The traditional idea of a “label” is going away. The existence of that particular line of business is an accident of history. Not a bad thing, but dependent of a set of circumstances (including medium and distribution) that existed for, say, 50 years.
There will still be a role for managing and promoting talent, but it will look more like marketing and less like distribution. It will have less dependence on intellectual property in the form of recordings (which are easy to reproduce) and more in the form of brands (which are hard to reproduce).
In startup parlance, the “moat” will be the artist’s brand, not the recording.
I don't understand what you mean by brands being hard to reproduce. cf. fake Rolexes... except at least Rolex still has the vanity element of the purchase going for it (ie. people would RATHER pay ten grand for a timepiece).
But in a way it's a shame for the labels, because while obviously there role as gatekeepers and distributors has been usurped, they do have extensive back catalogs which should now be more lucrative than ever due to the enhanced availability. Whereas before shops could only stock so many records, so most of the back catalog languished in obscurity or mail-order catalogs, nowadays it's on an almost equal footing with new releases. This was music the labels invested in and nourished for decades, but unfortunately due to the effects of piracy (including the white-flag cooperation with Spotify), they won't be able to harvest the fruits of their labour.
As for the artists themselves, frankly I think music is going to suffer. For established acts it might mean more freedom, and for fans more music, but the risk-reward relationship has been all messed up hence why despite having double the population we have nowhere near the quantity of great young songwriters launching careers as we did in the 60s. The 'get rich, be a star' allure has evaporated, replaced with the ordeal of American Idol / X Factor.
Right, this is the music industry adjusting to the freedom of information, one massive merger at a time. If they keep focusing on distribution, they'll keep losing money with piracy. I doubt music will ever be totally free, but they should at least focus more on shifting the market to branding and merchandise rather than fight an idealist war where no one commits piracy despite the ease.
Piracy is actually lower now on the list of how people get music for free. Number 1 is YouTube. Ad supported streaming and radio are also up there.
Piracy has been falling as a primary mover of free music for quite a while now.
The shifting of the market to branding and merch has been going on as long as I've been in the industry. I was a big part of it at Warner for a while, in our direct-to-fan initiatives.
The problem is where money in these companies is invested. They need to be technology oriented entities, but don't want to be. Apple cleaned the clock on that, and they let them.
AFAIK Youtube has deals with the labels so that they get a cut of advertising revenue for any music video. Also for anyone that uploads cover versions etc.
I wouldn't be surprised if that income is quite substantial.
Do you mean the total revenue isn't that substantial, or the cut of the income that flows downhill to respective people (like the artists, managers, etc) isn't?
Any artist royalty statement. (I manage a number of indie musicians). Same goes for Spotify. You are talking pence for hundred's of thousands of "views".
Probably costs more to account it to the artist than the actual royalty.
"Youtube partners will make in the range of $2.5 to $5 per 1000 video views The most popular stars will earn $5 per 1000 views. This can really add up if you have 1 million views per video. Nigahiga for example, will earn $5000 per video they put up. This range can vary depending on number of advertising clicks."
I don't want music to ever be free. I want my artists to be able to continue their craft and keep their concert costs relatively low. I want to pay them for their goods :) The people I listen to tend to be good enough for at least a dollar a song.
The problem with this is it assumes you can reasonably get to their concerts. One of my favorite artists is playing a gig on his home ground next Wednesday. It's 1,500 miles away from me. To the best of my knowledge, it's been years since he last played within a thousand miles of my house. I haven't seen him perform since 2006.
Also, I don't know about you, but the idea that you should support musicians by buying "gear" (I assume you mean stuff like t-shirts) just seems very, very mixed-up...
This is why I love bandcamp - pay as little or as much as you like is a great system. I, and others I know, have downloaded something for free, liked it, and gone back an given the artist money (along with a bunch of new sales through recommendations).
I'm fairly sure will be almost always free (except for live shows, and physical records as merchandise).
