Thoughts About the Music Industry
By
I was reading an article in the Tennessean this morning on the state of the music industry. Sales for music labels have continued to decline, and the writer stated that the downfall of the music industry started a decade ago when the original Napster hit the scene, and has been in a free fall ever since.
At this point in the game, the music labels’ perspective about their customers are, at its core, that they are crooks. Their reaction to new technology has been knee-jerk at best, and instead of understanding why a large portion of our culture would prefer to steal their music, instead of pay for it, has baffled them to no end. The reason they haven’t been able to figure it out is because they’re missing a key element to the cause of their problem, themselves.
When a large percentage of the population–at least the part that consumes your goods–feels comfortable enough to skip paying you for your product when offered the chance, there’s usually a good reason for that, and it’s not because people are bad. It’s human nature to not feel remorse about a negative behavior when you feel that negative behavior has been perpetrated against you first. In the case of music labels versus consumers, that’s exactly the case.
For as long as I’ve been alive, and consuming music via cassettes and CDs, I’ve felt ripped off by music labels. It may not have been a conscious feeling or thought, but there has always been that sinking feeling of dissatisfaction. In the past, I used to be marketed and sold musicians as a product, and in order to get that song or two I liked, I had to buy the entire album. However, most of the time, the album was crap. At least half of the songs were poorly written and performed songs, most likely forced onto the artists by the label.
The labels created a comfortable business model for themselves, and they did this by:
- Influencing and controlling radio, thus controlling what music you could listen to or not listen to
- Influencing and controlling retail store promotions and point of purchase displays
- Controlling the price of wholesale music to retail outlets, forcing retail prices to cost as much as $5 for a single and $18 for an album
There wasn’t a good way to discover good music, other than the mediums they controlled. There also wasn’t a way to affordably buy music either, because they influenced or controlled the distribution channels. All they really needed was one-to-three good recordings from an artist, and they could sell an entire album (or a way over-priced single.) Life was good for the labels…then came Napster, and more preemptively, the Internet.
The Internet provided a utopia for music lovers. It created online music communities, like last.fm, that would keep track of your music tastes, connect you with other like-minded music lovers, and make it easy to discover new music–especially music from independent artists. The Interent also provided the ability to get your music instantly (illegally and legally) and significantly easier to share copies of your music with your friends. It in essence, took away the control of music labels.
The world of online music communities, digital retail outlets, and even the ability to get music for free, empowered the the music consumer for the first time. For too long they had been ripped off by the music industry, and the new online world of music made that all too obvious. It wasn’t difficult for people to download and share their music for free, because consumers felt they were owed that music. For every album they purchased for $18 that only came with two-to-three good songs, they were owed not only the remaining songs that sucked, but both compensatory and punitive damages.
The point I’m trying to make is that people–minus desperation–do not steal from those who haven’t stolen from them. The profits made by music labels all these years–the money that has made them so fat–has been stolen from music consumers, and the Internet has allowed their revenge. More to the point, the music labels are the crooks, not the consumers.
A World Without Big Labels
Big labels in their traditional form will, or at least should, die. The future of music, which to some degree is already here, is decentralized music promotion and distribution. This world includes:
- Transparency of music. Consumers can now sample all of the songs of an album before they choose to buy and download it.
- Reasonably priced singles. Instead of having to purchase an overpriced CD of a single, consumers can now purchase the single at a reasonable price.
- Promotion for all. Independent musicians can now promote themselves online with affordable tools.
- Talent trumps money. With the amount of musicians that are competing for the attention of music lovers, it’s impossible for every good artist to become widely popular. However, the chances of being discovered and making a living being a musician has now exponentially increased.
- Radio of choice. Consumers are quickly discovering that they can control their music listening experience. They have more radio choices (via satellite) and now have endless listening choices from online streaming.
The big winners from this change are consumers. They now have greater diversity in the music that’s available to them, they have significantly more control over how and where they listen to music, and with the onset of special digital packaging that includes music videos and interactive experiences, they are getting more for what they pay for.
I see only one scenario for big music labels if they want to survive. First, they need to realize that they are the crooks, not the consumers. Their greed and control is what caused them to be hated and disrespected. Secondly, they will never be able to sustain the model of the past. If they don’t dramatically change, they will die, just like their business model. Third, they need to join the party–the online party.
If I had a big label–one that actually had some money left to spend–I would build or purchase a Web site that empowers musicians. A site and service that acts as their virtual agent. I would then change the definition of representation. Instead of exclusive long-term deals, you simply take a percentage of sales for albums and/or individual songs they have you manage. The site would allow almost any musician to be represented by the label, as long as they aren’t too shitty. It would also play well with others. Meaning, it would help them make sure their music is distributed and available from all major (and even minor) music sources (iTunes Music Store, Amazon.com, eMusic, etc…) Musicians would seek out their representation, because they are well networked and most of all, fair. Fair to the consumers and fair to the musicians.
