Rip. Burn. Die.

Part 1: Desperate Times

How Did the Music Business Lose So Much Money and Piss Off So Many Fans?

[Q] Playboy: Irving Azoff, who manages the Eagles and Christina Aguilera, recently said of the music business, "This is about as bad as it gets. These are desperate times." Is he right?

[A] Simon Renshaw(managing partner, the Firm; manager, Dixie Chicks and others): He is. From 1982 to 1997 the record industry enjoyed a free ride. People basically restocked their libraries, replacing vinyl and cassettes--and even eighttracks, God forbid--with CDs. Huge profits passed to record labels. For 15 years the record companies' coffers swelled and swelled--and then this crisis started.

[Q] Playboy: Everything from downloading to the price of CDs to the quality of music has been blamed. What's the real story?

[A] Moby (recording artist): This is a very unpopular thing to say, but the record companies themselves are at fault. In the late 1980s and early 1990s big corporations started buying them up. Their sole criterion for determining success was how a company did on a quarterly basis. A friend of mine who ran a big record label said that because of the pressure put on him by the corporation, all he cared about was an album that delivered one hit single. A lot of what succeeded was simple, formulaic, lowest-common-denominator stuff. If the record companies don't value the music, why should the consumer?

[Q] Playboy: Successful labels such as Island, Geffen and A&M have been purchased by large corporations. After the Sony/BMG merger, there will be only four major labels. How does consolidation affect musical quality?

[A] Ron Shapiro (former co-president, Atlantic Records): Corporations want irrational growth, but the music business has historically worked on long-term artist development. Now there is an incredible lack of patience for developing artists. When you program for your parent company's immediate gratification, you sign stuff that's easy to digest, not what you consider brilliant. We're not selling boxes of cereal; we're selling musicians, and musicians almost never live their lives to the rhythm of Wall Street.

[A] Rick Rubin (producer, Johnny Cash, Red Hot Chili Peppers and others; co-founder, Def Jam Recordings): It stopped being about music. The business became all about marketing and promoting singles. Radio doesn't care what the rest of the album sounds like, so the labels stopped caring too. And they taught bands to think that way. If you're in a band, you don't really know anything. You sign to a label and you're told to make a hit single. Then kids go out and buy the album for one song, and the rest of it sucks. The kids get burned and don't want to get burned again.

[A] Liz Brooks (vice president of marketing, BuyMusic.com; former Napster employee): Customers look at an $18 CD, and there may be one or two songs on it they want to own. That's not value for their entertainment dollar.

[A] Jason Flom (chairman and CEO, Atlantic Records): I have a very difficult time with all these generalizations. No one ever told bands to put a bunch of bad songs on an album. I mean, that's a ridiculous concept.

[Q] Playboy: Why are consumers so alienated from the music business today?

[A] Ron Shapiro: There's been a shameless lack of self-evaluation. Labels did all kinds of crazy things to succeed, to make the most money and to have the most hits--to win at all costs. It gives consumers the sense that they've been fucked with.

[A] Moby: If Bruce Springsteen had been signed to a major label in the 1990s, he would have been dropped three months after his first record. And the same with Fleetwood Mac, Bob Seger and Prince. Their first records were not successful.

[A] Marc Geiger (senior vice president, William Morris Agency; cofounder and former CEO, ArtistDirect): Bigger is not better. The entrepreneurial spirit that made the music business has disappeared. People once cared about the music and not about "I've got to file my 10-K and my 10-Q." That's the result of mergers.

[Q] Playboy: But we keep reading about Norah Jones selling 8.5 million records and 50 Cent selling 6.5 million. How can labels be losing money?

[A] Ron Shapiro: The record business is a bit like Las Vegas. You throw acts against the wall and hope a few will stick--to pay for everything.

[A] Simon Renshaw: Five percent of records make money, and the other 95 percent lose money. If Ford Motor Company failed 95 percent of the time, it would be out of business. The business model doesn't work--it doesn't make sense. Mergers are the reward for bad management. You screw up so badly there's only one thing to do: merge with another screwed-up business and perpetuate this bullshit for another couple of years. All you're doing is bilking shareholders.

[A] Sharon Osbourne (manager, Ozzy Osbourne; overseer of Ozzfest): Ozzy is signed to Sony, but we don't want to be with them, so we're not delivering anything. We're in a stalemate, firing angry faxes and e-mails to each other. The music people are gone, and the suits who've come in don't understand music. They have a fucking calculator on their desk, and that's all they care about.

