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Tuesday, June 30, 2009

The Zombie Economy

OK, I'm getting pretty tired of all Michael Jackson all the time too, but Umair Haque of the Harvard Media Lab has an excellent post on the Harvard business blog today relating MJ to investment bankers.

Essentially, the argument is that MJ is reported to have made about $300 million in royalties from Sony Music over the last 25 years. Sounds like a lot, right? But it averages out to about $12 mill a year. For the King of Pop? Only $12 mil a year after all those sales?

And that's the problem with the Zombie Economy, as Umair so uniquely puts it. The rest of the money went to the record company, who certainly didn't reinvest it in new products. It all went to Sony shareholders.

Now if you figure that the best and brightest minds that we have to offer have been going into investment banking for the last few decades because they can make 10 or 20 or 30 times what MJ could, and all they did was essentially move assets around instead of actually making something, that's why the US economy is currently in the state it's in.

In order to grow you have to make things, to produce, to nurture, to create. But when you simply recycle assets, the rich just get richer and everyone else just stagnates.

Sure sounds like the music business today, doesn't it?

1 comment:

Larry Jones said...

First, let's get real about the King of Pop. He gave himself that title, and threatened to cut off any journalist who didn't use it. He was an exciting showman and his recordings were well-produced, but take away the glove and the glamor and the hype and I don't know what song of his could stand on its own next to the great music of the 20th century.

But you're sure right about the music business -- if we needed any more proof that record companies are not good places for artists. The only reason they gave Michael Jackson even the $12 million is because he was a high profile international superstar and they couldn't hide the money from him. A talented artist with moderate sales would have been lucky not to end up owing the company.

Sony did not develop an artist so much as exploit a disturbed personality. You'd think they'd want to stop by his house every once in while, see if he was OK, try to keep the drug-dealing doctors at bay and the young boys out of his bed. After all, he was one of their greatest "assets," and it's been obvious for 20 years that he was unbalanced and out of control. In the end, all they did was use him up and burn him out (or let him burn out, either way...)

As for the music business today, it is only relevant to a small minority of teens and 20-somethings, and only because they don't know any better. As they mature they'll tire of being conned and manipulated, and they, too, will become unreachable by the mass marketers. The economy at large is undergoing a permanent change for the worse. I wonder if the industry will be able to adapt to a new reality of frugal entertainment shoppers and teenyboppers with unemployed parents, or if they'll all quit to become hedge fund managers.

Come to think of it, that might be better for the music and the artists.


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