The digitization of dance music has mostly benefited DJs around the globe. Customers in every country have increased access to a significantly larger catalog of music, and newly formed labels can now reach those DJs without a big investment of money. It may even be reasonable to attribute the resurgence of dance music’s popularity to the inevitable conversion to an online format. After a long slump in 12-inch vinyl sales, many dance labels are making a comeback or even re-entering the market after closing their doors.

I went to several labels and producers who have weathered the ups and downs of the past 10 years and asked them a simple question: “Are you better off now that everything is digital?” Their answers may surprise you.

THE REVOLUTION WILL NOT BE MONETIZED

It’s easy to assume that the digital revolution has been good for everyone because online retailers are doing tremendous numbers, and most DJs are converting their collections to digital. Has that translated into more revenue for indie dance labels? “Not really,” reports Phil Cheeseman, who first joined Strictly Rhythm records (www.strictly.com) in 1992. “The amount of money made for each sale is lower, and there are still mastering, artwork, promotion and distribution costs,” he says. “We still need to see a fairly big upturn in digital sales to replace the lost vinyl sales in revenue terms. However, in time, labels with good-quality catalogs will benefit from the always-available status of downloads.”

Nick Harris, one of the founders of NRK Records (www.nrkmusic.com), has managed to keep his label alive through the ups and downs of the dance market. While NRK has also seen its income drop, he suggests there are more factors at play. “It isn’t necessarily due to digital conversion; margins have always been thin in the independent-record industry. But the whole music industry is in decline anyhow. With the focus on entertainment shifting to DVDs and video games, there are just not the numbers of people passionately buying music nowadays.”

Selling 12-inch dance records was never a terribly profitable venture, but it still managed to fund and maintain a community of artists and labels for many years. More importantly, it provided the exposure necessary to get those artists the gigs and licensing deals that really paid the bills. Perhaps digital music is just a more convenient calling card? Cheeseman seems to think so. “That’s even more the case now as many — if not most — producers make very little from their records.” Really? If anyone was supposed to benefit from the digital conversion it should be the artists, right? So how are the artists faring now that most of their records are online?

MUSICAL CALLING CARDS

There are few more experienced or respected producers in the house-music world than Kerri Chandler. He has consistently put out quality records for more than 20 years and weathered more than just a few swings in house music’s popularity. When asked if he sees digital as a new way for artists to make money, Kerri responds, “Honestly, it’s an easier way to get the track out there, but I see it now as more of a promotional tool because everyone seems to give out the tracks anyway. It’s almost impossible to stop that. So I kind of put something more interesting on the vinyl version — artwork or something that can only be done with a true record. Inserts, signatures and stuff like that.”

So, even though digital downloads may have contributed to a resurgence in dance music, it appears that this narrower niche also suffers from the big conundrum facing most of the music industry at large. Digital is a great promotional tool, but few are making more money selling it. Chandler pointed out an important fact that most people forget. “Everyone followed the iTunes model,” he says. “However, iTunes wasn’t interested in selling songs — just the machines to play them to make their money back.” Chandler is right; Steve Jobs never intended to get rich off the iTunes store, even though its dominant sales haven’t hurt Apple any. The real gold medal was cornering the market on digital playback hardware with the iPod.

PILE IT ON

So how can an artist come up with his or her own unique strategy? Well, one thing would be giving your fans added value, a tip that comes from an industry claiming it’s impossible to make any money in the current economic climate: the airlines. Up over a crowded field, there peeks an airline that has blossomed in spite of others’ failures: Singapore Airlines. The company’s model was simple: Give customers little things they like — make their experience positive, and they will come back. Compared to the cattle-car feeling that comes with most airlines these days, it’s not surprising that Singapore is flourishing.

Some bands have caught on to the added value technique by starting to offer an interesting proposition: Buy the 12-inch vinyl album and also download the entire thing for free. That combo has contributed to an overall spike in vinyl sales in general, which jumped 36 percent from 2006 to 2007, according to the Recording Industry Association of America (www.riaa.com). This trend seems to be mostly centered around the indie-rock scene but may eventually trickle over to dance music, where there are still a significant number of vinyl holdouts refusing to relinquish their collections in favor of a laptop.

