What They'll Never Tell You About the Music Business

by Peter M Thall

  The Relevancy Factor

  One often-asked question is why there is a need for any of the world’s great (let alone near-great or mediocre) artists to record one more time the world’s classics, all of which have been recorded ad nauseum. Who would want to pay today’s $16.98 price (which inevitably must be charged) for an unknown pianist interpreting Chopin’s Nocturnes when you can get Arthur Rubinstein’s renowned recordings for far less. The latest Tristan und Isolde two-CD set released by EMI in 2005, which is the last studio-made operatic recording made by that company, retails for more than $50.00. While it is receiving rave reviews, it remains a bit pricey for most people. (As we shall see, some unknown pianists’ recordings—of almost the entire classical repertoire—are now widely available on budget labels for $6.99.)

  Why bother, then, to examine the secrets of an industry that has become all but irrelevant? Simple. It needn’t be irrelevant. Consider the following:

  • In 2005, sales of classical CDs were down 7% from 2004—21% since 2000. Since then things have gotten only worse, although streaming income and access to neighboring rights income have begun to take hold.

  • Millions of classical music enthusiasts from all over the world visit the shrines of music annually to pay homage to its interpreters: from Carnegie Hall to Lincoln Center; from Tanglewood and Chicago’s Ravinia Festival to concerts in Central Park; from the Connecticut Early Music Festivals, in southeastern Connecticut, to Wolftrap, in Virginia.

  • According to New York Times music critic Allan Kozinn, “Concert halls are sprouting like mushrooms.” New symphony halls have opened in Sonoma, Miami, Nashville, and Costa Mesa, California, and Toronto has recently opened a new opera house.

  • According to the American Symphony Orchestra League, 1,800 orchestras in the United States give about 36,000 concerts a year, 30% percent more than in 1994.

  • Not only are the numbers of concertgoers growing, they are getting younger: witness the attendees at the Los Angeles Philharmonic’s Minimalist Jukebox festival and New York’s Bang on a Can Festival.

  • Bon Jovi’s keyboard player is actually conservatory-trained, at Juilliard. Believe it or not, this is not unusual. Two of The Cars (Greg Hawkes and Elliot Easton) attended Boston’s Berklee School of Music, which, while primarily a jazz and pop conservatory, offers respected programs in the classical field as well in conjunction with the Boston Conservatory of Music.

  • A surprisingly large percentage of digital print distribution (some estimates are as high as 50%) consists of classical music.

  • More than 40 million Americans study a classical instrument each year. There are 3½ million keyboards sold each year in the United States.

  • The American Symphony Orchestra League (ASOL) has announced that its subscription audiences for classical music are getting younger—and larger.

  • In 2005, public attendance in the United States for orchestra concerts was over 34 million, up 35% from 1990.

  • Classical music sales have almost regained their historical 3% to 3.5% market share of total record sales inclusive of digital downloads of classical albums, which increased by 94% in 2005.

  • In December 2004, 47% of the television-viewing audience in Germany (14 million listeners) tuned in during prime time to hear the great Russian soprano opera singer Anna Netrebko.

  • According to the American Symphony Orchestra League, the number of classical music concerts is actually increasing—mostly via community or school concerts, park concerts, and even concerts featuring orchestral renditions of music with appeal to a young demographic: music from Star Wars, music from The Lord of the Rings, and even music inspired by the video game Final Fantasy. (The video game garnered seven sold-out concerts in the United States and Japan in 2005. The only advertising consisted of email blasts to the 2.5 million fans of the game.)

  THE METROPOLITAN OPERA

  The great achievements of Peter Gelb, now the general manager of the Metropolitan Opera in New York, deserve special mention. Obviously, the Met cannot tour like a pop or rock group—or even a musical—can. Mr. Gelb, fresh from his successes at Sony Classical where he joined audio and video performances to great acclaim, established a few years ago the Live in HD transmissions of live Saturday matinee performances at the Met, which are being delivered into movie theaters throughout the world. While other arts institutions, particularly classical ones, have begun to copy this model, the MET’s success is noteworthy.

  One reality of the opera world is that the cost of presenting an opera is mind boggling. Not only can it cost millions of dollars to mount a new production, but even to raise the curtain on an evening’s performance can burden an opera company with an astronomical cost approaching $1 million—each night! Opera companies in countries outside of the United States enjoy subsidies from their governments that are truly amazing. For example, France subsidies the Paris Opera’s $263 million annual budget with $133 million each year. In contrast, the United States provides funding of about $490,000 toward the Met Opera’s annual budget of $327 million!

  With a budget of that size, it is fortuitous that the Met is enjoying new sources of revenue never imagined only a few years ago. In 2015, the HD broadcasts were delivered into 1,900 theaters in 64 countries around the globe. There are usually twelve cameras in the house, not the customary few which were the mark of other Live at the Met broadcasts delivered only in the US via PBS. In 2010, Carmen was seen by 330,000 people. All paid about $25 for the experience, which included produced intermission features such as scenes backstage as the huge sets were being pulled down and set up for the next act. While the audience members per season at the Met Opera House itself amounted to 700,000 (approximately 92% capacity) in 2010, 3 million additional viewers attended the live broadcasts, which have reached 11 million tickets sold since the program launched in 2006. This represents a 375% audience increase with no added seats. Gelb estimates that 20% of the live HD audience had never seen an opera before. Each time they do now, the experience amplifies their interest to see more.

