Bands at New York's CMJ music festival eye economy

NEW YORK (Reuters) - Band members and music industry professionals cast a wary eye on the slowing economy this week as they gathered at the College Music Journal's annual music festival in New York.

The global economic crisis comes amid the music industry's dramatic transformation. Once a business where major labels were king, now bands often sell music for free online and instead make their money in different ways from playing live shows, selling merchandise and scoring advertising deals.

Matt McDonald, vice president of CMJ Network, told Reuters that attendance was high this year but the outlook for next year was less certain for a festival which has helped make bands like R.E.M., Red Hot Chili Peppers and The Killers.

"There's definitely been some concerns about the overall economy," said McDonald. "Are people still going to have the entertainment budget to go out, spend money for tickets and beer, merchandise from the band? That's certainly a big question."

The 28th annual CMJ Music Marathon blanketing New York's Lower East Side hipster haunts this week remains a big draw for bands, promoters, labels and fans wanting to tap into the independent music scene.

"We're doing great this year," said Martin Mills, chairman of Beggars Group record company. "But it's been an ongoing struggle for our industry. We've been hurting for awhile. Now the whole world is experiencing that."

For garage bands to stadium acts, there has been a shift to generating revenue from live shows, merchandising, licensing fees from television, film, and commercials, and selling individual songs on line.

But Shonali Bhowmik of New York-based Tigers and Monkeys said diversification has its downside in a troubled economy.

"You get offered a scoring job on television, but they want to pay very little or nothing because they think you should be grateful for the publicity," said Bhowmik.

Higher costs, including gasoline, food, hotels and equipment, have cut into an already slim profit margin for up-and-coming acts.

"You were paying $1.80 a gallon and suddenly it's $3.80," said Bhowmik. "The cover charges haven't gone up. The concept that you're going to be the next Nirvana is a nice idea, but most musicians almost just do it to have their art out there."

Other artists had similar stories about touring costs.

"When I play in (my hometown of) Chicago I have a four-piece band," singer/songwriter Joe Pug said before taking the stage here. "I tour with my manager in a small car that gets better mileage."

Duncan McKie, president of the Canadian Independent Record Production Association trade group, said "For our industry it's been an ongoing struggle."

"We just hope that we appeal to a niche audience that will not be affected. Canada has mechanisms to help bands starting out with touring costs because you have to travel and tour in the U.S. You can't just tour 10 cities in Canada," he said.

(Reporting by Robert Gibbons)