Recently, I spoke with Lee Parsons, who is currently the CEO of Ditto Music. As of midsummer, they were distributing around 12,000 artists online and had 7 UK top 40 singles with unsigned artists. In this interview Parsons talks about the record industry's attitudes toward technology, why labels have trouble seeing value in disrupts their core-business model, and what's just over the horizon.
How would you characterize the old record industry's attitude toward new technology how does it differ to that of the next music business?
Lee Parsons: Whilst the traditional record industry is always criticized as being slow to develop, the evolution of an industry that relies entirely on consumers should only truly develop at the rate of its consumers. Unfortunately consumer development has increased one hundred fold in the last 10 years making it increasingly difficult for labels to keep pace.
Instead of embracing new technology, majors spent most of the early 00's trying to battle against it in the hope physical sales would recover. To sit down and tell a music industry professional of 40+ years experience that everything he built his foundations on is now redundant is not an easy thing.
"While they are arguing against it, young people with no prior experience of the recording industry can look into it from
a fresh angle and have adapted it into a new model."
It is no coincidence that digital companies are making millions out of music, record companies are not. I have taken on two staff direct from Warner Brothers this year but they certainly weren’t corporate executives. They went form Warner brothers where their job was to make new income streams out of back catalogue, to Ditto where they were making new income streams from NEW music.
They certainly weren’t hanging on to the old model for dear life like their bosses. Warner’s have since made 40 redundancies in that one department and continue to look to back catalogue to improve finances. Unfortunately new technologies on the market are favoring the consumer, so labels have ultimately a hard time embracing something that is contributing to their downfall.
Why does this the traditional record industry have trouble seeing value in anything that potentially disrupts their core-business model?
Lee Parsons: Record companies cannot look into problems from a fresh, artist based angle. Problems are often solved but not in the way they were intended. For instance, Facebook began decades ago as a printed manual of College students and faculty. Through the expansion of Web 2.0 itself, a consummate of available web technologies and techniques, this became the phenomenon it is today. It could well be the future of music, we don’t know.
Shawn Fanning created Napster firstly for his own purpose. The new music models embrace as much technology and revolution as they can contain in a chaotic attempt to find a new and better path. Revolutionaries are prepared to make mistakes on the way; labels do not have this luxury. Many battles win a war, likewise through constant chaotic growth, development will come. Developing a new model for a major label is fuelled with risk so it is more likely they will continue to look for ways of containing technological advancement rather than embracing it as a new way of income.
Would the traditional industry be better off if they let any would be revolutionary try anything they like with new technology? Are there other ways in which the industry might be worse off?
Lee Parsons: The labels by being at war with the revolutionaries set themselves up as “The Bad Guy.” Major label fat cats aren’t going to convince a 9 yr old kid that sharing a song is wrong just because it affects their jobs.
"People LOVE free music. Free music is always going to win."
By continuing with their argument instead of reaching out to new technology they push themselves even further behind in public opinion.
Unfortunately it isn’t as simple as the “home taping will kill music” argument they thought it might be because the advancement of technology has overtaken even the revolutionaries’ expectations. For a new generation of people music is now free. You CAN’T fight that.
The record labels, the companies who PRODUCE the music are going to be the last people to launch a subscription model service. Artists like Prince had one of these nearly 10 years ago. They have no streaming service of their own. Over the last ten years labels have not changed anything and in turn they have not managed to prevent any technologies from evolving. Why were they not implementing these features themselves? They clearly should have embraced change rather than try to stop it.
What new technologies on the horizon have the potential to induce more chaos the traditional record industry can withstand?
Lee Parsons: There is nothing stopping iTunes or Google wiping the floor with the traditional record industry. They have their own delivery systems, their own promo tools with the widest reaching worldwide platform.
"The only thing they do not currently do is actually sign artists."
There is nothing stopping them doing this but why should they? It will only occur once they partner with a forward thinking revolutionary with a passion to build new structure. Hopefully they will have learned from the mistakes of Myspace records.
Once delivery, sales and social media are entwined we will move into an up to date model. In my opinion, in 10 years time Google and iTunes and companies like myself will own most of the recording industry as we know it.