The Increasing Irrelevance Of The Major Record Labels

from the who-needs-you? dept

Tue, May 18th 2010 1:39pm — Mike Masnick

Yesterday I attended the always worthwhile SF Music Tech Summit. This has to be the fourth or fifth time I've gone, and I always find that after it's all over and I've had some time to think about it, I recognize one key theme that kept hitting me over and over again throughout the event. This time it was the increasing irrelevance of the major record labels. I've been to a lot of music industry events in the past few years, and there's no doubt that the presence of the majors at various events continues to decline (though, they still seem to have no problem wasting ridiculous sums of money on lavish parties at some events). While the decreased presence at Music Tech might have been a result of the overlap with another industry event, NARM, which the labels almost certainly deem more important, what was more telling was the audience's reaction to the major labels.

The "big draw" at SF Music Tech was certainly the panel in the morning that had Ben Folds (who you hopefully know), Michael Tilson Thomas (again, who you hopefully know, but if not, from the San Francisco Symphony), Jack Conte (from the viral sensation Pomplamoose) and Glenn Otis Brown (from YouTube and Creative Commons). That panel was certainly entertaining, but tragically there wasn't very much time for any of the participants to speak, and with each one showing a video (often kinda long), the whole thing felt kind of rushed. But what struck me wasn't so much what anyone on that panel said... but what happened as soon as the panel ended. The very next "panel" was a discussion between a guy at Warner Music Group and someone at Cisco about the "direct to fan" artist websites that Warner Music has set up using Cisco's Eos platform.

Not so long ago, you would think that a new technological offering via a major label would be something of interest to this crowd. But, the audience had no interest at all. While the organizers tried to keep people around, lots of people flooded the previous panel's speakers while many more quickly evacuated the room. Probably one-third of the people were still there by the time the next panel actually began. That says something. In the past, the only way to be successful in the music business was to go through the major label gatekeepers. These days, almost no one believes that any more. In fact, many have realized that the path to success often means getting as far away from the majors as possible. Even if what Warner was doing was interesting (and, honestly, what was presented was full of buzzwords and hype, but little that seemed particularly innovative) just the fact that no one even seems to care says a lot about what people think of the major labels these days.

The final panel of the day, on "Music & Money," included both Michael Robertson and Tim Quirk -- both of whom have long been critics of the record labels and their business practices. It gave them a chance to (accurately) gripe about the record labels and how they've spent the last decade (or longer) shooting themselves in the foot time and time again by basically killing off every innovative new startup that popped up by demanding ridiculous fees just to operate. Honestly, that panel could have been a bit more interesting if it had included a representative from a major label to absorb some of the punches (and even to punch back), but one audience question summed up the whole thing:

"If the major labels are such a pain to work with, why work with them at all?"

The guy pointed out that there are tons of independent bands more than happy to embrace innovative new services. The real answer, of course, is that it's not that simple. While there are tons of bands that are innovative and willing to work with new services, the music business is still (even if it's changing a bit) a hit driven business. A music service without the hits doesn't do well. That's just the facts, right now. If you're offering a streaming music service or a music locker and major label content is blocked, you've cut your potential audience down by a ton.

But, still, the question -- and the answer -- is telling of the major label's stature in the industry these days. Their position now is back catalog filler. That's more or less how people view the major labels. There's a lot less interest in working through the old gatekeeper system. The labels will last for a long time (though, perhaps in different forms and under new ownership...) due to their back catalog and the need for music services to have access to those songs. But I don't think there's anyone left out there who looks to the major labels to lead the music industry any more (except, perhaps, some out-of-touch politicians).

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Filed Under: major labels, music industry, record labels

54 Comments

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Dark Helmet (profile), 18 May 2010 @ 1:36pm

Truthful answer required...
A. Have you ever attended any of these parties?

