Live music hits a high note

According to the Performing Rights Society (PRS), the live music scene now generates more value for performing artists than the recorded music industry in the United Kingdom. An indicator that's likely to have repercussions all around the world, the estimated worth of live music seems set to continue to overshadow that of recorded music.

In charge of collecting royalties on behalf of both writers and artists in the UK, the PRS is well placed to conduct such an overview of the live and recorded music industries. Will Page, the Chief PRS Economist for Music, writes in an associated report that: "the stellar growth of live revenues hints at a 'changing of the guard'; which for many emerging bands leaves behind a model where you would tour at a loss to sell CDs and towards a situation where 'live' related revenues are the main breadwinner."

So what does that mean for music aficionados and concertgoers around the world? Certainly the situation is set to change for the so-called music "middle-men" who operate between the artists and the consumers and the troubles faced by the recorded sector are well documented as the global distribution methods change and develop akin to any emergent technology. The popularity of internet music distribution has increased and in 2009 according to the International Federation of the Phonographic Industry (IFPI) more than a quarter of all recorded music industry revenues worldwide are now coming from digital channels, although the rapid growth of paid digital downloads hasn't been able to make up for the loss of revenue from CDs.

As the sales of recorded music slump, is it a reassuring sign that live music has now emerged as the market leader? Has it emerged on its own merits or is it just performing stronger by comparison? The industry is still clearly in a period of uncertainty as it comes to terms with the changes being made external to any insider development or strategy. The Economist and The New York Times have both reported that the downward trend is expected to continue for the foreseeable future. The way things stand at the moment, however, with the shift towards live music, indicates that while consumers may be turning away from the traditional distribution channels, the commitment to music and performance is still strong.

The "changing of the guard" identified by PRS is probably best exemplified by US-based live-events company Live Nation, which operates as a record label that signs artists, but not in a traditional sense. The company takes on promotion of the music product rather than ownership, and in this manner the company has taken on U2, Madonna and Jay-Z in the past, without being guaranteed copyright over the artists' future recordings. Other big names to have signed with the label include Shakira and Nickelback.

The value of live music is something that can be considered by both established and emerging bands, and sales of concerts tickets and merchandise contribute to the revenue, as does advertising or sponsorship from major corporations. The figures for concert revenue can be astronomical, as shown by the highest grossing group and solo concert tours of all time: The Rolling Stones' A Bigger Bang Tour, which earned approximately $558 million in between 2005 and 2007, and the Sticky & Sweet Tour by Madonna, which earned $408 million in 2008 and 2009. The success of music festivals throughout the world is also a factor, and the summer music festival scene has become something of an institution across Europe, the Americas and Asia-Pacific. As festival tickets ensure that patrons are able to see a number of acts on the same day, evening or even a period of several days, these represent an economical introduction to a wide variety of music and provide a platform for up-and-coming artists.

With music downloads outselling CD singles by four to one in the UK and the music charts revamped to include download sales, the digital revolution is having a big impact on the music industry.

Snow Patrol were the first band to benefit from the revamped charts

Snow Patrol's Chasing Cars was one of the biggest selling singles of 2006. On sales of CDs and downloads it went as high as number six in the UK charts.

As is standard practice, a few weeks later the record company deleted the CD and removed it from the shops.

With no physical format available to buy, the song no longer qualified for a chart position and disappeared from the top 40.

But with music download sites now the UK's favourite place to buy singles, each with massive back catalogues of songs, it was decided that just listing the singles currently on release may not reflect the way people were actually buying songs.

So from 1 January 2007, every song that is available to download is now allowed to chart.

Long-tail

"In the days of the physical single you were basically restricted to what record companies released in a particular week, and what physical retailers were able to stock," explained Steve Redmond of the Official UK Charts Company.

"And even the biggest store wasn't going to stock more than about 100 singles at any one time."

"In this new world you've literally got a choice of 300 million tracks every week. This changes the whole economics of the record business, because keeping things in stock isn't really that expensive in the digital world."

It is called the long-tail, the gradual sales of music, books and DVDs that are permanently available long after their release date.

Some analysts think this is going to make the most money in the internet age. Instead of trying to selling a lot of a little, you sell a little of a lot.

So how did all this affect the new look chart? Well, in the first week, long after the CD was deleted, Snow Patrol re-entered the charts at number nine on downloads alone - people had been downloading it in enough numbers all along.

Unsigned and in the charts

Koopa are the first unsigned band to land a UK top 40 hit

The following week, another first - the band Koopa became the first band to enter the top 40 without ever having a record deal, or a record in the shops.

Doing their own online marketing, the band bypassed the need to have a big record company behind them.

So, definitely one in the eye for the industry, but as Joe Murphy from the band points out - without any help, it was tough going.

"We built our own website. Then we started advertising that on Google, places like that. From there it was just getting on MySpace and our website, and making sure you're keeping people up to date with regular newsletters, messages and blogs on MySpace."

"From MySpace people were taking our banners and things like that, and putting them on their MySpace pages and we thought we could take that further and have things on MySpace and our website that people can download or send to their friends, just to invite them to check out the band."

It is not the first time an artist has used the power of the web, and social networking sites like MySpace, to create the hype to launch their career - Lily Allen famously did just that last year.

There's growing speculation that the Beatles catalogue is going to be made available online for the first time in the next few weeks Steve Redmond, Official UK Charts Company.

But Koopa were the first successful band who did not even wait to be signed up by a record company.

So is this the nirvana every band has been searching for? A world where you can have a hit without having to impress the suits at the big music labels? The suits do not think so.

"To make a splash in the consumer mind these days, more often than not, you need the power of a big company behind you," says Mr Redmond.

"Even in the digital world there's a requirement for someone to do that job."

"It may well be the case that some bands decide, effectively, to create their own record company, but nobody should be in any doubt that there's a lot of work attached to that. They can't simply decide that they're going to have a hit, they're going to have to work it just like a record company would do."

"In other words, the band becomes the record company."

In fact, the big music companies may be tempted to just sit back and let the bands do the work.

Fan base

"I've heard rumours of A&R departments that will only go to a band's gig once they've got a thousand friends on MySpace because they want that momentum to exist already, they don't want to have to create it themselves," said Paul Stokes, news editor of NME.

"So it's almost like the bands have to do the work and then A&Rs can come along and cherry pick the ones they want."

The UK is ahead of the curve on this one. Worldwide, downloads only account for 10% of music sales, but it is a good indicator of how the industry in each country will eventually change.

And there are more changes to come, thinks Steve Redmond.

"Go back a couple of years ago and there was a real chance that the singles chart had gone stale. It was predictable. Record companies became very good at marketing things into the charts. In the new digital world all bets are off."

"There's growing speculation that the Beatles catalogue is going to be made available online for the first time in the next few weeks.

"The significance of this new rule change in the charts is it's entirely possible that you could end up with the top 10 in the singles chart entirely dominated by Beatles tracks."