The day the pop-star died

AEG, which owns the O2 Arena in London, thought they had won the lottery when they secured Michael Jackson to perform 50 concerts there.  The “This is it” come-back tour was expected to earn revenues of $ 300 million for its investors.

However, his death has resulted in a precipitous cascade of losses.  $ 85 million of ticket sales to be refunded, $ 30 million already spent on the production, not to mention 50 nights of one of the most expensive venues in the world now standing empty.

The O2 Arena, previously the Millennium Dome, has a habit of bankrupting companies.  The death of Michael Jackson is also part of the gradual death of the existing model for the music industry.

For 50 years, big studio labels would work to create superstars and then control the distribution of music sales.  At its height, the industry sold $ 20 billion of music a year.  Since then, the advent of online music file-swapping has rocked the industry.  Digital music is now 15% of the total market, or $ 2.9 billion in 2007 - up 40% from 2006.  However, the market as a whole has shrunk by 10% to $ 17.6 billion. For every song sold legally, some 20 songs are swapped illegally.

Jackson’s demise has been a boon for record sales, but this won’t save the industry.

The question, though, is whether the super-star model of music production would have declined even without illegal file-sharing.

The ubiquitous penetration of the Internet and mobile phones have allowed the drivers of music popularity – teenagers – to experiment as never before.  100 million people have become seemingly permanently attached to their iPods.  They’re not all listening to the same songs.  The culture of Pop Idols has created a ruthless churn of minor celebrities.  The download culture, paid or not, has resulted in individual songs being popular, rather than in bodies of work.

Musicians now aim for one super-successful song, rather than a career in music.  Nothing shows this more than the astonishing growth in music festivals.  The summer season in the northern hemisphere features thousands of these multi-day events.  The North Sea Jazz Festival in Rotterdam attracts 70,000 fans; Burning Man in the US (not strictly a music festival) attracts 50,000; Glastonbury in the UK, a massive 150,000.

For several days, thousands of people cluster around multiple stages and listen to an endless stream of bands.  There are few musicians who can hold individual concerts to attract this volume of people.  Music success no longer means signing a major record deal; it means being invited to perform at a major event.

While these festivals may have become big business, the record labels historically remained well-clear.  The original studio model required that executives would groom aspiring bands and promote them into superstars.  The price for that was the major share of album sales. This still worked out well for the superstar musicians who would then hold concerts to earn the mega-bucks.

Many of the biggest music festivals started out as tiny events in muddy fields.  Glastonbury’s first event in 1970 attracted 1,500 people who got as much free milk as they could drink.  Bands performed there in the hopes of being picked up by a promoter, rather than out of a desire to make money from the festival itself.

How that has changed.  The new arbiters of music success are the hosts of such events.  While local residents worry about the influx of thousands of people, municipalities compete to host them.

The most popular music events create a life of their own. The winner of Pop Idols can briefly become a celebrity, just as the performers at Woodstock can briefly be cheered by hundreds of thousands.

The event has become the star, not the performer.  With Michael Jackson we are seeing the death of both the man, and the pop star.