Recording Studios Squeezed As Labels Tighten Budgets

Mirroring the music industry at large, the commercial audio-recording business is facing multiple pressures. While home or personal studios steadily advance in quality and lure more sessions from commercial facilities, the latter now face greater adversity: The major labels they have long served are simply making fewer records. Moreover, the budgets for recording projects tend to be smaller than in the past.

The dramatic advance of digital technology has enabled a flood of digital-audio-workstation (DAW) products-all with features rivaling equipment that until a few years ago was the sole domain of the professional studio-at ever-falling costs. As a computer-savvy generation reaches adulthood, musician and engineer are sometimes one and the same. More significantly, most professional producers and engineers own a DAW and often use these home or personal-studio-based systems to do overdubs, editing, and even in some cases mixing. Though this has cut deeply into commercial studios' business, it is not a new phenomenon, only an accelerating trend.

Intensifying the woes of commercial studio owners, however, is the economic stress that currently characterizes the music industry. The alarming numbers at retail-U.S. album sales down 10.7% in 2002, according to Nielsen SoundScan, and early indications of a continued downward trend in 2003-are acutely felt at the front end of the production chain, many audio professionals report, as new recording projects are increasingly scarce. Those that exist, many add, are not only smaller than they used to be but are scrutinized to a degree heretofore unseen.

"There are fewer artists making records and fewer yet being signed," says Chris Stone, founder of the World Studio Group and the original Record Plant Studios in New York. "The mid-level artist is taking up much less of the record-company budgets, and the lower-level artists are pretty much distributing themselves independent of the majors.

"My record-company friends are saying, 'We're just doing less,' " Stone adds. "'We're watching our stable, and we're putting out records we're pretty positive are going to be hits. We're signing fewer, and we're not running around the country trying to sign people the way we used to because we're cutting back on travel, we're cutting back on everything.' That means less projects going into the studios."

The industry is rife with rumors about possible studio closings. The situation is particularly tough in New York, where the economic downturn, astronomical real-estate costs, and the profound impact of the Sept. 11, 2001, terrorist attacks have compounded poor conditions in the recording market.

"Definitely, the budgets over the last two years have shrunk," says Tino Passante, studio manager at Avatar Studios in New York. "The typical budget has been slashed. We're doing the same amount of work, or more, to get sessions up and running, for less money. It's definitely affecting the studios."

Engineer/producer Ray Martin agrees. "Recording budgets are lower in general, and there's fewer of them. And [labels] are sticklers-they're really sitting on the budget. They're saying, 'This is the budget; you're not going over. If you do, it comes out of your producer fee.' They're really starting to instill that. The bean counters are stepping in."

The focus of the commercial recording industry has changed. Where before, weeks- or month-long projects were the norm, it has become an uncertain, week-to-week business. It is a trend that has extended to the busiest markets (Billboard, Dec. 28, 2002). "Everyone I've talked to, if they're being honest, will say that things are a lot more day-to-day and dicey now," says David Amlen, president of Sound on Sound Recording in New York. "My friends in L.A. had not been used to that until last year. That's the new 'normal' in Los Angeles, and they just can't conceive how you do business when you don't know that you're going to be busy in the next week or the next day."

Jane Scobie, president of Royaltone Studios in North Hollywood, says, "It's harder to keep business coming through the door. Budgets have really shrunk a lot."

Amlen adds, "Film and TV people that we've dealt with are as budget-conscious as they ever were, but they're not as micro-managerial as a lot of record-company people. I mostly deal in the sound-only industry, and what we've seen is that if it's an independent-not a major label, or even forms of music other than mainstream pop-they're very budget-conscious. If it's a big label and it's R&B-urban music-they're less budget-conscious; but everybody still wants a deal."

AUSTERITY IS IN

Given a changing business model amid unchecked piracy, a dearth of blockbuster releases, and worldwide economic distress, austerity is appropriate. This places corresponding stress on the symbiosis between label and studio, the latter both serving and relying upon the former in a paradigm that has generally thrived for decades. "With budgets being more scrutinized than ever, we're under pressure to cut wherever we can," the director of A&R at a major label says. "Studio cost is always an easy one to look at and say, 'Can't we go to a cheaper place than that?' "

Compounding the problem, Stone says, "the costs outside of the studio cost of getting a record made have been inflated. The cost of promotion is up, because you've got to buy your way into distribution. The cost of pretty much everything, including talent, has been inflated, whereas the actual studio cost has stayed flat or even gone down a little."

David Bendeth, until recently senior VP of A&R at RCA, agrees. "Today's environment is really different. The studios are not going to be as busy, because there's not going to be as many acts signed. They're going to have to take a hit; the producers are going to have to take a hit on the front end and get, probably, more on the back end. And the artists are going to have to be more prepared to really compete. A starting budget for any new act was probably around $250,000, and it's probably going to be more like $150,000."

