What does the decline of the music industry mean to non-profit organizations?

A New York Times article reports:
"Starbucks will be selling [Paul McCartney's] album ''Memory Almost Full'' through regular music retail shops but will also be playing it repeatedly in thousands of its coffee shops in more than two dozen countries on the day of release. And the first music video from the new album had it premiere on YouTube. Mr. McCartney, in announcing his deal with Starbucks, described his rationale simply: ''It's a new world.'' Article published May 28, 2007by Jeff Leeds, "Plunge In CD Sales Shakes Up Big Labels."

So the New World is killing the Big Dinosaur Labels--but what about the little not-for-profits like one we've been working for...

We did a lot of research on the "decline" of the music industry for our work with the Canadian Music Centre. The rest of the article recounts the continued trials and tribulations of EMI, the hatred/love of iTunes held by industry moguls worldwide, and failure of digital rights software (incompatible with iTunes) which has retarded the whole industry's move to digital music. Someone in the NYT article succinctly summed it up: "They missed the boat."

NetGain grappled with the question of the relevance of this business trend to our non-profit clientele, especially those working in the field. Canadian Music Centre, who we've been working with, is a small, national organization whose primary goal for the past 40 years or so has been to archive and promote the music of contemporary Canadian composers. They deal in "New Music".

"New Music" is a notoriously difficult genre to pin down. And the new music that they were collecting languished on paper in their basements and in five offices across the country. The Canadian public, by and large, has never heard or heard of these composers. In the past five years, the head of the CMC made dramatic efforts to shift the organization's paper-based library and archive system into the digital era. But by this spring, their digital efforts had stalled, and they didn't know how to recoup the value of their investment in technology--labour, the whole IT department, a new and improved website, etc.

What we realized in looking at the CMC's predicament was that they are absolutely caught up in the same maelstrom of the entire music industry. That it exists for them on a much, much, much smaller scale is both a blessing and a curse for them. Although the CMC is a not-for-profit organization, even the areas of enterprise in which they hoped to recoup their money for, distribution and promotion of CDs for sale, was, unsurprisingly, tanking.

But why should that be surprising? The CD is clearly going the way of the dodo (I haven't bought one in maybe two years). Continued investment in vying for a rack at HMV or other retails is a losing battle for a lost cause. The "curse" is that whatever is affecting the wider music industry is going to hit a small group promoting recorded music even harder. If 50 Cent can't sell a thousand albums, then how do we expect Jean Coulthard to sell even 100? And yet, our hunch (and the entire music industry's as well) is that the music-listening public has not dried up, their time and ears are merely being diverted to other sources, namely the digital landscape proliferating with "pirated" music or TV (in the form of the music video) or live performance.

At some point I thought if a million people were downloading tracks by Jean Coulthard, that would be a damn good thing. If a million people even knew the names (!) of the Canadian musical avante-garde, that would be a great thing. I mean, that's obviously the reasoning behind the National Film Board making all of their shorts available for download for free here. If nobody sees it, and nobody hears it, then why does the Canadian public pay for it?

The CMC's "blessing" then is already in its possession: 1. the largest repository of Canadian new music recordings (with perhaps the exception of the CBC) and 2. technology that exists for cheap, worldwide distribution.

We made two major recommendations to them. One was to free their holdings, following the principals of "long-tail theory."--More on Long Tail another time.

The second was to become a music publisher and begin to recoup their sometimes decade long investment in the distribution and promotion of new composers.

Leeds writes, "For the companies that choose to plow ahead, the question is how to weather the worsening storm. One answer: diversify into businesses that do not rely directly on CD sales or downloads. The biggest one is music publishing, which represents songwriters (who may or may not also be performers) and earns money when their songs are used in TV commercials, video games or other media. Universal Music Group, already the biggest label, became the world's biggest music publisher on Friday after closing its purchase of BMG Music, publisher of songs by artists like Keane, for more than $2 billion. "

Leeds also alludes to a "creative drought"--but I don't think there is one. Music is MORE exciting to me then ever before. But is the death of the mainstream star imminent? Anderson discusses it in long tail, and I think he's right. Our tastes are broader and more diverse than even we imagined. If the CMC can find its fans, they'll be 100% OK in this new paradigm.