Will Music Become A “Modest Niche Business”?
FORGET ABOUT STOCK OPTIONS & IPO RICHES
Earlier this week Silicon Alley Insider reviewed a survey showing distrust of record labels, took a quick look at the state of the industry and declared that music was fast becoming a "modest niche business".
Even if SVI is right, there is still money to be able in the niches. (Remember the Long Tail?) So they asked readers what opportunities they saw to make a buck on music.
"….the artists will win…There’s only one party that has any coherent vision, and it’s the artists. Radiohead may be the first, but they won’t be the last."
" label-type entities, unburdened with legacy cost structures, that can increase the likelihood of scoring popular acts by signing multiple acts – but without large advances and perhaps sharing a bit more of the upside"
Looking at the ideas, two venture capitalist said most ideas designed to make real money in music are D.O.A. Music’s inability to deliver the 3X return that VC’s look for as well as legal battles that haunt many music startups are to blame. (Music discovery was one bright spot where VC’s see potential according to Digital Music News.)
TWO THOUGHTS:
- Who cares? One of the great things about 2.0 is that you don’t need VC cash to start a business or to create, distribute and market content?
- What’s so bad about a bigger and broader artistic middle class alongside entrepreneurs to service and support it?
WHAT DO YOU THINK? Is there money to be made in Music 2.0? Or do you even care about the money?
if you’re a fan of GREAT music, 2.0 has killed your enjoyment. Throw the Radioheads and NIN’s out of the model,because their major label made it possible for them to sell directly to fans. While creating and distributing costs have lowered, creating GREAT albums’ cost has not significantly lowered. And simply making great content will not magically draw fans and make you a star.
There are two types of albums that traditionally made money for a label: one is the type that sells alot in the first few months and then has little sales afterwards, i.e. Ashley Simpson, boy bands;
the other WAS the talented bands like Pearl Jam that took time to develop. These are the types of albums that DON’T payoff for the majors anymore because as they develop, the file-stealing robs them of the revenue they had been getting in years past.
So how does a major make money? By releasing the first type of album; everyone then rants that the labels only release crap, but this is why– it’s the only type of album that makes $.
As the Radioheads and NINs get older and quit recording, we will see a landscape void of new superstars because of this; the bands that have talent today must keep thier day jobs, and their craft suffers, and the quality of the music suffers along with it.
It’s very ‘in’ now to hate the major labels, and I won’t defend many of their practices. But the fact remains that at least 75% of your favorite albums came from one of theses companies. To think that the death of these companies will not result in lower-quality releases is wrong.
I don’t know if I necessarily agree with that last statement Barry. I haven’t done the math, but I can assume you may be right that 75% of my favorite releases may have come from entities who shared the same names as these major labels, but they are not the same companies they were when my favorite albums were made. Only the name is the same in many cases. But In any event, What does the label have to do with the quality of the release? Some of the greatest records ever made were done in less than a week and on a modest budget. Sometimes before the label was even involved in the process. Sometimes the label never existed in the process. It’s really up to artists to have enough humility to push their work to it’s optimum level and do what it takes to make it happen. If you’re an artist that doesn’t have vision, get out of the business. No label is gonna do that for you. No label ever DID. Ask Black Flag about that. Ask Black Sabbath about that. Good enough is not good enough. You gotta be willing to go all the way. You willing to live in a squat with your bandmates? Put every penny you have into it? Eat rice for dinner, again? If you want it bad enough, you better be. And to counterpoint, I’ve heard some awful records that were made on ungodly budgets that only the majors could afford. Forgettable stuff.
Is there money to be made in music 2.0? Absolutely! Accessibility is as great as ever and music consumption is at all time highs. Now, we must figure out a way to monetize that situation.
DRM-Free & variable pricing models are two examples of the industry heading in the right direction. From an artist’s standpoint, there’s never been a better time to enter the industry with all the tools at their disposal. Things are looking up! Take my word.
