Friday, April 22, 2005

The continuing death of record companies

An Alternet article about the Grokster case coming to the Supreme Court (The Revolution Will Be Downloaded) goes through the intricate legal arguments to be made about P2P (peer-to-peer) downloading services. But this article also has this quote about the future of record companies from Mark Cooper of Consumer Federation of America:
Clearly [for] the label owners and the recording companies, their distribution model is based on a brick-and-mortar distribution model that they can control. That's over. That's going to disappear, no doubt about it. They will clearly try to use their labels and promotion to maintain a significant role in the middle of the industry, but that will diminish over time. There's no doubt that the creative industries are going to look very different in the near future. They've held on to the means of distribution for decades.

We're on the verge of a dramatic revolution in the production of cultural goods. It's important to remember just how expensive it is to market and distribute content the way the recording and film industries do now -- the production of CDs, the ad campaigns, the delivery of CDs to market, etc. Compare it with peer-to-peer, which is a direct transmission of content from producer to consumer. The recording companies as we know them will disappear.

To some this might sound pretty provocative but to others, it's old news. It's old in the sense that this predication has been made since Napster started up (way back in 1999) and that this still hasn't come to pass. It's that's so, why do people still repeat this theory and cheer it on? My guess is that they think of the record companies as "da man"- a powerful, greedy, ruthless force that has to be taken down. After that happens, great music will flourish and everyone will be able to enjoy it exactly as they please. At least, that's how it's supposed to happen...

Here on Earth, it's a little more complicated than that. This is obviously an appealing fantasy of the little people defeating the big corporations when we see the opposite happen most of the time. Finally, we can have control over part of our lives without worrying about whether we can find music and if we'll get jail time for doing so. The problem is that with all of this talk of slaying the beast, we don't have a clear idea of what will happen next. The assumption made is that artists will be able to take care of everything themselves with the power of the Net. At least, that's how it's supposed to happen...

David Day of Forced Exposure (one of the biggest indie distributors around) had these thoughts:

Labels, as collective of artists united under one banner and pooling their resources, developing a sound, a philosophy and getting someone to run their number and book their tours and upload their music? Those aren't going away. I mean, Neil Diamond doesn't need a record label. Sufjan Stevens needs a record label. Managers are one thing, but the collective power of a label (Paw Tracks comes to mind) cannot be denied.

When the Flaming Lips start doing their own accounting, taxes, rights negotiation, marketing, ad placement, contract writing, poster design, printing, etc. etc. then the dramatic revolution will take place.
And so it goes. But unless you think the gloom and doom talk about record companies' demise can easily be brushed away, here's some thoughts from Tony Kiewel, A&R rep at Sub Pop:
While I agree that people will always need banks (ED NOTE: compared to labels previously), I tend to disagree that artists will always need that in the degree they do today or in fact whether labels will be the ones to fill that roll. As recording technology gets cheaper (our biggest selling records were recorded for $200 and $3000 respectively) and distribution goes digital, a huge chunk of what we as labels are fronting for is rendered moot. We can't even claim to flex the muscle needed to get your music in to stores. Anybody can get their shit in itunes now through an aggregator. I-Tunes never has to worry about limited shelfspace or even concerning themselves with the level of push an artist has behind it. All that's left to us is marketing at the end. No small thing to be sure, but arguably a function that could be filled by any number of companies. Magazines, managers, online distributors, blogs, and a million things I haven't thought of could easily transform themselves into "labels." Many of them already have.
... which is also a good point and which is to say that no one can afford to be complacent nowadays. Day's point about labels being not only the ones who take care of the behind-the-scenes business but also trademarks of quality does make sense- I could imagine indie fans being enamored of many of the Sub Pop releases but how many people say "If it's on Warner Bros. or Sony, that's good enough for me"? Nevertheless, in an industry that's vexed by technology which makes hash of Moore's Law, in a market where complacency can mean death, there's no flow to go with- you have to stay on top of the curve.

What all these platitudes add up to is that these labels, both big and small, have to take very seriously the technology that's transforming the way that consumers access their music. I'm not cheering for any label to go under- I want them around so that we can still hear good music and if it means that it comes with a whole lot of bad music too, it's worth the risk (and there's people out there who'll buy music that you or I could consider crappy). Hopefully, some of the majors will realize by now that they can't sue their problems away and instead have to keep looking for new ways to keep reaching out to music heads out there.


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