  The HD live opera presentations begin at 10:00 a.m. on the West Coast, 1:00 p.m. on the East Coast, 6:00 p.m. in England, 7:00 p.m. in Europe, etc. Breakfast and a fulfilling morning in California; dinner and opera in France. And the Met Opera everywhere. What’s not to like? I know people in LA who “go to the opera” with a friend in New York City, one in Madrid, and one in Stockholm. And they text or use social media during the intermissions to share their experiences. The world is definitely getting smaller.

  Another benefit of this extraordinary program is the creation of intellectual property content and the opportunity to showcase new singers who eventually, and much faster presumably, will become household names. As to the content, the performances can be replicated on DVD’s or even shown on television in areas such as Asia and Australia where live attendance is not really practical.

  AN ESSENTIAL FOR SUCCESS: SPIRITUALITY

  There is a long-perceived need in human beings for a connection to things spiritual. In most societies, this connection is achieved, in part, through music. We are in an age in which spirituality and an effort to come to grips with the nonmaterial aspects of our civilization are important aspects of our daily life, and entire populations are searching for ways to manifest this vision and to experience this way of looking at the world. They are finding it in literature, religion, film, the outdoors, and, of course, in music. However, for some reason (and this time I cannot easily tell you “what they’ll never tell you”), the “nourishment” people are searching for, at least in the world of music, is not so easily found. Whether they do not know where to look for it, or do not find it in records or live performances, or simply do not have the ability to decompress from the pressures of 21st-century society is not clear.

  This failure is not the fault of Brahms.

  In the concert area, most live performances are merely a reiteration of what has been done previously. The creative spark that recasts a work for a new
generation is too often missing. You often come out of a concert wondering why you have gone.

  When the 150 or so leaders of the members of the United Nations gathered in New York for the UN’s fiftieth anniversary in October 1995, the New York Philharmonic “entertained” them with Beethoven’s Ninth (Choral) Symphony. It was a concert remembered only for Mayor Guiliani’s asking Yassir Arafat to leave the concert because of his aggressive past history in the Middle East. Everyone was checking their watches; the concert was not televised. Happily, it ended and everyone forgot it. Why? Because it had no meaning other than one more iteration of a familiar work. Sponsoring a big-deal event? How about the Ninth? In 2005, some 175 heads of state were back in New York City for the sixtieth anniversary of the United Nations. No one even bothered to present a gala concert. Then there is the Boston Symphony Orchestra’s final concert each summer—year after year after year—at its summer home Tanglewood. How many times can they present the Ninth without the effect of minimizing its specialness? Sure, it is still as brilliant a work as ever, and the performance gives Tanglewood the opportunity to showcase its renowned youth chorus, but enough already. How about the Berlioz or Verdi Requiem next time?

  Classical concerts featuring great works such as the Beethovan Ninth do not have to be uninspiring. Rarely was this great symphony’s resplendent spirituality ever evinced more effectively than when Leonard Bernstein conducted it in 1989 at the recently dismantled wall in Berlin. Televised, newsworthy, an absolutely memorable event—not just for the million or so Germans who were there, but also for those additional millions around the world who did, and will for all time, experience it on video and on CD.

  We do not have to go back to the 19th century to find music that in its ineffable way can touch the soul. Nonesuch Records’ mid-1990s release of Henryk Górecki’s 1963 Symphony No. 3 (in its third recording—not even its premier release) sold more than a million copies. This is a Polish symphony about a very sad and troubling subject—World War II—with a soprano performance in the Polish language and a symphony orchestra and conductor not among the most famous or sought-after in the marketplace. Yet it had an extraordinary appeal. A memorable performance by the great soprano Dawn Upshaw didn’t hurt. Was it a fluke? Certainly, records do not sell themselves. In the Górecki case, the hook was the use of a portion of the score in the famous crash scene from the motion picture Fearless. Word of mouth boosted US sales; once people were connected to this symphony’s wordless message, sales took off worldwide.

  The first Three Tenors’ album—recorded at the Baths of Caracalla in Italy on the occasion of the World Cup Soccer finals—sold 3 million units in the United States. And let’s not forget Andrea Bocelli, who, after a 1997 PBS special, grabbed the imagination of US consumers just as he had won over the hearts and souls of Europeans over the prior two years. Let’s also not forget that companies fought each other in almost embarrassing ways to grab the follow-up records of The Three Tenors, but the second didn’t do as well as the first, nor did the third do as well as the second. There is also the lesson of Chant, the bizarre recording of Spanish monks that sold several million copies, beginning in Europe in the early 1990s and spreading to the United States. The lucky record company (EMI—again) began spending its windfall profits on other artists and other projects, as though the success that was experienced with the Chant recording was going to replicate itself over and over again. This “brilliant” reasoning almost bankrupted EMI’s US classical division, Angel Records.