[A] Perry Farrell (recording artist, Jane's Addiction; founder, Lollapalooza): Musicians have been treated like dirt. It's sort of like boxing these days: There may be a few champions making money, but most of them are getting their head kicked in. That's what has happened to artists since Wall Street came into the music industry and bankers and accountants took the place of producers and A&R people. When Jane's Addiction started, Warner Bros. Records was run by people who loved music. They produced great groups. Those men were pushed out and replaced with accountants.

[A] Chuck D (recording artist, Public Enemy; producer): When businessmen start to think they (continued on page 148)Rip. Burn. Die.(continued from page 86) know what this business is about, we're dead. They start trying to tell artists what to do. No one told Picasso what to paint. He didn't paint a picture and wonder if people would think it was hot.

[Q] Playboy: Can we conclude that music today is worse than it was in the past?

[A] David Benveniste (manager, System of a Down, Deftones): I don't know. I'm 32 years old. I was just a kid when the industry was energized by Led Zeppelin, Pink Floyd, Fleetwood Mac, the Grateful Dead, the Doors and Crosby, Stills, Nash & Young. This wasn't just music. It was a culture. Compare that with the songs we hear on radio today. Big conglomerates own radio. They're concerned only with selling ads. They play songs for 15 seconds and call their focus groups. If the song researches well--great. If not, they take it off the air. What do we get as a result? Limp Bizkit. You can't compare Limp Bizkit to Led Zeppelin. You can't compare the All-American Rejects to the Doors. At the age of 75, when I'm talking to my grandkid, I'm not going to say, "I lived during the Strokes era!" Where's the music that will save the day now?

[A] Ron Shapiro: We all sort of smell the stink of commercialism and consolidation perverting the music. In the 1960s and 1970s, a time of great change in this country, music helped you define who you were--and it changed lives. Rock is no longer antiestablishment; now it speaks for the establishment. It reflects the powers that be, the things that make people feel powerless.

[A] Jason Flom: Are we just a bunch of old guys sitting on a bench reminiscing about the old days? I don't think so. There really was a golden age. But by the way, has anybody made The Godfather lately? Have you seen anything as good as that? The quality of the movies coming out every week in the 1970s was ridiculous. Yet the movie industry is doing better than ever with these sensa-tionalistic, dumb movies. Our whole culture seems to have become disposable.

[Q] Playboy: Do record labels really deserve all the blame?

[A] Rick Rubin: Artists aren't blameless. You have to be willing to write 40 songs to put out only 12. You have to push the limits of your ability. Some artists are lazy. Their album takes off, they tour, they take some time off, and they go back into the studio. They push out an album to a schedule rather than take as long as they need to make a record great. Also, since MTV, music has become much more image-driven. Image should have nothing to do with it.

Part 2: The ineptitude is Mind-Boggling: Why do CDs cost so much?

[Q] Playboy: CD sales have been declining since 1999, but the average cost of a CD has kept increasing. Are consumers right to complain that CDs cost too much?

[A] Moby: It's pure greed. Maybe the record companies could save themselves if they stopped charging $20 for a record that costs very little to make, if they stopped spending millions on corrupt indie promotion, if they stopped giving themselves millions of dollars in bonuses and if they stopped spending a million dollars on a music video. A video should never cost more than a house in West Virginia.

[A] Jason Flom: I think it's ridiculous. You'd be hard-pressed to find anything that has risen less in price over the past 30 years, whether it's movie tickets or bus fare. I don't know why people are willing to pay $3.49 for a ring tone but think $13 is too much for an album. Maybe it goes back to Napster--for a while music was free. It still is, if you're willing to break the law.

[A] Sharon Osbourne: The ineptitude is mind-boggling. These people!

[A] Andy Gould (manager, Rob Zombie): I'm not saying that I don't like some of the people in the industry. I do. And some of them must be smart. It's like no matter what you hear about George W. Bush, you think, He must be kind of smart. I mean, he did become president. He must be smarter than I am; I ain't fucking president. The same thing goes in the record business. I'm sure some people out there are smarter than they appear, but they do seem to have forgotten something essential to the music business. It's become all business, and they've forgotten about music.

[Q] Playboy: What's wrong with putting businessmen in charge of the music business? We keep hearing about these huge recording and video budgets. Shouldn't someone be telling bands not to overspend?

[A] Sharon Osbourne: The guys in suits spend all their time at lunch and have no idea what's going on in the streets. We had signed with Sony and suddenly they were all up in arms about downloading, while they themselves were creating the software to make it possible. Talk about out of touch. They didn't care. They were making millions even though the record companies were losing a fortune.

[A] Simon Renshaw: Without a doubt, some executives are grossly overpaid. If you have an executive whose company is losing $200 million a year, why would you pay him $20 million?

