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The Flop Industry / by DJ Yaniv Tal (Hadshot Haheizar)

Article posted by admin on 16th Mar 2003

Before I start I would like to apologize to all that I might offend with this article, if I do so it was indirect and without any bad intention. I would also like to declare that all the numbers that I'm stating here are my own estimations and not based on real facts (it could be that my estimations would be far from reality).

This article is to supply sufficient answers to all those new age people with colorful clothes, which often ask things like:

How much your best selling title sold?
Why do the distributions kill the labels?
Why do the labels kill the artists?
What does it take to be distributed by a distribution company?
How can I open a label?
If I make good track how much do you pay?
What does "exclusive" mean?
What's the difference between trance, full on, progressive- and tech-trance?
Who killed JFK?
How many licenses can I get?
Is the scene going commercial?

To those who look upon the Trance Scene (trance, psytrance, full on, psychedelic, progressive trance, tech trance, trance with housey touch) from the side and say "wow, so many artists, music, labels, distributions, parties, magazines? these scene must be a pumped up money machine"

You are wrong!

The truth about this scene is that it's so small and uninteresting which makes it almost unknown, in other words if you will look in the yellow pages you will not find the Trance Scene inside. This scene relies on psycho sound junkies, party freaks, psychedelic fast food drug lovers, people who appreciate the evolution of the electronic music and the ones whose ears have passed the sound barriers and just looking for something innovative (I wish that this would be the majority). All these people are so extreme in their way of life that they will dedicate all their resources, money and time to become a part of this machine. I don't know about you, but I started a label and later on a distribution only because I love this music and I wanted to spend all my time around this music without any interruption of a regular job and so on. I also know that many of the labels and the distributors, which you know today, have started for the same reason.

For what reason they do it today is another question?

To answer on behalf of myself, I'm doing it because I'm interested in music business, in interesting well-produced music and- I don't know what I could do instead! In this scene there is nothing like a "big" artist or a "big" label, if you will ask 100 random people in the streets of any city of the world (except of Goa) who is Hallucinogen or Infected Mushroom (or any other artist which you consider to be big in this scene), if you will get lucky one will tell you that he heard this name once before??

That's the fact Trance Lovers, your heroes are nobody!
This music is unknown!
It is not played in TV,
It is not played in international Radio Stations,
And it is not reviewed in any global music magazine!

When an A&R (Artist and Repertoire) in a major music company will get a demo of any project band, which you imagine are the biggest seller of this scene, he will put it in the garbage because things selling below 75.000 copies world wide are not subject for negotiations!

Ok, we got rid of the majors and we're left with the independent companies. 10 -8 years ago everything was simple, because there was only 1 distribution, 5 labels, 20 artists and 10,000 people who were looking for this music. Today you have at least 10 big distributions far more than 50 known labels, over 500 artists and less than 10,000 people who want to buy this music.

About the distributions:
Every distribution has their key labels and mainly the same imports. Whenever a distribution lists a new label in their catalogue, they reduce the sales of the other labels in their catalogue, due to the fact that most customers have a fixed budget, which needs to be divided by the number of releases. Whenever a distribution doesn't take a new label to their catalogue they make their competitors stronger.

Whenever a distribution dares to sell to a shop or another distribution for credit, they have to face the following risks:

1. The buyer is a new cutting age hippie who decided that from today on his business will be selling records, but doesn't have the budget to back-up his wishes. So maybe he will not pay his bills to the distribution, the distribution will fail to pay the labels bill, the labels will fail to pay their artists or printing bill- somebody might go bankrupt!

2. The buyer is a well-known distribution discovering a 'new' trend. They stock giant quantities and after some time they realize that they can sell only a third of what they ordered, so they return the goods to the distribution. The distribution will return it to the label, the label printed too much upon demand, they get half of the quantity 6 months later (when they hardly can sell it any more). After 2 or 3 times that things happen like this- the label will go bankrupt!

Whenever a distribution does not agree to the customer requests for selling him on credit, they stand in that high-risk point- The customer will get in touch with the label direct, promise them big promises and convince them to sell to him direct on credit. This action can lead to 2 possible situations:

1. Since the label can't supply this customer with important releases every week they will be added to the bottom of the 'urgent' payment list and maybe will not be paid at all, until they will have their next big product to come.

2. Since the label supplies the buyer direct he will not pay his previous invoices to the original distribution and so the distribution will not be able to pay their open invoices to the label?

All this leads to a chain reaction of unpaid invoices which always lead to a bankruptcy of at least 1 company sooner or later??

Another problem of the distributors is the turn over:
The distributors have to reach 'x' turnover to be able to run their company. Now, the products have a very short life 1-3 weeks and than it's not so hot anymore, so they have to find every week new products to make their list interesting enough for the shop to order every week.

