Adopting New Music Business Models Doesn't Mean The Death Of Record Labels

from the not-at-all dept

Wed, Mar 19th 2008 1:41pm — Mike Masnick

There is this incorrect impression out there that, just because I think many record labels have made strategically poor decisions, I think bands should go without record labels in attempting to adopt the new business models that are out there. That's not the case. In fact, I think there's a rather large role for what used to be a "record label" to play in this new ecosystem, and have said so before. Some musicians can try to go it alone, but for many it doesn't make sense. These new business models still require plenty of business smarts and the ability to do marketing -- and that will require experts in those areas. It's just that the expertise needs to be in applying those skills to the new business models (using the content as promotional material and selling scarce goods), rather than the old model. So while we often point to artists ditching major record labels, it's only because those record labels have failed to adapt, and ditching the labels is the only way that some artists are able to try out these new business models.

So, I find it odd when people suggest that a band signing with a record label shows that somehow the model we discussed "failed." Case in point, a commenter on a recent story pointed to a blog post by Chris Anderson about a band he wrote about in his first book, which had originally turned down offers to sign with a record label, but has now changed its mind. The commenter suggests first that I ignored this (when I hadn't yet seen it) and second that it goes against my theory. It absolutely does not. Nowhere have I said that bands should ditch their labels. In fact, I've said that they should sign with labels that recognize the new business models and can handle the "business" side of things, while the musicians focus on making music. In fact, we've highlighted labels such as Nettwerk, that seem to recognize this.

So, once again, for the record: the positions we take around here aren't "anti-record label." They're not even "anti-RIAA." They're actually pro-music, in trying to guide the way for musicians and record labels alike to embrace new music business models that allow them to grow, while giving fans what they want. It's not a zero sum game where one side wins and the other loses. If you understand the economics and the business models, everyone can do a lot better in the end.

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Filed Under: business models, copyright, economics, free, music, record labels

19 Comments

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Hellsvilla, 19 Mar 2008 @ 1:45pm

There's this foundation again
The very foundation of what makes a record label a record label is what is at stake here. They cannot just change their foundation. If an artist needs publicity, they should hire a publicist. NOT someone who is good at running a soundstage to mass replication workflow. All those other things that the labels do for their "talent" is completely secondary. Its more of a "perk" than anything else.

Someone else can supply those things for the artists that cannot do it themselves. There is NO NEED for the labels to do it. For that matter, the labels pretty much suck at those perks anyways.

The entertainment cartel IS dying. There simply is no need for the big labels anymore. The artists are better off without them.
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Douglas Gresham, 19 Mar 2008 @ 2:54pm

Re: There's this foundation again
Yes and no, Hellsvilla. The record labels (particularly the big 5) have made their business a cartel by effectively controlling distribution and supply. In the New World Order of free net distribution, they obviously can't do that, so they can't control in the way they're used to. Moreover, you are musicians don't need a label in order to get their stuff out there. That doesn't mean that artists are necessarily better off without labels, though, as the article points out. It just means that the labels have to demonstrate tangible benefits to musicians rather than rely on their old, artificially controlled business model to ensure there's no choice in the matter.
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Larry, 19 Mar 2008 @ 3:24pm

The Music Industry Will Fall Soon-
The music industry is about to change big time for several reasons. 1. They are fast losing business to pirating software 2. There is potential in the future for an MP3 player that could store all the music ever recorded. (And when that happens, the music industry will be screwed)
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Bruce Warila, 19 Mar 2008 @ 4:40pm

This dinosaur will not die..
The big labels are still billion dollar businesses and everyone that works at labels is not inept. Some of these businesses will merge and some will transform, but the labels are not going to vanish any time soon, irregardless of the MP3 player that can hold every song in the world.

It's great that some artists can go it alone now. However you are right, artists still have to have all of the right tools in the shed. Unless you are willing to think way outside the box (as an unsigned artist) and write a plan and raise capital, I don't care how good your music is - you are probably going to need a record label or a company like Nettwerk to move forward.
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Hellsvilla, 19 Mar 2008 @ 4:50pm

Re: This dinosaur will not die..
Whats the matter... Never heard of Amie Street? there are quite a few indies making quite a nice bit of money by AVOIDING the labels.

Granted, Amie Street isn't going to be taking care of the finer details of getting a roadshow on the road, BUT... I ask you. Why does an artist need a LABEL to do that job for them? What does a recording studio have to do with a roadshow? Nothing.
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Anonymous Coward, 19 Mar 2008 @ 5:57pm

Re: The Music Industry Will Fall Soon-
But will we have 1 GB/s sharing networks to fill it up in our lifetimes?
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Mr. Tunes, 19 Mar 2008 @ 8:07pm

there are mp3 players that already hold more music than people can possibly listen to in a month, and they've been available for years, so i think an mp3 player that holds all the music in the world is kind of irrelevant.

interesting how in the dance and electronic world, sometimes a label is a good route for an artist to adopt simply because that label is a name brand that DJs look to for quality. and some DJs will buy everything that the label releases.

so an artist with a great single or album who releases on their own might not do very well, but an artist with a crap release on a great label can do very well for themselves.
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Marc Cohen, 19 Mar 2008 @ 8:24pm

It Could Mean the Death of These Labels
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Marc Cohen, 19 Mar 2008 @ 8:26pm

It Could Mean the Death of These Labels
Sorry about the error above.

