Is this the end of the music industry as we know it?
The music industry is in a state of meltdown. That's the view shared by most observers after the Irish Recorded Music Association confirmed this week that album sales fell by 10 per cent for the fourth year in a row in 2007, with revenues down 13 per cent.
Such statistics are bound to send a shiver down the spines of our record company execs, who will be anxiously looking over their shoulders at the ruthless job cuts announced by EMI in London last Tuesday.
The new owners of the once-venerable institution, the private equity firm Terra Firma, plan to sack 2,000 staff at the label, including the company's much-loved CEO Tony Wadsworth. Many industry watchers in the UK fear that these new number-crunching suits have no feel for music or musicians. Think Alec Baldwin in Glengarry Glen Ross
Robbie Williams' manager even accused Terra Firma's axe-wielding boss, Guy Hands -- whose background is in the Japanese banking sector -- of acting like "a plantation owner" One Irish victim of the label's new austerity is The Thrills, dropped after the poor performance of their Teenager album.
However, some would see the restructuring at EMI as an inevitable reaction to what was a particularly dismal year for the company -- Paul McCartney terminated his long-standing relationship with the label, calling it "boring", and released his album Memory Almost Full via Starbucks; Radiohead refused to re-sign to EMI, preferring first the web and then the indie label XL instead. And now the Rolling Stones are jumping ship - rivals Universal are releasing the soundtrack to Martin Scorsese's rockumentary on the band.
But have the cutbacks backfired? EMI stalwarts Robbie Williams and Coldplay are threatening to withhold their new releases over fears that the company no longer has the capacity to market them properly -- a ploy which won't go down well with management, who view Coldplay's forthcoming album, Prospekt, due in May, as the company's most sacred cash cow.
If Coldplay don't play ball,the label faces the prospect of a repeat of the ignominy of last year when no new album by an EMI artist made the top 50 sellers of the year.
The crisis in EMI and the domestic sales slump is being blamed on the rise of digital downloads on the internet. IRMA's Dick Doyle told this newspaper this week that for every album bought here, 20 are downloaded illegally.
The trend is a global one: the biggest selling album of 2007 in the US was Josh Groban's collection of Christmas standards, Noel. It sold 3.7 million copies. Rewind seven years and we find that the top-seller of 2000 Stateside -- by 'N Sync -- sold 10 million copies: a drop of over 60 per cent.
But if the major labels, with all their financial muscle, are feeling the pinch, whither the smaller record companies, who operate on much tighter margins?
One has only to look at the fortunes of storied London-Irish indie imprint Setanta, which in its heyday in the 1990s had a staff of 15 in its office and basked in the success of Irish bands like Divine Comedy (who later signed to EMI ... only to be dropped last year) and the Frank and Walters as well as nurturing the likes of A House, Brian and Catchers. It also released Edwyn Collins' big hit A Girl Like You as well as Richard Hawley's first two albums.
But now, after 20 years in the business, founder Keith Cullen operates the label on his own from his living room. Though still looking after the odd band like The Chalets, Cullen is busy exploring other career options, and is currently writing his second novel.
"The industry is totally f**ked," says Cullen. "It was all going pear-shaped anyway but the major labels accelerated it by their tactics.
"The majors all approach the business with the attitude that my co*k is bigger than yours. It's schoolyard politics."
Cullen laments "the death of A&R" -- how the major labels don't allow their artists to develop. If an artist isn't successful with their debut, they tend to get dropped, he says.
Cullen says that the model for success has changed: albums are now promo-tools for their live shows, which is where they now make their money. Before, touring was what a band did to make punters buy the album.
The Setanta boss also points out that, even with the decline of traditional record shops, the availability of music in the global coffee chain Starbucks has actually increased the amount of outlets open to artists trying to reach the public.
Damien Rice is one star who has made a buck from having his music available in their stores -- according to one source, the singer/songwriter has increased his sales by tens of thousands.
So it seems rock'n'roll is merely an accessory now: 'can I have a regular latte and the new Joni Mitchell album to go, please'.
One positive development of the internet for Cullen is that, by having his artists' music available on web platforms like iTunes, fans from Tuam to Tokyo can buy it -- and without him having to keep any physical stock. "I haven't had a record player in my house for 12 years," he says, "because CDs take up too much space."
Yet the MySpace phenomenon with its DIY ethic has reduced the need for small labels like Cullen's: "Why would a new band starting out need me?" he asks. "Only the majors can wave cheque books around."
Unless they're EMI...