Music was free before copyright came along in the last couple of centuries, and is natural for it to be free again now that distribution and sharing is even easier. Already there are plenty of people releasing their music for free, and there is no reason why everyone shouldn't do the same.
Without the sales to support such a large "industry" of lawyers and business people, and without the need for many of their services (marketing and distribution, at least), are major labels not irrelevant?
With dwindling sales they seem willing to further exploit their one resource, the artist. Artists on twitter are talking about getting monthly cheques for ~7 cents from Spotify. Guess who made that contract?
I feel like we're about to hit a new low for professional career musicians. Their existing structure is falling apart (and it should) but the replacement is not quite ready. Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant.
It's a tough gig. Signing to a major label is not a great move financially (cue the albini essay), they're in dire straits and will exploit you for every dollar you can generate, leaving you with little but debt.
I hope that in the future, the fat will be trimmed from the industry (good riddance) but a sustainable model will be created where the artists and minimal management make healthy livings without being run ragged just because they devoted their lives to making music.
One of the conclusions one could draw from your comment is that the wrong kind of people (professionals) have been the ones involved in developing musicians' careers. ie, lawyers, corporate marketing-type people, etc.
As a professional musician I think this is correct.
The biggest challenge that I face is in my career (besides the creative challenges of creating compelling music) is this: there are very few smart, talented people who have an initiative to help me develop my career AND the skills to do so.
My current annual income is X, derived primarily from concerts.
If I had the right people helping me this could easily become 6X, and I would gladly pay my team of part-time
helpers a substantial percentage of equity to make it happen (rather do more than less, bigger pie to split).
But chances are the people with the talent to make that happen would rather do other things that will:
- make more money
- will be more fulfilling than, say, cold calling venues or other less-than-edifying things that, ultimately, make or break a career.
When I read about the idea Derek Sivers had to get people to specialize in 'Muck-Work' I got really excited.
If someone created an oDesk for musician's specialized helpers that were good at a myriad of very limited, but important tasks, they could make a pile of money.
It's easier said than done. I think Derek realized this and that's why we're still waiting for Muck Work to launch...
Does this Muck Work require talking to you/other musicians in person?
I'm wondering if this business opportunity requires a physical encounter or could be done remotely. I actually would love to support musicians and other artists/talented people by doing their Muck Work. One of the problems I've encountered informally is that there are major trust issues! My job requires them to trust me and building that trust is not easy, even in person, since there are so many sleazy MBA fraudsters out there.
Fraudsters specialize in getting people to trust them. Honest helpers, however, specialize in helping. I find that the fraudsters are accorded more trust than me, even though I don't have a scammy bone in my body.
I find it highly rewarding to help others focus on and develop their talents by moving the furniture out of their way. I actually just love seeing artists express themselves and so that motivates me to do their Muck Work. (great word for it by the way)
The way I understand it, 'Muck Work' was meant to be a go-to place for people specialized in all the things musicians would like to outsource. To my knowledge, it never launched (Hey Derek: am I wrong?)
Regarding trust issues, that is an excellent point. It is ironic that you would like to help, but can't for lack of trust.
The easiest way to overcome that is to make small promises, then keep them/over-deliver.
Most people who try to help musicians have good intentions, but are not actually effective. They make promises, then fail to deliver, leading to disappontment for all.
My two cents: a person who would like to help should just identify an area in which they have real experience, and focus on that, insted of 'dabbling'.
For example, I have professional photographers, sound engineers, designers who essentially donate their time, or work at a huge discount, as a way of supporting my work. I find that VERY helpful.
As a counter-example, I've had people offer to help cold-call potential clients, but these people have no experience cold-calling, so it has been a big waste of time.
oDesk has been infinitely more helpful in a matter of months than any of the 4-5 people in 1st world countries that I've had try to help over the years (which led, in turn, to me being extremely cautious about help).