New business models don't mean the death of record labels. However if current leadership continues into the future as they have in the past, it could mean the death of these record labels.

Check out the Ad-Supported Music Central blog:
http://ad-supported-music.blogspot.com/
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Twinrova, 20 Mar 2008 @ 4:19am

Mike, I'm stunned at your position on this.
Okay, let's face it. Most of us here have been listening to music for quite some time. But the question really comes down to HOW are we listening to this music?

We had NO control over what was played on the radio, obviously, and this was always dictated by the labels. If a teeny bopper is hot, despite the fact her lyrics blow, she's on the radio while very, very talented (but unattractive) women struggle to become "mainstream".

The labels have, for years, screwed over both the artists and the consumer. To think that even ONE artist should sign with a label is appalling (please note, though, that some independent labels are actually providing a much better model than the "big guys", but aren't very profitable to take on every new artist).

In today's world, a geek can make a song titled Numa-Numa a worldwide hit. I see artists out there putting their songs on the web for free, just to try and get noticed. If these artists put themselves in the labels' hands, they're doomed and consumers are screwed.

Back in the day, it was very difficult to find artists who weren't mainstream. Record stores seemed to carry more to the labels than they did to the music. Every once in a while, you'd find a really good "mom and pop" music store that carried imports and other unknown artists (it's how I discovered The Cocteau Twins).

Have any of you heard of this group? Chances are, no. Why? Because the "big guys" labels didn't think they were radio worthy.

Mike, I can't agree with you on this one. Even if the labels "reorganize" to a new business model, you can bet they're still going to take the bigger piece of the pie and consumers will be forced to pay it.

Consumers who pay .99 for a song are being fleeced and this price is due to the royalties charged by the labels. So why is it that artists continue to feel cheated by the labels so much, THEY'RE the ones stepping out to make new business decisions?

RIAA must go away. Not because of the lawsuits, but because they represent the greed of the labels, not the music. It must go away because it's antiquated and can not represent every artist in the world. It's a buggy whip in the hydrogen fuel cell world.

I can rant all day about the bad things regarding the labels and RIAA, but I won't.

What I will close with is kudos to all the artists out there who know what music is all about. Not the money, but the recognition.

After all, how much millions do you think Beethoven, Bach, Handel, etc. got for THEIR works? ;)
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Willton, 20 Mar 2008 @ 5:28am

Re: Mike, I'm stunned at your position on this.
Propaganda - n. - information, ideas, or rumors deliberately spread widely to help or harm a person, group, movement, institution, nation, etc.
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SomeGuy, 20 Mar 2008 @ 6:12am

Re: Mike, I'm stunned at your position on this.
"Numa Numa," as it's commonly known thanks to the goofy guy and his funny dancing, is actually titled (I'm gonna butcher this) "Dragstea Din Tae" by a Romanian (I think) band called O-Zone. Just FYI.

The RIAA as we know it will die. The Record Companies can not live the way they once did in this new environment: they can not be the symbols of Greed which they currently are. People won't stand for it. But that doesn't mean that idea of a Label is going to die, and it doesn't mean every incarnation will be evil. A new form of "record company" which offers useful business services to bands -- unknown or otherwise -- for reasonable fees has a place in this world. If they charge too much, artists will go elsewhere. If they don't provide useful services, artists will go elsewhere. Because now they can, because now they don't NEED the Record Company. But if it's useful, convenient, and reasonably priced, there's still a market for it.
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Justin Boland, 20 Mar 2008 @ 7:16am

Amen.
It's a testament to the confines of the "Blog" medium that any kind of nuanced (that is, realistic and honest) opinions and statements are lost on 80% of the audience. People really do want to reduce us to our simplest possible meanings for quick and easy digestion.

This was a concise and nescessary post, and I think there's a lot of people who are on the same page. Most of the "music 2.0" bloggery is just armchair opinions from dudes without a career anyways.
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Mike (profile), 20 Mar 2008 @ 9:19am

Re: Mike, I'm stunned at your position on this.
Okay, let's face it. Most of us here have been listening to music for quite some time. But the question really comes down to HOW are we listening to this music?

I'm not sure what that has to do with whether or not music labels remain.

We had NO control over what was played on the radio, obviously, and this was always dictated by the labels. If a teeny bopper is hot, despite the fact her lyrics blow, she's on the radio while very, very talented (but unattractive) women struggle to become "mainstream".

Then don't listen to the radio. I don't. There are many other options these days. Again, though, that has nothing to do with whether or not there are music labels.

The labels have, for years, screwed over both the artists and the consumer. To think that even ONE artist should sign with a label is appalling

Did you read my post or just the title? I'm talking about labels that actually understand and work within the new business models we're talking about.

