Major Labels

Can The Music Industry Save Itself? – Introduction


Next: Off With Their Heads

Last week we listed the Top 10 Issues Facing Music 2.0  which started a debate both on Hypebot and other blogs. But what can the industry do to save itself?  We’ll explore that question and give our suggestions this week on Hypebot including your ideas. To get the discussion started, here’s a 5 point action plan from two UK firms, Leading Question and Music Ally, based on their research:

1. Music needs to be bundled with other products and entertainment packages: Value can be created from many other ways than consumers simply buying the occasional download. Music needs to move away from per unit sales and become more of a service than a product. It should be pre-loaded into devices, bundled with mobile tariffs, offered as part of TV/Entertainment/ISP packages.

2. Labels needs to experiment with new release schedules and formats: The old model of single and album releases has run its course. Labels needs to be more innovative if they are not to be freezed out altogether. Look at the likes of Radiohead, Nine Inch Nails and Prince and experiment with new and varied formats, new pricing models and release schedules, digital only releases and promotional partnerships with brands.

3. Free doesn’t mean no money: The music industry should not fear free. It needs to…

embrace it. The culture of the net is free or at least feeling free.
But money can still be made from other sources: everything from
advertising supported services, to brands paying for an association
with the artists to newspapers paying for giveaway CDs.

4. Change the charts:
The Charts don’t make much sense anymore. Now
that fewer and fewer people are buying music the charts need to reflect
the other ways that people are consuming music.

5. Trust the DJ:
Online means anyone can access or own John Peel’s
entire record collection, but the instant and massive availability of
music on demand means you need a trusted guide like John Peel more than
ever. The new layers of value will come from the social connections
that come about through music as much as from the music itself.

Next: Off With Their Heads


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  1. –Offering CDs (for free) within the price of admission is a great example for satisfying #1
    –#2: Consumers want fresh things. If you create a 12-track album, why not release it in 3-song phases? It will only give you more time to market the album and keep everything FRESH
    –#5: Recommendation engines will be huge moving forward. I don’t want to hear what the record labels shove down my throats. I want to listen to the best songs as determined by the people that actually know the artists. On that note, I have been developing a platform that will hopefully become the ultimate resource for furthering music discovery based strictly on FAN input. More to come another time..

  2. Along with some of the already recommended ideas, here’s one I feel strongly about: trim the fat! Why do so many hands have to touch a band in order for that band to have the support that they need, and for a label to be “successful”? Get rid of all the overhead! It’s obvious we’re going to have to make our own business ‘legends’ in the industry at this point, on the indie level at least, so just get rid of all the unnecessary costs and learn to DIY! It’s not necessary to have an army of outside “industry professionals” to deal with a band’s management, publicity, development, booking and whatever else. There are a few smaller labels out there doing all of and within their own company, and doing it successfully. Internalizing their efforts on their own bands and only going to outsiders when they absolutely need to instead of the other way around, like it seems the larger labels do. Today’s new labels – since there is obviously a new business plan needed – should be developing a core crew of professionals who can handle their artists, top to bottom, in-house, instead of farming all that stuff out to others who are skimming off the band’s revenue for providing services that probably are not personal enough for each band anyway. Maybe this is an ambitious idea – to take the reins with both hands and try to create change this way – but in the end, if enough small labels did something like this, eventually the venues, the retailers, the ‘big whigs’ of the business who are responsible for ‘letting’ bands get where they need to go are going to HAVE to take notice.
    There is no doubt that while some bands can DIY, there are probably more that NEED the guidance and structure that a “label” provides for them (or should, at least). It’s time to stop feeding the bloated and fat money machines (Sorry booking agents. Sorry band “managers”. Sorry everyone who is not doing enough to actually earn back the fee they are charging these bands…) and tighten the belt to run a smooth, efficient business.

