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George Graham's
2005 Year-end Audio Essay

(As broadcast on WVIA-FM December 28, 2005)

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Once again it's the dreaded last Wednesday of the year, and that means that in place of our album review, we have our annual look back at the world of music, as I see it from my own decidedly askew perspective. It's my chance to cast brickbats, philippics, and vituperations, and exhibit general grouchiness -- occasionally with justification.

In 2005 the disconnect between music and the corporate music industry became a chasm. On the one hand, there was a bumper crop of worthwhile new music for those with an opportunity to hear it, and on the other, the major label music industry seemed on the verge of imploding. And the latter was at least in good part self-inflicted.

I usually include a section on technology in these year-end diatribes, but this time, we'll start with the fallout of technology.

The word that epitomized the paradigm shift in the music business is "iPod," Apple computer's enormously popular portable music player that stores large amounts of music digitally. After the tremendous success of the original iPod, as anyone who was party to Christmas shopping for a young person knows, Apple introduced a host of new models, some very tiny, and one that will play video. But regardless of the model, the iPod divorced music from the CD, or LP or cassette, or 8-track tape, for that matter. That was already under way with the popularity of downloading and sharing music files, but before the iPod, one needed a computer to play them, and people who downloaded music tended to be tech-savvy types. The iPod made digital music files very easy deal with, and among increasing numbers of people -- not all of them college aged -- the iPod, and similar devices have become the preferred medium for listening to and obtaining music. For a whole generation of music fans, the CD is old fashioned and so "Nineties" or even "Eighties." The paradigm shift has been further accelerated by a raft of new accessory products introduced in the last year or so, such docking stations or plug-in accessories to play your iPod through your car radio or home stereo. So what's the point of having a CD collection if you can carry hundreds, or even thousands of tunes on your pocket-sized digital music player and listen to them wherever you go.

So not surprisingly, CD sales fell though the floor in 2005. It is ironic that the music business seemed to he heading for a turnaround in 2004, with CD sales making a gain after several years of minimal growth or declines. In 2005, by one estimate, CD sales were down 12%, while others show a decline of more than 20% at some stores. Many independent record stores are failing, and the amount of shelf space devoted to CDs in the so-called "Big Box" and electronic stores is being reduced.

One place where sales was up was Apple's iTunes website, where sales grew by 150% in 2005. Paid downloads of music from various vendors, were being sold at a rate of about 6.4 million a week, toward the end of the year. But the rate of growth was slowing, and the download business is not very profitable to the record companies, still representing only about 5% of their revenue.

Of course, it can be safely said that most of the downloaded tunes on people's music players are not paid. Two thousand five was a watershed year regarding music downloads. In the summer, the Supreme Court announced its decision in the Grokster case, and came down firmly on the side of the record companies, saying that file sharing sites could be prosecuted for copyright violation. Some of the sites tried to settle, some tried converting to paid download sites, and by November, the Grokster site itself had shut down. But according to surveys, even after the court decision, file sharing and downloading are more popular than ever. Since the Grokster decision, one survey has shown file sharing downloads to be up more than 26%. And with the proliferation of high-speed Internet connections, and the rise of the BitTorrent system, the movie industry is now facing a similar situation to the music business, as it become more technically feasible to download the much larger files needed for movies.

Speaking of the movies, that brings me to one of the reasons I think that a good part of the music business' travails are self-inflicted. If you go into an electronics store, you'll see displays of DVDs and CDs for sale. It's possible to buy a fairly recent movie, on a sale, for $9 or less. It gives you two hours or more of playing time, often with surround sound, plus often special behind the scenes features. A hit CD will set you back $12 or $15 giving you maybe 45 minutes of playing time, with maybe two or three decent songs on a major label release. CDs have ceased to be a very good value to the consumer, especially when she can purchase downloads of those two or three good songs for 99 cents a piece or less. Out of the posh executive suites of the record labels come laments and calls for a campaign to teach people the value of music. One observer did make a valid point when he said that if people are spending over $100 for a ticket to one of the big concert acts for one night, why should anybody complain about spending $15 for a CD that will last a lifetime. But for many, CDs are just not cool, and in a world with so many media vying for one's attention, music on CD represents an ever smaller priority.

