The Record Industry: Going Alternative

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Illustration by Dave Wheeler for TIME

Plastic Beach, released in early march by Damon Albarn's virtual band Gorillaz, is what used to be quaintly called an album. These days, though, the songs are just the beginning. With the recorded music industry ravaged by piracy and unable to keep pace with digital delivery, Gorillaz is showing a way forward. Plastic Beach — which debuted at No. 2 on the U.S. and U.K. charts and sold over 200,000 copies in the first week alone — is as much a multimedia experience as it is a record. Buyers are given a special code that they can use to access computer games, manga-style videos and live audio streamed on the Gorillaz website. The band's label, debt-laden EMI, is so convinced that Albarn fans will want to access all of the extras, it is allowing people to listen to the album for free on the Guardian newspaper's website.

EMI's strategy reflects both the weaknesses of the music business, as well as the possibilities for a new future. The crisis in the industry is well known: although sales of songs via iTunes and other digital media increased by 10% to 15% in the U.S. last year, that wasn't enough to offset the 20% falloff in CD sales, which still account for about three-quarters of the market. Globally, recorded music sales plummeted from $26.5 billion in 2000 to just $17 billion in 2009, according to the latest set of figures available from the International Federation of the Phonographic Industry (IFPI), the antique-sounding industry body.

Artists have been fleeing the music giants too, preferring to sign with smaller labels or self-distribute their albums as the big companies have tried to force them to sign deals giving away a portion of their live performance and merchandising revenues. Radiohead guitarist Ed O'Brien — who is also a member of the Featured Artists Coalition, a London-based trade union for, of all things, rock stars — says "the music industry isn't in crisis, the recording industry is; it is an unbelievably good time to be a fan of music and new bands." Radiohead has opted for the viral route before, distributing its 2007 album In Rainbows via the Internet, asking consumers to pay what they thought it was worth. (The band is now signed with XL, an independent label.) Even a big pop artist like Robbie Williams is looking for a financial investor rather than a record company to fund his next crop of albums as he seeks greater financial control over his work.

A Positive Note
Despite the gloomy statistics and artist defections, the release of Plastic Beach shows that the music majors haven't run out of ideas yet. For Universal Music, the market leader, this means moving away from the business of selling singles and CDs and investing more in online, subscription-based services — the next generation of the buy-per-song model made popular by Apple's iTunes. Rob Wells, the head of digital for Universal's London-based international business, says the company is close to finalizing a deal with the cable company Virgin Media on a new service that would allow consumers in Britain to listen to and download as much music as they want for a fixed fee of about $12 a month. While the average iTunes user downloads about $35 worth of songs a month, says Wells, the new service would be profitable if a large enough number of not-so-serious music fans signed up. In Britain, for example, the average adult buys only two to three albums a year — spending far less than the $142 a year a subscriber to the Virgin Media service would pay.

Universal's problem, though, is persuading its rivals to follow its thinking. The other three leading record companies — Sony Music, Warner Music and EMI — are skeptical. They worry that so-called Mister 50s — a term used in the industry in Britain to describe the 30- and 40-something men who spend £50 buying new music on the weekend — would be the only people who would sign up. That would mean reduced revenues per customer overall. Nevertheless, insiders expect those three companies to eventually give in, though they are likely to set limits on the number of songs that can be downloaded.

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