Recording Industry Persecution Complex: Claiming EMI's Plight Is Due To File Sharing

from the um,-no dept

Bas points us to a bizarre opinion piece for NME (which is usually a bit better than this) in which recording industry insider Alan McGee posts a near factless diatribe claiming that EMI's recent takeover by Citigroup proves that "downloading has murdered the music business." There's almost nothing accurate in McGee's piece. It's fantasy-world writing where people just make up stuff. Let's dig in a bit:

First things first: EMI is still a great British label. I mean, it owns the Beatles back catalogue! So why is it in the hands of a bank? It’s just economics. Guy Hands bought it in 2007, at the height of the market, when people were paying stupid prices for everything, not just labels.

Ok. So we agree. Guy Hands (well, really his firm Terra Firma) paid way too much for EMI in 2007. Frankly, that's the reason for EMI's plight today. Terra Firma got infatuated with the names on EMI's roster, didn't understand the recording industry at all, and got suckered into paying way over a reasonable price, and then couldn't handle the debt load. It had nothing to do with people paying stupid prices in 2007. People weren't paying stupid prices for record labels -- just Terra Firma. And that's because they didn't really understand what they were buying.

The trouble is, now everyone has woken up to the reality, which is that illegal downloading is murdering the music business.

So much incorrect in such a short sentence. First, I don't think anyone views the industry's situation much different in 2011 as they did in 2007. File sharing was rampant then as it is now. The struggles the recording industry were facing were already quite clear in 2007 (hell, they were clear in 1997 to people paying attention). Second, the only part of the "music business" struggling is the record labels. Nearly every other part of the music business has grown massively over the last decade. Third, there is little to no evidence that "illegal downloading" is the cause of any serious problems. Yes, it does act as a substitution in some cases, but as we've seen over and over again, when musical acts embrace file sharing in conjunction with a smart business model, they end up making more money. So, no, "illegal downloading" is not the cause of EMI's problems. EMI's inability to adapt to a changing market, combined with a massive debt overload was the issue.

I actually think Guy Hands didn’t do a bad job. He was just personally unfortunate. He came along at the wrong time. Shit happens. It was a time of affluence of abundance. Then the world economy turned upside down, Lehman Brothers went broke, and the world changed. The market crashed.

Huh? The market crash had nothing to do with the troubles facing EMI. Nor does McGee show how the two are connected. As with his earlier claims, he just insists it's true with no proof.

EMI's problems should be a wake-up call. How did they get into this mess? It all comes back to the impact of illegal downloading. We have to change the legislation in this country and come down much harder on piracy.

First up, we've already discussed why the impact of unauthorized file sharing was not the problem, but more importantly, countries around the world have been changing legislation plenty over the last decade to come down much harder on "piracy" and it's done nothing to improve the lot of the record labels. Is McGee totally unaware of the Digital Economy Act in the UK? Rather than recognize that such laws have been passed and have not helped the record labels, McGee just wants more protectionism. That old line about the definition of insanity being doing the same thing over and over again and expecting different results may apply...

Otherwise guys in little bands starting out now are never going to be the next Rolling Stones.

Wait, so the only options are failure or the Rolling Stones? And that statement is a ridiculous one either way. What we've seen (and been documenting for years) is that things are much better for bands starting out today than in the past because they don't need to win over the gatekeepers. They can find their own audience. They can create their own business models and make a living -- unlike under the old system, where you either hit it big or you gave up and went back to your day job. As for who will be the next Rolling Stones, I have little fear that the general nature of human psyche will continue to find new acts to turn into superstars.

And, should we even mention just how much money the Rolling Stones make from touring, which is an industry that has actually been helped by unauthorized downloads in building up larger fanbases of various bands?

When you download an album illegally, it's not the record company guys that get fucked -- those people are still on massive salaries -- it's 19-year-old kids, it's guys in bands making £100 a gig.

Wait, what? In this very same paragraph you claimed the totality of EMI's problems were due to unauthorized file sharing, but then just a few sentences later you claim the record labels aren't impacted. Keep it together, McGee. As for the impact on the 19-year-old kids making £100 per gig, they can actually be massively helped by file sharing, because the more people who know and like their music, the more people will be willing to come out to their gigs, so maybe they'll start making more than that £100.

When I came along in the 80s and 90s, I was lucky to be in a market where people bought music. Now If I wanted an album, I could just go on some torrent site and download it. You've got to give bands a chance, let them develop. In the 80s, bands started dodgy, then they got good. The bands I worked with – Primal Scream, My Bloody Valentine, even Oasis -- it took them a few years to go from being OK to being good. These days bands don't get the chance, they just get dropped.

Again these are statements that appear to imply some sort of causal relationship, but fail to show any. What does the fact that people bought CDs have to do with letting a band develop? I mean, if it really takes so much time for a band to develop, then doesn't that mean people shouldn't be buying their early music anyway? And the final line highlights the crux of the problem: it assumes that the only way to succeed today is by signing to some big label. So if that label drops you, you're screwed. And yet, we're seeing over and over again that musical acts are being amazingly successful without a label (since they don't need to make nearly as much money as they have to on a label to make a damn good living). In fact, we're seeing bands celebrate being dropped from their labels, because it means more freedom to develop and the ability to make more money.

There's only one independent label, post-Creation, that's really been phenomenal, and that's Domino. Laurence (Bell, owner) is a genius. He's touched with gold dust. Whether it sells or not, he's got the magic touch.

This is a total non sequitur. What does the fact that there's been a good indie label have to do with file sharing or EMI?!? Furthermore, "whether it sells or not," seemed to be the whole point earlier in the article. Now it doesn't matter? Finally, to say that there's only been one good indie record label suggests a level of ignorance to what's actually going on in the music world today. There are a bunch of fantastic indie labels out there. Perhaps McGee should get out more.

As for me, if I ran EMI, I'd get legislation changed and make a profit by stopping piracy.

Can someone -- anyone -- explain how getting people to stop downloading creates a profit anywhere? Getting people to stop downloading doesn't magically make them start buying. And it's not like EMI hasn't been among the efforts by all the major record labels to get legislation changed for years, and all of that has done absolutely nothing to stop file sharing. It's pure folly to suggest that there's some sort of magical legislative move that will stop unauthorized file sharing and create "profits" at the same time.

What will do that, however, is smarter business models -- something that McGee never even seems to consider. Thankfully, reading through the comments on that article, nearly everyone is pointing out all of these points to McGee, though I doubt he'll ever read any of them.

Filed Under: alan mcgee, failures, music industry
Companies: emi