Major Labels Shift Revenue Strategy From Partnership To Ownership
Rocked by shrinking revenues and disappointed in the revenue generated by music services like YouTube, MySpace and imeem, the four major label groups have begun shifting their search for larger revenue streams from licensing and revenue sharing to an ownership model.
The trend began with 360 deals which give labels control of all the artist's revenue streams and investments in a variety of music tech companies. Then came the MySpace Music partnership. Now labels are going further with their own intiaitives and even starting companies that compete directly with the same new services driving music 2.0.
Last week, word leaked that the majors are exploring their own Hulu-like competitor to YouT
ube. Yesterday Universal announced an addition to its ongoing effort to boost sagging ringtine revenue by selling direct to fans, and today came word that Universal backed TotalMusic is getting into the
playlist business. EMI has retooled its own flagship site to directly serve consumers. All are efforts to
drop the middle man, develop more direct relationships with fans and boost revenues.
Much like the era in which the major labels dominated distribution channels and access to radio, they would prefer a return to gatekeeper status. But their efforts may be too little too late, and the collective power of hundreds of startups, thousands of motivated artists and millions of resourceful fans may prove more powerful.
The last sentence is definitely the one to look at. Human nature doesn’t like desperate, and the biz is grasping at grasses in loose cliff side soil, on its way down the mountain. Attracting fans of the music biz should not be what they focus on. What they should focus on is content/talent. Bring artist development back. Re-invest in the art of it all. Want to gain support? Do it through the medium that started it all for you! The music. Thanks for the post.
“But their efforts may be too little too late, and the collective power of hundreds of startups, thousands of motivated artists and millions of resourceful fans may prove more powerful.”
That’s my hope!
Bruce, any signs of these major labels merging?
I don’t watch them closely enough to have a strong opinion but isn’t that likely given objective conditions?
I agree 100% Nicholas with the need for investment in artist development.
Clyde, I’m not sure I see major label mergers happening this year. Though it might be smart, they still have the resources to hang on….
Majors are not innovators, they’re copycats so they’ll fail in this space. I know they’re fighting to survive, but they need a mindset change.
A re-trenchment to the ownership model is clearly backwards. But in my mind it gets back to an issue of risk and return. With many musicians more willing and educated enough to take their own risks, especially with internet tools, perhaps the labels should scale back their expectations and overhead structures and offer the value adding services:
1. Loans to musicians with specific rate of return, goals and flexible structure
with associated classes on business/cash management
2. A & R Coaches or hot line for DIY’s
3. Training services in the various music disciplines
4. Production services as work for hire
5. Business related services for musicians-pay as needed.
(marketing, pr, bookkeeping, tax accounting, bookings, etc.)
I caught Lawrence Lessig on Colbert’s show. (Actually, I watched it on YouTube.) He’s hawking his new book, “Remix,” waxing poetic about the “electronic commons.” That’s all very nice. But if he really walked his talk, he would have put the book out for free as a text file, and let us “remix” it, and make it better. But no, that greedy bastard actually wants to get paid for writing a book, and there’s a copyright notice on it, no doubt. Doesn’t he realize that business model is dead??
The ML model is done…but apparently, the old people are not.
Music execs aged 50 and up cannot get this right. They are too arrogant, entrenched in the idea that they are the stars. Since the 80’s Talent has meant less and less…and books like Hitmen have driven a false legend. The mystical midas touch never existed and now reality is coming home to roost.
Young people doing new things and being patient enough to avoid these 360 slavery concoctions is our only hope. Old school, gold pinkie ring, gangster, major labelism is the Beowulf of fails.
Babyboomers, please, handover the wheel. You’re going to get us all killed.
brendan b brown
wheatus.com
That would be fantastic…but labels don’t have those skills to offer people. Those who work at major labels know nothing of your 5 point list. ESPECIALLY the training services in the music disciplines bit.
You can’t sell what you don’t know and Majors don’t know music.
brendan b brown
wheatus.com