Ultimately, it remains to be seen how the profits will pan out and whether guys like Kerri Chandler and Nick Harris will continue pressing records for another 10 years. Personally, I have confidence they will. Even if digital never turns into a profitable venture, there will always be a market for creative people and the inspiring music they make

This article was taken from my column “the digital dj” in Remix magaine

  • http://www.kodermusic.com DJ Koder

    Sad facts. I wonder what percentage of laptop and CD DJs buys all the tracks that they spin. I use laptop for DJing and I buy all the music that I play. I think that doing otherwise is stealing from the musicians whose work you admire. There's got to be a way to make money on a product that is as popular as independent music, and it should not be limited to selling drugs on parties that otherwise do not even break even.

  • EULA

    What most labels and artists still haven't realized is that they are no longer in an age where they can build an entire industry around mere content. The arrival of the Internet means anything that can be digitized is no longer a profitable venture. Everyone now has the ability to copy and distribute content at virtually no cost, unlike the old days where you needed labels to print, package, ship, and get advertising and retail space for a bunch of plastic discs. This also calls into question the relevance of our current copyright laws, which in my opinion are grossly over-extended and severely impede the progression of our culture under the disgusting notion that ideas and expression can somehow be owned and licensed (so-called "gatekeepers of culture").

    People will want to share things they love with others, especially something as personal as music. It is a natural human impulse. If anything, the emergence of file-sharing communities on the Internet has taken music back from the slick marketing executives and re-established a direct connection between artists and fans. It's also put everyone on a level playing field; artists and fans only exist in relative terms, because everyone now has equal potential to produce great music and have it heard around the world. We are all ultimately "users" of music.

  • Sc1C

    Company profits may be down but judging by a few of my freinds' success, personal profits are up.

    They would have likely been just another promo taking up space in a dusty backroom at a record company somewhere (major or indie), but instead they can take the power into their own hands and release their music by their own rules.

    Much as EULA suggests above, digital has allowed users to take the power back.

  • EULA

    [quote comment="15002"]Sad facts. I wonder what percentage of laptop and CD DJs buys all the tracks that they spin. I use laptop for DJing and I buy all the music that I play. I think that doing otherwise is stealing from the musicians whose work you admire. There's got to be a way to make money on a product that is as popular as independent music, and it should not be limited to selling drugs on parties that otherwise do not even break even.[/quote]

    Your argument is predicated on the idea that music only serves to be exploited as a commercial product, which is not only artistically disingenuous but also unsustainable in a modern society that fully embraces the free exchange of ideas and information.

    There are certainly other (legal) ways for career artists to make a living, and it's up to them to figure out how they can do so without depending on selling copies of songs. It's a natural consequence of a free-enterprise society that you will need to innovate and transform your business model to keep up with disruptive technology such as the Internet.

  • http://tos.network.in.rs DJ ToS

    Sorry. Just hooking my email-notification. I see, this is gonna be a hell of a comment ride. Can't wait…

  • http://www.myspace.com/djkloseline Kloseline

    Well it is an interesting article but it really only shows one sid eof the music industry, the sales of records. there is another side which conects right with the airline industry. the touring of artists. it is a fact that touring has never been more profitable for artists. if you ask any underground artists how they make their money thew will aswer 0 with 12" little with albums (the majority dont have one) and all the rest with touring and stuff that is just related to its popularity. this is however a bad thing for the label but it ensures that we will have music for the rest of our dj lives even tho some labels might die, but arent they supposed to die if you dont need them any more ???

  • http://www.eangolden.com Ean Golden

    [quote comment="15007"]

    Your argument is predicated on the idea that music only serves to be exploited as a commercial product, which is not only artistically disingenuous but also unsustainable in a modern society that fully embraces the free exchange of ideas and information.

    .[/quote]

    [quote comment=""]Well it is an interesting article but it really only shows one side of the music industry, the sales of records. there is another side which conects right with the airline industry. the touring of artists.[/quote]

    both of these are excellent points and are the underlying message I was trying to make in the article (but didnt have space to go into)

    its an artists responsibility to look at their career as a whole and not rely on music sales for income. that being said, theoretically, they should be making more with digital since there is no physical distribution or manufacturing of product. Why are they not? partially because of the amount taken by digital shops- which is another important article in the making.

  • tk22

    Actually, you have the iTunes model backwards – Apple originally lost money on selling iPods so that they could make money selling millions and millions of songs.

    I think now though they make money on both.

