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Survival of the Fittest in the New Music Industry

Bands are cutting costs, touring more and getting creative to make up for falling album sales

November 8, 2012 3:50 PM ET
shirley manson garbage
Shirley Manson of Garbage performs at the Warfield in San Francisco.
Tim Mosenfelder/Getty Images

As they prepared to record their new album, Not Your Kind of People, Garbage received a crash course in the new realities of the music business. Having parted ways with Geffen, their former home, the band began investigating new ways to distribute its music. "We're used to the old system," says singer Shirley Manson, "so we thought, 'Let's see what's out there,' because we've been gone so long."

Unwilling to sign with another major label, Garbage decided to follow in the groundbreaking footsteps of Radiohead and Nine Inch Nails and release the album themselves. In doing so, the band realized it had to pay for recording and videos out of its own pocket. "The freedom it affords you is so amazing," Manson says, "but it's nerve-wracking. We've put our own money into it. Bringing the record out on our own label poses some problems for us."

Garbage Make Their Big Comeback

As Garbage and newer bands are learning, the music business is no longer what it was in the Nineties – or even five years ago. In the past, bands would receive respectable cash advances from labels to make albums and videos. After their records were released, they'd tour for months, or perhaps a year. With any luck, mass outlets like MTV would promote them and air their videos. Then bands would take a break before starting the cycle once again. 

In a business hobbled by recession and declining CD revenue, few of those rules apply anymore – in ways that can be both encouraging and demoralizing. To compensate for the fall-off in record sales, musicians are touring for longer stretches and are being forced to cobble together a living by any means necessary, from licensing songs to any TV show or video game that will have them to asking fans to contribute to their recording costs.

"I used to hear the word 'overexposure' more than I do now," says Dan Reed, music director of NPR's World Café, who sees more bands than ever visiting his studio. "In this crowded media market, I don't think there's such a thing anymore. Bands are vying for any spot they can where they can reach a sizable number of people. We're all working harder. The music business is no different."

To satisfy fans who've grown up with the Internet, musicians are expected to churn out new material as quickly as possible. Tennis opted to release their second album, Young & Old, 13 months after their 2011 debut. "The demand for music and output is so high," says singer and keyboardist Alaina Moore. "If you stop altogether, which bands used to be able to do, people will assume the worst and move on and forget about you. Our management will message us on tour, saying, 'We could use another B-side.' And we say, 'Well, we're not even home, but OK.' It's crazy."

The rise of Twitter and Facebook has helped bands connect with their followers like never before, but it also means another distraction from the creative process. "Fans expect things to come directly from the artist," says Tennis manager Rob Stevenson. "You have to get yourself to the next gig and do a good gig and do your social media stuff. And there are still only 24 hours in a day."

Former Dresden Dolls singer-keyboardist Amanda Palmer was tweeting with fans while sitting at her piano and writing a song for her new solo album, Theater Is Evil. "I felt kind of silly, and my superego was saying, 'Really, Amanda?'" she says. "But hundreds of people were writing, 'I can't wait to hear the song.'"

The new rules of the shrunken music business begin in the studio, where recording budgets, especially for new and indie acts, have been slashed. "The big difference is that there are no longer big advances," says Richard Grabel, a music business attorney who represents bands like Passion Pit and Ra Ra Riot. Jeff Castelaz of Dangerbird, home of Silversun Pickups and Liam Gallagher's Beady Eye, says his bands rarely get to spend more than $10-15,000 making a record.

"Everybody is under major constraints to drive down the cost of making records," says Castelaz. "You have to watch every penny. You're not going to spend $50,000 to make a record that's going to sell 5,000 copies. That would be a bloodbath."

To get around diminished budgets – or labels altogether – some bands have begun turning to Kickstarter, the "crowd-funding" service that lets musicians pay for recording costs by way of contributions from fans. (The site also helps fund movies, video games and other creative endeavors.) On the site's music category, fans have contributed an average of $25, according to a source at the company, and bands have been able to raise in the area of $20,000. In return for their investment, fans receive autographed records, concert tickets and other memorabilia.