  3. I’m not sure that the industry can save itself. But artists and fans can save it in a myriad of ways. For one, stop with the single already. Make me an ALBUM. Not 11 shit-songs and an earworm. I want art. I want flow. I want craft. And I WANT to pay for it.
    Singles are for casual listeners… a watered-down, comehither billboard, intent on not only getting your attention but manipulating it.
    Paraphrasing/quoting Oliver Sacks:
    Science dictates that music (a.k.a. singles) specifically designed to hook you in — an “endless repetition” regardless of “the fact that the music in question may be irrelevant or trivial, not to one’s taste, or even hateful — suggests a coercive process,” where music “enter[s] and subvert[s] a part of the brain, forcing it to fire repetitively and autonomously (as may happen with a tic or a seizure).”
    Is this what we now require of every song, a calculated brainwash of sound, a “defenseless engraving of music on the brain” (Sacks again) that we literally can’t get out of our minds?
    Creepy. And the sure way to mass-produced homogeny.
    Oh wait. Kind of like the way radio is now?
    Lord knows the last thing I want to hear is a string of singles. Even of my favorite songs. Talk about mentally exhausting.
    Think of it like this. The single is a teaser, an aperitif, a taste… a free sample. The ALBUM is the main event, the SUBSTANCE. And albums are for FANS — INVESTORS in music, who stick with you long after the single has wormed its way out. Can you imagine Tattoo You without “Slave?” “Start Me Up” may have gotten you to the table but “Little T & A,” “Black Limousine,” etc. that’s the meat. Yum.
    And that’s the model I’m talking about. The model of making ART and selling it because it has VALUE. That’s the model that works because it works for FANS.
    Fans GET the album… they embrace the collective idea that music is dynamic; its impact relies on time, place, emotion, mood, memory, presentation, etc., i.e. CONTEXT.
    Just think about how many times when you first heard a song, you didn’t like it… but another time, you did. Not exactly accidental. Contextual. And not the kind of thing that happens if you simply play the same single over and over again on YouTube.
    But if you put an entire album on replay… you spend time with the songs, you give them room to breathe, you grow to love them. They take on MEANING.
    Music surrounded by music that informs it has MORE meaning… the kind of meaning that only a group of songs, purposely arranged and comprising a greater product can create: an all-encompassing audio art-form that is, by its very essence, the bare-bones magnificence of music: a wondrous, sonically shared experience — exactly the kind of thing that fans are willing to pay for.
    Because in a world where singles are incessantly everywhere and also free (thereby, inherently valueless) true, artful albums are RARE (thereby, somewhat priceless). And I don’t know about you but I don’t want what everyone else has for free… kind of the same way I feel about extra large, logo-emblazoned T-shirts. Keep ’em.
    But a compendium of great, interesting songs… dead-ringer singles, sleeper hits, introspective soundscapes, covers turned inside-out, indulgent guitar solos (please, bring those back)… that’s what I want. I want to actually hold it in my hand, open up the liner notes and rub my nose in them, inhaling that new-ink-on-paper-smell.
    Limited copies. Frame-worthy artwork.
    Raise the standard.
    Charge me double the price.

  4. In a perfect world, Kate’s ideas would be the answer to everything. But in the real world, it doesn’t hold water. The average customer doesn’t want a higher standard for a higher price; they want more of what they’ve come to expect for less. They want singles, they want logo emblazoned t shirts, they don’t want to have to spend time with an album to enjoy it.
    The problem is that over the past decade or so, music has been so heavily de-valued that there’s no way the average Joe will be convinced to pay double the price, no matter how great the artwork is or how slick the package is. Most of them will rip the disc to his or her computer and throw the songs they like on an iPod anyway. Where is the value in packaging and presentation at that point? Very few people care about the ink on paper smell if they can find the music for cheap or free.
    As a side note, I understand where Kate is coming from, as I too appreciate the holding a new album in my hands and flipping through the liner notes. But I also realize that’s a far too idealistic way of thinking and while I feel like there will always be a spot for physical releases and limited editions for the right people, if you don’t figure out a way to make yourself relevant to a wider audience, you’ll be left behind quickly.
    It’s easy to make music (or almost anything for that matter) for fans. Like Kate said, fans are the ones that get you, fans are the ones who stand beside you. The trick is making something that will get people who aren’t necessarily fans to take notice. And the way things are today, ink and paper alone won’t cut it.

  5. I posted this as a comment last week but it is more relevant here.
    Regardless of the record companies’ ever increasing efforts to stop it, their existing business model is in an ongoing state of decline. To regain some of their former financial stature and growth, record companies, majors and independents alike, along with unsigned artists, too, must cultivate and create, as quickly as possible, a new digital marketplace where competition can flourish and where some semblance of control over music discovery and distribution can be exercised. In this brave new world, record companies must immediately combine their forces together and move quickly to consolidate as much of their depleting customer base into a single digital location where decisions can be made about new music. This new DRM and royalty free, digital location must be organized into a new business model that allows anybody trying to build a career as a successful musical artist to be discovered, exposed, branded and monetized. Additionally, record companies must take advantage of the clout their remaining legacy artists have, while they still have control over them, to help them get a foothold in this new digital world.
    In the old business model, all of a record company’s distribution, marketing and promotion efforts were centered terrestrially and, up until recently, these channels of distribution were strictly controlled by the record companies and their close friends at radio. Now with the Internet and the advent of digital music distribution, this axiom is no longer true. In the digital world, record companies can no longer exercise the level of control over the marketplace they once had. Unfortunately, there are a multitude of Internet sites that use music as some part of their mix of activities. This limits the ability of record companies and independent musical artists to easily promote their music in any kind of truly effective or meaningful way. However, if artists and labels were to consolidate their support and efforts into one digital environment on the Internet with a global reach, they could foster the development of a much more promotable community than they now have and thereby have a great deal more control over the exposure and financial fate of their music.
    Just think how much more effective it would be for record companies and artists in general to have one destination on the Internet where people went to find their new mainstream music and where people could influence and be influenced to make decisions about that music. Both the cost effectiveness and efficiency of new music discovery could be scaled down and become more manageable for record companies, independent labels and unsigned artists. Artist development and branding could be focused into one place. By developing an array of special tools to promote and consolidate a base in this major new digital music world, record companies, artists and managers could much better maintain and retain the attention and interest of the average music consumer. Think about it. This is not just a sensible and practical decision for record companies, artist managers and artists to make and emotionally own, but it is a sound business decision that can potentially solve many of their current problems dealing with music discovery and financial scale.

