Reinventing the Music Industry

Mike over at Techdirt has a very interesting read about the music business. As a long-time musician, songwriter and, most importantly, music fan, the parade of bad decisions made by the music industry over the past few years has just about driven me nuts.

As Mike points out, a large part of the problem is that portions of the music industry, primarily the record label cartel represented by its henchman the RIAA, is trying desperately to hold on to what is quickly becoming an obsolete business model. Beginning with the re-examination of industry economics that led up to Courtney Love’s excellent piece in Salon back in 2000 (which proves either the value of ghost writers or that Courtney isn’t the complete nincompoop she generally appears to be), through the emergence of online distribution as the channel of choice for the new generation, and up to the current spate of lawsuits against children and dead people that have coalesced all manners of opposition into a line of defense that is starting to turn the tide of battle, the music industry has struggled to figure out a way to preserve what has long been the highly profitable role of both gatekeeper and banker to the music.

The music industry in general and the record labels in particular have not faced the fact that the world has changed- and all of the lawyers in the world can’t change it back. The bag is empty and the cat hasn’t been seen in years.

Which leaves the music industry with two choices, and only two choices: find a new business model or hold on as hard as you can until the cash pipeline dries up. The smart choice is to take some pain now to become a part of the new world order. The dumb choice, which seems to be the way the industry is going, is to sue everybody in sight for moving your cheese. Those lawsuits work on underfunded individuals who have no choice but to capitulate. They don’t work on an entire movement or on moms from Oklahoma.

Other than the fact that you can’t turn back time, the most aggravating and self-destructive part of the record label’s strategy is that it is attacking the very people whose goodwill is a requirement to sell records. It takes biting the hands that feed you to a new level. No one would complain too loudly if the RIAA sued people who share thousands and thousands of songs with anyone who wanders by. But the RIAA decided early on to sue all comers, thus the public relations war was lost at the first battle. Sometimes it takes more than money to prove you’re right, and sometimes even the Deathstar blows up. I don’t think that ever occurred to the record label executives, even though the automated voice has to be saying in the back of their minds “auto-destruct sequence initiated, this ship will self destruct in 4 minutes.”

In my opinion, driving force behind the record labels insistence in trying to stuff the cat back into the bag is that the record labels historically made so much of their money via the creation and distribution of the media (meaning the actual CDs and before that LPs and tapes, as well as the album art, etc.), and they know that the margins of old are not going to be available under the new distribution system.

When your entire industry is based on huge margins, it’s not surprising that you’d resist anything that threatens the status quo. Additionally, if songs are sold online for a buck a piece, the artists are going to quickly realize that it’s cheaper for them to rent some studio time, pay a producer and take the finished product directly to the online distributor.

Without the ability to serve as the gatekeeper, the record labels recognize that their position in the entire process is precarious. That’s why the RIAA isn’t going to buy into Mike’s plan of artist promotion, more product and resulting loyalty. Which means that the only alternative is to take the record labels out of the equation- their own short-sighted actions in effect becoming a self-fulfilling prophecy.

Like it or not, the world has changed. While the change was bad for the record labels, they should have known the gravy train wouldn’t last forever. And over time this change will prove to be very, very good for artists and consumers.

It’s time to clean up the milk and go back to work. Let the record labels keep searching for the cat.

We know they’ll never find it.