Tuesday, January 15, 2008

When it rains, it pours

On top of all the problems experienced by working production professionals – death of music industry, typical January blahs, some kind of strike – we have also been visited by another bit of bad news. What, no rain of frogs?!?

Axiom, one of the major production pay-roll companies went under – taking many millions of dollars with it. My favorite definition for Axiom is “A self-evident principle or one that is accepted as true without proof as the basis for argument.” Which could be read as “so true it needs no back-up” or “don’t ask for proof, just trust us.”

Payroll companies handle the taxes and payments for most productions, since there are so many details and loop-holes in tax laws and with-holdings. Axiom (and associated companies) going under does not just effect those in music videos and production but lots of other places as well. Some folks have lost their health insurance that they assumed had been paid for by the company, others are stuck with no money at all for work they did. The beleaguered prod cos are now stuck finding more money to pay the people they owe, since the first time they “paid,” Axiom swallowed up the cash and trucked it away to Enron-ville. Over on "Totally Unauthorized" there is a sharp dissection of what this will mean to production types.

The more “stable and safe” companies – from Axiom to formerly big-balling production houses - go under, the more it is clear that there are no guarantees in music video. That certainly isn’t news, but it is easy to forget that nothing is for sure, especially with the state the industry is in. It never was guaranteed, but shiny office buildings and cool, custom printed business cards can sure cover up the cracks in the foundation.

Young directors looking to get more work are now faced with the realization that “making it” and signing at a hip prod co means nothing if the company goes under in a week or two. There are fewer and fewer rules all the time, which leaves lots of room for new ideas and new people. Especially if the old people are bankrupt or indicted.

Bit of side business. On the ‘Ville there was a post about Janet’s new video and people sharing their thoughts. Then the thread goes sideways with the appearance of an incredibly obvious fake “Dale Resteghini” posting ludicrous stuff. (Hint, most people can spell their own name.) Trust me, Senor Rage is too busy making his next ten videos to post on Antville. Some easily convinced types should be careful when they reply to emails about imprisoned princes in Nigeria. The thread is a fun read, never-the-less and remember that “gullible” is not in the dictionary.

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Monday, January 07, 2008

Loss Leader

The LA Times did another one of their “Ultimate Top Ten Lists” – cataloging the artists that have made the most money in the last year. The musician with the biggest/longest tour are always the champs and in 2007 it was The Police that earned the most. Less than 10% of their earnings were from selling music and the bulk of the cash came from concert ticket sales – it helps to have an fan base with well-paying jobs (i.e old people like The Police and the Stones).

Digital tracks grew, but still ended up being a drop in the bucket for artists. The ring-tone phenomenon also does not look quite as savior-y as it once appeared:

"Likewise, although some performers are developing comfortable incomes from ring-tone sales, the mostly young R&B, hip-hop and pop acts who placed highest on SoundScan's ring-tone/master-tone tallies aren't anywhere near the top of either concert tour or album sales rankings. So ring tone isn't included -- yet -- because it wouldn't affect any rankings in the Ultimate Top 10." - LAT
The fact that touring is such a big part of the money makes it clear why Live Nation wanted that fat chunk of the ticket and merch from Madonna (and apparently Jonas Bros as well).

CDs have become the loss leader for the artist – the thing that they do to get them back out on the road for some more of those lucrative concert dates.

The music is the loss leader for the merchants at Best Buy or Target – getting people in the door with discounted CDs where they will (hopefully) buy the more profitable Monster Cables and fabric softener.

The music video was always the loss leader for the record label – the thing that they pay for (and make zero money from) to promote the music, but the music itself seems to have become another loss leader. You can see why music video budgets are shrinking – the money the labels have is shrinking AND the music video process is now even one more step removed from the profits (touring and merch).

Music videos were never profitable for labels on their own, but at least they were tied to the core business - they helped sell records. Now that the core business is concert tickets and t-shirts?

Each step removed from the actual income, means less dollars makes it through. Like college buddies sipping your beer before they pass it on down the stadium row from the vendor – the thirsty guy at the end only ends up with backwash and sheepish looks from his friends.

Maybe Live Nation wants to hire someone to make videos to show at concerts to encourage fans to go out to the lobby and enjoy some delicious Jonas Brothers t-shirts.

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