> Today's professional musicians have to tour constantly to be profitable enough to survive, not to mention constantly churning out new tracks to remain relevant.
I think this is just the nature of the beast, so to speak. Due to the large number of musicians, the very, very low cost of recording a track, and the global, nearly free distribution channel of the Internet, the value of a pre-recorded piece of music is practically $0.
However, going to a show, seeing a real performance, feeling the music, etc etc, is still worth $10 a ticket to me, even for music that isn't particularly good. You can't copy/paste that experience on to someone else's iPod.
Your comment summarizes where we are today, but maybe there's other solutions in the future?
Right now we have basically the two mentioned modes of contact with the artist: listening to their released music and seeing them perform live. Already big concerts have been adding revenue streams with things like VIP tickets or a chance to meet the artist, but what about more streams in the online domain? David Lynch is a bit of a pioneer in this space, from what I gather his website has a paid-subscription model where you get access to a ton of his work from finished pieces to random things he does through the day. If some of my favorite artists had networks like this I would consider subscribing.
If you really want to change the game, first change the vocabulary and context and the game will change itself.
You mean:
>> the cost of a pre-recorded piece of music is practically $0.
The value remains the same; The sum of the marginal benefit of hearing the music each time, which is likely greater than the $0.99 that people pay for a song on iTunes (otherwise they wouldn't pay it). If you aren't willing to pay for the song but is willing to copy it from someone's iPod if given the option then the value of the song is the opportunity cost of doing the actual copying.
Apologies in advance for glibness, but, who cares? Record labels are irrelevant.
The capital costs of producing and (more importantly) distributing popular music have fallen through the floor. The heavily-promoted music products people think of when they think of EMI or Warner are in large part contrivances that exist primarily to perpetuate EMI and Warner.
The future barely even belongs to independent labels like Matador. Eventually, the Internet and commerce are going to figure out how to let any artist effectively be their own "label", outsourcing every function served by a label today to some Internet startup.
This is one reason why "buying the whole music industry" would be a stupid decision by Apple. We're always staring so intently at the next 12 months, but if you move your gaze upwards just a few fractions of an inch you can see that none of this stuff is going to matter. Labels are a bad investment.
So what? Exactly what does ADA do that gives them a competitive advantage that will hold over the next 10 or even 5 years? Their expertise at merchandising? Because really, isn't ADA's core value proposition "getting CDs into the racks at Best Buy"? Who gives a shit what's in the racks at Best Buy? We really think people are going to be buying music at Best Buy 5 years from now? No they won't.
No, ADA also ships to indie retail world wide, manages relationships with about 70 DSP's, plus the rights of those relationships (i.e., some get the full record, some have to bundle, some only take AIFF files, etc).
TuneCore or The Orchard or CD Baby sort of do the same thing, but without international reach and without all the DSP relationships.
Stuff doesn't just magically show up on iTunes, Spotify, Rdio, MOG and god knows how many other places (including promos to radio, etc). It also doesn't automagically show up with cutouts and exclusive tracks depending on the retailer.
Also who do you think manages publishing catalogs for bands like Radiohead (Warner) or Arcade Fire (EMI)?
Best Buy will likely eliminate music from their planograms by next year. So will Target and Wallmart at some point. They mostly have. That doesn't mean that an upstart can disrupt the space. There are huge market barriers to entry.
If (stipulate) digital distribution on iTunes, Amazon, Spotify and Rdio is going to account for the majority of all music sales in 5 years: exactly what is the "market barrier to entry" a middleman firm like ADA or a "major label" like Warner can rely on? Can you do me a favor, because you know more about this than me, and be as specific as you have time for?
I'm not bullish on the prospects for small music startups. I wouldn't start one. But that doesn't mean that the middleman roles in distribution and promotion aren't going to be taken by some new entrant.
