Know your customers: Costa Pilavachi on the classical recording industry8:00, 2nd August 2017
From the age of steam to the age of stream, there has been a constant need for consumers to get their hands on recorded music. Whatever the changes in technology, the fundamentals of supplying that need have remained constant. Our guest editor Costa Pilavachi appraises a business in flux and offers some back-to-basics advice
Already into its second century, the classical recording industry is well accustomed to shrugging off cyclical predictions of its imminent demise. Periods of declining sales are inevitably followed by bursts of success, driven by technological innovation.
In the 1940s, 78s were replaced by the monaural ‘Long Playing’ album; the LP, in turn, was upgraded to become a stereophonic carrier; it was then joined by its more versatile and portable little sibling, the music cassette; and, starting in the early 1980s, many of us experienced the extraordinary CD boom, with the inexorable rise of the digital compact disc.
Since then, we have had many new inventions, all of which failed to create another wave of prosperity for the industry: DAT, SACD, MiniDisc, DVD-audio and others came and went following sizeable investments from the electronic industry but offering little movement to the recording industry’s bottom line.
Classical music as an audio-visual, rather than as simply an aural offering, has also become established as a much smaller side business, and we have seen various physical carriers dominate this area, such as the VHS cassette, Laserdisc and now the DVD and Blu-ray, offering clear pictures with the same audio quality as a CD.
Today the classical industry is on the verge of another period of growth as we enter the ‘Age of Streaming’. Unlike the immediate success of the CD, kickstarted by the classical music community, the rapid expansion of the streaming business has been driven by pop fans. Growth in classical streaming has been rather slow – until recently.
We now find ourselves in a transitional era in which the classical industry is set to experience a streaming sales bump, like our pop brethren, but at the same time the decline of CD sales of recent years has slowed and we have even seen the emergence of a new ‘mini’ market for the venerable vinyl LP! The rate of change and consumer behaviour varies wildly between countries and nations, with the growth of streaming (and decline of the CD) mainly noted in the United States and the United Kingdom, while other European nations and the great classical music markets of Japan, Korea and Greater China are consuming music in all formats, whether physical or digital.
Technological innovation is a wondrous thing but for me the magic of the business to which I devoted my career is the music and the artists who bring this great art form to life, whether ‘live’ or through the medium of recordings. ‘Artists and Repertoire’ or simply ‘A+R’, is at the heart of the recording industry and the key to success – or failure.
When asked, what is the difference between the ‘major’ recording companies such as Universal Music’s Deutsche Grammophon (DG) and Decca, Sony Classical and Warner Music Group, and the so-called ‘independents’ such as Hyperion, Chandos, Ondine, Bis, Onyx, Naxos, etc, my answer is, ‘It’s the artists’.
The majors are essentially in the business of creating international ‘artist-brands’ while the ‘indies’ are more focused on recording and releasing repertoire.
Of course, the basics are the same: labels sign artists, agree on repertoire, make or license the recordings and then release them to the market on any and all formats. The difference lies in the type of artists who the labels sign and the different levels of investment devoted to promotion and marketing. The majors control their own distribution and they have companies in as many as 60 different markets worldwide, often with classical specialists who work to make the artists as well known as possible in their country.
Indies, on the other hand, operate on a different scale and they seldom have the resources to back a global career in the same way. Majors have a greater market presence and because of their large pop departments are better able to work with global market giants such as Apple, Amazon, Spotify, and others as equals. Companies such as these are now key to success in today’s music market.
All labels have a challenge finding exciting ways to present repertoire which is already recorded many times, or discover new repertoire (unrecorded older music as well as contemporary) which will tickle consumer fancy – this is not so easy. Everyone in A+R is looking for the ‘holy grail’ of living composers who write music that the public is prepared to buy on a consistent basis.
The growth of streaming has stimulated a new, generally younger and perhaps more eclectic listening public, and this has brought to the fore a new music genre which combines elements of classical, pop, progressive electronics and other styles. For lack of a better term, some call this new genre ‘neo-classical’ and it includes a wide range of composers such as Ludovico Einaudi, Max Richter, Ólafur Arnalds, Nils Frahm and others. Sales of such offerings are healthy in contrast to the music of the so-called ‘art composers’ favoured by the non-profit sector whose recordings have seldom sold in large numbers despite many, often heroic, efforts over the years by virtually all labels.
The backbone of the majors’ classical business is still the signing and development of the world’s best performers, the ones who have that elusive ‘star’ quality, the ability and willingness to expose themselves to mass media and to tour around the world performing their recorded repertoire. Artists who have definite and original ideas about repertoire are obviously attractive to labels but the time-tested concept of a great artist producing new and fresh versions of the masterpieces is still compelling to a wide sector of the public.