  6. Nice comments.
    My attention is more on the nature of the questions and the answers.
    From my perspective the Music Industry is fine there’s just a lot of pain and uncertainty at the top in the corporate sector. EMI Just announced they were halving their commitments in the part of the world I hail from and I could barely stifle my glee at further opportunities for innovative business being created in this vacuum.
    People keep going on about labels!!! Sure their are people with business skills who are needed to support musicians. I see it as fairly limited to desribe these people or groups of these people as “labels”.
    I’m not a label. Is Nettwerk a label? I guess it is. What about The Firm?
    Maybe the question should be “Can labels (major or otherwise) remain relevant as a business model for the music industry?”

  7. @David: The joining of artists and labels for promotional purposes you described borders upon anticompetitive, and it ignores the fact that the Internet has spawned thousands of niches. That cat is out of the bag. A website cannot be all things to all people. It was the same before the Internet. Magazines, journalists and record stores are often genre-specific or have specialties. That’s for the best even though it’s more costly to service a myriad of media outlets. These are issues that can be somewhat mitigated through targeted advertising and digital distribution of promotional materials.
    @LM: The fat really does need to be trimmed. I’m not talking about well-paid executives. Leadership is valuable. I’m talking about finding ways to do more with less. Labels are releasing fewer titles and putting their eggs in fewer baskets. Mergers and downsizing has resulted in trimmed artist rosters. And artists are taking longer between albums. It’s no surprise sales are down. There are fewer releases out there exciting consumers.
    I agree with Brad about the price of an album. Core fans will pay more for an exclusive, higher quality package, but the median fan wants the music at an affordable price.
    The beauty of the Internet, as many artists have shown, is that many consumer segments can be served at once. The future of the music business is a multiple products for the many different levels of fan involvement: online fan clubs, download subscriptions, merchandise, albums and singles (in both physical and digital formats).
    Not only that, but the Internet can serve consumers’ different buying habits. Subscriptions have their place, and 100-track-per-month subsciptions at eMusic certainly have their place for people who like to buy in bulk. Free ad-supported services absolutely have a place in the marketplace. They serve the more casual and more price-sensitive consumer. Plain ol’ download stores will always have a place. Many people cherry pick a track at a time…songs they hear on the radio, hear in movies, hear in commercials and television shows. (Over the weekend I spent quite a bit of time in a car with a friend and his iPod. I couldn’t believe how many songs gained popularity from movies and TV shows. He always goes directly to iTunes to buy after hearing it. That must be why soundtracks have such a high digital-to-physical ratio.) Even free downloads have their place in the marketplace. It’s important to let people sample the music…not just hear it, but live with it for a while and get to know it.

  8. I think record labels will actually “save” theirselves. This is not the first time the music industry has been experiencing deconcentration patterns, It will probably be only a transitory phase.
    What record labels should do (actually they are already doing to a certain extent) is horizontal integration or buy-outs of digital aggregators, the ones that look more succesful (many of them will probably not exist anymore in few years time). Vertical integration with downloading/social networking services(ex Myspace) is also a viable option.
    In this way they can still be in control of the main distribution channels.
    They should also start signing new artists only on a 360 contract base to increase revenue streams. Artists are still dying to sign with a major. Majors are the only ones which have enough resources to effectively promote acts and, in these times of increased competition, support them to emerge out of the crowd.
    Currently record labels are simply repositioning theirselves in ways to enhance their gate-keepers role.

  9. I don’t know, Bea. First, I think suggesting that most artists are “still dying to sign with a major” might be overstating things. Among the wide swath of artists across various genres I’ve spoken with over the past few years (particularly at this year’s SXSW), the majority have expressed an aversion to major label deals. The majors may still have access to substantial resources, but in a marketplace where they can no longer suppress the supply of recorded music or exclusively control the channels of promotion (which are increasingly cheap or free), this advantage is greatly reduced. Artists, largely, are not ignorant to this changing environment. They see the successes others have had through self-production, promotion and distribution. And those who have transcended their ability for a wholly DIY approach are probably aware of the slew of indies they can sign with who will allow them to keep their masters, and who won’t nickel and dime them on some 360 deal. The majors may still lure a few ingénues or young saps with the jingle-jangle of a fat advance, but I’d say a growing number of artists are keen to the pitfalls and dwindling influence of a major deal.
    Secondly, the major labels can integrate themselves up, down and sideways in the digital space, and still not make up the shortfall that the decline in physical sales has caused. Obviously, they will seek to make up these losses by generating alternative streams of revenue in myriad ways (look at what has just been suggested here), but it’s hard to see them sustaining any real competitive advantage over the nimble upstarts or promotion-hungry conglomerates that are, or will be, pursuing those same things. That said, I suspect the majors will “save” themselves in some form or fashion, but I doubt that this is merely a “transitory phase” that they will rebound from stronger or unscathed. EMI is a harbinger of things to come, and I suspect that as the corporate giants who own the other major labels tire of the diminishing returns we will see them undergo some significant changes.

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