B. If so, have you ever seen illicit narcotics that look like cakey snow there?

Inquiring helmets want to know....
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NAMELESS ONE, 18 May 2010 @ 1:59pm

labels what labels
we dont need no stinkin weasels er labels.
and the "snow" is never done out in open these days lol
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Anonymous Coward, 18 May 2010 @ 2:35pm

there will always be a market for the alternative, the other option. the grateful dead through phish with a side path through frank zappa and captain beefheart. what is important to remember is that even as these acts gained fame and / or notoriety, and even as they may have walked across the path of the mainstream, they didnt represent the mainstream except for that split second. in the end, the mainstream always comes back to overshadow and render tiny even the biggest of the people who took the other path. there is always another path, and that path is often strong. just never mistake that alternate route as being mainstream because it really isnt.
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- Anonymous Coward, 18 May 2010 @ 3:11pm
  
  Re:
  What generally happens is the when the mainstream is overshadowed by the altenative they switch, the main becomes the alternative and the alternative the main.
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- Anonymous Coward, 18 May 2010 @ 4:29pm
  
  Re:
  "But I don't think there's anyone left out there who looks to the major labels to lead the music industry any more (except, perhaps, some out-of-touch politicians)."
  
  You forgot this one, Mike!
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Anonymous Coward, 18 May 2010 @ 2:47pm

Isn't back catalogue about to be decimated by the copyright take-back provisions?
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Anonymous Coward, 18 May 2010 @ 2:48pm

Hey Mike, nice blog BTW.

Quick question-- What do you say to those record label morons who contend that you are a self-important blowhard with an ill-informed opinion about everything and an insatiable need to be worshipped by sheep-like fans and late-night blog boys who live in Ma's basement?
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- Anonymous Coward, 18 May 2010 @ 2:53pm
  
  Re:
  such as yourself?
  [ link to this | view in chronology ]
  - Anonymous Coward, 18 May 2010 @ 3:04pm
    
    Re: Re:
    BINGO! How'd you know?
    
    Mike!!! IS THAT U?? This blog is SUPER AWESOME! I mean, I can't believe this is really your site! YOU DID A GREAT TALK!!! I'm nervous just typing, knowing you are there on the other end. Let me tell you a little about myself. I am 39 years old (pretty cool, huh, 39?) and I got your T-Shirts in XXL (both of them on eBay, of course)!!
    
    I'm living at home, in the basement, rent free, and I've got cable and a plasma TV. Domino's delivers. I guess you could say I'm living the dream. Anyway, I was wondering if you could tell us who's the best record label to buy music from.
    
    Chao!
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    - :Lobo Santo (profile), 18 May 2010 @ 3:06pm
      
      Re: Re: Re:
      It's spelled "Ciao"
      (you 'tard)
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      - Anonymous Coward, 18 May 2010 @ 3:11pm
        
        Re: Re: Re: Re:
        Here's my best Lobo Santo impression.. (ahem)
        
        Hey, Lobo Santo, welcome to the internet.
        
        Did I nail it? I thought that was pretty good.
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    - Tom Landry (profile), 18 May 2010 @ 4:09pm
      
      Re: Re: Re:
      The fat-guy-living-in-the-basement shtick huh?
      
      *slow golf clap*
      
      I look forward to more of your original and edgy humor.
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      - Anonymous Coward, 19 May 2010 @ 12:12am
        
        Re: Re: Re: Re:
        They sound like a broken recording industry.
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- Esahc (profile), 18 May 2010 @ 3:58pm
  
  Re:
  Wow, bitter are we?
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- Brendan (profile), 18 May 2010 @ 11:46pm
  
  Re:
  Just because all the cool kids didn't want to stay for your talk is no reason to get angry and hit the other children.
  
  Also, is your resume up to date? You can laugh now, but the anti-major sentiment just grows every day (and night, yes). Soon that fat paycheck you've come to love may just bounce.
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Anonymous Coward, 18 May 2010 @ 2:59pm

Noted that one of the sponsors was LimeWire. Curious what its reps had to say.
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- Anonymous Coward, 18 May 2010 @ 3:06pm
  
  Re:
  i think they may have said 'its been nice'.
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hey, 18 May 2010 @ 3:20pm

title
Capitalizing Every Word In A Headline Is Annoying, Misleading, and Useless.
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- Anonymous Coward, 18 May 2010 @ 3:46pm
  
  Re: title
  No one cares.
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- Anonymous Coward, 18 May 2010 @ 9:08pm
  
  Re: title
  Capitalizing Every Word In A Headline Makes The Headline Stand Out, Which Is Useful Since It's A, You Know, Headline.
  [ link to this | view in chronology ]
DocMenach (profile), 18 May 2010 @ 3:23pm

Intersting tactic
Anonymous Coward (is that you TAM?) is being exceptionally strange today. Its like he just decided to blather like an idiot. He normally blathers like an idiot, but he usually pretends to have more than two brain cells. Now he's not even trying.
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- Anonymous Coward, 18 May 2010 @ 3:41pm
  