THE SILVER LINING?

Interestingly, many industry professionals register a surprising degree of approval with regard to current conditions. Like the bursting of the dotcom bubble, they feel that a market correction applied to the music industry will produce positive change along with hardship.

"I think there's a great movement on the part of A&R people to not go into a project unless they feel that the artist is ready and all the songs are there," producer/engineer Joe Chiccarelli says. "The days of 'Let's go in and do some tracks and see how it goes'-I don't see that happening much."

Bendeth says, "For the last 20 years, every time I made a record, I thought, 'Is there a way to do this cheaper?' With a new act, especially, being in debt that early in their career puts so much pressure on them. The question became, 'Why is it that records cost so much money?' A lot of the reason I came up with was because [artists] are not prepared in the first place. So the key has always been preproduction for me: knowing what you're going to do before you get to the studio, as opposed to writing your songs in the studio, which a lot of people do."

While the studio-especially high-end facilities offering services akin to a four-star hotel-traditionally represented an artist's comfort zone, a place in which they can relax and let inspiration flow, it is a luxury fewer acts can afford today. Yet, Chiccarelli says, there is an accompanying upside. "I would much rather work in a situation where everybody feels the artist is ready to record and has the right material and that the team of people is the right one," he asserts. "It only makes for a better record and keeps all parties happy."

Another consequence of a contracting industry, coupled with wholesale changes at the executive level, may be a higher-quality product. "There's not enough development happening," Bendeth says, "although I think you're going to see a movement toward that, because you're going to have all these people out of work, and what are they going to be doing? Going to the independent sector. The industry is falling in on itself, so you're going to see, I think, a lot more of people doing things for passionate reasons: getting behind an act and doing everything they can to push it and maybe not getting their paycheck at the beginning."

Drew Young, booking manager at Clinton Recording Studios in New York, agrees. "The indie market seems to be growing, whereas the major market is shrinking." That's a big part of the studios' predicament, because an independent project may be budgeted as low as $25,000, he says. "Their sales projections seem to be growing very well, but for them, a hit record may be 40,000 units."

With the downward trend in budgets and the reliance on more indie clients, many commercial studios now have to rethink their own business models. Chiccarelli says, "Obviously, studios have to look at this differently."

SEEKING SOLUTIONS

Seeing the overall number of recording projects fall, existing budgets shrink, and more and more recording services rendered at private, DAW-based studios, commercial facility owners increasingly meet the serious challenges they face by diversifying their services. Many studios, such as Avatar and Sound on Sound, have built small production rooms akin to a private studio. These suites, usually DAW-based, offer the advantages of high-end studio services and infrastructure for the resident producer and built-in tracking and/or mix work for the facility. Sound on Sound has also established a producer/engineer management company, SOS Management.

Further, Sound on Sound recently opened a fourth studio, a Pro Tools room tailored for preproduction and overdubs, in a move to retain the client who might previously have cut basic tracks in one of the facility's main rooms and then taken the project to their personal studio for subsequent work. Royaltone Studios' Scobie is considering the same move. "We want to expand two rooms we've got and make it a really cool Pro Tools overdub area," she reports. "A lot of people that have Pro Tools don't have a soundproof overdub area and don't have the environment that we have here."

In lower Manhattan, Steve Rosenthal, owner of Magic Shop-long a one-room studio located less than two miles from the World Trade Center-has diversified in different directions, building a restoration room that has attracted a sizable amount of transfer and archiving work, including the Rolling Stones Remastered series in 2002. As co-owner of New York club the Living Room, he is recording a second collection of live performances from the venue for his Stanton Street Records.

"I worked really hard on rethinking the whole studio," Rosenthal says. "Having the adjunct of the restoration room is really helping a lot. I don't think you can be a one-room studio or a one-function studio. The music business is obviously very confused and continues to contract, so you have to figure out ways to get around it."

Avatar Studios is also in the process of launching a label, 441 Records. "It will be licensing titles from overseas," Passante says, "and distributing them in the U.S., at first. We'll be signing acts down the road as well. If you can only book X amount of days per month and the budgets are going down, but the demand to have the equipment is still there, you have to tap into other channels of revenue."

In the studio business, the maxim that one is better off investing in real estate gains resonance with every illegal download and each new round of major-label layoffs. Every audio professional will attest to theirs being a business of passion over profit. But against the current backdrop, the meeting of art and commerce more closely resembles a collision.

"One thing is for sure," says Rose Mann Cherney, president of Record Plant Studios in Hollywood-a renowned facility that nonetheless has not been immune from the declining quantity of recording budgets-"the times are a-changing, and the successful business is going to be the business that changes with the times, like it or not."