[A] Moby: It makes me want to scream. People from the record company fly firstclass, and the artist flies economy. They stay at the Four Seasons while the artist is at the Days Inn. But what really galls me is that everyone who works at a record company has health insurance, yet none of the musicians do. It's so profoundly unethical that it's unconscionable. Record companies have mistreated artists for 50 years, and now they expect sympathy from us?

Part 3: It's Payback: Will Artists Abandon The Major Labels?

[Q] Playboy: Consumers are obviously unhappy. What about the musicians?

[A] Marc Geiger: As the labels became all powerful, the artists became powerless. They were at the bottom of the food chain, but now it's payback: Artists who can reject labels are doing so.

[Q] Playboy: Will more artists go out on their own and work around the labels?

[A] Andy Gould: Pearl Jam has no record label. Other big names don't want to be part of the industry. They would rather do it themselves. Why not? They can cut out the middleman.

[A] Sharon Osbourne: If we get out of our contract with Sony, we will do it ourselves. We would probably make an album and give it away on the Internet for free. Then we'd have another one that you could purchase on the road.

[Q] Playboy: Aimee, you were on three major labels before starting your own independent one. How much money were you making on a major label?

[A] Aimee Mann (recording artist; former leader of 'Til Tuesday): That's easy--none. I made a little bit on the first 'Til Tuesday record but only a little.

[A] Michael Hausman (manager, Aimee Mann): Let's put it this way: I was in 'Til Tuesday, and I had part of the songwriting royalties. We probably sold 800,000 CDs with our first record, and I never earned more than $35,000 a year. Now we make a lot more money. We ship 200,000 of Aimee's records to a distributor at a little over $9 each. That leaves us with about $1.8 million. We can make the record and do the marketing and promotion for $1 million. After costs, that puts our profit at $4 or $5 a CD.

[A] Aimee Mann: There's this mythology among artists that you can't do it without a major label. One of the first things Michael said to me after we got up and running was, "It's not that hard."

Part 4: The Enemy Invades The Shoreline: How did Napster Overthrow The Record Companies?

[Q] Playboy: What role did Napster play in the music-business crisis?

[A] Ron Shapiro: The day the Napster story broke on the front page of The New York Times--March 7, 2000--the executives at Atlantic Records gathered in a conference room to read it together. I'll never forget that day as long as I live. The enemy had just invaded the shoreline, and we hadn't seen them coming. Everybody knew instantly that things were going to change forever.

[A] Russ Solomon (founder and chief executive, Tower Records): There's no question about that. One morning we woke up and realized how much Napster was affecting the business.

[A] Andy Gould: If I hear one more record executive say, "Oh, the problem is downloading," I'll fucking punch him. I'm just sick of it. It's such an excuse.

[A] Ron Shapiro: People spent a lot of time being outraged about Napster. But there were 100 million people using the service every day who loved music and shared it. Shouldn't we have found a way to monetize that?

[A] Perry Farrell: They all say downloading killed the industry, but maybe people started downloading because the industry wasn't giving them what they wanted--good music at a fair price.

[A] Simon Renshaw: The average kid thinks, I'm not stealing from the bands; I'm stealing from the record companies, and the bands say the record companies steal from them already. They could care less.

[A] Rick Rubin: When you abandon your audience, you can't be surprised when it finds another way to get what it wants.

[Q] Playboy: The RIAA has prosecuted people for illegally downloading music. Metallica has sued downloaders. Do you support the prosecutions and lawsuits?

[A] David Draiman (recording artist, Disturbed): [Sarcastically] Real smart. Turn your customers into enemies. Demonize them.

[A] Perry Farrell: It's pathetic.

[A] Andy Gould: Suing your customers? Have you ever heard of anything so fucking stupid?

[A] John Mayer (recording artist): The RIAA suing its customers is akin to my getting onstage and making fun of overweight people in the crowd.

[A] Chuck D: It's like a Roman emperor busting into a house and raiding the kitchen. because the family grew the food on land that was considered imperial property. Besides everything else, suing over downloading doesn't address the real problem, which is burning CDs. Yeah, Sony is against downloading music, but the company also makes blank CDs and sells burners. What the hell? The corporations are trying to get it from all sides.

[A] Moby: It's incredibly hypocritical and disingenuous for record companies to go after file sharing but leave CD burning alone. CD burning is a much greater threat. But a lot of parent companies also make CD burners and blank CDs. They go after file sharing because they don't have any financial stake in it.

[A] John Mayer: You can go into a Comp-USA--I don't recommend it, but you can--and buy 50 CD-Rs for $10. I guarantee you, most of my lost sales come from kids going, "Oh, I already bought it; don't worry about it" and then burning a copy for a friend.

[Q] Playboy: When fans download your songs or burn a copy of your CD, are they stealing from you?