But anyone who has had the most elemental familiarity with economics knows about the law of supply and demand. The simple way to boost sales is to cut the price, and despite a large amount of bloodletting in the form of layoffs and downsizing at the major labels, significant price cuts for CDs just don't seem to be on their radar. In 2004 the largest record label, Universal, experimented with price cuts, but that seems to have been applied selectively.

The record labels are beginning to recognize the situation vis-a-vis CD sales, and are looking to other avenues, in addition to paid downloads. A big area of growth right now is cell-phone ring-tones. They are terribly overpriced, and even more annoying to anyone within ear shot of the offender's phone when it goes off, but in 2005, it is estimated that over $500 millions, that's half a billion dollars of good money was spent on cell-phone ringtones. Think of all the good that could be accomplished in society with the half-billion dollars people spent on ringtones. Billboard magazine, which remains the bible of the music business with their myriad of charts of hits, has been running a hit ringtone chart. The top ringtone of 2005 was 50 Cent's Candy Shop. Interestingly, number 20 on the cumulative ringtone chart for 2005 was Lynyrd Skynyrd's "Sweet Home Alabama." And at least two cell phone companies are working on so-called ringback tunes -- so when someone calls your cell phone, instead of hearing the familiar sound of the phone ringing, they hear a song that you pay to place there.

Somewhat less annoying to those around the cell phone user, and another potential revenue stream for music companies and artists, is selling downloaded songs to be played on cell phones with built in music players. Motorola released with considerable hype its so called ROKR phone that features iPod technology. But it got bad reviews because of restrictions placed on the use of the music, and the number of songs that can be downloaded, not because of technological limits but because of business decisions to protect profits.

And that brings us to the three letters that technophiles hate, DRM, or digital rights management. It's the attempt by the powers that be in the music industry to limit one's ability to use the music you have. The proliferation of mp3 files as a means to exchange music, despite the lousy sound quality associated with most mp3 files, sent the record labels looking for technical means to prevent the music from being copied from one person's computer to another, or as some record company execs would have it, from one's CD to any other medium.

Of course, there are various competing systems for DRM and file protocols, and that is the reason that there is a good deal of frustration among those trying to buy paid downloads -- files encoded for one system, say the one devised by Microsoft, won't play on for example, an Apple iPod. Someone come up with a converter program that allowed one to convert other user-restricted file systems to play on an iPod, so Apple changed the iPod's design so it would not work. As much as people like the iPod, Apple is turning out to be at least as greedy as any of the major labels, in trying to limit competition and restrict what its customers can do.

Meanwhile, the record labels have been at work trying to come up with a CD that could not be copied. That resulted in a backlash among music fans who found that their CDs would not play in their computers. But it reached its peak when the combined Sony/BMG label secretly started using something called the XCP "root kit." When you put one of these music CDs into your computer, if the auto run feature was activated, it would install spyware on your computer, not only restricting how you can use your music, but also the software would report how you used your music, and presumably the songs you have on your computer, via the Internet to the record company. When this was discovered, computer security people also found that it made one's computers vulnerable to viruses, and fit the classic definition of spyware -- software that is designed to be hidden in one's computer and is very difficult to remove. After Microsoft and other computer security companies declared XCP to be genuine spyware, the Electronic Frontier Foundation, and the Texas Attorney General filed suit, under Texas' anti-spyware statute. Greg Abbott, the Texas state attorney general declared "Don't mess with Texas computers," and the lawsuit seeks $100,000 per violation. It was a public relations disaster for Sony/BMG, and they quickly launched a recall campaign to remove the offending CDs from stores, and exchange them from customers, whose computers were probably already infected with the spyware. Once again, it's an example of record labels treating their customers like thieves.