Compare: Ticketmaster has what seems to be a mortal lock on the business of music performance. But concern promotion is a relationship driven business where firms compete to lock up exclusives with a few venues in each market. None of those venues are particularly interested in vertical integration. So Ticketmaster is likely to hold on to their market position until forced out of it by a huge company or government action.
Why, exactly, is Amazon or iTunes going to abet attempts by firms like Warner to lock up distribution? Amazon has already aggressively positioned themselves up against the major incumbents in publishing. Remember, all they have to do for music is to let more small labels interface with them; unlike the agency debates in publishing, they don't even have to fight the business model.
I just don't see it. However complex you think the music world is, so that we need firms like CD Baby to get artists listed on iTunes, I just don't see why 5 years from now a label like Kill Rock Stars is going to need the relationships it needs now to gets its products into the mainstream market.
It is going to get easier for companies like KRS, and harder and harder for firms like Warner. It just looks like it has to.
You're assuming all the record labels do it distribution.
But they also do management. Without a startup that tackles the management side of things (which is pretty complex relationship wise, this includes relationships with venues and between producers and bands, just so much) attacking distribution is only half of the issue
Labels provide one or more of the following to various degrees of capability:
- Management
- Tour support
- Publicity (photos, PR, etc)
- Radio promotion
- Video promotion
- Tour routing and agent of record
- Marketing
- Distribution and Sales
- Websites, fanclubs and direct-to-fan
- Merchandising (physical and e-commerce), including distribution/sales (Hot Topic, etc)
- Art
- Video production
- Online marketing and community management
- Partner relations
- Licensing management (sync, etc)
Not all labels do all of this, it is case to case. Even labels in the same parent corp (UMG, EMI, Sony or WMG) don't do all of these. Indies vary as well.
What is the subset of these services that are (1) competitively defensible and (2) viable?
To be defensible, a major label should hold a significant competitive advantage in providing the service.
For instance, distribution and sales has been locked up by major labels for a long time because they have the infrastructure and relationships to strike deals with major retailers.
But direct-to-fan isn't defensible and websites aren't defensible.
To be viable, the service should matter 5-10 years from now.
For instance, video promotion is likely to be relevant for many years; it's expensive to produce an excellent music video and channels like Youtube mean they continue to matter.
Terrestrial and satellite radio promotion on the other hand is going to be irrelevant in 5 years.
The labels still have one very vital function - marketing. While it's true there are great musicians out there who are also marketing geniuses, most of them aren't. There is always going to be a number of people involved in helping a musician's career. You can call that group whatever you want. Right now it's called a "label".
I'm not suggesting that Steve Albini is suddenly going to become a merchandising genius, only that Warner Music can't monopolize music marketing talent. Small firms will have a hard time getting a foothold in retail music, but as retail music starts to matter less, more small firms will enter the market to start bidding down the price of "marketing" and "promotion".
I don't think you can expect creatives like musicians to all of a sudden start focusing on the non-music creation aspects of their businesses. I think "business" people will still exist for creative musicians. Record labels dying might mean these business people will no longer exist in that form. It will simply shift from commoditizing the musicians into commoditizing the business people, which is how it should be. After all, who's more important, the artist or the people who manage and market the artist?
I think his point was that new startups and markets will emerge to help artists with the business side of making music. (Promotion of music, concert/tour management, advertising etc...) They're already starting to appear.
So that may not be much of a lock-in for the big music labels.
I think you should take it as an axiom that if the major labels don't have anything viable that they can lock up, there won't be anything that they stay significant in.
So long as terrestrial radio matters, they can parlay their ownership of that channel into many other offerings.
But one by one, the things that major labels maintain structural advantages in are falling into irrelevance.
One day, and it won't be long from now, the last relevant thing that major labels own will fade into irrelevance. And then all the other things that major labels "do" will be "done" by lots of other companies, more agile companies, companies that focus on just those things. And that'll be the end of the major labels.
This isn't exactly insightful stuff, is it? I feel like you can pull case studies about it from the history of 20th century business.