[A] Moby: When I make music, I want people to hear it. I don't really care if they pay for it or not.

[A] John Mayer: If you have the dedication to sit at your computer for two hours and queue up on some kid's connection at Penn State while he's serving one of my songs, then maybe your time is worth getting that song for free. I make an incredibly good living. Not as good as Dave Matthews, but I'm not in a race.

[A] Moby: I've downloaded my own music just to tweak the nose of the RIAA. Are they going to sue me for illegally downloading my own music? I hope they do.

[A] Liz Brooks: They blame Napster, but long before it the industry was out of touch with its consumers, who were already alienated when Napster arrived. It wasn't just the free music. Napster brought this incredible sense of access, a smorgasbord of any record you could have dreamed of: one you heard when you were a child, a B side you liked or the obscure Norwegian remix you hadn't been able to find in your local store. Not only could you find it on Napster, if you had a high-speed connection you could get it in a few minutes from another person, which is very empowering. Every business that has had massive Internet success, such as eBay or AOL, has been based on community.

[A] Simon Renshaw: Technology had a staggering effect. No one saw it coming, and we responded with our usual mentality: We put our heads in the sand and denied it existed. Record companies had always controlled the system by which music reaches the public, but the Internet leveled that playing field.

[A] John Mayer: You can't fight technology. You have to adapt to it. But record companies aren't known for being crafty. They're inflexible; they can't react quickly. It's a slow-moving industry, and it's been slow to respond to technology, which moves like a fire hose.

[A] Marc Geiger: Blaming technology for the industry's problems is like blaming the weatherman for a hurricane. My forehead is flat from the number of times I've hit my head against the wall trying to tell record industry executives that technology was coming and would change things forever. Napster founder Shawn Fanning was the bad guy, but if he hadn't written Napster, someone else would have. And the technology isn't popular because people want to steal. That's the biggest bullshit the industry will tell you. You don't want to pay? You bought a burner for $299. You upped your bandwidth because it was painful sucking a song over a 56kbps connection, so your ISP fee went from $21.99 a month to $40. You may have bought an iPod for $500. You bought cool Cambridge Sound Works speakers, and those are a couple hundred bucks. Then your old four-gigabyte hard drive filled up with music and porn and other stuff you downloaded, so you replaced it with a new $1,800 computer and a 20-gigabyte hard drive. Don't tell me people don't want to pay for music.

[A] Liz Brooks: There's no going back. When I was at Napster, it was the most exciting thing I had seen since I was 14 and discovered punk rock. Napster offered me a job and I seized the opportunity. Maybe seven people worked at the company. We had pizza stuck to the ceiling, cereal boxes and engineers sleeping in the server room. It was wonderful. It was the fastest-growing application in the history of the Internet. Napster's first six months surpassed Hotmail's first six months, when Hotmail signed up 18 million users. It made Hotmail look like a Yugo on the autobahn.

[Q] Playboy: The labels sued Napster, and the company went out of business. Did that put a stop to file sharing?

[A] Joe Fleischer (vice president of sales and marketing, BigChampagne, a research firm that monitors file sharing): Kazaa has been downloaded more often than any instant-messaging program.

[A] Andy Gould: We could have made Napster a subscription service and embraced it, but we didn't and drove everybody to a million different places. Now it's going to be really hard to get them all back.

[A] Liz Brooks: There's no way to stop what Napster started. Look at how much good it did to squash Napster: Peer-to-peer isn't going away.

[Q] Playboy: There's some evidence that downloading can help record sales. Perhaps the most file-shared artist of 2003 was 50 Cent, but he also had the year's best-selling record. Is downloading a good form of promotion?

[A] Chuck D: I don't think it hurts anyone. It's great exposure, especially in a business in which big companies co-opt and buy exposure. Downloading is just the new radio. Norah Jones is one of the most downloaded new artists of all time, and her second album sold a million units in its first week on sale. In the end, downloading does not hurt this business; it helps it.

[A] Moby: My album Play wouldn't have sold 10 million copies worldwide without file sharing. People came up to me and said, "I read an article about you, so I went to Napster and downloaded a song, and then I bought your record."

[A] David Draiman: I say free file sharing is great as long as there is some measure of control. You want it for marketing reasons. You want to get your music out there. There's no greater tool for massive exposure with little effort and cost.

[A] Perry Farrell: We always had free downloads on our site, and we had a website early on. We've always been involved online in trying to keep a close connection to our fans. They get music for free, but they'll pay because they want digital quality from a reliable source. The more tunes are made available for a price that seems fair, the more people will accept it. They won't stop just because you tell them it's wrong. So make it easy and cheap to get the real thing. iTunes does it.

Part 5: The Innovation: Can Itunes Save The Music Business?