Result: the market is full with unnecessary products, which compete with each other.

About the labels:
The labels try to get their hands on the trendy stuff in a good time, release fast and sell a lot, but they have few problems:

1. If it is a new label they will have a problem to find a distribution, because all distributions are full of labels already?

2. They have to pay advances to the artists, pay and print the records and get paid within 90-120 days if they will get paid at all. That slows them down and by the time they release the music, the "smart" artists already gave their trax to all their friends who swapped it with other friends and distributed it on MP3- by the time the album is out, nobody wants to buy it anymore.

There are 3 kinds of labels:

1. The major-related or big-budget label: These labels come as a division of a major record company who wants to invest in an upcoming style and has to grab the market by the balls, or totally rich guys that find nothing else to spend their money for.

These labels pay ridiculous high advances to the big artists (advances which never justify these sells), they pay those advances because they want to catch the market with big names and they have a big budget to spend and they don't give a fuck about the future of the scene. Mostly those labels make few experiments with the style- see that its not profitable and go on to the next thing- leaving the scene with blown-up ego artists which got used now to big advances and will not accept less in the future?

2. The long timer hard survivors:

These labels work on a small budget and pay well-calculated advances in relationship to expectation of sales? these labels discover artists, make them big and later on loose them to category no 1.

3. The "open/close-labels":

These labels are newcomers that want to have a label for mostly artists who never manage to get a record deal in the first two categories and decide- "we will do it ourselves". The result is that either after 1-2 releases they are fed up with investing money for no profit and they close their business down. Or since they find no distribution they gather with some more "open/close-labels" and create their own distribution, which lead to a market full of unnecessary products and confused consumers.

About the artists:

The artists are standing in an electronically competition since what counts for good music in this scene is the fattest sound and the coolest samples. For this they have to be daily updated with new software and machines, which cost more, than what can be covered by selling their music. This scene is infected with new young artists who have fresh ideas and more knowledge about software than the big dinosaurs. This scene is full of different projects made by the same artist. The reason is to be able to sign as much tracks as possible to different labels avoiding breaking the exclusivity section in their contract. This scene is full of non-innovative artists, which produce one-time-hits to meet the markets demand. The result: no big name, no fame, no money, no fans, no picture, no bikini girls in video clips.

About the consumer:
There are few kinds of consumers for this music:

1. The junkies:
Crazy kids spending all their money (and their family's money) on CDs and records. These people buy every week at least 5 different products, they play it 1- 2 times and then want to get more (unfortunately this is an endangered species).

2. The "wanna-be DJs":
These people are the most updated ones. They buy everything, they record all, and they swap whatever, just for the chance that they might be booked to play for free in a future party.

3. The "Mafia guys":
3 guys come in the shop and buy 3 different CD, but later on all three of them have all three CDs!

4. The "wanna buys":
"I want to buy all these 10 records but I don't have enough money because I spend it all on lollipops, so can you keep me this 3 for next week..and when will you get new stuff?"

5. The classic consumer:
"Hmm? I love these Goa parties and I love this music, so I should have at least 1 CD of Goa at home, do you have a special CD with Goa sound"

6. The smart ones:
These guys know exactly what they want and what they need, if they get it in advance by swapping or MP3 its good, if not - they buy it.

In a scene that demands new sound everyday- you can't expect big sales from just a single product. In a scene where a DJ requires only 'new' sound to be able to play- you can't expect to hear amazing innovative sets. In a scene where all consumers look like pirate drug addicts- you can't expect positive support by the Media. In a scene where everybody who has a computer and a bit of software can make a track- you can't expect to have plenty of good music. In a scene where everyone want to be a part of the machine- you can expect that one day trance will eat itself. In a scene where freaks try to run a business- you can't expect correct payment days and good book keeping.

Suggestions for solutions:
The distributors have to take care to sign serious and quality labels with a promising concept and output

The labels have to take care to show the artist correct calculations about how much their record can really sell and not promise them unrealistic no based on unrealistic advances just to seduce them to sign a deal.

The artists might want to be more innovative and to spend a bit more time on each track they make, instead repeating on the prototype. In order to support the scene, which feeds them instead ripping it off by copying.

4. The club owners and party organizers should look that the DJs that they book will carry with them some original CDs or records and not just copied material? (Hey, you pay them so much money- at least make sure that a part of it goes back into the scene). We all know that clubs have to pay royalties to their local society for playing music- maybe they could ask the DJs what tracks he played and give this list to the society so the money that they pay goes back to the artists.

BUT I do have something positive to say: Just imagine that this scene will be successful being played in the radio and TV all the time. The sells of ATMOS t-shirts will top Michael Jackson?

Would you continue to feel so special whenever you put a new CD in your player?

February, 2003.