Challenging music's one-track mind

By Clare Matheson
Business reporter, BBC News,

Could this man be the saviour of the music industry?

An unknown Canadian artist and new record label have issued a bold challenge to a music industry they believe may be sowing the seeds of its own destruction.

While record companies are charging lower and lower prices for their CDs - even to the point of giving them away - the new kids on the block are charging the outrageous sum of £100.

For a single.

And the most expensive single in history won't even chart. Record company Victorious Kiam is releasing just 100 copies of Somewhere There's An Angel by Thurston Revival - otherwise known as singer-songwriter Dan O'Connell.

Taking a stand

Why adopt such a novel strategy?

"Ultimately, underneath the surface it's an arrogant and outrageous statement. There's only one song, not even a B-side," says Dan.

"But given that, it's ironic that the goal of the whole project is to force people to describe music as art.

The single may be pricey, but it could make a good investment

"Almost everything you read is built around a discussion of music as a commodity - this brings the focus back to the music to be thought of as art."

James Foley - music editor at industry newsletter Record of the Day (ROTD), which owns Victorious Kiam Records - adds the group wanted to "stand out above the oft-repeated death-knell of music".

Instead of complaining about falling sales, declining profits and shrinking margins, music companies should be looking to new ways of resurrecting the business, he argues.

"For us it was a non-traditional way of looking at the industry," Mr Foley says. "We thought we'd try to break an artist in a different way."

And they have. A day after the launch, sales are heading for the 70 mark - enough to cover costs and turn a small profit.

Meanwhile, its buyers may also have made an investment for the future. The single has 10 different covers, each by a different up-and-coming British artist.

Price worries

But the launch of the single - in a cramped, sweaty West London art gallery - was also a wake-up call to the industry and its fans.

"The music industry is worried that illegal file-sharing, cover mounts and giveaways have adjusted the public's perception of the financial value of music," the label says.

"That is, fans now consider music almost a free commodity."

The margins from CDs have fallen away quicker than we expected Peter Thompson, Vital Distribution

And it's no wonder fans now expect to get something for nothing, industry experts say.

Freebies - at gigs or as covermounts - all chip away at the belief that we should pay for our CDs, while the proliferation of free music on the web does little to help.

While Prince may be giving away his latest album at gigs and on newspapers for free, offerings from other artists are certainly going cheap.

Now a single track can costs as little as 79p - with the artist getting an estimated 10p and the record company 30p - compared to with £1.50 for a CD single.

Compare that to the end of the 1990s when CD singles cost around £4 - with the artist getting 50p, and the record company up to £1.

It's a distinct change from the launch of CDs in the 1980s, when the format was seen as the industry's golden goose raking in huge amounts of money for very little outlay as consumers rushed to replace their vinyl collections.

Squeezed

So it's no surprise that the falling prices have brought the industry face-to-face with its biggest crisis in years.

"The problem is that all of the business is still built on CD sales, and the margins from CDs have fallen away quicker than we expected," says Peter Thompson, managing director of record distributor Vital Distribution.

"Reducing margins only works if volumes increase, but what's happened is that prices have been reduced in order to create volume but the volume has not materialised in the way people would have hoped.

"That means it's harder to generate profits and with no profits you can't invest in the business."

Prince recently hit the headlines with his CD giveaways

There's no denying that sales are in decline. In the UK sales fell 20% in the first three months of 2007 compared with the same time in 2006.

Meanwhile, according to record industry statistics compiler Nielsen Soundscan, worldwide sales are expected to plunge by about 11% this year. That would make 2007 the worst year for the recording industry for more than a quarter of a century.

And while digital sales are rising, experts say they will not make up the shortfall.

Shopping shift

As the labels are battling falling sales, shops are dealing with a change in consumer habits.

Earlier this year, retailer Fopp closed its doors and big name rival HMV has long been struggling against a downturn in sales.

Music has essentially only one value: the one you hold yourself James Foley, Record of the Day

As Domino Records general manager John Dyer says, aficionados "no longer make their weekly or monthly pilgrimage to browse the shelves of their local record store".

Instead we are impulse buying at supermarkets or "kids are going online and getting together" to swap playlists.

Mr Thomson says that the industry is currently caught in a "spiral" where companies are now slashing prices - effectively piling 'em high and selling 'em cheap - in an effort to turn a profit and get records into homes.

Lost ground

Recent success stories like The Fratellis and Klaxons sales were driven by the record firms wanting a big impact in week one and putting their albums in record stores for sale at as low a price as £7.99.

Despite its low-key launch, Dan's single drew plenty of attention

In turn, retailers are encouraging lower prices to drive sales against digital and supermarket competition.

"High Street retailers made a big mistake with their price points," says Stephen Godfroy, director of independent retailer Rough Trade.

By concentrating on price, they lost a key audience interested in making "exciting new music discoveries" beyond the charts, he adds.

"Rough Trade is a testament to the fact that people are shopping in different ways and willing to seek out new music beyond the charts."

But does ROTD believe its call to arms will be heard?

"We never expected people to take up the challenge, but it's captured people's imagination either as collectors or they've understood the message that we're trying to educate people with," says Mr Foley.

"That music has essentially only one value: the one you hold yourself."