Aside from the XCP debacle, Sony/BMG has also sold some 20 million CDs with another spyware program called Mediamax that also reports what music you are using on your computer, and according a lawsuit filed by the Electronic Frontier Foundation, even if you click the icon for refusing to install the software, it installs files anyway that do the monitoring. And the flap over XCP has not deterred the other major labels. Most are working on some kind of anti-copying and monitoring system.

You may recall, a couple of years ago when the record labels were starting to go after downloaders, suing 11-year-old kids, for example, they were also lobbying Congress for legislation that would specifically allow them to rummage around in anyone's computer to look for what they thought were so-called illegal files, and to wipe out your hard drive if they wanted to. The legislation did not happen, but you can see the amazing level of hubris among the major record labels.

All of this is good lesson on why with Windows based computers, one should always deactivate the auto-run and auto-play features for the CD drive. Or better still, use open-source Linux.

Meanwhile, the merger of probably the two oldest and greatest record labels, Columbia Records, which has been owned by Sony, and RCA Records, which has been owned by the German media conglomerate BMG, has not been going very smoothly. Many had expected the combination to become the largest record label, in terms of sales, but that has not happened. Universal retains first place. While the spyware controversy was emblematic of the problems at Sony/BMG, which still is controlled by two separate international companies -- there has apparently been a culture clash between them, and some visible infighting reported in the music press.

The Warner Music Group, which had been spun off Time-Warner, Inc. and taken private by investors headed by Seagrams whiskey magnate Edgar Bronfman, in 2005 made an initial public stock offering, and the price was below expectations. Investors have become wary of the music business.

To make matters worse, both Warner Music Group and Sony BMG were hit with large fines for payola, the illegal practice of secretly paying radio stations to play their records. Sony/BMG paid $10 million in fines, and Warner Music paid $5 million. "Payola" is a word that was coined in the 1950s, for exactly the same practice, at which time it was outlawed. Some people just don't learn. Eliot Spitzer, the crusading New York state Attorney General prosecuted the labels, which caused the FCC to announce it will take a serious look at the commercial radio station owners, to see if prosecution for accepting payola bribes was warranted.

However, some major labels are beginning to see the writing on the wall, and are timidly venturing into other means of selling music, in addition to ringtones. Both Universal, the largest of the labels, and the Warner Music Group have experimented with download-only labels, music sold without CDs. The more intriguing is Cordless Records, launched by Warner Music, and headed by the legendary record company president Jac Holzman, who founded Elektra Records in the 1950s, and which was later home to such people as July Collins and the Doors. Cordless Records signs bands to limited length exclusive contracts, at the end of which the artists own the master recordings. Instead of making an album's worth of songs say every two years, the label expects artists to release so called "clusters" of three to five songs every few months, to be sold exclusively as downloads.

In an effort to, as they say in the corporate world, "create more value," for CD buyers, so-called Dual Discs were introduced in a big way in 2005. They feature a conventional audio CD on one side of the disc, and DVD content, including videos, graphics, and other things on the other side of the same disc. So far, unfortunately, the format has received a tepid response from consumers.

And with corporate commercial radio singularly indifferent to promising new talent, the labels are trying to pursue other means of getting exposure, and are turning to television, pitching music by up-and-coming bands to popular shows, and also earning money by placing songs in TV commercials. Whether that will add up to replacing lost CD sales remains to be seen.

But seemingly lost in all of this business reporting of sales figures, is the music. The fact is, major labels are releasing bad music. I've said this before, but it bears repeating. In the glory days of the 1960s and early 1970s, the record labels were essentially run by the generation of people who founded them, and they were first and foremost music fans themselves. They were willing to risk a loss on the debut album of a promising artist they believed in, and there was a lot less concern about quarterly profit/loss reports for Wall Street investors. Now, with most of the label part of conglomerates, whose every move is studied by Wall Street, the people now running the labels live in fear of each quarterly report, so there is a great unwillingness to risk money on a new artist if that artist does not score a huge, instant hit debut album. Bob Dylan, Bruce Stringsteen, U2 and so many other major artists of today would never had a chance to make a second album under the current way of doing business. So, they sign and release artists who either sound almost exactly like one who did have a hit, or have connections to a hit artist. Innovation has largely disappeared from the major labels. So it's no wonder that music is as bad as it is, and why it is not selling on CDs in the numbers the media conglomerates want. It's also why probably more than 80% of the CDs we feature on Mixed Bag are now independent releases.

