The group was as much a cash cow as a pop phenomenon, and their hiatus will affect all the people – and the bands – whose careers depend on boyband cash
One Direction’s “hiatus” in 2016 will inevitably be traumatic for their fans, but manna from heaven for those who enjoy sneering at lachrymose teenagers for possessing a taste in music they think is vastly inferior to their own. The other story here, however, is that it is also going to be equal parts painful and costly for the businesses that surround and rely on the group for a significant amount of their income.
Musicians at the same level of success as One Direction operate like global businesses. They become transnational corporations that contribute enormously to the economy and generate employment, either full-time or part-time, for thousands of people in a vast ecosystem of their own making. So those laughing up their sleeve that the group’s split is somehow a victory for “real music” are also laughing at companies feasibly closing and people possibly being laid off – or at least having their incomes slashed dramatically. It’s not just the Man missing out on a fat Christmas bonus – the salaries of everyone from the junior staff at the band’s record label, Sony, to the lighting riggers on their tour could evaporate. Spare a thought, too, for those bands who are dropped, or not signed, when Sony’s revenues diminish.
As the second most successful recording artists in 2014 after Taylor Swift, One Direction sold 3.2m copies of Four, their most recent album, globally in 2014, according to the International Federation of the Phonographic Industry (IFPI). The year before, they were the biggest recording act in the world, moving 4m copies of Midnight Memories. Their record sales may have declined slowly – 2011’s Up All Night and 2012’s Take Me Home have each sold 5m copies globally – but they remain one of the few acts to set record shop tills ringing when a new album is released. Record company employees aren’t the only ones crossing their fingers for a sales spike with every 1D album – so are all the staff at CD manufacturers, distributors and retailers.
It goes without saying that they are hugely important to Sony Music, the parent company of Syco. But just how important? They were the label’s biggest recording act of 2014, outselling AC/DC, Pharrell Williams, Beyoncé, Barbra Streisand, Michael Jackson and more. The 50 biggest albums of last year collectively sold 86.1m copies, and One Direction accounted for 3.7% of those sales. When we focus in on Sony’s share – around 22.3m albums – One Direction comprised 14.4%. To have those sales missing next November, when it might have expected a 1D album, will have a huge impact on Sony.
But, hey, who cares about a bland corporate behemoth losing sales anyway? Well, the impact further down the food chain can be immense. The IFPI’s 2014 Investing in Music report found that record companies annually put $2.5bn of their income back into A&R to find and develop new acts. That means 15.6% of their revenue is invested in what is, in effect, R&D – a figure that puts music ahead of other sectors such as software and computing (9.9% of its revenues go into reinvestment) and pharmaceuticals (14.4%).
That investment becomes all the more significant when you note that recorded music is one of the riskiest businesses, with around 90% of signed acts failing to turn a profit. So One Direction are helping to bankroll a huge number of other acts, both new and old. Some you might hate for being chart fodder (insert your own pet peeves here), but others include Patti Smith, First Aid Kit, Odd Future, Everything Everything, Liam Bailey, Foxes and Giorgio Moroder, whose sales don’t run into the millions and all currently benefit from the 1D windfall.
Record sales, however, are just one part of the story. Being a modern pop band, One Direction will be signed to a multiple-rights deal, meaning that Sony shares in their revenues outside of CD sales, downloads and streams. This includes live, merchandise and sponsorship. As record sales slip, these are the most profitable areas for many acts, and the scale of what One Direction contribute is staggering. Business Insider estimated that in 2013 One Direction would gross $457.5m (£293.6m) from their stadium tour, $300m from record sales, $150m from cinema tickets (for the This Is Us concert film), $15m from DVD sales and $67.5m from merchandise sales.
Then there are endorsement deals, the income from which is rarely made public and depends on the length of the affiliations and what markets the endorsements appear in. For an act like One Direction, this can easily run into the millions per deal. And like Krusty the Clown, they have attached their names to a lot of products – Colgate (including 1D toothbrushes), Pepsi for an NFL tie-in, Nabisco (which sponsored their US tour), Toyota in Asia, Nintendo (for the Super Pokémon Rumble game) and even a Nokia phone in 2011. On top of this, Our Moment was reportedly the fastest-selling fragrance of 2013. Each of these deals are significant; collectively they are phenomenal.
Even if you are horrified by the idea of mere pop singers raking in millions of pounds each, the reality is, as it is with all successful acts, that what they personally make is a fraction of what they collectively generate: thousands of others directly or indirectly on their payroll also have to be paid. Alongside Modest! Management’s estimated 20% cut of the group’s gross earnings and Sony’s share of their income, there’s also the agents, promoters, venues, stage-builders, touring musicians, assistants and road crew.
That said, the band members are not short of cash. Forbes estimates they will earn $130m this year, making them the fourth-biggest celebrity earners of 2015 and the second biggest in music after Katy Perry. In 2014, the Sunday Times projected they had a combined worth of £70m. Yet what the personally make is a fraction of what they collectively generate.
One Direction’s economic footprint is colossal, and they cross so many industries that their disappearance – even for a year – will bite hard across all of them. If they are gone for too long, another pop phenomenon will take their place; that is a fundamental dynamic of the boom-and-bust cycle of all pop music. But there will be a significant economic vacuum until that happens, and when it does, there is no guarantee they will match the scale of 1D’s success. Maybe their solo projects will, collectively, make up the shortfall, but only a few members have ever left a big pop act and had more success as solo artists. There’s Michael Jackson, George Michael, Robbie Williams, Beyoncé and, well, that’s about it.
Before the comments section gets bloated with people cheering at this (in their view) awful pop band disappearing, pause to think about what would happen if the single biggest source of revenue for the company you own or work for disappeared. Think of what that could mean for “streamlining” the staff to meet that month’s payroll. Think also of the millions flowing into the UK in wages, taxes, consumer spending and more that a pop phenomenon can contribute to the economy, and what it would mean if it all suddenly dried up. Suddenly, it’s not quite so funny.
This article was written by Eamonn Forde, for theguardian.com on Wednesday 26th August 2015 15.39 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010