[Q] Playboy: How big of a success has iTunes been?

[A] Jason Flom: This is the first year that downloads are having a noticeable impact on the labels' bottom line.

[A] Ron Shapiro: I have a 12-year-old son who lives for music, and he's been in a record store only four or five times in his life. He spends almost all his leisure hours using iTunes, and every night it's, "Daddy, can I buy one more song?"

[A] Aimee Mann: It's amazing that an online download store is such a recent development. I mean, how could you not have seen that coming? Major labels just clung to this attitude of "We do it one way and it's always worked for us, and the wolf apparently is not at the door. We don't have to worry about that."

[A] Chris Bell (director of product marketing, iTunes): A number of artists are still unwilling to make their music available for individual song downloads. We respect that. It's their creative decision. They're pretty much hanging up a sign that says.

[A] Kazaa: This way.

[Q] Playboy: Apple has sold more than 3 million downloads in a week, plus 4.4 million iPods since October 2001. Is it surprising that such a successful way to profit from digital music came from outside the music business?

[A] Andy Gould: We have no brains in this industry. In 1979 we were up in arms about home taping--it was going to kill music. The industry was in free fall. Two things saved us: CDs were invented, and MTV came on the air. We had nothing to do with creating either of them. The last time there was a free fall, in the 1960s, at least we came up with FM radio and new ways of touring, which pulled us out. Now we are bankrupt of ideas. Everything that has come along recently to give the industry some life--Napster, iTunes--came from outside it. We don't have anyone with a fucking original idea. If you're making $10 million a year, why bother?

[A] John Mayer: In the music world, there's so much room for cleverness--which is where Steve Jobs comes in. He knows how to be clever. He's prospering now because he's clever in an industry that is just so well-known for not being clever.

[A] Simon Renshaw: If you look back in history, innovation tends to surface during moments of crisis. But it comes from outside the core affected industry. Steve Jobs wasn't concerned about musicians, and now he's selling iPods. Forget the 99-cent download. That's irrelevant. Music is just something that goes on his iPods. Apple will continue to do well, but the record companies have lost because now everyone is a distributor. BestBuy.com, WalMart.com--they're all selling downloads.

[A] Liz Brooks: Depending on which analyst you believe, Jobs's margin on the iPod is between $70 and $175. He can afford to lose money on music. Technology once again drives the transformation of an industry. Everyone is following Apple.

[Q] Playboy: What will the long-term impact of iTunes be?

[A] Chris Bell: Think about the ways people discover music: Market research shows that you hear about it through word of mouth or on the radio. You may see an artist on TV, on Letterman or Saturday Night Live. You scribble the name on a matchbook cover and look for it online or at a record store. And iTunes has just broken down a lot of those barriers. You can see a band on SNL and have its music on your iPod in the morning. We also provide a way to release music between official album releases and to keep the relationship with the audience very vibrant and rich.

[A] David Benveniste: iTunes is cool because you can download whatever song you want, but it doesn't necessarily kill CDs. At the end of the day, U2 and the Chili Peppers and Dave Matthews--bands that have real music and a real message--are still making money.

[Q] Playboy: Steve Jobs recently called the album obsolete. Many people think it won't exist in 10 years. Do you agree?

[A] Simon Renshaw: It'll be sooner.

[A] Chris Bell: Customers have a choice, and 45 percent of the songs on iTunes are still sold as part of an album. The much-predicted deconstruction of the album has not happened. But a song economy has been evolving during the past five or six years, and people want the choice. iTunes is all about choice.

[Q] Playboy: There are still plenty of online file-sharing services. Will people choose to pay 99 cents when they can get songs for free?

[A] David Draiman: It's worth spending the measly 99 cents on a download instead of spending all that time trying to get the frigging thing for free.

[A] Chris Bell: The first thing I'd say is that all the music we sell on iTunes reflects a pent-up demand to get it digitally. A lot of customers have said for a long time that they're willing to buy music if given a viable alternative to stealing it. In addition, we're getting to people who are shopping for music and discovering it online for the first time, because it's so easy to get CD-quality music.

Part 6: The Refrigerators Take over: Will Record Stores Vanish?

[Q] Playboy: If iTunes and Kazaa are replacing record stores, will Tower and other brick-and-mortar businesses become things of the past?

[A] David Draiman: We don't know what will happen. Tower has filed for protection under bankruptcy law. If you can get something online, why should you leave home?

[A] Russ Solomon: I obviously feel all these changes. However, Tower is recorganizing and will open more stores, if I have anything to say about it. We're not ignoring the Internet, either.

[Q] Playboy: But what about Draiman's point? Why go to a record store if you can get music online?