  Re: Intersting tactic
  no the one you have an issue with is one of mikes minions trying hard to kill discussion that doesnt go mikes way. it is pretty easy to spot.
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  - DocMenach (profile), 18 May 2010 @ 3:51pm
    
    Re: Re: Intersting tactic
    What discussion was that? Idiot Coward took over the comments from the very start.
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  - Anonymous Coward, 18 May 2010 @ 5:33pm
    
    Re: Re: Intersting tactic
    How much does the tinfoil industry pay you, TAM?
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    - Anonymous Coward, 18 May 2010 @ 11:02pm
      
      Re: Re: Re: Intersting tactic
      nowhere near as much as oracle pays you mike.
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      - Anonymous Coward, 18 May 2010 @ 11:05pm
        
        Re: Re: Re: Re: Intersting tactic
        So you admit to working for the tinfoil industry?
        
        Fucking shill.
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Bill Werde (profile), 18 May 2010 @ 3:58pm

back catalog?
Hi Mike, I hope you've been well. Curious about something here: How can you say that labels are now "back catalog fillers" when iTunes and other digital retailers easily sell 1.5 to 2 million tracks each week, of JUST the top 10 hits? That's all current, of course. Last week's number one, Eminem, sold almost 400k copies of his new single, "Not Afraid." That's an unusually high number. But still, digital tracks chart toppers are generally selling around 250k per week. (The digital tracks chart updates each Thursday and can be seen here: http://bit.ly/cQFMrq ) Given all of the major label talent that has been developed and connected in just the past couple of years - from Lady Gaga to Susan Boyle, Justin Bieber to Miley to the Zac Brown band - I'm not really sure where you're coming from on this point.
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- Mike Masnick (profile), 18 May 2010 @ 4:18pm
  
  Re: back catalog?
  Hey Bill, thanks for commenting...
  
  Curious about something here: How can you say that labels are now "back catalog fillers" when iTunes and other digital retailers easily sell 1.5 to 2 million tracks each week, of JUST the top 10 hits?
  
  "back catalog filler" may have been slight hyperbole. I did say in the post:
  
  "the music business is still (even if it's changing a bit) a hit driven business. A music service without the hits doesn't do well."
  
  to explain why music services need to work with the major labels. But I was talking about from the point of view of those services. They view getting the major label deals as a necessity just to get people to use their services. Perhaps I should have just used "catalog filler" rather than "back catalog filler," though the back catalog is still quite important. None of these services, and no bands or users, seem to look to the major labels for any sort of real innovation. For most of these services, bending over and accepting a ridiculously bad deal with the major labels is a necessity just to get users. But it's not a path to innovation or to any sort of business success.
  
  And let's be clear about the numbers here. You say "iTunes and other digital retailers," but you mean mainly iTunes, which dominates the market, and who is really making their money on hardware sales. The music itself is not the business model. The major label music is there to get people to buy more iPods and iPhones, which is where the actual margin is.
  
  Yes, you need to work with the majors because they have "the hits," and "catalog filler" but they're a huge anchor on innovation in the business model realm, which is the point I was trying to make.
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  - Anonymous Coward, 18 May 2010 @ 4:34pm
    
    Re: Re: back catalog?
    thus once again showing the relevance to the general public of the record label business. amazing, isnt it?
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    - Anonymous Coward, 18 May 2010 @ 4:41pm
      
      Re: Re: Re: back catalog?
      Only to their ears and not to their minds, which is the part of the body that responds to innovation.
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      - Anonymous Coward, 18 May 2010 @ 5:37pm
        
        Re: Re: Re: Re: back catalog?
        yet, what are people trading online? they arent burning bandwidth on massive corey smith trades, they are pirating lady gaga, and jay-z, eminen, and all sorts of other label material. they are voting with their minds, their ears, and their desires. they know what they want, and it isnt another ditty from ok go.
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        Anonymous Coward, 18 May 2010 @ 5:47pm
        
        Re: Re: Re: Re: Re: back catalog?
        They're listening but they're not caring. Huge difference.
        
        Why do some love Apple and Google more than EMI? Innovation. People care about the products produced by Apple and Google.
        
