How Quickly Is The Music Industry Shrinking?

mariasci | October 27, 2008 3:30 am

We all know the music biz is in trouble: Its health is generally measured by sales figures, with reports of the financial failures of major labels a close second. But for people working in the trenches, the industry’s health is measured by one simple metric: whether or not people are getting fired. This is applicable broadly, too. Arguably the biz can absorb the various changes going on, and may be making more revenue from other sources even as sales decline. But if they’re not making money, that will be reflected starkly in companies either closing completely or cutting large numbers of employees. To find out what the trend is on this score, I went through five years’ worth of Billboard Bulletin stories looking for news of closings and staff cuts, and summarized my findings on a couple of charts:

The data are divided up into indies and majors, with the yellow line representing the total number of companies that closed (chart 1) or companies that made major staff cuts (chart 2). Some findings:

  • You’ve still got better odds working for a major label. Though they made massive layoffs, they’re still afloat, while a total of 26 independent companies have closed over the last 5 years.
  • Still, the job cuts have been brutal. Major labels have made major staff cuts 29 times since 2004.
  • Things are only getting worse. Closings happened at a somewhat reasonable rate in 2004 and 2005, and dipped considerably during the apparent boom year of 2006, but jumped sharply in 2007 and have maintained that level in 2008. As for cuts, restructuring in Warners and Sony/BMG resulted in a larger relative numbers for 2004/2005, but the same pattern holds here.
  • 2008 should be as bad as 2007. Though the numbers may look lower, the 2008 data is for only 10 months. Extrapolating out will yield the same or higher numbers compared with 2007.

    It’s possible, of course, that all these closings and cuts are for the best. Maybe shedding all these employees will allow major labels to operate at a profit again. And maybe weeding out the failing companies will allow the successful startups to thrive. That may end up being true. But for the people at the heart of it, the ones going in every day and putting their time in, things don’t look good.