2 billion doesn't sound like a lot of money to me.
Apple could use, say, a third of its cash and own the entire music industry outright? not that the labels would ever sell, but still. amazing how tiny that industry is given how much noise it makes.
A bit above $4bn total, according to the article: "recorded music unit" goes to Universal for $1.9bn (£1.2bn), "music publishing unit" goes to a consortium led by Sony for above $2bn.
EMI had been bought by its (now insolvent) owner in 2007 for $4.2bn, although it was apparently widely overpriced.
> Apple could use, say, a third of its cash and own the entire music industry outright?
Maybe less than that, a third of their cash reserves would be what these days, $26bn? The regulatory agencies would also have to agree, of course.
No point. Apple has been contributing to the death of the big labels for years, both through iTunes, which artists big and small can use, and by putting high-quality hardware and software suitable for production into the hands of the little guy.
The business models are fundamentally opposed, and Apple's is winning. Buying the big labels wouldn't change that, it'd just be throwing a bunch of money at shareholders who hung on too long.
Unregulated markets do lead to monopoly. Why? Because it is the very nature of competition. There will be a winner (or a few) and most will either be acquired or they will die out. With monopoly comes political power and this leads to crony capitalism. Then the monopoly can now dictate prices and influence both legislation and government regulation. The idea that companies will compete in perpetuity and benefit consumers as a result is flawed. Competition will not last, someone will win.
I would be inclined to consider MS Windows had monopoly on market of desktop OS, and that particular market had little government oversight, essentially a free market. And Microsoft did what any rational monopolist would do, use it's monopoly power to stop spread of any other OS (by deals with OEM,etc), tried to enter other markets by use of monopoly, etc etc. Standard oil comes to my mind as another monopoly, but the market of petroleum was essentially not that free.
Now you may argue that the OS market was not technically free (as none has been in history of mankind), but I don't see any reason that why a better product would not gain monopoly in free market, and then, barring any restriction, why would the monopolist not (ab)use its power to maintain monopoly.
I don't see how Standard Oil was a monopoly, it only ever had at most 60% of the market. And even then, oil prices fell substantially during its reign so what's the problem?
Windows for all its market share, has still coexisted with Mac OS for decades. During that time computers have become more affordable, more prevalent, and more useful and having a dominant single platform seems to have been beneficial to many industries. So again, I don't see what the big problem is.
The only monopoly that seems genuine to me is (/was) DeBeers diamonds, although the fact they have no control over the sale of second hand diamonds makes me question its authenticity.
Can't we admit that monopolies are basically a myth? Why do people keep bringing them up as if there's numerous examples of monopoly abuse or monopoly-induced misery.
>> Can't we admit that monopolies are basically a myth? Why do people keep bringing them up as if there's numerous examples of monopoly abuse or monopoly-induced misery.
Exactly. The only monopolies that have ever existed in history are ones given monopoly privilege by government force.
Monopolies do exist, especially in developing countries. And they tend to control prices when no competition is around. The only reason why monopolies are no longer as dominant in the United States and the West is because of the outlawing of monopolistic practices like hoarding or selling products below costs to kill off smaller competitors. Again I don't deny that government involvement sustains monopolies but monopolies are first created by the free market, and then they kill that very free market that brought them to the top. I think we should do away with campaign contributions and go straight with public financing.
Well my point is that "free market" will destroy "free market". The idea is an unsustainable model because once a winner emerges politics gets involved. I do not deny the fact that government involvement can help sustain a monopoly, but my point is that the creation of a monopoly starts with the free market.
I'd argue otherwise, in any other case, but since a label's success solely depends on the success of its artists, which isn't always predictable, and considering the shrinking number of artists wishing to be signed onto a major label, there's a possibility of the music labels consolidating even more.
Then again, by the time they do, they just might stop mattering altogether. I keep hoping for self-implosion, anyhow.