9 Ways Musicians Actually Make Money Today

Thanks to thousands of fans, Palmer raised more than $1 million to help pay for and promote Theater Is Evil. The biggest number of contributors, 7,000, paid $25 for a special-packaging edition of the album. Thirty-five backers paid $5,000 each for Palmer to perform in their homes; one paid $10,000 for Palmer to visit and paint his portrait. Palmer says $250,000 of what she raised will go toward recording and production costs, along with $105,00 for producing a coffee-table CD and art book; after multiple other expenses, she'll be left with less than $100,000. "People say, 'Don't you feel awful begging your fans for money?'" Palmer says. "And I say, 'You don't get it – I'm doing my job.' Musicians used to think that if they worked hard, they'd be a star like Madonna. Hopefully we're seeing a new understanding of what it means to be a working-class musician. It's a job."

Record sales were never a major income generator for musicians, thanks to high recording and promotion costs that were charged against the artists' accounts. In the current climate, they're even less of a factor.  Last year, the L.A. R&B party band Fitz and the Tantrums prepped for a major breakthrough when they performed at the VH1 Critics' Choice Movie Awards.

"It was a huge opportunity," says co-manager Lisa Nupoff. "There we are playing in and out of every commercial, in front of Spielberg and Scorsese." But the following week, the band's debut album, Pickin' Up the Pieces, only sold 300 more records. "That's the new music business," says Nupoff.

Digital streaming sites like Rhapsody and Spotify are not yet proving to be viable financial substitutes for CDs. According to Moore, Tennis' typical digital-streaming royalty checks are minimal: "You'll get a check for $100 in six months." Managers are equally skeptical. "You have to sell a thousand copies to equal a few cents," says Brian Klein, co-manager of Fitz and the Tantrums. "As a user, I like Spotify. But as a business, I don't think it's going to be profitable for an artist. It wouldn't even buy coffee for the whole band."

Bands like Fitz and the Tantrums and Dawes are also spending more time than ever on the road. Both acts left home to promote albums – and stayed out for up to three years, performing sometimes multiple shows a day at clubs and for online outlets. "In the last 16 months I've been home maybe two months collectively," says Fitz lead singer Michael Fitzpatrick. "It's really exhausting. You're doing a performance for a website and you know they have almost no readership, but you do it anyway. You're in somebody's garage doing a taping and you know no one will see it, but you think, 'OK, five more fans here or 10 more there.'" As a result of the nonstop roadwork, Fitz broke up with his girlfriend, and drummer John Wicks defaulted on his mortgage and had to find a new home. The band has to earn $3,000 a night to satisfy its overhead – a figure it only began hitting last summer, after almost two years of touring.

Thanks to the role touring now plays with bands, it's become increasingly common for your favorite act to come through town multiple times during the lifespan of a new album. "We never used to see third cycles for tours," says Andy Cirzan, a promoter at Jam USA in Chicago. "It's increasingly commonplace. Bands want to build momentum, or they just need money." Yet that strategy has its pitfalls. "You have to make sure you don't hit markets too much," says Stevenson. "You might get a short-term financial gain, but it might hurt you – 'Oh, I saw them already,' or, 'I'll catch them next time.' That's the kiss of death. Familiarity breeds contempt."

Yet musicians also say the altered landscape of the music business is affording them opportunities they never had before, like creative freedom. "We were immensely relieved not to have any major label influence whatsoever," says Manson, who claims Geffen executives rejected a solo album she cut right before Not Your Kind of People. "I turned in some songs and they were met with unbelievable contempt," she says. "They were telling me that because they weren't pop songs they were worthless, and I should make a record like Duffy. Fuck that."

Bands and managers are also becoming adept at using social media to sell music and tickets. To get the word out about shows at Madison Square Garden, the reunited cult band Dispatch cut a deal with Facebook for a special fan page. "We spent no money and sold 58,000 tickets," says manager Steve Bursky. Fitz and the Tantrums initially gave away free MP3s of their music to spread the word – and, in the end were rewarded with respectable album sales of 120,000 copies.

As for the song she wrote while on Twitter, Palmer says the track, "The Killing Type," was worth it: "It's the best song I've ever written. I emerged from it thinking, 'Whatever it takes.'"

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