  • http://www.eangolden.com Ean Golden

    [quote comment=""]Actually, you have the iTunes model backwards – Apple originally lost money on selling iPods so that they could make money selling millions and millions of songs.

    I think now though they make money on both.[/quote]

    sorry to be contrarian but your dead wrong.

    from:
    http://www.theregister.co.uk/2003/11/07/your_99c_…

    At an Apple financial analyst conference on Wednesday CEO Steve Jobs admitted that Apple makes no revenue from the online download service, the iTunes Music Store, that he launched in April. As iTMS is the leading download service, with 80 per cent market share (or so Jobs claimed), where's your 99 cents per song going?

    "Most of the money goes to the music companies," admitted Jobs.

    "We would like to break even/make a little bit of money but it's not a money maker," he said, candidly.

  • EULA

    [quote comment="15020"]its an artists responsibility to look at their career as a whole and not rely on music sales for income. that being said, theoretically, they should be making more with digital since there is no physical distribution or manufacturing of product. Why are they not? partially because of the amount taken by digital shops- which is another important article in the making.[/quote]

    There are a number of obvious ways to distribute your music over the Internet without having to rely on middlemen retailers. In my opinion, artists who license their work to digital shops are still relying on an antiquated busines model (selling copies) and as a result, they get caught in the same old traps.

    Trent Reznor has already proven that a high-profile artist can still make money by going truly independent (no labels, no retailers) and not treating his fans like criminals (releasing his work under a Creative Commons license). Even though I realize he built his career with the help of major labels and MTV, I still respect him for having done what no one else in his league has yet dared to do. Electronic artists, who are most in tune with technology and its impact on society, should be at the forefront of this movement.

  • Bleep

    There has been a lot of talk about the conceptualization of a digital "packaging platform" with an advertisement model to freely distribute music while making some money at the same time.

    I have been involved in this process for some time; I had my own review and interview website, I opened a digital label with e-shop store front, I have demonized illegal downloading, I advocated it. It seems I have seen things from every angle in this round table and the aforementioned idea seems like the most plausible one so far.

  • Olaf

    [quote comment=""]There has been a lot of talk about the conceptualization of a digital "packaging platform" with an advertisement model to freely distribute music while making some money at the same time.

    I have been involved in this process for some time; I had my own review and interview website, I opened a digital label with e-shop store front, I have demonized illegal downloading, I advocated it. It seems I have seen things from every angle in this round table and the aforementioned idea seems like the most plausible one so far.[/quote]

    [quote comment="15025"][quote comment="15020"]its an artists responsibility to look at their career as a whole and not rely on music sales for income. that being said, theoretically, they should be making more with digital since there is no physical distribution or manufacturing of product. Why are they not? partially because of the amount taken by digital shops- which is another important article in the making.[/quote]

    There are a number of obvious ways to distribute your music over the Internet without having to rely on middlemen retailers. In my opinion, artists who license their work to digital shops are still relying on an antiquated busines model (selling copies) and as a result, they get caught in the same old traps.

    Trent Reznor has already proven that a high-profile artist can still make money by going truly independent (no labels, no retailers) and not treating his fans like criminals (releasing his work under a Creative Commons license). Even though I realize he built his career with the help of major labels and MTV, I still respect him for having done what no one else in his league has yet dared to do. Electronic artists, who are most in tune with technology and its impact on society, should be at the forefront of this movement.[/quote]

    although i agree for 99% with your views you seem to ignore one important point: quality-filtering. In the past record-labels, and even more important: record-stores, where your filter of all the new music coming through. They had a certain taste, and maybe even did know your personal taste, and could filter most of the crap for you. Now on the internet, i don't even bother to check f.e. beatport, because over 80% on it is just bad.

  • EULA

    [quote comment=""]although i agree for 99% with your views you seem to ignore one important point: quality-filtering. In the past record-labels, and even more important: record-stores, where your filter of all the new music coming through. They had a certain taste, and maybe even did know your personal taste, and could filter most of the crap for you. Now on the internet, i don't even bother to check f.e. beatport, because over 80% on it is just bad.[/quote]

    Music blogs and blog aggregators are quite adept at filling the traditional tastemaker role. Pandora also works pretty well at helping people discover new music.

  • Producer

    [quote comment="15007"]

    Your argument is predicated on the idea that music only serves to be exploited as a commercial product, which is not only artistically disingenuous but also unsustainable in a modern society that fully embraces the free exchange of ideas and information.