        Not so much by EMI.
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        Anonymous Coward, 18 May 2010 @ 6:57pm
        
        Re: Re: Re: Re: Re: Re: back catalog?
        and what do they love to listen to on their apple music players? emi music. what do they watch on googles youtube video site? emi bands music videos, videos with emi music in the background, and so on. you see, they are intertwined. fun, isnt it?
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        Anonymous Coward, 18 May 2010 @ 7:36pm
        
        Re: Re: Re: Re: Re: Re: Re: back catalog?
        Yes. The recording industy cannot innovate. Only companies that deal with technology can innovate. Shocking.
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        Hephaestus (profile), 18 May 2010 @ 8:39pm
        
        Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        You are both wrong. It has nothing to do with the labels or apple, it is/was the money spent promoting that gets the downloads and sales. That is a failing system at this point.
        
        What I see happening is a group of people coming together and doing it right. An ex label artist with a following to promote, one of the top 20 remixers to make it sound great, a face book type with half a million fans to spread the word, one small band or artist with some serious talent, a burn on demand CD service, every pay download venue with the music on it.
        
        Then you have the undeniable proof the labels arent needed any more. That is what I am looking for ... that one moment that defines the total fail of an old business model and a monopoly industry.
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        Anonymous Coward, 18 May 2010 @ 9:38pm
        
        Re: Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        You're right. I am wrong. I can admit it. I wonder if other Anonymous Cowards can admit when they are wrong?
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        Hephaestus (profile), 19 May 2010 @ 7:04am
        
        Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        Which AC are you by the way?
        
        "The recording industy cannot innovate."
        
        or
        
        "and what do they love to listen to on their apple music players? emi music."
        
        also ... the apple music player is called an iPod or iTouch ...
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        Anonymous Coward, 19 May 2010 @ 9:46am
        
        Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        I am the AC who uses capital letters. It just makes sense.
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        Anonymous Coward, 19 May 2010 @ 7:04am
        
        Re: Re: Re: Re: Re: Re: Re: back catalog?
        "and what do they love to listen to on their apple music players? emi music. what do they watch on googles youtube video site? emi bands music videos, videos with emi music in the background, and so on. you see, they are intertwined. fun, isnt it?"
        
        But the ubiquitous "they" don't give a s**t what label produced the music. Fans are fans of the performers, or the performance, but not the label. The earlier commenter had a very good point - people have affinities for certain 'brands' whether that's Microsoft, Apple, Google, or Gucci. And the 'brand' to consumers of entertainment is NOT the label or studio - it's the people who actually MAKE the content and do the CREATIVE work. the EMI's and WB's of the world are not creative entities, they are only business entities. I generally don't buy (or download) much music as most popular music made in the last 20 years is garbage. The music I DO get is (surprise) BACK CATALOG stuff - classic rock from the 60's and 70's (and I am not THAT old btw), and I am well aware that doing so helps finance the labels and the RIAA - both of whom I DETEST, but I am not going to infringe to make a statement, I just don't buy very much anymore. I have a collection of over 300 cd's most of which (250 or so) were purchased well before 1996, so in the last 14 years, I have bought roughly 50 cd's or about 3.5 a year.
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        Hephaestus (profile), 19 May 2010 @ 7:07am
        
        Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        "and I am well aware that doing so helps finance the labels and the RIAA - both of whom I DETEST, but I am not going to infringe to make a statement, I"
        
        Buy them USED this way you can have it both ways ... not infringe, and make a statement.
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        DH's love child, 19 May 2010 @ 12:37pm
        
        Re: Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        "Buy them USED this way you can have it both ways ... not infringe, and make a statement."
        
        Hephaestus FTW! I actually have bought a lot of my CD's used (the original post was mine BTW). I also listen to a LOT of classical music and that is harder to come by used, so I got a lot of it from emusic until they scampered over to the dark side..
        
        "They are business entities, yes, but the idea that they had no influence on the finished products you enjoy is completely ridiculous"
        
        I never said they didn't influence the finished products, only that they don't create anything. You also, inadvertently I'm sure, hit on who DOES influence the sound, which is the recording STUDIO, who may or may not be owned by the label.
        
        As a matter of fact, the Pink Floyd sound was not created by EMI (their label), it was created by none other than Alan Parsons at Abbey Roads Studios.
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        Anonymous Coward, 19 May 2010 @ 11:21am
        
        Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        "And the 'brand' to consumers of entertainment is NOT the label or studio - it's the people who actually MAKE the content and do the CREATIVE work. the EMI's and WB's of the world are not creative entities, they are only business entities."
        
