As a whole, the music industry makes 50 percent of its annual revenue from live music performances, and the other half, it makes from recorded music in the form of streaming services, paid downloads, physical sales and licensing of music for movies, games, TV and advertising.
Pollstar estimates project that the live music side of the business will lose $30 billion — a figure that includes “unreported events, ancillary revenues, including sponsorships, ticketing, concessions, merch, transportation, restaurants, hotels, and other economic activity tied to the live events.”
In a 2011 interview, the Observer asked Erv Karwelis, owner and operator of Dallas-based label Idol Records since 1993, “How'd you manage to survive the financial apocalypse of the label industry?” referencing the label’s ability to outlast the disaster the record industry faced staring down file sharing sites like Napster.
He responded, “I've always kept my overhead low and try to keep everything as lean and mean as possible.”
Today, while explaining how Idol Records weathered this pandemic, Karwelis responds in the same comforting tone a near-decade later, “I've always, always kept overhead low and tried to be nimble.”
Karwelis has certainly seen a drop in revenue due to the collapse in the live music industry for international and local acts alike.
“We had a bunch of different tours that got canceled,” Karwelis says. “We had actually had one band [Vanessa Peters] in Italy on a European tour when this all happened. That was a pretty big tour, and the whole thing got canceled. They've actually been stuck in Italy for quite a while and ended up recording an album over there instead.”
Not only have sales diminished without performances, but, as Karwelis notes, it's through live music that new acts get most of their exposure outside of their friends, family and local music die-hards.
“A lot of these artists will sell quite a few records or CDs at their shows — that's a big source of record sales,” Karwelis says. “At that level, the biggest way of winning over new fans in different markets is to go play a show, and hopefully, the people that went to see the band falls in love with it, becomes a fan and starts either buying records or streaming it or whatever it might be.”
As a whole, the music industry has seen recorded music sales wax and wane over the course of the pandemic. Physical sales of music have declined by 23 percent this year, while streaming has grown by over $1 billion. Q3 reports show that the biggest name in the music industry, Universal Music Group, had revenue grow 6.1 percent from this time last year.
How independent record labels are faring as whole is a bit harder to estimate. It would be fair to say that business in the world of independent records isn’t exactly booming, but for Karwelis, this is not the worst of times.“It's always pretty much been obvious to me that you just have to adapt. Nothing really stays the same in this business. Formats are changing all the time.” –Idol Records owner Erv Karwelis
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Keeping overhead low and always being open to change is the best recipe for keeping the business going through good times and bad.
“It's in our best interest to not be a bloated operation, spending all kinds of money,” Karwelis says. “We don't really have a big staff or a big office space or anything like that. Those labels that do have that kind of stuff are definitely having a harder time surviving.”
Considering everything that artists have had to endure over the last year, Karwelis has not seen a decrease in their creativity and is excited about what is coming out in 2021 — particularly from bands like Secrecies, Protest and Aztec Milk Temple. The excitement is mutual, says Aztec Milk Temple's frontman, Scott Tucker.
"Although so many artists release music independently these days, being signed to Idol has been great for us," Tucker says. "There’s something to be said for being able to hand over a finished product and not worry about all the nitty-gritty day to day push that a record label takes care of.
"It’s also great to work with someone like Erv who’s literally seen and done it all, as far as the music business goes. I’m happy and grateful he chose to take Aztec Milk Temple on.”
“We've gone back to releasing more singles now rather than albums,” Karwelis says. “Bands don't really want to put an album out right now and then just have it fall through the cracks, not being able to play shows to promote it. I've seen quite a few other labels and are just doing the same thing.”
The focus on individual songs is the biggest change the pandemic has wrought upon the sale of recorded music, and Karwelis sees this as a good thing.
“We’re making sure that the songs are more single-worthy rather than having a couple really strong songs on the album and the rest of not being maybe so great,” he says. “Everything we're releasing is hopefully something that the radio will play or people will be interested in hearing on playlists and stuff like that, and Spotify.”
Keeping costs low and the staff small has also helped Idol Records adapt to changes in the industry quicker than bigger operations.
“It's ultimately just me,” Karwelis says. “It's always pretty much been obvious to me that you just have to adapt. Nothing really stays the same in this business. Formats are changing all the time.”
There is a bit of irony in the fact that what was once feared would be the death of the music industry is what is now keeping it alive.
“The big record companies got hit pretty hard when digital music came along, and everybody predicted that they were just going to completely fold,” Karwelis says. “But it basically emerged bigger and stronger. It took them a little while, but they survived it when they finally realized that they needed to change.”
Karwelis agrees that streaming music on Spotify is not without its problems, but it does solve one problem while the industry adapts to compensate for the others.
“People do complain about Spotify not paying very much, but it killed off illegal file sharing,” Karwelis says. “Nobody's really going to a site like Napster anymore and downloading a bunch of them.”
One steady stream of revenue Idol Records depends on through every industry crisis is TV and film licensing, which has proved to be a stable business this year.
“I've always had a pretty good relationship with music supervisors in the industry that come to me pretty much daily with requests,” Karwelis explains. “They might be trying to find something that can replace a song with a same vibe. Or they might be looking for a certain lyric or subject, like, ‘It's a happy day,’ or whatever.”
Karwelis is realistic about what is next for the music industry — that is, he is not making any predictions.
“When the venues do open back up, and things do resume, you might just get a lot of people that just still don't feel like feel comfortable going out in public,” Karwelis says. “It'll definitely survive, but it'll be interesting to see how it picks back up and what it will look like.”
And whatever it looks like, Karwelis will surely be there keeping his overhead low and staying lean, mean and nimble.
