The 17th annual GRAMMY SoundTable, presented by the Producers & Engineers Wing at the Audio Engineering Society Convention in New York on Oct. 7, featured a spirited debate by industry insiders about the state of the music industry. Under the banner "Death Of The Record Business? The Rebirth Of The Music Business: Part II," the SoundTable was a continuation of a June 7 discussion presented by the Nashville Chapter of The Recording Academy. Dave Adelson moderated the AES event, and his opening remarks set the tone for the panel.

"In 1999, the U.S. music business peaked at 14.2 million dollars in sales," he said. "Rather than argue if the record business is dead, let's just assume that level of business — of selling shiny discs and earning 14 million — is over. We are reaching double digit declines since the year 2000. Let's concentrate on how we are going to monetize this business. That old business is done with. Now what?"

In addition to Adelson — who serves as editor emeritus at HITS, executive producer at WireImage Video, and senior producer/music correspondent for "E! News Live" — the SoundTable's panelists came from every corner of the music industry: Susan Butler, legal and music publishing editor for Billboard;Michael Caplan, president and co-founder of Or Music; Jonathan Daniel, partner of Crush Media and Management; Robert Hurwitz, president of Nonesuch Records; and GRAMMY-winning engineer George Massenburg, who described himself as a "compassionate technologist."

The SoundTable tackled many hot-button topics, including downloading, digital rights management, iPods, file-sharing via peer-to-peer networks, and inventive models for distribution and management. All topics were discussed in a spirited give-and-take. For starters, Hurwitz compared the ongoing shrinkage of the conventional music business model to the dilemma publishers faced in the early '60s when the emerging dominance of television slashed their revenues.

"One part of the music business is the sensation business — the idea of creating a new sensation every week that kids will buy," Hurwitz explained. "But just as television has created intelligent programs…we have a responsibility to the artists and to the public to keep standards as high as possible. There are a lot of people who deeply care about music. They want you to bring them up to your level, you don't have to bring them down."

Adelson posited that today's consumer has moved beyond the heavily marketed sensation, citing the success of modern rock quartet Fall Out Boy — a bona fide sensation with a million records sold — as one model of inventive marketing.  

"Nobody wanted to sign the band, no one thought the songs were good," Daniels recalled of the band that his company manages. "We made a record and started plugging — playing the band anywhere we could. The band started making better T-shirts, a better Web site, and the fans got more involved."

Daniels continued to relay that the focus on fan-based marketing helped the band's first major label release, From Under The Cork Tree, sell 70,000 units its first week. The album continued to gain popularity and reached No. 9 on Billboard's Top 200 Albums chart.

"[The success] was about a band's connection with its fans — and without any airplay — until the album sold a million," he said.

Caplan then transitioned the discussion to address the industry's preconceived notions about consumers, and some record company's digital rights management technologies that produce non-playable CDs.

"The world is divided into two types of people: Those who get records for free and those who buy records," he stated. "People in the business who get records for free make these assumptions about what people listen to. You have to get past that stuff. I just bought a Mac, 'cause the major labels are about to wage war on the consumer. People pay 15 bucks and the protected CD won't play in the PC. The major labels are still trying to stamp out [downloading] but the genie is way out of the bottle."

One audience member commented that digital rights management is "putting gum in the wheels to stop the enjoyment of hearing and making music."
 
"The consumer feels like they are buying the music on the CD," Daniels added, "and the industry feels that they are only buying the CD, not the music on the CD."

Butler furthered the discussion by addressing some of the legal murkiness associated with copyright laws and technology.
 
"I am not sticking up for the labels, but some of this goes back to copyright laws," she said. "I sold all my CDs after I got iTunes, but was told that under copyright law, if you put a copy on your iTunes and you get rid of the disc, [then] you no longer have the legal right to the copy on iTunes. You only have a right to make a copy and keep it as long as you have the physical disc. So my iTunes is illegal now."

Hurwitz responded to this notion of illegal downloading and spoke about the overall health of the music industry.

"I would love to walk into a movie anytime I felt like it. I would like to take any car I like," he said. "Artists and composers are part of a precious profession; these people work really hard. I am more concerned about them than the rest of the world. Without them there are no record labels. They are our first responsibility.