The death of the Zimbabwean music record company; the rise of the Independent artist

So the digital music revolution in Zimbabwe rumbles on with today’s news in The Herald about leading record company Gramma Records active consideration of introducing MP3’s. Emmanuel Vhori, Gramma’s general manager is quoted as saying “Recording companies are prepared to give it (their) all, to extinguish the flames of piracy that had literary turned musicians into destitutes.” Certainly the proliferation of kudubba (copying) and pirates at places like popular Harare Zimex mall and the Gulf Complex is engulfing the music industry in flames of piracy.

Noble as Vhori’s words are, the question here is, is this not too little too late? The danger for Zimbabwe’s music industry is that by the time they have the framework to deliver digital music, the market will have become so used to illegal downloads and file sharing that the whole thought of paying for a song will be totally foreign.

This is not a moot point as we have seen a similar phenomenon taking place in the newspaper/ magazine business. Consumers are so used to getting free content online that it’s virtually impossible for newspapers to monetize their online properties through subscription revenue, leaving them to rely primarily on advertising revenue.

Prior to the digital revolution, Zimbabwean artists already faced a tough operating environment that has weak enforcement of intellectual property laws and royalty collection. This was evidenced by constant complaints from musicians in various industry and public fora. In that environment at least musicians could rely on tape and record sales as a stable revenue stream. No more!

The ubiquity of low priced pirated CD’s and DVD’s on the Zimbabwean streets is the new gorilla that is eating the artist’s lunch. Pirated music and movie products are conveniently available at every sidewalk and intersection providing consumers with ready access to the latest, hottest entertainment. Add to this Internet file sharing software and the sheer ease at which users can share files provides a convenience experience that is hard to beat.

As a response to these technological developments, in October 2011 the Zimbabwe Association of Recording Industries (ZARI) of which Gramma is member, introduced a “budget CD and DVD”. The music industry touts the product’s authenticity and high quality (both packaging and video & sound fidelity) for the same price of the pirated products which are of variable quality. However, does the consumer really care about these quality perceptions that the industry has? The loss in sound fidelity on a ripped song to a typical listener is for all intents and purposes imperceptible. A sound engineer may have quibbles but the average music listener is more than happy with the sound.

When it comes to distribution, ZARI contends the budget CDs and DVDs will be available to all music retail shops and flea markets as well as main Zimpost offices. While these outlets certainly make sense, they are not sufficient because as noted before, the pervasiveness of CD/DVD venders on every pavement and intersection surely is far more convenient for consumers. I find it hard to see why the consumer would be persuaded to find a shop or music retailer to purchase the product? Surely a more appropriate plan would be to take a leaf from the pirate’s playbook and use street vendors to distribute the product.

Remember the street vendor is not a pirate, he/she is a retailer who simply buys a product from a wholesaler (in this case the pirate) and ZARI is essentially trying to replace the pirate. So to do that effectively ZARI should offer the street vendors a better deal than that they are getting from the pirate. This most can be in the form of a larger margin for the street vendor.

If ZARI get this right then legal copies of artists work can be as readily and conveniently available which is precisely what the market is used to and clearly the preference of the consumer as demonstrated by the roaring success of the pirate business model.

A major limitation of the budget CD as a product which I believe is a deal breaker is the 6 songs maximum. The pirates on the will sell you full albums for the same price. In terms of value, the pirates’ offer is a no-brainer.

As great as this move to embrace digital is, it will not solve revenue loss from CD/DVDs. Historically, the prices of original CDs have been much higher than the standard $1/unit pirate price. The migration to a standard/fixed price model in the music business is not unique to Zimbabwe. Apple pioneered the model through its iTunes store. iTunes introduced a 99c/song price for any and every song in its store.

Though this price was agreed to by the music industry (basically the major US labels: Warner Music, Universal, Sony and EMI) it represented more of a ceasefire than a truce in the digital music wars. The same record labels have long contended that variable pricing for songs is their preference. They would like to charge up to $5 for some songs depending on demand and market factors. Apple, who control the platform basically don’t like the messiness price variability would bring. The record companies’ grumbling has seen them experimenting with a rival service to iTunes.

From a purely business perspective, their gripe is based on the simple fact that they are losing revenue in the quantum of billions from declining CD sales and substituting that with the millions coming in from iTunes and digital revenue.

