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'Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age' by Steve Knopper

Music IndustryNapster Inc.The Eagles (music group)MarketingScienceDeathPaul McCartney

Few industries inspire more enmity than the record business. It's been tainted since the birth of rock, with transgressions that include payola, greed, a reactionary aversion to technology and a plantation mentality toward its bread and butter -- the recording artists.

Thanks to the Internet and the MP3 revolution, karmic justice has finally been served: The record industry has toppled like a house of cards. To many, its collapse is less a crisis than a beautiful sunset.

Yet as Steve Knopper notes in "Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age," this was a business hellbent on destroying itself for at least 30 years. Digital music was merely the final dagger in its heart.

Knopper, a Rolling Stone music business writer, thoughtfully reports on the record racket's slow, painful march into financial ruin and irrelevance, starting with the near-catastrophic sales slump that began in 1979 after the demise of disco. Though the labels persevered, they finally lost control of their product when they chose to ignore the possibilities of the Internet.

Now, it's consumers and recording artists who have the power. Musicians can create, produce and distribute their work without the indentured servitude of record labels.

That's great news for younger artists, but even geezers like the Eagles and Paul McCartney have taken advantage of the new technology.

McCartney distributes through Starbucks, and the Eagles sold its 2007 album, "Long Road Out of Eden," exclusively through Wal-Mart -- how's that for a hippie dream?

And Radiohead's 2007 "In Rainbows" was first issued as a download, for which customers could pay what they saw fit. Meanwhile, fans can buy tracks through e-stores or "share" their collections through torrent or file-swap sites.

The record industry hates it, but that's the bed it made. Rather than trying to monetize the new technology, the labels chose to fight it. "It became the moment the labels killed themselves," says Jeff Kwatinetz, chief executive of the talent management company the Firm.

When copyrighted content could no longer be controlled, the industry, long obsessed with piracy, spent tens of millions of dollars in court to destroy file-sharing promoters such as Napster.

By the time labels got around to authorizing the digital sale of content in 2003 -- to Steve Jobs and iTunes -- the deal turned out to be much more beneficial to Apple. (As of April 2008, iTunes had sold more than 4 billion songs around the world and was the top music retailer in the U.S.)

But this is just the most egregious mishap in a long history of foot-shooting. Knopper piles on examples of incompetence, making a convincing case that the industry's collapse is a drawn-out suicide.

Through dozens of interviews, he recounts the business' ebb and flow from MTV to Michael Jackson's "Thriller" to the cash cow that was the CD. "That is the single thing that made the record industry roll in cash," says Howie Klein, who ran Reprise Records in the '80s and '90s.

Despite the new format's pristine digital sound and convenient size, label chiefs were wary. Yet it was an instant success. Music fans began buying their collections all over again. In 1983, the CD's first year on the market, sales jumped 625%.

Still, "[w]hen Netscape went public in 1994," Knopper writes, "introducing the world wide web to the public and ushering in the internet boom, top executives at major labels were largely unmoved."

As the 20th century ended, teen popsters Backstreet Boys and 'N Sync were making millions. Meanwhile, Napster was the hippest site on the Web.

"Had the labels made a deal with Napster," Knopper notes, "they would have found several immediate advantages: a built-in user base of 26.4 million people as of February 2001 . . . ; an efficient way of communicating with customers; and the flexibility to set prices at a number of levels. The sad fact was employees at major labels had spent years and years downplaying the internet as a marketing tool."

Now, the conventional music business model is all but DOA. Sites such as YouTube, Facebook and MySpace are important hubs for music promotion, while artists earn big licensing money through Guitar Hero and telephone ring tones.

It's a brave new world, yet many in the industry still don't get it, thinking that a few big hits can cure all ills. "But continuing to build an entire business that relies on another 'Thriller' is simply not viable," Knopper writes. "Hits are getting smaller and smaller and they just don't have the healing power they had in 1982."

The hits may be getting smaller, but as "Appetite for Self-Destruction" reveals, music is adaptable. The record business? Not so much.

Himmelsbach is a Los Angeles writer and producer.

Copyright © 2014, Los Angeles Times
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