I think the innovations in social media and file sharing will help artists become more independent and distribute their work directly to consumers. The trick is finding a way to monetize this efficiently and minimize the risk of people just getting it for free. Maybe adding advertising per download would be a viable option, I think there are some start-ups that are already doing that.
Wow. I knew the labels' economic relevance was declining, but I'm amazed that one of the four key "factories" in the commercial music industry just changed hands for $1.9 billion - less than half of Dropbox's recent valuation.
That's been mentioned a few times, someone even said four big tech companies (e,g. Apple Google Facebook and Microsoft) should just buy one each and cross-licence, the customers would love that.
The question is, is this recession-based consolidation, or is it part of an inevitable decline of the music industry as the idea of "major labels" goes away?
I'd be more worried in the idea that there is no competition in label's market at the largest scale. Supposedly label contracts aren't exactly very artist friendly already, and I can't imagine as an upcoming artist it's going to get any better.
On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet.
>> On the otherhand, there are now a million indie labels, and lots of success stories from people using the internet.
Exactly. As long as there is free competition among labels (i.e. music producers) there will be continually lower prices (i.e. better contracts) for musicians.
And the "million indie labels" have brought much more competition.
I would say overall it is a great time to be a recording artist.
I would like to see the quantified evidence of an Internet band making it through full ascension without ever touching one of the big 4/3. It is REALLY hard to find.
It's a great time to be a recording artist and be self sufficient. If you want to be the next U2 (or if you are U2) it's rather difficult and will remain so.
People speak about disruption. This industry is ripe for it, but it won't happen until a lot of the past is weeded out through attrition and better players take hold. It'll take an inversion in corporate structures.
Right now its too easy to never sign a band and just mine catalog for a long, long time. Hence the value in publishing assets, and the value in mechanical for catalog.
As you can see by my previous reply, I'm kind of cynical on this. I agree with what you just said, jwallaceparker, but I'm looking at the other side of the same coin.
Competition is good and the web is also great but I think too many indie labels pollutes the market with crap and eventually indie labels will be known for selling crap records, gimmicky records, or weird artists not because they're good but just for the sake of weirdness and novelty.
I also think the Internet is overhyped in terms of letting indie artists get heard. It makes a great news story but it's still incredibly rare, possibly even rarer than getting major label contract.
I'd say more competition at high levels is good, there's too much at the smaller level, and the web makes it easy for any schmuck to release music no one cares about. There has to be a better way!
When I was younger I used to be one of the schmucks releasing music no one cared about online so I'm allowed to say that haha.
Why are you assuming small labels want to grow bigger? Many indie labels are owned by or have contracts with larger labels to provide wider avenues of distribution. Alongside with those, there are plenty of small labels and small artists, verging on your "schmucks" definition, that are perfectly content with their sales and the size of the fan base they have.
These are small artists and small labels who often record music because they love to do it, and they chose to do it in whatever way is most comfortable for them. Not everyone in the music industry is in it for the profit.
Which is completely unfounded given that, with Spotify, one pays a flat fee to listen to as much music as one can; there is nothing stopping him or her from listening to the entire album.
Soon after Apple (Computer) set up business, the Beatles' record label (Apple) asked Apple to change their business name. They didn't, so Apple (Computer) signed a contract with Apple to never enter the music industry.
They broke this twice. Once in the 80s when they released music hardware, and in the 2000's when they founded iTunes. The Beatles weren't pleased about this contract breaking, so they denied permission to distribute the Beatles on iTunes.
I think the Beatles situation has to do with Michael Jackson having owned the Beatles catalogue for a time then Paul Mcartney bought it back (I think?). I'd start your search with that in mind.
Also, the Beatles are on Apple Records which was/is their own label (but still under the umbrella of another label, possibly Columbia, I think).
My broad strokes are correct but the details are questionable. I'm a big Beatles fan so I had to take a stab at answering your question. Keep those facts in mind on your search for answers.