And the independent, or "indy" scene is where music is happening. Such releases get almost no play on the corporate commercial media, but it's been a very good year for a wide variety of music, released by small independent often ad-hoc record labels, and frequently by the artists themselves, who are able to sell their CDs directly, often through websites, and earn a lot more money per CD than they ever would on one of the major labels. And in contrast to the seeming implosion of the major label scene, the number of independent releases had never been greater. In 2005 WVIA received close to 2400 CD releases, almost 500 more than the previous year.

On the concert scene, things have become very stratified, with a slight increase in revenue, but a smaller number of tickets sold. And most of the money was made by long-time veteran artists. Paul McCartney, U2, the Eagles and Neil Diamond were the among the top money makers, and fans who could afford it were willing to pony up some astronomical prices. The best seats for a Paul McCartney concert at Madison Square Garden in early November had a list price of $994.50. The reunion of Cream at the same venue carried a top ticket price of $350. U2 on a 90-concert tour, all sellouts, grossed $260 million in ticket sales. Meanwhile, the concert business was not as kind to up-and-coming artists, with promoters booking fewer such shows. I think that says something rather unhealthy about the concert business.

Perhaps this may be a byproduct of the commercial media's star obsession. That of course, extends to commercial radio. With so few large companies owning most of the commercial stations in the country, openness to new music is probably at an all time low. Research says that people want to hear recognizable hits, and in an effort to deliver ears to their advertisers, that is what the commercial stations are doing. But there are some signs of change. A few commercial stations, looking at the numbers and seeing the growth of public radio audiences, are taking some cues from real radio and trying to be more wide-ranging, introducing whimsically names formats as "Jack," which supposedly includes everything. But they still end up being repetitious, perhaps doubling their small playlist, and the emphasis does tend to be on tried and true oldies.

Satellite radio seems poised to begin to make an impact. Sirius Satellite radio famously lured sleaze jock Howard Stern -- no loss to broadcasting there -- and XM snared NPR's Bob Edwards. They were moving aggressively to get their receivers into the hands of the public. I saw one advertised speical in which the receiver was free after a rebate, but of course, there is still the monthly fee, far better spent on a membership in Public Radio. The satellite companies offer a lot of channels, but with so much public concern at the concentration of ownership in commercial radio, here we have only two companies owning all the satellite radio channels. That can't be healthy. And of course, there is the very real problem of compatibility -- satellite receivers work with only one of the services, and not the other. To receive both satellite systems, you need two separate receivers, and of course, to pay fees to each one of them. Imagine if you needed a different kind of radio to listen to each radio station.

Meanwhile, back on the ground, digital radio, or as it is now being called "HD Radio," is getting the backing of a number of the big commercial station owners, who are putting digital signals on the air, which can be done on top of a regular FM or even AM station. Better sound is offered, but also the ability to multicast, or broadcast more than one program at the same time. The problem is that receivers are very hard to find, and quite expensive. WVIA does have plans to go to digital radio once the dust settles, and of course, when we can obtain funding for the new equipment.

Adding a twist to all of this, is the proliferation of so called "podcasts," yet another fallout from the iPod. These are do-it-yourself radio outlets that let one broadcast sound to Internet listeners, whose computers can be set up to automatically receive any new programs from the podcaster, storing them in a form that can be transferred to one's iPod. It opens up the concept of radio to millions of potential programmers. That is, unless, the record industry sues the podcasters. They are demanding royalties be paid for each and every cpoyrighted song included in a podcast.

