Music Biz Blues


Little did Jackson Browne know when he wrote Running on Empty that within a year it would come so prophetically true. That was 1978, when Saturday Night Fever sold more than 15 million albums, and America was rock’n’roll heaven. Then, suddenly, the gas crunch and recession hit, and the whole stack of wax went straight to, well, meltdown. “The industry,” says Poco’s Rusty Young, “is in a state of shock.”

The tremors are everywhere. “This recession has affected everyone in the music industry in an extremely harmful and negative manner,” moans Bad Girl Donna Summer. Warner Bros. Records budget-choppers had the temerity to refuse to throw a $40,000 promo party for Rod Stewart’s latest tour. Worse, the same label took Maria Muldaur off the road altogether. “It’s happening all over,” says Muldaur, who was one of countless artists and groups who had to curtail plans for the summer of 79. Fans, feeling the pinch themselves, may or may not sympathize with the likes of Ronald Isley of the Brothers whose $2 million New Jersey home was just seized by the IRS for $660,000 in back taxes.

Emerging star Rachel Sweet, 17, complains that “instead of staying at the four-star hotels, you stay at the three.” Newer Wavers like the Police doubled and tripled up in rooms—not with groupies but roadies. Sometimes they slept in their cars. In the faster lane, the rock group America gave up its private jet. “We used to think it was a necessity,” sighs lead singer Gerry Beckley. “I guess the honeymoon is over,” adds crooner Kenny Loggins. “No more limousines and expensive champagne. But how long could it go on?”

How long indeed could music people be oblivious to the workaday world? “In the past we had this idea that every secretary should ride in a limo, every stockboy should have a satin jacket emblazoned with the hot act of the week and no one in the record industry should drink domestic water,” says Warner Bros. Executive VP Stan Cornyn. “Well, you can only live in Disneyland so long before you have to grow up.” Most of the major companies have fired at least 50 employees. At CBS Records, where the body count was 172, victims took to wearing T-shirts reading THE CRASH OF ’79. But that wasn’t the worst case. Georgia’s Capricorn Records, headed by Phil Walden, an important fund raiser for Jimmy Carter, lost an $875,000 judgment to Allman guitarist Dickey Betts for nonpayment of royalties. With more suits pending, phones are disconnected and Walden is reportedly talking to Polydor about a merger.

The rock bottom line is that the whole music business is in a frightening tail-spin. Major acts like the Allman Brothers and Peter Frampton are failing to come alive, sweating to fill halls and to move records at their usual clip. Record grosses are down an estimated 30 percent, and costly returns of unsold records (particularly LPs) are sometimes as high as 50 percent of the original pressings. The slump in the more chaotic concert business is harder to pinpoint, because promoters can cut their losses faster. Kansas, for example, reduced its run from two nights to one at Madison Square Garden, Kiss from four to two. Other artists aren’t even trying to fill the major halls. Rod Stewart, who played the 20,000-seat Chicago Stadium in his previous visit to Chicago, this summer ventured only the Uptown Theater (cap. 4,000). An expensively promoted revival of the Newport Folk Festival for Labor Day weekend was abruptly canned. Concerts that do sell out increasingly do so at the last minute, and one of the few joys of the shakeout is to see scalpers eat so many tickets.

Sums up Gene Simmons of Kiss: “The truth is that the country is suffering, and all the entertainment-related industries are down.” Concurs Bill Graham, the veteran San Francisco impresario: “For the first time in the 15 years that I’ve been in the rock industry, we might just be affected by the overall economy of this country.” Indeed, during the 15 years of unbroken growth that began with the arrival of the Beatles, the record business boomed an incredible 500 percent, leapfrogging both the movies and all spectator sports combined to become the No. 1 dollar-spinner ($4.2 billion last year) in entertainment. That upward curve has at least temporarily ended, and with it the myth that rock is recession-proof.

“Music is less important than food,” explains Kenny Loggins dryly. Nile Rodgers of Chic observes: “People don’t have as much bread to throw around as they used to.” The price of music, like everything else, is going up. Concert tickets average $10 to $15. Most albums now list for $8.98, and Fleetwood Mac’s upcoming double LP, Tusk, will hit the market at $15.98. Home taping off FM radio or a friend’s stereo—a form of piracy depriving artists and labels of their royalties—is a problem. In fact, the one music store product that’s still on the rise is blank tapes.

As for concerts, “The kids are more selective,” finds Journey’s keyboardist-vocalist Gregg Rolie. “Two tickets, gas, some wine and half a lid can cost more than $50 for one evening. That’s a lot.” L.A.-based promoter Jim Rissmiller says that allowances don’t stretch so far these days and figures that kids who might have caught five shows a month now only see two. “They have to decide whether to see Frampton or the Bee Gees—not both.”

Meanwhile, the artists are squeezed in the murderous escalation of road costs. “I wonder if the government realizes how many lives they’ve affected by the oil crisis,” wonders Disco Queen Summer. “It’s crazy to be touring now,” says Simmons, whose Kiss paraphernalia fills eight semis and two buses. The group called, ironically, the Cars had a rider written into a concert contract guaranteeing them gas, and Ted Nugent once found himself near Kansas City vainly searching for the precious fluid.

Jerry Garcia, the Grateful Dead head, points out that “we have to keep our employees’ salaries up with the cost of living.” Kiss supports a road crew of 50 people, each costing $1,000 a week. Hotels, food and hall rentals have also inflated 400 percent since 1975, figures one tour manager. “That,” explains CBS Records executive Arma Andon, “is why we had to take a lot of artists off the road and concentrate on the ones that are the real killers live.”