AFAIK. Michael Jackson owned the publishing rights to the Beatles songs, not the Beatles recordings. Basically the sheet music rights, royalties when Beatles songs are played on a jukebox or the radio or someone does a cover version of a Beatles tune.
It's a complicated arrangement, When in 1989 Paul McCartney wanted to print the lyrics to Eleanor Rigby and other songs for a tour, he discovered he'd have to pay a fee to Michael Jackson.
The buzz/concern about the merger is semi-premature. Universal will be fighting for years in order to pass regulatory in the EU. IMPALA, who tied up the Sony/BMG merger for 3 years, is dead set on blocking the UNI/EMI merger: http://www.musicweek.com/story.asp?sectioncode=1&storyco...
Who knows what the industry will look like in 3 years. UNI might even decide to bail on the deal by then.
In my world, concert festivals & blogs have replace the need for major labels marketing role, and itunes / amazon / cdbaby have replaced their manufacturing / distribution role.
That said, I've seen friends of friends at iTunes start micro-labels that seem to focus more on online & concert only efforts.
I'd be more concerned about consolidation if it was the 90's again.
Update: Yes, you guys are right. I'm spoiled - I live in Austin "live music capital of the world" and have mostly non-pop taste in music.
In my world, concert festivals & blogs have replace the need for major labels marketing role
In your world perhaps, but a lot of concert festivals and blogs have heavy involvement from major labels in promoting content. It might look like these blogs discover bands out of nowhere, but I promise you they are forwarded a ton of content from labels.
For example, take Mo'Wax from back in the day. Under James Lavelle they cultivated an impressive collection of up and coming artists in the electronica scene. Finding similar artists became a breeze by browsing through their artist roster. Similar things can be said about Breakin' Bread and Metalheadz
Problem is that record labels became to large and too broad. Their only real purpose to create revenue instead of giving exposure to artists.
I think that netlabels have to start being as selective and driven as real labels.. Look at Jahtari, they have a good, clear "image" and are very consistent.
Why do we cringe at the idea of single-digit numbers of record labels, movie studios, or publishers, but not at search engines, operating system vendors, etc?
What I find a bit strange is that if this where any other business, where one of the major players bought up one of the others, then this deal would need to be approved by the US, EU an perhaps others. Aren't the politicians concerned with competition in the entertainment industry?
This is sad because Universal was the most beefy of them four.
It was something like 1:1:2:3 (e/w/s/u) weighted by catalog ("impressions").
Now it would be like 1:2:4
Universal controls the more than half of said impressions, speaking of western mainstream music.
(Luckily, they also seem to be the sanest of all four)
I actually interpreted the title as having the exact opposite emotion - the frustration that there are only three oligarchs in this entire business now.
It was frustrating to me personally. Of the 4 sharks, EMI was the most forward thinking one, at least to a degree a major label can be. If commenters recall, they were the first to jump onboard with iTunes, and explore other digital delivery avenues. They also tended to sign promising artists that graduated from smaller labels. A lot of artists and fans considered EMI the "biggest indie label".
EMI has been a shell of its former self for years though. No real new signings, and only Coldplay. They had a progressive streak when they hired some digital natives, but they left out of frustration quickly.
Yeah, that stood out to me too. Consolidation like this is one less to deal with, and it gets rid collusion between parties that should be independent, but fewer parties means less competition and fewer choices of vendor.
Micro-labels are cool and online services like Rdio and Spotify are great but is there anyone out there doing anything in this space besides these players?
It seems like this industry is prime for disruption and I'm not talking about the kind of disruption the current startups are doing. I see a ton of startups focusing on getting music to the consumer but what about startups that focus on grooming new talent for the big time?
