Vivendi CEO Sees 'Strong Likelihood' of Turnaround by George Ziemann -- September 20, 2008 Vivendi's CEO, Jean Bernard Lévy, says we're at "the turning point for the music industry." Yes, we are, but I don't think it's going where he thinks it is. This comes from Financial Times, via an article at CDfreaks, which I was turned on to by Wesley, who looked me up based on a comment that Jarom had posted. So now I feel obligated to talk about it. Lévy "is predicting a return to growth in the industry as new ways of making money from legal digital downloading come to fruition." "I think [in] the music business, there is a strong likelihood that we are getting close to the lowest part of the cycle and we are extremely active in developing new business models, new sources of revenues. This must have been a pitch to stockholders. Lévy acts like Universal is out changing the world, when in fact it has been the leader in suing anything that so much as whistles a tune or plays a cover song in a YouTube video. Universal is run by Doug Morris, who thinks the digital age is like being asked to perform kidney surgery on his dog, or something just as clueless. Lévy talks about new deals with Apple; Morris hates iTunes. No great plan has "come to fruition," unless he's talking about ventures that have succeeded despite the harassment from the record labels. "I really believe we are at the turning point for the music industry and I didn't say that two years ago." The problem with Lévy's prediction is that it is all based on business deals. And even if he's right, he's counting on making up $15 a pop declines (CDs) with 99 cent uploads, ringtones, and kickbacks from manufacturers. His big selling point is that UMG's first half was up 5% from last year's dismal performance. He's not talking about how Universal has recently acquired the Rolling Stones, which probably accounted for the entire increase in revenue, plus another percent or two. Universal had emerged from the downside of the market as a clear leader of an industry that would soon be able to claim it had "reinvented a new era for the music business". Okay, this guy is in France, which is, like, a whole 'nother country, but "reinvented a new era"? What the hell is that even supposed to mean? I think Lévy has failed to consider that indies no longer have to be approved by the labels. If he cuts a better deal with Apple, we'll get the same deal, which is gonna piss off people named Lars when they see non-famous musicians like me getting 65 cents a song, compared to the dime his band gets to split. This means that the good news in the foreseeable future is for the little guy, who can now record, engineer and master their own recording, in their living room, enter their product in the retail market, and obtain global distribution with no consultation, contracts, advances, advice, approval, or interference from anyone associated with the traditional industry. This is a quantum leap forward for musicians. In this context, the "little guy" also includes the 70 or so percent of artists that the labels cut loose over the past 5 years as "underperforming" acts. That's the new era I predict -- one in which the artists see, acknowledge and understand that the benefits of a recording contract are far outweighed by the long-term cost. The record labels will still be utilized by those artists who need to be packaged and sold, but it is the artists outside the major label system who will revitalize music. By far, the greatest benefit that distribution services such as Tunecore provide is accountability. While Sony and EMI seem to be the industry leaders in poor accounting and lame excuses for not paying artists, all of the labels are notorious for doing it for decades. If you sell your music through Universal, they will be paid fairly and accurately (and they'll make damn sure of it; you will be paid according to the terms of your contract. If you sell your songs through iTunes or AmazonMP3 without a record label, you will be paid fairly and accurately. This is a feature which none of the labels can offer, even when they're keeping 70 to 85 percent in the first place. This minor detail suddenly turns the business of selling recorded music from a band's greatest logistical hurdle into a simple registration process that's comparable to submitting a t-shirt design to CafePress. What I see happening is a lot of talented artists which have been kicked aside, for whatever reason, all finding their niche audiences. Individually, most of us will probably pull in some modest sales, depending on how well we market ourselves. But none of us will likely be selling a million copies of anything. We're at a turning point, all right. I'll agree with Lévy on that one. Our sales are finally going to count. Collectively, we outnumber the signed artists by at least 1,000 to 1. The ability to get into the market without the necessity and expense of manufacturing, packaging and shipping plastic discs, all necessarily incurred prior to the first sale, is an enormous step forward for independents. Modest success on the part of all independents would create a significant shift in market share, away from the cartel. Since I've already broken my cardinal rule and predicted something, let's go out on a limb and call for a 20 percent U.S. market share for indies in 2010. That's only a few points to gain, but I can't recall having seen it above 20 percent ever.

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