Even the killers are going to cool their expenses. “If an artist asks us for a gold lamé jumpsuit, we’re gonna ask him what it will do for his album,” says MCA Records President Bob Siner. Notes Journey’s Rolie: “We don’t drink Heineken anymore—we drink Budweiser.” And rock’s most notorious indulgence? “We don’t use coke,” says Journey road manager Pat Morrow. “Even if the high were worth it, the money would do us in.”

Cost-cutting is harder with the recording end of the business. Vinyl, alas, is a petrochemical by-product and thus at the mercy of OPEC. Studio costs have “doubled or tripled,” calculates Poco’s Young. “A band has to make twice as much as it did five years ago to break even.”

Yet the industry, still giddy from 1978’s “gorillas” (the trade term for super-sellers), added to its problems by pressing too many records this year. RSO President Al Coury notes that “standards for success have exploded into unreality. The Bee Gees did four and a half million on Spirits Having Flown. That’s fantastic. And I’m disappointed. We’re going back to where ‘gold’ [sales of 500,000] is a realistic gauge of success.” Sometimes there was overproduction so that the album could be promoted as having been shipped “platinum” (one million sales). Now the colossally hyped gold-platinum certification process will be deferred until four months after a record’s release. The plaques will not be bestowed until, as it were, all the returns are in. “We are no longer in the business of cramming records down distributors’ throats,” says an Elektra official. That will also save acts like Chicago, Billy Joel and Frampton from being victimized themselves when a release bombs. “The bands were eating millions of records,” says Simmons of Kiss. “Artists are not good businessmen. By and large they’re idiots.”

All that bearish talk aside, there is a contrary theory—strongly held by those groups riding high—that the real reason for the downturn is that the music is worse. “We’ve been discoed to death the last couple of years,” says Nashville’s Charlie Daniels (whose own Million Mile Reflections is in the top five). “I just can’t tell one group from another.” Hazards John Entwistle of The Who: “If there’s a 30 percent drop in record buying, maybe it’s because there are actually 30 percent fewer decent records. There’s a whole lot of trash out there.” Observes lead guitarist Chris Stein of the upstart group Blondie: “People don’t want to spend their money on the rock dinosaurs who have been doing the same thing over and over for years. Superstar groups who require vast amounts of money to subsist are ridiculous.”

Many “dinosaurs” aren’t suffering—at least yet. Even though their latest LP, Back to the Egg, has been a comparative stiff, Paul McCartney’s Wings just signed a three-album contract with Columbia for a guaranteed $6 to $7 million. Other superstars are also feeling no pain. Olivia Newton-John claims that “as far as my album sales go, which is the only way I have to gauge, it really hasn’t affected me.” Dolly Parton thinks a little thing like an energy crisis would never deter her fans “even if it means going back to the horse-and-buggy.”

The other bullish news of ’79 is the mainstream emergence of talented, no-frills acts like Rickie Lee Jones, Elvis Costello, Chic, Dire Straits, Nick Lowe, Joe Jackson and the Police. Their success is explained partly by their pared-down production costs. Another example, the Knack, came out of the L.A. club scene to achieve what may be the hottest LP debut since Meet the Beatles, striking gold on their low-budget Get the Knack in just 13 days. The Knack spent $17,000 in recording compared to the now standard minimum of $100,000.

Two of the other major successes of this recession summer have been Supertramp and Kenny Rogers. Super-tramp, an exception to the new austerity trend, spent $500,000 just to launch its six-month world tour and another $400,000 to cut its LP Breakfast in America. That record has stayed in the top five for five months, which would have meant five to 10 million sales in more euphoric times—but only three million this year. The effacing soft rock-country vet Rogers was told that his current two million seller, The Gambler, would have sold four million any other year, but he shrugs: “This is the largest record I’ve ever had and I’m thrilled just the way it is.”

What the industry is holding its breath over is the upcoming fall releases by titans like the Eagles and Fleetwood Mac. “If the Eagles’ LP stops at two million,” says Elektra/Asylum Chairman Joe Smith, “it will show how bad things really are.” Smith says that for laughs he sent Eagle songwriter Glenn Frey a rhyming dictionary to underscore the urgency of speeding production. Sighs an overwrought exec representing Fleetwood Mac: “We can’t push them: that would be like the Globe Theatre calling up Shakespeare and telling him to hurry up with King Lear.”

In any case, it’s a more somber but wiser group of moguls and artists now cinching their jeans belts. Says America’s Gerry Beckley: “It’s been a learning session for everyone involved. We’re cutting out things that just weren’t necessary to begin with.” Clearly, the business is in a massive reappraisal. Gene Simmons modestly proposes a summit to coordinate tour planning. To wit: “Kiss sitting down with The Who and the Rolling Stones and saying, ‘All right, you take the South, and we’ll take the North!’ ”

What about the artistic consequences? “If it’s not so lucrative, maybe the really true musicians will rise to the top again,” says Muldaur, perhaps wistfully. Blondie’s Stein fears just the opposite: “Companies could play it safe and push everything in the direction of total Muzak.”

Regardless of what the next wave is, it will be hard to break the music establishment of its silver-spoon tastes. “The people in this business love the life-style too much. That’s often why they’re in it in the first place,” says L.A. PR exec Bob Gibson, who handles Aerosmith, Suzi Quatro and Van Halen. As for himself, he says, “The first week of the recession, I went out and bought myself a new Rolls. I want to go out in style.” But Kenny Loggins for one hopes that others in the business will react more rationally to music’s Crash of 79. “The important thing,” he insists, “is that this isn’t really a drop. It’s just a return to normalcy.”

Related Articles