We've got YouTube, SoundCloud and the like that make getting heard easy but the onus is on the music maker to spread the word. No one will listen to your song on these sites unless they're being promoted. It would be cool to have a new kind of "major" label that gets you exposure in a way the majors do but without totally screwing over the artists. Most musical acts make burger-flipper salaries and do tons of exhausting work because the deals they sign are heavily favored toward the label.
Or maybe like a universal label like BankSimple (now Simple) but for music labels.
On second read, I think this sounds vague and kind of naive. Oh well. Is anyone doing anything like this that I don't know of or has it been thought of and found to be a bad idea?
I think you have some interesting ideas there. Majors see themselves nowadays only as some vehicle to bring local success towards a global stage. There is still A&R'ing going on, but it is far less long-term oriented. What the record industry should take as an example is in my view other brand-centric business, such as sportswear or luxury goods companies. But the main problem is going to be there is that the industry is too much fixed within their pricing strategies. The main problem started in my opinion already by selling all (CD) Albums for roughly the same amount of money. They try to break through this now by different premium strategies, but when prices are fixed by and large the market has very little dynamic and potential to change.
It's not a bad idea, but there are two major drawbacks:
1) it's not that profitable. Companies that have tried some variant of this include tunecore and rcrdlbl but both dropped the bits that weren't profitable.
2) imagine startups are like bands; the founders will always do a better job making noise than a hired PR agency. Labels introduce politics and want to see success line their pockets, not the artist's. They will always recommend charging for music, rather than giving it away to reach a larger audience.
The "startups are like bands" analogy actually implies a different, more interesting model: what about a startup incubator for bands?
Pick the most promising unsigned bands out of a set of applicants, and give them access to smart folks who have experience with being successful in the music industry along with other promising bands?
Bands don't IPO or get bought out, but a deal for percentage of revenue might still be viable, sort of like a manager/agent contract. I have no idea what the potential upside of a successful band is, so I don't have a clue whether the numbers add up to make the financial aspects of this work the way an incubator does, but it seems like it's worth exploring.
The band would still be in charge of their destiny, unlike with a major label or some more onerous types of management contracts. They would just have a access to a lot of insight and help toward achieving that destiny.
In a world where the web exists, YouTube, all these video and audio sharing websites and tools, I'm not sure the notion of a major music company is needed anymore. Make music, record it, put it out there, be findable, if it's any good, people will like it, share it, trade it and generally find out about it. At most, artists may want to sign up with some company to help promote themselves, but as a general rule, quality will win out in the end. May just take time. On the other hand, if you get lucky you can go viral quickly. Just have a monetization channel active and ready. And there are tons of self-service ones now, not just for the music itself but for related products/media like posters, t-shirts, etc.
There is no really good reason that a "music recording industry" needs to exist any longer.
Before vinyl records people would pay money to see a live musical performance. Operas, musicals, concerts, a live event people can go to and enjoy. The concept of paying money to listen to a pre-recorded performance is a relatively new phenomenon. It only made sense during the short time window when the ability to copy pre-recorded music was expensive. Now that the cost of digital music reproduction is zero, there is no legitimate way for this industry to continue, and there is no real reason for it to continue other than if it is legislated to continue.
Ironically, vinyl is the one segment of the industry that well. It's been growing double-digits percentage wise every year for at least the last 6-7 years.
In 2010, vinyl sales were actually higher than in 1991, the last year the majors were distributing most releases on vinyl. 2011 looks like it could be up as much as 25% over 2010.
Why is this? Well, at least for me, it's a much better value proposition, despite being substationally more expensive. Full size art, much better sound quality, etc.
I would say this is a bad move that reduces competition, but the Big Four have been acting like a Big One for a while, conspiring together against us normal folk who like music.
There will still be a role for managing and promoting talent, but it will look more like marketing and less like distribution. It will have less dependence on intellectual property in the form of recordings (which are easy to reproduce) and more in the form of brands (which are hard to reproduce).
In startup parlance, the “moat” will be the artist’s brand, not the recording.