[A] Russ Solomon: I think stores will complement online outlets. They're going to exist side by side. Why go to a record store? Many people still find it easier to buy music in a packaged form, and many like going to stores to browse.

[A] Andy Gould: When I was growing up, a record store fostered a sense of community, which is long gone. Tower is not a great place to buy records, but Amoeba--a music store in L.A., San Francisco and Berkeley--is and it's doing great. You can ask the guy behind the counter, "Do you know Captain Beefheart?" and he'll go, "Yeah. If you want to check him out, listen to this." Tower has all these little nerds in fucking Marilyn Manson T-shirts. You think they're going to know?

[A] Russ Solomon: The problems we and the industry have had are making us look at everything we do. We have to do better. We know that.

[A] Andy Gould: If a music store can be made to feel like a community environment again, maybe you'll have a culture that hangs out there.

[A] David Benveniste: The experience of going into a record store has to become much more exciting. There's a reason Marilyn Manson sells out shows across the country but sells only 300,000 records. His performances are like Broadway shows--they're stimulating. Tower has to make its stores as exciting.

[A] Russ Solomon: We have to figure out a way to attract young people. The strongest thing, of course, is price. The industry has to do better and offer more. We're also looking at ways to make the experience more fun. Crazily enough, I'm experimenting now with soda fountains. We're going to put one in our Atlanta store. I got to thinking, What would happen if we put a soda fountain and a jukebox in a record store?

[A] Marc Geiger: The record stores--whether Tower or Amazon.com or any of the others--aren't going away. Everyone said movie theaters would disappear because of the VCR, but they didn't. Movie theaters actually got better. Many old theaters were run-down mom-and-pops that sold Jujyfruits and didn't have THX sound or stadium seating. Instead of disappearing, they became Cineplex 10s with a Starbucks and good food and THX and 92 movies to choose from. It's Darwinian. For movies, I may be a pay-per-view guy. The guy next to me may like Blockbuster. The next guy may like Netflix. The next may subscribe to HBO. The next loves to go out to see movies. Are we all jerks? No. Music will be the same. For some, record stores. For some, downloading. For some, music by cable. For some, satellite radio. For many, all of the above.

[A] Russ Solomon: There will be many ways to buy music. In addition, you can do more things in a record store than just buy records. We're exploring them. The fastest-growing part of the business right this minute is music video on DVD. We sold $20 million worth last year. We'll also look at selling downloaded products in stores. However, at this point the number of songs being downloaded is still infinitesimal compared with the total number of songs sold on CD. In one recent week, 1.6 million downloaded songs were legitimately paid for, and 12 million units of CDs were sold. Multiply that times 12 songs on each CD and you get 144 million songs. People bought 144 million songs in packaged form, as opposed to the 1.6 million downloaded. I'm not writing off packaged goods.

[A] Simon Renshaw: I don't think music stores will disappear; I just think refrigerators will take over more space. You'll see CD departments in Barnes & Noble and Borders decrease in size. The chains--Tower, Virgin--are becoming increasingly irrelevant. We'll see fewer titles physically released; the vast majority will be distributed and sold in non-physical form, and CDs will be just for big-artist releases, sold with convenience and price in mind by the Wal-Marts, Targets and Costcos. Sad, huh?

Part 7: The Lowest Common Denominator: is clear Channel the Enemy?

[Q] Playboy: Now that we have so many ways to discover music, is radio as important as it used to be?

[A] David Draiman: It's a massive factor. Your average joe still has an average car stereo--with a CD player if he's lucky--but no satellite radio, no streaming audio and no Internet radio. And teenagers' lives revolve around the car. Radio is at the center of it all. I'm sure many programming directors all over the country will be. very happy to hear me say that.

[A] Simon Renshaw: Most North American radio is owned by a few large corporations. Clear Channel is by far the largest. All it cares about is ratings and selling advertising. Radio has become the lowest common denominator: "What 20 songs does our audience like most?"

[Q] Playboy: Clear Channel owns more than 1,200 radio stations, and its concert division sold more than 27 million tickets in 2001, nearly seven times as many as the closest competitor. Some Clear Channel stations banned the Dixie Chicks after the group denounced President Bush, and this year it knocked Howard Stern off its stations for supposed indecency. What's your view of the company?

[A] John Mayer: It's really hip right now to hate Clear Channel. The company's been good to me, and I don't think you can be a performing artist and not have a relationship with it.

[A] Sharon Osbourne: Right. Some people think Clear Channel is the bad guy, but not us. As a sponsor of Ozzfest, Clear Channel built this house.

[A] Joe Fleischer: I think the idea that Clear Channel or MTV controls the music business is false. Clear Channel is not in the music business. Clear Channel is in the advertising business, and it is incumbent upon them to play what people want. Instead of whining, artists should make better music.

