not possible because EMI, Universal, Warner and Sony Music have international operations in every country in this world that give them point-of-sale access. The artist doesn’t have it and the internet doesn’t have it.”
At present, he said, bands cannot make a living out of sale of music on the internet. Kilkenny instanced Spotify, the latest peer-to-peer streaming system that provides a legal alternative to file-sharing. He recently met with a record industry professional who pursued Spotify for royalties for an artist whose song had 600 streams on the system. The record company received £1.61. The artist received around 20 pence.
“The day of the major label is done,” he said. “I’d like to be positive, but I actually don’t see that the gap is going to be filled by something that’s going to give people the ability to market their product worldwide. That gap has been created and as far as I can see it’s not going to be filled.”
Live music is the aspect of the industry that is still turning a significant profit – and that is why concert promoters are now the most powerful people in the music industry. With that in mind, Kilkenny’s advice to aspiring artists is to get down to their local pub and start playing.
“We haven’t managed to leave the record companies behind,” he said, “but we have to leave the record companies behind because they are thrashing about all over the place going nowhere. It’s about getting out there and getting your talent recognised locally and building from there.”
Whose fault is this? For sure, the labels must shoulder some of the blame. But the artists too are culpable, specifically those who have failed to make a stance against illegal downloading.
“If the record industry fails miserably, which I think is going to happen, it’s because they couldn’t come together,” he said. “They couldn’t agree amongst themselves what to do. And it was the same with artists. Why didn’t the artistic community, the guys whose rights were being impugned – why didn’t you guys stand up and say ‘fuck you’?”
“Why didn’t U2 or Bryan Adams or Sting? Successful artists did nothing. That’s why we are where we are today.”