I always remind myself that every day thousands of people around the world are seduced for the first time by Vivaldi’s Four Seasons or Beethoven’s Ninth and it is natural that they will gravitate to the artists ‘du jour’ who they see on tv rather than the great names of the past who are long gone and of primary interest to the (aging) cognoscenti.
Hence the importance of media and what I feel is the growing power of ethnic pride and nationalism – local media tend to focus more on artists from their own countries and clearly a star artist from a populous and well-off nation such as France, Japan, Korea, etc will sell more music at home than a star from Georgia or Peru. As an avowed internationalist and anti-nationalist it saddens me slightly that this factor is more important today than in the past and as a result it has become more difficult to ‘break’ artists worldwide. Strangely, in our globalised world it seems more comfortable to support one’s own national heroes than look further afield.
Here we are, half way through the article and the notorious ‘C’ word has not been mentioned once. ‘Crossover’ is the term that seems to vex the core classical community more than any other. Frankly, I have never understood this. Crossover, which covers a very wide spectrum of music, is a completely separate business to core classical. The audiences are different, the marketing and promotion methods are much more akin to pop than to classical, the appeal is far wider and the financial rewards considerably greater. No wonder that countless classical artists, especially opera singers, have willingly plunged into this more popular and populist arena and enjoyed the rewards.
Projects like the Three Tenors and the tenor Andrea Bocelli, who I signed to Philips Classics in 1995, have sold tens of millions of albums compared to the few thousand expected from a typical classical project. Success in the world of crossover, soundtracks, musicals and other areas that can be handled better by classical teams within the majors, gives the labels a larger market share and therefore, a bigger footprint, both within their companies and in the media market. It also provides much needed funds for longer-term artist development. It has always been astounding to me that, especially in this country where there is a distinctly snobbish and ‘exclusive’ side within the classical community, we constantly faced sanctimonious criticism and hostility for pursuing what was clearly in everyone’s interests.
What will a classical label look like as we approach and enter the century’s third decade? Can a label serve as a total, ‘360-degree’ base for an artist, handling management and concert agency services, promotion, marketing, social media, endorsements and strategic alliances with products and companies, publishing (if they also create new music) and all other aspects of their career?
What will happen if and when classical streaming really takes off? What needs to happen before this takes place? Can Apple, Spotify and Amazon, today’s streaming market leaders, convince the classical consumer to pay for a subscription? More important, is there a big enough market of what I call ‘connoisseurs’ who will demand higher resolution, faster broadband and better curated sites? Can the digital giants cater to this sophisticated demographic or is there a viable market for classical-only sites like the worthy start-ups Idagio and Primephonic? What is the future of an audio-visual streaming site such as Medici, which is now ever-present in the world’s concert halls and competitions, drawing large audiences, especially for free content?
Ah, there it is at last: the ‘F’ word: ‘Free’. It was a while in coming but I present it to you in all its stark and unambiguous simplicity. How is it possible for such a free approach to lead to anything viable and long-lasting? I realise that the recording industry – but also the business of artist management, audio-visual production and music publishing – all exist in sync with what is, essentially, a non-profit world of classical orchestras, opera companies, festivals and concert halls, all of them subsidised by the state or private and corporate benefactors.
I will put my cards on the table and state my view that offering regular free streaming such as on Medici (which, to be fair, also offers paid subscriptions) or by Opera Europa’s Opera Platform, is damaging to the interests of the art form they purport to serve as they will ultimately devalue the product, as surely as if the participating institutions offered their tickets for free. How will we ever develop a self-sustaining, viable business if prime artistic product is continually offered gratis? I look forward to howls of protest.
Last spring I decided to step down from my role at Universal Music and I now spend my time as a consultant (to Universal Classics, among others) and as a volunteer trying to help a variety of classical music non-profits in any way I can. I will enjoy witnessing the revival and continuing evolution of the classical recording industry as new artists, executives and the rewards of streaming bring new prosperity to the industry. There will be great opportunities and as in every era there will be winners and losers.
To my colleagues – artists, administrators, recording executives – I offer just one piece of advice: take a page out of the business of football and start thinking more about the ‘fan’. Never before has it been easier to interact with our consumer and supporters. I still treasure memories of my student years working in a record shop and having that direct contact with the customer. What a thrill when they came back a week later excited about the album I urged them to buy and trusting me with their next purchase. Know your customers, treat them well, build up that trust, follow them but also lead them and you will never go wrong.