Story first appeared on WSJ.com.
"ABC, Easy as 1, 2, 3, Simple as do, re, mi..." This cheerful, uncomplicated sentiment, expressed by the Jackson Five to a melody itself so simple that it might have been an attempt to provide a blueprint for the pop song, went to the top of the U.S. charts in 1970.
Some four decades later, the music industry looks a good deal more complicated. There is probably no other business that has suffered quite as much commercial upheaval at the hands of digital media. The recording industry's mood in recent years could be better summed up by the opening line of the song the Jacksons knocked out of the No. 1 slot, The Beatles' "Let It Be": "When I find myself in times of trouble..."
After a dramatic decline in album sales during the past decade, there are signs that things are changing in the world of popular music. This week, Nielsen SoundScan's midyear report announced that album sales in the U.S. have risen for the first time in seven years, thanks to albums by artists such as Lady Gaga, Adele, Katy Perry and Mumford & Sons. Indeed, that target would have been reached even without Lady Gaga's album "Born This Way," which sold a million copies in its first week of release in May.
There is cause for optimism, too, on the other side of the Atlantic. Two of those success stories—Adele and Mumford & Sons—hail from the United Kingdom, which remains the dominant territory for European pop music. In particular, Adele's second studio album, "21," has been the phenomenon of the year, selling more than three million copies in both the U.K. and the U.S., and topping the charts across Europe and as far afield as Brazil and New Zealand.
The singer is also featured for the second time on the shortlist for this year's Barclaycard Mercury Prize, often seen as a barometer of the health of the British music scene. The list, which was announced last week and has traditionally been viewed as a showcase for innovative new acts or critically acclaimed artists who may not have commanded mainstream attention, even found itself the subject of some grumbling on the Internet from those who thought "21" had, by dint of being too popular, ruled itself out as a candidate. Interestingly, the bookmakers concurred, swiftly dropping it as favorite and installing instead "Let England Shake" by the alternative rock singer-songwriter PJ Harvey.
But then, attempting to second-guess the Mercury prize is a mug's game. The shortlist also includes the stadium rockers Elbow (who, like Ms. Harvey, have won before) and Katy B (who, like Adele, trained at the BRIT School for the Performing Arts in Croydon), whose "On a Mission" is an out-and-out pop record. They sit alongside urban hip-hop from Tinie Tempah and the folk music of King Creosote. There used to be the odd nominee drawn from the world of modern orchestral music, though none has featured for some years now. A jazz album—this year it is "Good Days at Schloss Elmau" by the pianist Gwilym Simcock—also usually features on the list, though so far none has ever won.
It may be that this very diversity is a key factor in the relative health of the British music scene. UK Music, the umbrella body that lobbies for the industry as a whole, estimates that music contributed at least £5 billion to the country's economy last year, with £1.3 billion coming from exports. While this makes the country second only to the U.S. as a source of repertoire, 81% of the country's music companies now employ fewer than five people.
The primary reason for this shift from the traditional model, in which giant record labels controlled every aspect of a band's career, is technology. While online music piracy has greatly reduced the income from album and CD sales, the same phenomenon has actually increased the market for music as a whole.
In fact, the Nielsen figures suggest that—even before considering the income from direct-to-fan sales, public performance royalties, advertising from sites like YouTube or Internet streaming services—overall music revenue has increased by more than 50% since 2006. At the same time, recording and distribution costs have fallen to near zero. When I interviewed Daniel Ek, founder of the Internet music-streaming company Spotify, last year, he argued that, like home taping in the 1980s, these changes had actually greatly increased the appetite for music.
Pat Kane, of the band Hue and Cry, had several Top 40 hits in the late 1980s and early 1990s. He said the changes have certainly been complicated, and he is still in the middle of them and they now run their entire business by using what is ubiquitous to drive people towards what is scarce; that is, as everybody knows, what capitalism is all about. The ubiquitous thing now, because of the ease of copying, is recorded music. The scarcity is in live stage performances and unique objects with our imprimatur on them. For example, for their next album, 'Hotwired,' which comes out in January, they might issue the chance to buy, say, an original vinyl copy, with handwritten lyrics and a personalized message, all framed.
This model is an inversion of what was previously the norm, when bands would stage tours, often at a loss, in order to promote a record. With the shift within the industry and the culture at large, however, even the biggest artists have embraced such innovative commercial models. Four years ago, Prince caused outrage in the music industry by giving away three million copies of his new album with U.K. newspaper the Mail on Sunday, and not even offering it for sale in shops. But the artist, whose previous record had sold only 80,000 copies in the U.K., went on to sell out 21 nights at the giant O2 arena in London. Sales of his back catalogue also boomed.
Craig Potter, the keyboard player with Elbow said it's very definitely the case that people are considering things that they wouldn't have thought of when we started out 20 years ago. He says putting songs in adverts, licensing, ringtones, that's all part of it now. He added they were actually worried about stepping up to arenas, because they didn't want just to do 'fist in the air' anthems, but luckily their more mellow stuff still seems to work with those audiences. But even then, he thinks they would have struggled if their last album hadn't broken through. For most of their career, people thought they were Manc miserablists. The band won the Mercury Prize in 2008 for "The Seldom Seen Kid," and their latest album, "Build a Rocket, Boys!," is on the this year's shortlist.
Mr. Potter, who is also the band's producer, acknowledges the changes that have been wrought by the ability to record an album on an ordinary laptop computer. He stated that these days, bands can totally do it themselves. And even if producers are brought in, the record company often don't fund it. He added that people talk about whether labels will even exist in five years time. But when they began, going into a proper recording studio was almost as big a deal as getting signed.
For Elbow, live performances and recording sales have become a virtuous cycle—sales of their latest album skyrocketed after their performance at this year's Glastonbury festival. But both Messrs. Potter and Kane point out that their bands had an audience created under the old models.
Mr. Kane said it used to be that 'Top of the Pops' on TV and airplay on [BBC] Radio 1 were what mattered. He also stated that people in the business still expect some macro-level solution for the industry. That may come, but he thinks it may be wishful thinking. Whatever, it has to be a solution that respects a generation that sees universal copying as a reality.
Mr. Potter also points out the disadvantages for bands setting out on a career in the new reality. He said not everyone is going to be entrepreneurial, and getting recognized in the first place is the hard bit. He also said it's difficult if you're going down to the Job Centre or working in KFC to turn down a wedge of cash that will keep you going for the next year or whatever. And there's a reason why studio recordings work, and it's partly knowing you've got to get on with it because they're expensive. It's a bit different if you're at home with no time constraints, and you decide to go and put a wash on in the middle of a track.
Mr. Kane said the creative challenge is to respond to the new commercial environment, and it is actually reintroducing elements of craft and care and design that have been relegated since the days of the triple-gatefold album.
Anna Calvi, whose eponymous debut album was released by the successful independent label Domino, and whose atmospheric, Gothic music received a boost from videos posted on YouTube, also sees new technology as a boon.
She said she thinks that the Internet has allowed for a lot more diversity in music, and it is a healthy part of the artistic process to be able to show your work, and this is now possible for everyone. Perhaps this has filtered through to labels, and more diverse music is subsequently being signed. It's obvious that independent labels are leading the way in Britain.
Even so, within such a dynamic and changing industry, it may be worth remembering that the same Michael Jackson who topped the charts 41 years ago, and went on to sell more than 61 million albums in the U.S. alone, ended his life with unsettled debts of $500 million. At the time of his death, however, he had hit on a way to settle those liabilities. He was planning on staging a series of 50 concerts at the O2 arena.
