Dissonant music biz still reaching for high notes

HOLLYWOOD — Thank God for Steve and Eydie.

They’re one reassuring element in what has become the most unsettled corner of the entertainment cosmos — the music biz.

Steve Lawrence and Eydie Gorme seem completely unfazed by the disruptions wrought by label consolidation and piracy. They’ve been singing together for 45 years and they’re about to embark on yet another tour, this time focusing on the songs of their close friend Frank Sinatra.

What’s more, the duo still boast a loyal fan base, still control their own master tapes and handle sales of their classic albums through their own Web site, steveandeydie.com. And they seem still to be having fun making music.

Everywhere around them, though, the notes have gone sour.

Sales for the Big Five congloms, which account for 80% of the music sold in the U.S., have slumped 10% annually over the last three years. Copyright theft is, by all accounts, rampant.

In something of a knee-jerk reaction to piracy and dwindling sales, recording industry trade org the RIAA has fought back by suing otherwise law-abiding citizens for illegally downloading songs from the Internet.

The Big Five have all suffered layoffs over the last year or so and now are trying to merge with each other — most recently Sony with BMG and Warner with EMI. (Vivendi is holding on to Universal Music, hoping for a resurgent market down the road.)

Under these conditions, do these congloms have their eye on developing new talent or marketing their assets? Don’t count on it.

While the economic models underlying the film and TV biz are under strain — costs have soared for movie talent and production, network revenues have plateaued — the business model for music has crumbled.

It’s hard to imagine what a fair price for these congloms is when pricing a single song is such a contentious issue.

Consumers do not want to pay what they allege are unfairly high prices for CDs. But authorized Internet download services are not yet ready to lower prices for individual songs — right now most are at 99¢ a pop — to make it worth consumers’ while not to simply file-share for free.

Meanwhile, the labels are fearful that each song purchased online could signify the loss of an entire CD sale in the store.

Universal Music is so concerned that it has just slashed CD prices by 30% in an attempt to boost its sagging bottom line. It’s unclear whether its rivals will follow suit.

A few artists — most notably the Beatles –are still so skittish about what they might lose from the free-for-all that they’ve declined to have their works offered online.

And as more of the middlemen are cut out of the food chain, some artists likely will clamor for a bigger share of royalties. Expect there to be price wars before the smoke clears.

There’s also a general sense out there, hard as it is to verify, that much of the music being manufactured today is just not up to snuff, or is even downright offputting. Stay up for the performing guests on latenight TV or at many spots on the radio dial and you’ll see what I mean.

The war against piracy is a serious one, but the biz needs to stop focusing on suing file-sharers and figure out new ways to make money on music.

That doesn’t mean, as Sony America chairman Howard Stringer put it recently, returning to the heady (but hit-and-miss) pre-conglom days of Tin Pan Alley, but it does mean discovering and developing talent differently. It also means allowing for consumers to personalize their musical choices more easily and cost-effectively.

Already a few Internet-based services are hatching ways for consumers to customize their own discs with mixes of their favorite songs, video clips and other content.

And digital services soon may be ready to go after indie talent not connected to the major record labels, thus cutting out more middlemen and in theory opening up the field to creative voices.

Entrepreneurs on the Net might be encouraged to experiment with different pricing models: Current hits by Britney Spears or the Backstreet Boys, for example, could be priced higher than older recordings by Bix Beiderbecke or Barry Manilow.

Retailers might even experiment with different price tiers, offering special rates to heavy music consumers or to those testy college students who are just a click away from Grokster or Kazaa.

If the music biz does manage to get the economics right, perhaps the creative juices will flow again: It’d be nice to see performers less sullen, lyrics less lurid, music execs and retailers less harried.

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