[Q] Playboy: Clear Channel is one of President Bush's and other Republican politicians' biggest supporters. Is that why the government doesn't regulate it more closely?

[A] Simon Renshaw: [Sarcastically] That would be saying that big business has some sort of influence over the government, wouldn't it? I can't believe you'd suggest something like that. Big business gets its will done by exerting financial muscle in the elective process. Hopefully Clear Channel's importance will decrease. Satellite and Internet radio are growing.

[A] Ron Shapiro: The issue for me is the current lack of healthy competition in our country in general. How has it happened that a handful of corporations control most of the basics of our lives? It's capitalism gone wild. Where's the competition? That worries me more than sales going down. One major company, Viacom, owns virtually all the video networks. One or two major companies own all the radio stations. It's harder and harder for David to go up against Goliath, because our leaders have focused on letting Goliath get bigger and bigger.

Part 8: Ticket Sales Fell off The Cliff: Why is The Concert Business Stumbling?

[Q] Playboy: From 1996 to 2001 the average price of a concert ticket increased by 61 percent. Why?

[A] Simon Renshaw: Consolidation within the concert business drove up ticket prices. Ticketmaster has a near-monopoly, which allows it to add surcharges of unbelievable proportions--often $7 to $9 a ticket.

[Q] Playboy: Does Ticketmaster get that money?

[A] Simon Renshaw: Ticketmaster, the venue and the promoter get it. Ticketmaster says to a building, "We'll guarantee you X million dollars a year for the right to be your exclusive ticketing agent." The only people who get nothing are the public and the artists. Is it worth it? I guess we'll find out when people stop buying tickets.

[Q] Playboy: Hasn't that started to happen? Lollapalooza was canceled this summer because of bad ticket sales.

[A] Jason Flom: Ticket sales are terrible.

[Q] Playboy: Marc, as co-founder of Lollapalooza, do you blame high ticket prices?

[A] Marc Geiger: Some people blame ticket prices or service fees, but last year was a record year with the same or higher prices. Others blame the lineup, saying there was too much indie rock and too few commercial bands--but who knows, because the entire touring business died this summer. Unlike the record business, in which you can blame a lack of good records or piracy, it's difficult to pinpoint a cause. All we know is that ticket sales suddenly fell off a cliff. I actually think it's an aberration, but we'll see.

[A] Sharon Osbourne: Ozzy's catalog used to sell constantly. Now his sales are horrid in America, though not in Europe. Touring is our cash cow, along with merchandising. As a result, the major record companies are trying to get new artists to sign away their touring and merchandising, which is insane.

[A] John Mayer: We charge around $40 for a ticket, which isn't a lot of money. Twenty three-year-old kids have $40 to spend on a concert. They may say they don't, but they do. Probably 80 percent of my income comes from concerts. I've never seen anybody rip and burn a concert ticket. But if you make your money selling singles, you'd better put on your best suit and go before Congress.

[A] Sharon Osbourne: We could charge more, but with what's going on with unemployment in this country, we want to keep ticket prices down. The fact that kids still come out to shows tells you one thing: They want music. Music is still important in their lives. They may not be that interested in CDs, but they want music.

Part 9: The Future: How does The Music Industry save itself?

[Q] Playboy: Can the music industry be saved?

[A] Simon Renshaw: It's time to burn it down. It's time to get rid of the system. The whole business is so hopelessly antiquated that companies will have to reinvent themselves from top to bottom.

[A] Chuck D: People still buy good records. That's the message of Norah Jones's success. But they are no longer going to tolerate something that is microwaved and put out for mass consumption.

[A] Andy Gould: The business needs to look at other opportunities. I saw a band the other day--kind of a cross between Everlast and Sugar Ray, good-time rockrap. The guy said, "Most of my songs are about drinking and fucking, so why don't we put ads for Budweiser and Trojan between the tracks?" Holy fucking mackerel, I had never thought of it. Now, is that a good idea? Probably not. But maybe you could go to Budweiser and get it to sponsor the back of a CD. It's not the worst idea I've ever heard.

[Q] Playboy: What are some other changes we'll see in the future?

[A] David Draiman: There could be direct billing when you download through ISPs. A pop-up window would say, "You're about to be charged 99 cents to your account," whether it's AOL, Earthlink or MSN. "Do you accept the charge?" Click, boom, no credit card. Half goes to the ISP, half goes to the label, and everybody makes money.

[A] Rick Rubin: The way we get music might look a lot more like the way we get cable TV--a monthly bill for all the music you want. You want the equivalent of Showtime and HBO? You pay a little more.