This reality has spawned a new danger for recording companies: encroachment by other industry players onto their turf. Exhibit A is the decision by Jay-Z to dump his record label Def Jam and sign up with event company Live Nation. The 10 year deal is valued at $150 million and will see Jay-Z recording, performing etc under the aegis of Live Nation. Other mega acts like Madonna and U2s signed have signed similar deals.

Live Nation’s bet is that performing, touring, merchandising, sponsorship, royalties and other commercial tie ins are the new reality in the music business. The heavy reliance on CD sales is over. Given that Live Nation is not a record company but an events company further illustrates the shift in power happening in the music game. While this was happening the recording companies where busy trying to implement and enforce a cumbersome digital rights management (DRM) framework with harebrained limitations about what could be copied, shared and even how many times a song could be copied from a CD.

I do wonder if Gramma, ZMC, Metro and co have been observing these developments. So far their efforts look half baked, half hearted and reactive.

For an indication of how the MP3 route can work for an artist, cast a glance at South African musician DJ Cleo, whose song Facebook (surely there’s no better song to epitomise the digital era) was the recent winner of two MTN SA Music Awards (SAMA’s) in the ‘Best selling download of the year’ and ‘Best selling ring tone of the year’ categories.

Cleo has jumped on this band wagon and everytime I’ve seen his interviews he urges viewers to get his downloads and ringtones. Significantly DJ Cleo according to his Facebook page “wholly owns an independent record label” called Will Of Steel Production which handles his work. In South Africa getting a mobile download is as easy as sending an SMS and the song sent to your phone and a commensurate deduction made from your airtime balance. Significantly Telecel with its Teletunes service is leading the way in Zimbabwe.

Another interesting example of a band embracing new media is that of American rock band Pearl Jam. As noted by marketing guru Seth Godin in this talk the band has released a number of albums exclusively through their website and everyone of those albums has been profitable.

The Herald article has this interesting bit:

Kudzi Nyakudya (a musician) was arrested in Harare after he was found selling his own CDs. The matter only came to rest after his recording company, Diamond Studios, withdrew the charges against him. In an interview, the firebrand gospel artiste pleaded guilty to the offence, saying that he needed to survive, since his recording company had dismally failed to adequately market his music.

Surely this incident perfectly captures everything that is wrong with Zimbabwean recording companies. The value they are adding to artists has to be questioned. In the analogue era, the record company provided recording facilities, bulk publishing of tapes/records/CDs and marketing and promotion. Each of these activities was expensive and artists, especially new ones would need a recording company’s backing to foot the bill.

The cost of each of those functions however has been radically lowered by technology. This writer has visited several ‘urban grooves’ recording studios in Harare and has been impressed by the sheer improvisation and ingenuity in converting the bedrooms of suburban homes into studios. The cost of publishing has fallen to nearly zero as it practically costs the same to ‘make’ one MP3 as it does to make a million. Likewise the costs of distribution are neglible with mobile networks and the Internet making it a snap.

So in this bold new world, what value does the recording company provide? Surely artists now are better served with dumping them and internalising their function.

The challenge so far in Zimbabwe is the attitude of artists and possibly the lack of enterprising technologists to assist artists in setting up their independent distribution and promotion units.

Just as the ‘traditional’ recording studios missed the urban grooves revolution they are being left behind by the digital train.

With respect to attitude witness the efforts of Sani Makalima when he released an encrypted CD in an attempt to prevent it from being copied and redistributed. And it’s not just Makalima; there have been marches by Zimbabwean musicians as well as clampdowns by police to arrest street vendors of pirated artistic works.

It should be noted that this piece is not about promoting piracy, neither is it a paen to destitution among our artists. Rather it’s a call for artists to take advantage of the technological changes to have greater control of their work and to profit handsomely from it. My suggestion is for artists to take the following steps to successfully leverage the new technology paradigm:

1. Fire your record label,
2. Educate yourself on using the Internet particularly social media to build rapport with your fans, and
3. Hire an ICT expert to develop the production and distribution of your work via mobile and Internet,
4. Hire a business/commercial manager to handle your brand, promote your work, events/shows, sponsorship, merchandise, royalties etc
5. Ensure there is great synergy between these 3 players i.e. Yourself (the artist), The IT guy and the Business guy.

If you are starting out and find it difficult to hire your own team, then surely it’s possible for a group of artists to come together and pool their resources to put in place this team for their benefit. As DJ Cleo has shown, if you cleverly embrace technology you are able to put the ‘business’ in showbusiness. As for the record companies, either they adapt (fast enough) or they die.