Well, enough of technology and business. How about the music of 2005? Well, looking at the commercial music scene, as measured by the Billboard sales charts, it's pretty much an entirely different planet from the musical realm we inhabit on this program. Topping the year-end charts are 50 Cent and Eminem. Green Day did come in at #3, and U2 at #8. But the one has to go down to #20 to find an album we played, Ray Charles' Genius Loves Company, and coming in surprisingly at #29 was Jack Johnson's CD In Between Dreams, which we did feature on the weekly album review series back in the summer.

Likewise, the Grammy Award nominations were on another planet musically. In 2003, as you may recall, Norah Jones was a big winner, as were a number of other CDs we featured on Mixed Bag, but in the pop category, there is not much danger of the Graham Awards overlapping with the 2006 Grammy Awards very much.

So let's talk about some of the trends I saw. The chanteuse was very much in focus this year, with lots of interesting and rewarding recordings by rather romantic or sultry-sounding women vocalists. One of my favorites was by Welch-born vocalist Judith Owen, who reworked Deep Purple's Smoke on the Water in a stunning way. Also a standout was Lizz Wright's Dreaming Wide Awake.

The chanteuse proliferation definitely extended into jazz, where it seemed that most jazz releases were by female vocalists. They were of variable quality. The end of the year Billboard jazz charts had 7 of the top 10 being vocal recordings, including Paul Anka -- how did he ever get on the jazz charts. But there was also some worthy developments -- the finding and release of the long-lost recording of John Coltrane and Thelonious Monk at Carnegie Hall in 1957 was a major event, and it even sold very well. There was also the emergence of some worthy young talent, including the prodigious debut of Kyrgyzstan-born teenage piano sensation Eldar Djangirov, and the very impressive band of teenagers and early 20 somethings that Gary Burton assembled on his CD Next Generation.

The jazz-rock fusion scene remained surprisingly active, with a fascinating recording by the Pat Metheny Group, which seemed almost to entering the jam-band realm, along with notable CDs by Dave Weckl and a pair of albums by various guitarists paying homage to Miles Davis and John McLaughlin respectively.

In the folk and singer-songwriter field, there were almost too many outstanding albums during the year, with Cheryl Wheeler, Zoe Lewis and Greg Trooper releasing particularly memorable recordings.

Two Thousand and Five was also a very good year for bluegrass, with new CDs by groups ranging from the very traditional Del McCoury Band to the very eclectic Nickel Creek.

The blues scene had sales concentrated among venerable performers and rockers who play blues-influenced music, i.e. George Thorogood, who topped the annual Billboard blues chart, along with B.B. King and Eric Clapton. But the year also brought fine new recordings by some great soul-influenced singers like Terry Evans, Solomon Burke, and Ellis Hooks. The year also marked the return of the legendary Siegel-Schwall Band from the 1960s.

On the World Music there were some interesting fusion efforts, such as a remix album of Ladysmith Black Mambazo's music, and a group called Swap, that combined Celtic and Nordic music and musicians.

Finally on the regional music scene, there was again a wealth of new recordings by artists in many styles. I counted 29 CD releases that we featured during the year by artists who have been on the Homegrown Music series.

And one last note: probably the biggest domestic news story during 2005 was the devastation caused by Hurricane Katrina to New Orleans, one of the most musically influential cities in the world, which has given us so much. Without the styles that came out of New Orleans, there would probably not be Mixed Bag, or for that matter much of any, jazz, rock or soul music. There were the scenes of rock legend Fats Domino being rescued from his flooded home. Buildings in New Orleans may be rebuilt, but it is truly a concern that the cultural and musical melting pot that was New Orleans before August 29 may never be completely restored, with so many of its residents, including presumably many musicians, scattering around the country. Let's hope that this great musical city can find its heart again.

So there you have our view of the music world in 2005. I warned you it would be eccentric. If you haven't succeeded in turning off the radio in a few minutes, we'll bring you our annual reading of the obituaries for the year. And later, an even better reason to flea your wireless receiver, the 32nd or so annual Graham Awards.

(c) Copyright 2005 George D. Graham. All rights reseved.
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