I’m all for cheaply recorded albums (I’ve got more than enough Guided by Voices in my collection) but as a fan I don’t want everybody to record an album for $50 just because it’s technically possible to do it. Put some effort and expense into the damn thing. Albums that sound well-crafted still cost a lot of money to make, and I sincerely hope artists and labels will continue to spend what it takes to record an album that sounds really great. The typical person can pick out a shitty sounding album. If the album is geared for the mainstream, a cheap production isn’t going to cut it. For niches like indie rock, it’s not like Bob Rock needs to have his name on it.
…I don’t think the major labels will die – I think they just won’t be so “major” anymore – in the same way the long tail is producing and sustaining more artists – just at lesser levels – the analogy can be applied to the label too.
A label used to be about control: control of the cash to produce product and control of the distribution of that product. In the new market they have lost that second element of control. This just means that their money is less expensive.
I remember reading the Steve Albini article and thinking how crap the system was – but power corrupts – maybe without such total control the labels can return to a more mutually benevolent model…and less you doubt – pigs do actually fly in Topanga Canyon!
Music will never become just a niche business. 99% of those in the digital music space continue to abdicate the function of new core artist music discovery to major labels and their larger independent counterparts. I am a hungry man who, at age 57, has spent the last 30 years of his life in the music business and the past 2 years developing a detailed understanding and his own philosophy in as well as investing every sent he has into the music discovery space in the form of a new website soft launching in a few months. Intimately familiar with the A&R process and major label mechanics, I see processes for the discovery of new mainstream core artists are slowly evolving on the Internet. In the new Web 3.0 environment those sites providing the 16-34 demographic with a small selection of excellent choices and more control over those choices will discover and break artists into the mainstream. Any sites attempting to do this will have to provide equally compelling value propositions for both artists and those who want to discover them. Artists must be given a business model where they can really make money and user-fans must be given the necessary tools to create the power to express their true musical identities and the ability to influence the musical tastes of others easily. All this should be done on a single site or two where the whole music world, i.e. major labels, independent labels, and unsigned artists, comes to compete in much the same fashion as they have done in the terrestrial space for the past 80 years. Slicethepie, Sellaband, OurStage, Garageband, Idolunderground, TheSixtyOne, MusicNation, BetaRecords, Fuzz and MyStrands are some of the few sites in the new music discovery space that have any kind of traction with OurStage having the most, 450K unique monthly visitors. Most of these sites are tied in some fashion to the old record business model or to a battle of the bands concept. On none of them can artists build a moneymaking business or find enough fans to emotionally own them and break them into the mainstream. Please feel free to enlighten me if there is any site of a truly compelling nature where a potential new core mainstream artist can be discovered.
Will music become a niche business? You guys crack me up.
A few years ago I was working with sports entrepreneurs IMG on some music stuff as they had decided to break into music promotion and management. After a year or two they decided it wasn’t worth the hassle. I asked the Commercial Director, who was a paragon of diplomacy, what he though of the music business and after a very long pause (maybe a minute) he said, “Well…it’s a niche business, really, isn’t it?”
The entire music industry’s annual earnings equal the income for one middle-size mobile operator. Or some of IMG’s sports events. The majors are just a bunch of small bullies throwing their toys out of the pram. Who cares? The rest of the business world doesn’t.
I’m curious where you get your facts from Barry. The prevailing data suggests that pirates are not – and will never be – purchasers of the music they rip, regardless if it’s Pearl Jam or boy bands (see “The Effect of File Sharing on Record Sales,” at the Harvard Biz school site).
Major labels rationalize their failures to unknowledgeable shareholders and ignorant pundits by pointing to piracy. The reality is that they are 1/4erly thinkers only interested in the short term SoundScan scenario. They will not support a Pearl Jam today, because PJ does not fit with a model that continues to only be about short term gain.
And, BTW, 75% of my favorite albums have come from independent labels.