New Label Models: Which Will Survive?

As CD sales and label profits tumble, a great deal of hope and excitement has been attached to a variety of new models:

  • Music Is Free – And hope to make money elsewhere
  • Name The Price Radiohead asks the fans to pay whatever they want
  • D.I.Y. – The artist is the label handling or hiring out distribution, marketing, etc.
  • Label As Partner – Band delivers master and label does the rest sharing profits more equitably – often 50/50
  • Ad Supported Releases – One-offs like Prince and the UK newspaper or Pennywise and MySpace
  • Ad Supported Labels – The new RCRD LBL
  • 360 Deals – The band as brand. Labels get a percentage of all revenue streams (albums, tours, merch, etc.) in exchange for longer term career investment
  • The New Old Label – Keep costs down and hope to monetize across multiple revenue from downolads to ringtones to YouTube

Which model has the greatest chance of success?  Its far to early to tell, but several of the Record_2
models above will probably find traction in the months and years ahead alongside new ones not yet imagined.

Instead of a single business model controlling an artist’s career, wouldn’t it be better if release methods become situational depending on genre, where an artist is in their career cycle and their goals for the release?  If a band is new or about to embark on a tour, perhaps giving it away (supported by ads or not) makes sense.   If you’re a budding pop star in need of grooming and mainstream media, then the 360 deal may be for you.

Artist and fan empowerment is the mantra of Music 2.0.  Replacing the old model with a single new one serves no one but the gatekeeper.  Choice is freedom; and freedom leads to better music.

What label model(s) do you think will survive and thrive in the coming months?

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  1. My guess is that each band will find their model, probably neither of those but a mashup of some of them.
    Merankorii, for instance, is D.I.Y. in everything but in the physical releases (CD’s/Tapes), where it has a “label as partner” that doesn’t share profit but edition units. It was decided (yet not demanded by the label) to avoid concurrency with the label, so the physical edition price is whatever the label is practicing, but the digital release is exactly the amount people feel they should pay for a digital release: it’s free. Yet, thanks to ReverbNation’s FairShare, free means that the digital releases are “Ad Supported Releases”.
    This is just an example, but I guess the future is, above all, the end of “one size fits all” business models…

  2. The act-centric model that’s implicit in your choices is going away. It’s too expensive to capture and keep the audience’s attention for a single act. No one wants to invest promotion dollars in short-lived acts that can disappear tomorrow. Anyway promotion doesn’t work so well these days.
    Labels can survive only if they have a brand identity with consumers and advertisers. If that sounds like the old MTV, you’re right. Advertisers demand mass audiences and only a big label with a brand-name platform can promise them that.
    But a newly branded label looking for mass advertising support won’t have it easy. TV broadcasters are coming into the same space and the target demo has shown little willingness to be reaggregated into mass audiences.
    But given the alternatives…

  3. An interesting question, Bruce. However, I think it’s important not to mix apples and oranges. The three key constituents here are the artists, the public and the rights holders. For the public, I think they’ll need a model wherein the music “feels like” free (yes, I’m somewhat of a disciple of Gerd Leonhard), particularly in the case of digital music. For the artists, I think your suggestion that the deal be mutable/flexible based on where they are in their career cycle is a good one. As for the rights holders, obviously, I believe they should be paid. Which is where ad- or corporate-supported models come in. This would enable brands to provide another service to their consumers.
    At the end of the day, if we can figure out how to serve the public and the artists, then everything else will work itself out, since the industry will adapt.

  4. The bigger labels, entrenched in the world of radio and continuing to judge their success by looking at first week soundscan numbers have a harder go of adapting to any of these new models. The sweet spot is occupied by labels like Fueled by Ramen, which straddles both worlds but really have a strong direct connection to both fan and artist.
    Labels are good for a few things: being the bank for artists and offering some sort of marketing services. As “VC’s For Talent” the model looks like a hybrid of 360 deals/ equity split with a leaner, meaner team where revenue is derived from smaller pieces of a larger pie.

  5. I am really beginning to think the model that was once proposed by Team Love Records is the way to go. I didn’t follow up on the label so I am not sure if they followed through.
    But heck, give it all away and try your darnest to educate your audience about the inferior quality of mp3s and the superior quality of vinyl. Giveaway a million free copies of your album online in hopes to sell 10,000 units of high quality, finely packaged vinyl.
    I definetly don’t think that open access to the iTunes and eMusic catalog, as presented by CDBABY and Tunecore, to anyone equipped with pro tools is the future of indie music. The SnoCap sales have been disappointing…no one goes to myspace to buy music, atleast not from local bands that they exoect to get the music free from anyway.

  6. I think that several models will survive including the old label model of finding and breaking talent and making their money back by selling overpriced CDs. This portion of the business, will however, be a fraction of the size it used to be.
    I think that subscription services and giving away music for free (without ads) will have limited success.
    The most successful new model will be advertising supported downloaded music, for all the reasons I explore in my blog Ad-Supported Music Central, http://ad-supported-music.blogspot.com/.

  7. I think all the models have their place – dependent upon what resources an artist has and where they are in their career. We’re about to embark on the touring model and will find out first hand whether it’s sustainable.
    One thing that I know I tend to forget is that ultimately – it’s about the songs. I was watching the 60 minutes segment on the Eagles and I can’t remember whether it was Glenn Frey or Don Henley – but they were asked why they thought the Eagles had such longevity and success – his answer was to reel off the list of songs: “One of These Nights, Tequila Sunrise, Witchy Woman, Hotel California,…” listing almost 20 cuts – all them instantly familiar… which hammered home the point that it’s about the music – the songs and the show.
    You see it all the time – from Coldplay’s “Yellow” through to Feist’s “1,2,3,4” – the right song can change the model overnight – and sure – the artists had worked long and hard to get to the point where the songs could be heard and placed, but still – it starts with the song.
    I believe the trick is to build enough flexibility into your system so that you’re not locked exclusively into one model.

  8. Interesting article. Thanks. I agree that all of these models will have their place. I also think a big rise of “low-end mp3 stores” like eMusic, Napster & MusicMatch will be seen (as discussed recently http://blog.fatdrop.co.uk/releasing-music-in-the-current-climate)
    High-end sites like Beatport, Bleep & Juno will continue to have a good cut of the new-release market but the cheaper sites which benefit labels only if they sell in high quantities will play a massive role in the future.

  9. Hi there all
    My name is Matt I run a successful business (http://www.kurb.co.nz) providing digital and physical media services to musicians and other creative entrepreneurs.
    I have recently written a post in response to the “new models” debate and other stuff written in this blog and touched on a few new concepts of my own including
    – “label” takes 100% of content retail?
    – wholesale and cut in every partner
    – the rise and role of the “online content manager” [that’s me!]
    – one flat fee for life long premium access
    I am newish to blogging and focusing more on content over presentation ;] but please feel welcome to come and check it out.

  10. This is my point of view. I don’t think any one model will take over the industry. It will be a combination of two or more of the models and combination might even be determined by a artist-to-artist basis. This industry is ready for a revolution. I dont think it will come from anyone currently employed at a label right now either. It’s going to be a current student or intern studying the music business and new media. I have faith in the youth of this industry and the industry itself. Give it a little more time.

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