  Some blame conservatory education, or the lack of it, on the blandness of instrumentalists’ performances. I suppose it has always been our nature to idealize past styles and artists and to find fault with the new. There are so many competitors for so few places that young musicians are unreasonably forced into trying to win auditions by replicating an acceptable, renowned rendition of a work. Individuality and innovation are not, for them, a goal, but a distraction and a sure way to lose the audition. The absence of vitality is not theoretical; you can feel it when you hear it.

  A fluke is only a fish. No way is it a harbinger of the future. Fortunately, the nonfluke examples of classical recordings that have made it big—almost always helped along by artists like The Three Tenors, Kiri Te Kanawa, and Renée Fleming who have found ways to distinguish themselves from the ordinary—are numerous. No, the classical music industry has not drowned. It is still swimming, if in fairly deep water.

  NEW LIFE FOR AN OLD GENRE

  It is important for anyone reading this chapter to understand that much of what has been written before in this book about royalties, music publishing, audits, management, investments, etc., is applicable to classical music, and to classical musicians and composers, as well. Indeed, a clear understanding of those issues previously discussed may be essential to the survival of the classical music industry. All of the elements of the classical music industry—from the artists to the record companies, from the lawyers and the managers to the agents—must find a way to comprehend how the successful and financially sound portion of the popular music business works so that they can find a way to apply this knowledge to their own world.

  Here is a telling example from my experience. I represented a classical music ensemble that performed mostly public domain material—you know, Bach, Telemann, Vivaldi. Yet all of their arrangements of public domain works were copyrightable. This particular group understood this on some level and registered their arrangements in the Copyright Office and with their performing rights society. But what they did not know (until I told them) is that the performance of their recordings outside of the United States and Canada generated significant performing rights income (collected automatically by the performing rights societies around the world) for which publishing companies would be willing to pay substantial advances, while at the same time administering their copyrights around the world and making sure that they were properly registered with foreign performing rights societies. As discussed in chapter 15, proper registration of a work is absolutely essential in order to collect both performance and mechanical income. In this case, the music publisher administrator also ensured that the mechanical royalties generated by the sale of this particular group’s recordings overseas were properly credited, paid, and collected. Not only was the money accurately collected, but it was collected years earlier and at considerably less cost than it could have been had the group tried to take on this collection and administration function itself.

  Arrangements like this are made every day in the popular music business, but those in the classical world have either no idea or very little understanding of the cash-generating options staring them in the face. A lot of money is involved. Maybe that is what scares them, since money is something that classical musicians and their representatives rarely expect to see from the exploitation of their careers outside of live performing. I have never encountered so many low self-images in any group of like-minded people in my life. Maybe it is because the piano teacher’s ruler was wielded too often; maybe it is because, like all artists, they are dreamers, not strategizers; maybe it is because there are so many of them competing for the same work that the circumstances of their lives reduce their confidence and keep their spirits low. Whatever the reason, it is time to get over this resistance and to start using the tools and resources available to them.

  THE CD ARRIVES: BOTH A BLESSING AND A CURSE

  In the early 1980s, classical record companies finally got what they wanted and needed: a new technology. Not only did CD recordings sound fabulous, but they also were virtually indestructible, at least compared with the LP. The companies were able to mine their catalogues, reconfigure all of the recordings they had long ago forgotten they owned, and resell them all over again. How incredibly lucky they were!

  But as with many good things, this one came with a curse. Once the (perceived as) limited classical music market absorbed all of these new releases, the consumers stopped buying! They had been given everything they could ever want. An
d they did not want anything else. What spiked at a 20% share of the total record market dropped to under 2.5%.

  The Rise of the Budget Label

  The budget labels have done fantastic things for a slew of new artists—most of whom are quite accomplished musicians. The revolution in the pricing and structures of classical recordings in recent years has had a tremendous impact on the availability and the reach of new recordings.

  In order to induce sales, record companies have always priced long-released recordings or “lesser” artists’ recordings lower than top-line recordings, but they considered those records low-end products. Then a brilliant German entrepreneur, Klaus Heymann, decided to glamorize so-called “budget records” by offering recording opportunities to heretofore unknown artists—from violinists to pianists, flutists to singers. His record company, NAXOS, is based in Hong Kong, and Mr. Heymann’s extraordinary sensibility toward classical music and the effect it traditionally has on populations all over the world has combined with a sound sense of marketing and distribution in a way that changed the classical music business forever.

  NAXOS, whose CDs retail for about $7, does not customarily pay royalties to the artists, but the artists get to record what they want, their records fill the record store bins (such as they are) and digital catalogues with all the new recordings the stores could possibly desire, and everyone wins. It is A&R without the A—almost totally repertoire based. The choice of music is a more salient marketing point than the name of the artist. If, at the same time, the artist can build on the record catalogue to enhance his or her celebrity, performing career, and finances, all the more power to the artist. (NAXOS, notoriously, neither signs major artists nor does a great deal to promote the artists it does sign.)