Record labels admit music will soon be free, but they have a plan
Most people with at least a passing interest in the music industry wonder what the hell the major record labels are playing at. With the industry changing before their very eyes, they seem to be sitting back and letting it happen, refusing to embrace change as the consumers so clearly are doing. But apparently, we’re all ignorant to what’s really going on.
It’s hardly news that the music industry is in flux. The Internet has changed everything, from how music is distributed, how people view piracy, and how artists have other options other than signing to one of the major record labels.
However, what is news is that the major record labels have a master plan in mind, one which will see them running the current business models into the ground before they embark on a new direction. That is, at least, according to TechCrunch’s Michael Arrington who claims to have been informed of all this by “a big music label executive”.
This industry bigwig claims that the record labels aren’t as clueless as most people seem to think. Most of the majors realize where the industry is headed – all music will be free, whether streamed or downloaded. But until CD sales reach zero, there’s no need to reorganize the business models that have stood the test of time until now.
This timespan for action is estimated to arrive between 2011 and 2013, when the record labels hope to have most artists signed up to controversial 360 contracts. These see the labels taking a percentage of nearly every revenue stream the artist brings in, not limited to record sales as most current contracts are.
Until then, sticking to the business models of old, and propping them up by both suing startups which sit on the wrong side of the legal fence, and taking payments from the likes of Apple and MySpace Music for paid downloads is good enough.
There are a couple of spanners in the works though. What’s to say that the majority of artists will sign on the dotted line of a 360 music contract? Surely the point is that they now have more options than just taking the first deal thrown at them by a record label? Both Radiohead and Nine Inch Nails have shown there are alternatives available.
There’s also the fact that the record labels seem to be assuming the present situation will continue for the next five years and beyond. The past decade has taught us that in this new, emerging marketplace, things can change very quickly.
It’s nice to think that the majors are now seeing the light but they still seem to be seeing it through rose-tinted spectacles where they are still king.
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March 9th, 2009
Finally, some recognition that value does not equal price! Just because it has no cost does not mean it has no value and its high time the music biz recognizes that fact.
March 9th, 2009
First of all, thank you for an excellent post and for helping to disseminate this fascinating interview. Although the record companies seem to have finally identified the problem they are facing, their solution serves to show how they got themselves in this mess in the first place. I think that is unbelievable that a record label executive would come out and say that music would be entirely free by 2013. This does not serve anyone’s purposes, as it seems that he or she is basically indirectly endorsing illegally downloading music, as apparently it will be free within the next two to four years anyway. If I am an artist on this person’s label, or really any artist signed to a major label I am angry that someone involved in my livelihood is supporting a practice that hurts me financially. It also seems fairly ridiculous that record companies are absolutely fine with suing startups and taking money from music downloads. It certainly gives the impression that they are twiddling their thumbs while their companies burn down around them. I think the real question this executive needs to ask himself is that in 2013, what happens to the artists that are not signed to these 360 deals? You would think that if record labels started to give music away for free there would be a huge amount of breach of contract lawsuits, which would result in a mass exodus of artists from their respective labels. Additionally it is hard to believe that labels can still be arrogant and assume that artists still depend solely on them and would be more than willing to sign 360 deals. Would you agree that the majority of established artists probably do not need record labels to distribute their music anymore? Even a middle of the road band like the Presidents of the United States has found a way to circumnavigate around the labels by releasing their music through an iphone application. It might be high time for record labels to start assessing why artists need them at all, and adjust their business model accordingly.
March 11th, 2009
Tbh i do not think they are being ignorant, Watching their company burn around them, yes and no. One, what they are currently doing is not working, so they dont know how to fix this problem yet, and it takes time for things to work. This is their alternative.
Trust me when i say this, they are not stupid enough to just think the artists would openly agree to these new terms. They made it up to the CEO, i doubt their that dumb (some still lack common sense). Theirs most likely information that is not being told as it seems this info is a leaked and not a statement.
My 5 cents says they have a plan to keep the artists with them after this transition. Say easier to make music, less harrassment on the equipment. I can sit here all day and think of ways they can keep the artists but i wont list them all.
The norm says the ones in power are stupid and corrupt, but its not like that, theirs definately more than that, good or bad i do not know.