    There are certainly other (legal) ways for career artists to make a living, and it's up to them to figure out how they can do so without depending on selling copies of songs. It's a natural consequence of a free-enterprise society that you will need to innovate and transform your business model to keep up with disruptive technology such as the Internet.[/quote]

    No it isn't, it is predicated on the idea that music amongst many other qualities also inhibit the capacity of being treated as a sellable commodity. Nobody in society has ever been forced to sell their music for money it has simply been provided as a possibility for people to make a living of something society in general has considered as a valid commodity.

    In other words the only ones who are trying to impose a reduction of the possibilites embedded within music are people like you who are purpotrating the point of view that all music should be made accessable for free.

    Since the decision concerning under which circumstances an item at hand should be made available for free or not lies solely within the grasp of the owner of said item and certainly not with the consumer of the item the current development considering the music industry can be seen only as a natural consequence of a society not upholding the law on behalf of several thousands of its citizens.

    You might disagree on the terms under which various artist and composers decides to make their material available to you or not, you might even find them oldfashioned or plain silly but this still doesn't give you the right to break the law and steal their property.

    It's their music and therefore their choice, not yours.

  • Producer

    In general I have several times been struck by an disturbing undercurrent of insensitivity on behalf of the artists needs beneath these discussions of internet sales and rights.

    Who are you guys to tell anybody in the productional line of the record industry under which circumstances they should be able to live, work and sustain an income ? Why should they or any other be forced into maybe touring around the world like modern day gypsies just to facilitate you with the possibility of music free of charge in the comfort of your own homes whenever you deem it necessary?

    A vast amount of people in the industry don't want to be performing artist, their sole interest lies within the conceptual design of sounds, music and songs. They just want to create – not entertain – and those peoples artistic possibilities has been greatly reduced due to the internet community's ignorance of under which circumstances actual music production evolves both on an artistic/idealistic and personal day to day based level.

    It takes time to do art and the more time an artist have to spend away from home the less time he has to create those gems that everybody in our culture as a whole constantly keeps craving on a day to day basis from the ranks of our artist.

    Mind me for telling you lot a very simple truth: If a product suddenly is rendered free of charge in a society the average consumer will lean towards a tendency of rendering both the inate validity and the originator of the product as being null and void, which this thread is a perfect example of:

    The nauseating and deeply disregarding tone carried by several commentators towards the conditions of musicians and composers of the world – without which product you wouldn't even be capable of envisioning your life – is sickening.

    The highly inappropiate misconception between on one side what the consumers in their own mind are allowed to crave from the artists and on the other side under which terms the facillities the consumer deem necessary for the artist to be able to provide these services to the consumer – the consumer even defining the exact form and circumstances under which the artist has to live and provide his work to the public domain – is deeply alarming and points directly towards an ever consuming and ever increasing black hole of cultural greed located in the middle of every human being's mind in the western hemisphere of today.

    Most of the people who are agreeing to these ideas of the artists providing everything for next to nothing are not artist themselves. They are merely consumers craving the endlees submission of the artists to the consumers slightest whiff of needs and desires for all access and all free entertainment at all times with abolutely no regard for the artists personal and artistic needs or position in the modern society.

  • Moonsmile

    But then again, it's not really the artists royalty we argue about (or do you?).

    It's all the extra costs that sometimes have little or nothing to do with the artists original work. F.e:

    * labels taking a lot of money to do marketing,

    production of records (by this I mean making a physical CD and also costs related to having a factory, which will be redundant due to digital distribution),

    distribution and transport of records (also redundant due to digitalization, this is also good because no or less transporting around records saves the environment),

    then the store selling the record must pay for their locale, taxes, wages, don't take me wrong here, of course a webshop has expenses but a webshop isn't quite as expensive to run and maintain as a real shop,

    and then labels want to make money for themselves which makes this a totally unnecessary business for the artists.

  • mycole (B33SON)

    Really good article. I have to disagree that these are necessarily sad facts, I thought the last section pointed out quite well that the profit model our industry is changing and new strategies and opportunities are out there. So what if the days of the $16 CD are gone (thank god for that!) because with them went the constraints that a physical record store puts on access to the music we want. I doubt we'd have so many genres of electronic music if we still had record stores and radio stations telling us what we should like.