It's difficult to respond to you when you seem to have made your conclusion based on the title, not the post.

Mike, I can't agree with you on this one. Even if the labels "reorganize" to a new business model, you can bet they're still going to take the bigger piece of the pie and consumers will be forced to pay it.

So you'd prefer busy musicians spend all their time handling business matters rather than writing music? There's a place for labels that understand consumers and understand how to treat music fans right.

Consumers who pay .99 for a song are being fleeced and this price is due to the royalties charged by the labels. So why is it that artists continue to feel cheated by the labels so much, THEY'RE the ones stepping out to make new business decisions?

Clearly, you didn't read my post. I absolutely agree that labels have made dumb decisions, but don't confuse dumb decisions with the concept of a music label.
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Twinrova, 20 Mar 2008 @ 12:28pm

Re: Re: Mike, I'm stunned at your position on this
Then don't listen to the radio. I don't. There are many other options these days. Again, though, that has nothing to do with whether or not there are music labels.
>I don't, actually. I feel I should state that I'm not an "average" consumer. I know where to get music. Do you think the iPod lovers out there really do? (not, of course, including the P2P method many use).

Did you read my post or just the title? I'm talking about labels that actually understand and work within the new business models we're talking about.
>I did. But I responded to the fact the "little guys" can't compete on the same scale. Sure, they can do some good, but how many out there really do justice compared to others? A few, to say the least. Also, keep in mind that not every label will sign every GOOD artist, which instantly puts a label on the "bad" side, IMO.

Clearly, you didn't read my post. I absolutely agree that labels have made dumb decisions, but don't confuse dumb decisions with the concept of a music label.
>I'm trying not to here. Really. I got the gist of this thread but I don't see labels doing any good. Do I think busy musicians should take care of their business matters? Absolutely! Because it comes down to this:
If one isn't popular, one has free time.
If one is popular, one can hire business managers. If this happens to be a label, then fine.

I guess what I'm asking for here is a few labels that don't follow the typical business model.

Note: I've notice many upcoming artists are banding together to form their own "label". Good thing? Maybe. We'll see how it does with new artists they bring on.

Mike, I agree with your views on changes in the industry. I truly do. But I can't say that this wishful thinking is going to happen any time soon, especially when big labels are STILL fighting change.
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Anonymous Coward, 20 Mar 2008 @ 6:52pm

Management
In fact, I think there's a rather large role for what used to be a "record label" to play in this new ecosystem, and have said so before. Some musicians can try to go it alone, but for many it doesn't make sense. These new business models still require plenty of business smarts and the ability to do marketing -- and that will require experts in those areas.

That's what's called "management" and many musicians have been hiring professional management for a long time. It seems to me that what you're suggesting basically boils down to the record companies getting out of the dying "record" business and into the "management" business instead. The problem with that is that the record companies have such a bad reputation for screwing over the musicians that it is hard to imagine many musicians trusting a record company to manage them. One of the reasons many musicians hired managers in the first place was to protect them from the record companies.
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LIL MACC LOCO, 27 Mar 2008 @ 1:42pm

Adopting New Music Business Models Doesn't Mean Th
First off, as an independent artist starting literaly from the beneth the Ground i'v actuly have had the experiance of going it alone.by the way "LIL MACC LOCO" The Walking dead Man Is available via itunes,Rhapsody,and e-music. (Quick shout out).anyway's there are pros and cons to every thing you do as an artist you have to ask your self, "are you willing to give up basicly your soul to a lable to gain finances". some will say yes, and you'll go on tour you'll see your name in lights the'll basicly make you who you are as a artist but when it comes to royalty paments and so forth who do you think put up all that money and how much are you intiteled to. your just a voice on a beat, you didn't even wright the music, if you did it probley wouldn't sound like that so you end up with a car and a house but you can't quit your day job. now there pro's and cons there doing it your self you have to do all the work that includes marketing,and promotion you have to put on so many hats when do you have time to do anything else. then you have budjit restraints that hold you back, !and for what! minamal gain! i'm not trying to discurage young artist i don't want no one missing the point here. the point is do what makes you happy and wey out the pros and cons before makeing a decision if you become a succes good. if you don't at least you tryied and you can never say i think i could of. !you no!
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Hephaestus (profile), 4 Aug 2009 @ 10:32am

Re: Re: This dinosaur will not die..
Thanks Hellsvilla ..... I like behind Amie Street .... so that said ....

lots of great Ideas here ....

243 note/entry) Allow artists/bands to set up "free to max" or "max to free" price based on downloads counter. (Like Amie street)

244) Allow artists/bands to set up "free to max" or "max to free" price based on Time till or time since. (Price goes up or down based on how much time is left or has passed)

245) etc... etc .... other reason and methods for the "free to max" and "max to free" go here

Hooah!!!
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Hephaestus (profile), 4 Aug 2009 @ 11:50am

Re: Re: Re: This dinosaur will not die..
Replace "I like behind Amie Street"
with "I like the idea behind Amie Street"
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