[A] Liz Brooks: There may be a new type of record company, too. Some alternative labels are showing that labels can still work. Vagrant has Paul Westerberg, Dashboard Confessional, Alkaline Trio and No Motiv. Through consistency of brand and word of mouth, it has created a wildly successful business. Vagrant isn't living a poor punk-rock life. It's probably making more money than most of the major-label entities.

[A] Andy Gould: Do you notice how much video games still sell? Do you notice how much that industry has embraced television? You can't watch a hip TV show without seeing a video-game ad. When was the last time you saw a music ad on TV? Everything we do--the Tylenol we take, the Coca-Cola we drink, the films we see--is advertised on TV. I can come home and see a guy spraying fake hair color on his hair, but I can't come home and see an ad for Metallica. Don't you think we should wake up?

[A] Rick Rubin: So much will be decided by the music itself. Who will make something that will blow everyone away? Where will it come from?

[A] Simon Renshaw: Music is alive and well. BMI, the songwriters' royalty-collection agency, announced that its revenue was up. There is still a large amount of money in music, but less is flowing to the record companies--they still think it's about selling pieces of plastic.

[A] John Mayer: Ten years from now, software will allow you to go online and get any record you want. The guy who makes that software is going to get the money, not the record companies.

[A] Liz Brooks: The companies still have a role. They've been good at finding talent and making records. Artists need to be discovered by somebody. A&R and production are still needed.

[A] Jason Flom: Ring tones could be tremendous business for us. Soon you'll be able to download songs wirelessly onto your cell phone. I've done this; you plug headphones into the phone, and the sound is just as good as an iPod. There are a lot of mobile phones--more than 136 million in the U.S.--so that creates an incredible new market. At the same time, there's a danger from Symbian phones, which allow you to download ring tones illegally. That's a concern.

[A] Marc Geiger: The winners in this? Consumers. They'll get more music, the way they want it, at fair prices. One big downside to all the choices: the white noise of available content. Filters will be more crucial than ever. A filter can be radio but also critics, websites, TV, everything. The new list of filters has to mature. It's just starting.

[A] Perry Farrell: If you want to make music because it's your passion, you have to think of it in different terms. The old idea--that a company will sign you, there'll be champagne backstage, and you'll run around out of your mind and not pay attention to the business--is over. Instead you have to come from a different place: I love to make music. I'm going to allow the music to be spread around on the Internet as a calling card. I'm not looking for big advances. I want to perform for people year-round. I'm not going to wait five years until my next recording. It's healthier.

[A] Russ Solomon: At least we know that music is no less important than it ever was. Maybe it's more important.

[A] Jason Flom: Yeah, the good news is that music is more popular than ever. More people are spending more time listening to music and playing with their new musical devices than ever before. As an industry, we're going to survive.

[A] Ron Shapiro: Music is everywhere. People never see a movie without music. They never get married without it.

[A] Perry Farrell: People will get music one way or another. That's all we know. Danger Mouse put out The Grey Album using samples from the Beatles' "White Album" and Jay-Z's Black Album--what we call a mash-up. Danger Mouse can't sell it because of all the licensing issues; he'd be sued if he did. But he plays it live. People are digging this music. They will look at whatever he does next.

[A] Jason Flom: I don't know if anybody is smart enough to say what the industry will look like even two years from now. Things are changing so fast.

[A] Simon Renshaw: In this business, whatever we say now will be irrelevant in six months.

[A] David Benveniste: I think it's going to get worse before it gets better. Lots of faceless music. No message, no art, no cultural value, no ethical value. Things will change, but we don't know when. Kids are smarter now than when we were kids, and they have access to the Internet. They can hit Send on their computer and disseminate information anywhere in the world in 10 seconds--a song, an image, a phrase, a religion, a word. So when the next thing comes, it will hit hard and big.

What Went Wrong--by the Numbers

845 million: overall music sales (in units) in 2000

803 million: overall music sales in 2001

693 million: overall music sales in 2002

687 million: overall music sales in 2003

1.8 billion: number of blank CDs sold each year

$3.5 billion: worldwide sales of ring tones in 2003

1.7 million: number of iPods Apple sold in the first six months of 2004

4.4 million: number of iPods Apple has sold since they were introduced in October 2001

70 million: number of songs sold by iTunes in its first year

2.6 billion: number of songs that are illegally shared online each month, according to Recording Industry Association of America testimony to Congress

29: percentage of Americans surveyed who admitted to using free file-sharing services before the RIAA lawsuits were announced

14: percentage of Americans surveyed who admitted to using free file-sharing services after the RIAA lawsuits were announced

260: approximate number of stores closed in 2003 by Musicland Group

294: number of stores closed by Wherehouse last year, out of a total of 405