        They are business entities, yes, but the idea that they had no influence on the finished products you enjoy is completely ridiculous. Do you think Pink Floyd had any idea how to mix their records to sound the way they did? Or that Bob Dylan just magically found all the session guys who make "Like a Rolling Stone" sound so amazing?
        
        They are motivated by profit, and there's no getting around that. But they are also gigantic hubs of information, assets, and expertise that it takes a huge amount of money to maintain.
        
        I can't wait to hear how much complaining everybody does about what music sounds like when they no longer exist.
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        Derek Kerton (profile), 19 May 2010 @ 3:30pm
        
        Re: Re: Re: Re: Re: Re: Re: Re: Re: back catalog?
        I agree with your rebuttal. However, the value you cite above is essentially a brokerage or talent finder service. Sound room engineers, session players, etc.
        
        That kind of role is one for which the web is exceptionally well suited. Storing profiles of talent, searchable in many ways, with many filters. Each profile has sample work, and has ratings from other members of the community.
        
        If A&R, reproduction, and distribution are former label-exclusive roles that have been subsumed by technology, then "talent brokerage" is also something that modern tech can accomplish.
        
        "I can't wait to hear how much complaining everybody does about what music sounds like when they no longer exist."
        
        I think it will sound great.
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        Anonymous Coward, 19 May 2010 @ 11:15am
        
        Re: Re: Re: Re: Re: Re: back catalog?
        Oh f#@& off. If you could steal an iPad as easily as you steal music, you'd do that too.
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    - Anonymous Coward, 18 May 2010 @ 6:47pm
      
      Re: Re: Re: back catalog?
      Not really. You count as one individual, thereby being too specific to be considered general. Unless there's a team of shilltards typing this up for you; either way "general public" would still be questionable in application if it focuses on a group with heavily vested interests.
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Hephaestus (profile), 18 May 2010 @ 4:48pm

hmmm ....
You really need to point out stuff that hasnt been self evident for the last four years or so.

"Their position now is back catalog filler."

Thats the reason for the collection society expansion. The attempts to charge people for playing music to horses, singing and humming at work, collecting on ring tones, playing for previews, and all the other idiocy they are attempting. This also wont last because of provisions that allow authors or their heirs to terminate copyright grants.

"you would think that a new technological offering via a major label would be something of interest to this crowd. But, the audience had no interest at all."

From a psyche perspective it went from hatred to apathy for music fans in the US about 2 years ago. With the younger fans being the first, you are seeing it now because the people at these events are older and the apathy has now worked its way up into their age groups. Give it another two years and the labels won't even show up, and if they do it will be to empty rooms.

Mike in the future do yourself and us a favor. Look at the ages of the people that show up, the ones that leave, the ones that comment and in what direction, pro or anti. It will give you a great feel for where things are going.

JHMO
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Anonymous Coward, 18 May 2010 @ 6:14pm

What's up with all the record industry tards today?
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- Tom Landry (profile), 18 May 2010 @ 6:47pm
  
  Re:
  people tend to make a lot of noise when they know they're dying.....
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  - Anonymous Coward, 18 May 2010 @ 6:50pm
    
    Re: Re:
    "Empty vessels make the most noise" also comes to mind.
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    - Anonymous Coward, 18 May 2010 @ 7:37pm
      
      Re: Re: Re:
      "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
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Dohn Joe, 19 May 2010 @ 1:00am

What Determines a "Hit"?
While there are tons of bands that are innovative and willing to work with new services, the music business is still (even if it's changing a bit) a hit driven business.

======================

Yes...and what determines a "hit"? Whether it's played repetitively 5,000,000 times on radio stations...whom are all well greased by the labels...shucks!
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- The Infamous Joe (profile), 19 May 2010 @ 9:50am
  
  Re: What Determines a "Hit"?
  Yes...and what determines a "hit"?
  
  A torrent with 50,000 seeders and thrice that in leechers?
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Travis + Julie, 20 May 2010 @ 2:58pm

yes!!!
Love this article!!! Times are changing quickly.

Best,

Travis + Julie
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RoBeast Rollie, 21 May 2010 @ 8:28am

Warner Bros.
Warner has artists signed to its own label who can't even get their albums released. Why would independent artists give two shits about their innovations?
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