The music industry is in crisis. The fundamental cause is the unbundling of creative content from physical media: the same phenomenon that is behind the troubles of the newspaper publishing business.
At one time, music was not bound to physical media at all but was part of the oral/performance tradition. Artists supported themselves through patronage and direct payments by their listeners.
Musical notation was the first technology to change the music business. It arose not as a means of publication and distribution, but for the preservation of music and the convenience of its performers—and music became fixable, in some respects, to a physical medium. Various musicologists improved and standardized notational methods through the 16th century, concurrent with the printing press boom, and music publishing became a viable business.
Music flourished as an industry due to the entrepreneur's ability to produce and sell copies of sheet music and collections—to fasten creative content to salable, durable physical products. "Pirating," though, was a commonly accepted business practice in the United States, until Congress extended copyright protection to music in 1831.
Before the publishing revolution, music was not so much a business as an art, and musicians were independent of commercial specialists: lawyers, agents, publishers, printers and resellers. They were beholden only to the makers of instruments, their fellow artists, and the gratitude and generosity of their admirers. That changed when composers made a Faustian bargain with publishers. It seemed like a good idea at the time and, for centuries, it was.
After 1878, with the perfection of the first practical sound recording and reproduction systems, recorded music followed the same strategy as music publishing. Not just notations, but actual musical performances could be fixed to mass-reproducible physical media. The advent of the phonograph brought a crisis to the music publishing industry's reliance on sheet music sales, but publishers (and the composers they represented) adapted their revenue model to draw income in the form of royalties, on the strength of copyright protection.
Radio broadcasting was initially seen as a threat to the recording industry because it made music "free" to the consumer—first with the support of the radio set manufacturing industry and, eventually, of advertisers. The music industry demanded—and received—compensation through broadcast performance licensing, but its income from that source paled in comparison to that from record sales. Eventually it became clear that radio broadcasting was an effective music-marketing tool because of its reach and influence. Radio was not an on-demand medium, so consumers who wished to hear a particular performance at a particular time still needed to purchase it in its physical form.
Digital technology changed everything, and that is where we are today. Music and its performance are no longer bound to salable physical media. Individual consumers are able to cheaply copy, store, and distribute music. Whether those practices are legal or not is almost irrelevant, because in practical terms the laws and patents that protect the rights of creators, performers, and their licensees are unenforceable.
The business models are broken. The industry faces the prospect of a return to its roots: the support of musicians through patronage and the gratitude and generosity of their admirers.
The good news is that digital technologies are available to musicians, as well as to their audiences. Composers, arrangers, and musicians can create, perform, distribute, and monetize their products with as much independence from the traditional middlemen and facilitators as they are willing and able to claim. If one wants to go that way, one can. But the upside potential for the independent artist is limited; the rewards are different, and of a smaller scale, than those possible for musicians who choose the traditional route to success.
The music industry has long offered the alluring potential of quick and possibly obscene profit. That is not and has never been the principal motivation for every musician or music business person, to be sure, but it has always lurked in the wings behind the dream of artistic acceptance: the hot score, the hit single, the platinum album, the world tour, the merchandise, and the star on the walk of fame. If not the goal, that elusive dream has always been the ultimate verification of one's value. But to be honest, achieving that dream was never the pay-off for talent alone, or talent and hard work. It was the product of a machine, and artists never ran that machine.
Those at its controls are struggling today with the new digital reality. They are re-jiggering the machine, changing its components, re-tooling to maximize and maintain the profitability that fuels it. Music served on a platter is no longer the product, but the music and those who make it are—once again.
In a way, the machine too is returning to music's roots—to the song, the personalities, and the performance, rather than the page, the disk, or the cassette. It returns with the benefits of the contraption it has evolved to become: its profit motive, its managerial skills, its media reach and influence, its marketing power, its packaging abilities, its synergistic properties and its business relationships. Of course, it also arrives with the burdens of its artistic timidity, its pandering to public preferences, and its reputation for greed intact. You can learn everything you need to know about the machine from "American Idol."
Musicians, since their Faustian bargain with the Mephistophelean machine, have always been only a part of the system, and they are finding that their relationships—and their place in the revenue stream—are changing. Ironically, as the performers and their performances are increasingly the salable product, their share of the revenue will decline. There is no other way to feed the beast.
Musicians have two choices, and every imaginable opportunity in between: to go it alone, or to ride with the machine. Either way, the future is uncertain. But the future always is.