    In any case, I love the example of offering the entire CD when purchasing the 12". Awesome thinking! It'll just take time before more great ideas like this emerge and we have a solid business model again.

  • Ean Golden

    [quote comment="15032"]

    A vast amount of people in the industry don't want to be performing artist, their sole interest lies within the conceptual design of sounds, music and songs. They just want to create – not entertain – and those peoples artistic possibilities has been greatly reduced due to the internet community's ignorance of under which circumstances actual music production evolves both on an artistic/idealistic and personal day to day based level.

    It takes time to do art and the more time an artist have to spend away from home the less time he has to create those gems that everybody in our culture as a whole constantly keeps craving on a day to day basis from the ranks of our artist.

    [/quote]

    producer brings up a very valid and well articulated point. There are few "alternative" revenue models besides touring that are available to artists at the moment and some people may have no interest in playing out at all.

    Bleep brings up:

    "There has been a lot of talk about the conceptualization of a digital “packaging platform” with an advertisement model to freely distribute music while making some money at the same time."

    I am confident that some creative and enterprising people will come up with ways to make creating music a viable career again. it will just take more out of the box thinking and a willing artist base.

  • niels

    some good points "producer" but really I think your points could have been made without inundating us with such an alienating spew of words and rants. what you believe morally or ethically as far the price of music is concerned is irrelevant. people can and will steal music. a new business model needs to be created otherwise were going to be left with a lot of "starving" artists and a bunch of askew good-doers baffled at the lack of consumer consideration sitting angrily with no new ideas to present. and these ideas certainly arent going to come from some venture capitalist investing in another e store. I'm personally just waiting for something new. one of the many reasons I visit this site, as I believe it plays a role in the forefront of the digital revolution, especially as it pertains to music. it'll be exciting to see. phew, good article by the way.

  • EULA

    [quote comment=""]what you believe morally or ethically as far the price of music is concerned is irrelevant.[/quote]

    I don't think he was defending the price so much as the retained ownership of his publicly released work. That is an ethical question that we could go on all day about, but the bottom line is that the genie cannot be put back in the bottle. Today it costs nothing to copy and distribute music, and people will get the music they want for the lowest possible cost (zero). Until someone comes up with a profitable revenue model that adequately answers that challenge without infringing on consumer rights (e.g., DRM), then artists will have to make a living like they did before the days of recorded music — through live performances.

  • Iceman

    Producer, no one is telling you or any other producer for that matter, how to live, work, or sustain an income. You know who is though?

    The market!!

    Sad reality, buddy, but you are just as susceptible to a world that is changing as some Detroit auto worker. Change or stop moving, choice is yours.

  • http://kodermusic.com Dj Koder

    An interesting argument on the subject by researcher Mark Mulligan titled "Why Music Can't Just Be Free": http://weblogs.jupiterresearch.com/analysts/mulli…
    and a completely killing contra argument by Mike Masnick: http://techdirt.com/articles/20081118/1647262872….

  • Sebastian

    I wish I could say that buying artists' music was ethical. The fact is, buying music from a store or internet store is almost just as much stealing. What is iTunes paying for when you pay $.99/track? You don't even get a jewel case and liner notes! Under most large contracts, about $.70-$.80 is going into the hands of everyone BUT the artist! My solution, buy music directly from the artist at shows or their website. Furthermore, go to their shows! Buy drinks, pay the cover. That gets artists paid (by and large). Keep working out new music buying-solutions and find a common ground. Music shouldn't be free but buying it should benefit the artist, not lawyers.

  • http://ambusiness.ru ?aK?He?

    ? ? ??? ????? ????????? ???? ???? ?? ??? ??????? ???? ??? ???????? ??? ??? ???? (?????: ?? ????????) :)

  • bobo coco

    [quote comment="15367"]I wish I could say that buying artists’ music was ethical. The fact is, buying music from a store or internet store is almost just as much stealing. What is iTunes paying for when you pay $.99/track? You don’t even get a jewel case and liner notes! Under most large contracts, about $.70-$.80 is going into the hands of everyone BUT the artist! My solution, buy music directly from the artist at shows or their website. Furthermore, go to their shows! Buy drinks, pay the cover. That gets artists paid (by and large). Keep working out new music buying-solutions and find a common ground. Music shouldn’t be free but buying it should benefit the artist, not lawyers.[/quote]
    +1

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