“…an ancillary business.”

There was a short Q&A session from The Eagles’ manager, Irving Azoff, in the NY Post yesterday.

http://www.nypost.com/seven/02172008/business/eagles_soar_97980.htm

At one point in the article, he says that the music industry will have to wake up and realize that recorded music sales are an ancillary business. He says touring revenue is much more substantial.

Well no offense, but isn’t that obvious? Does anyone in the music business really think recorded music sales should (or could) somehow compete with touring revenue? Isn’t that why record labels are trying to get a piece of their artists’ income from their live appearances?

Again, why is there such a discrepancy between the income generated through touring and record sales? The answer is overpriced tickets. The Eagles have sold millions of copies of their new album through Wal-Mart, but those are priced out at around $12. What is the lowest priced concert ticket to one of their shows, maybe $50 for nosebleed seats? Of course touring revenue is by for the most profitable avenue for artists to take – especially when they can charge over $200 for certain blocks of tickets every show like The Eagles do.

Let’s face it - this isn’t some sort of answer to the industry’s problems. The legacy artists currently are taking advantage of the high guarantees offered to them by promoters. Why wouldn’t they? Other than The Eagles, what other legacy artists are moving big units of their current studio work? This will not be an indefinite scenario, however. Christina Aguilera or the Foo Fighters will not be commanding $200+ tickets on a nightly basis in 25 years. As soon as The Eagles, The Who, Streisand, The Rolling Stones, and U2 stop touring – managers like Azoff will not be able to tell the promoter to sell tickets at $200.

There is no question that Irving Azoff is one of the best managers in the music business. He shouldn’t be so quick to dismiss recorded music because it is one of the greatest creations in history. It drives inspiration and evokes emotion. It helped make The Eagles legends. And it can still be lucrative. Azoff’s deal for The Eagles with Wal-Mart looks like a stroke of genius. He gets them a 2-3 album deal with a guarantee in the neighborhood of $30 million. And even better, the new album is moving units. Is it because it is a Wal-Mart exclusive? No, most likely it is because The Eagles are still a viable act and more importantly, it is effectively priced. Consumers don’t mind spending money on music, but they aren’t thrilled having to pay nearly $20 for one CD, so when a new double disc release comes out from one of America’s all-time biggest selling acts under $12, it is going to move.

Yes, recorded music currently is an ancillary business and frankly, it would also have been in 1975 if Eagles concert tickets were $200 instead of $10. Recorded music does not have the same short term value that concert tickets currently do. But recorded music has a lasting effect – that is why The Eagles can charge $200+ for tickets because of the magic they once created in the studio.

At one time, recorded music, radio and the concert industry somewhat worked as one. It was a vehicle used to break artists. It will never be the same again. The business changed and currently is having an identity crisis. Labels still are occasionally breaking acts, radio is still playing certain artists in heavy rotation and agents are trying to break bands on the road. But it doesn’t work as often or as well as it once did. The model is outdated. There is less room for error. The cycle has been damaged beyond repair.

How will acts break in the future? A clear cut, definitive way has not been revealed. I certainly don’t pretend to have the answer. It is a scary time for new artists, but in some ways, possibly liberating because they have to know they have more control over their destiny than their forefathers did.

The music industry can’t assume that a healthy outlook is to continue overpricing concert tickets in order to continue overpaying itself bloated salaries. Azoff knows this. But he isn’t trying to reinvent the wheel. He is trying to help his artists earn as much as they can and right now, that place is on the road. Most likely, recorded music will continue to be “an ancillary business” because in no way will it generate the gross dollars of concert revenues. However, there is value in reestablishing a sense of importance for recorded music. The current musical landscape and the greed of record label executives helped kill the album and value of recorded music. Hopefully someone swoops in and saves the sinking ship. Does Irving have any ideas?