Music 2.0 - Exploring Chaos in Digital Music

October 3, 2007

Will the Radiohead model stunt other artists?

Filed under: Music Industry — maths @ 4:54 am

Slowly Downward

Now that we are probably over the initial amazement and exuberance at Radiohead’s innovative pricing and marketing model which seemed to involve virtually all of blogosphere, it may be time to look at further impact on the rest of the industry while we wait patiently for our donation enabled Radiohead downloads to materialize on 10 Oct.

The unbridled glee that greeted the Radiohead model was unabashedly accompanied by hopes that this would signal the death of the major labels.
Thom Yorke himself told Time shortly before Radiohead commenced writing songs for their new album,

“I like the people at our record company, but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say ‘F___ you’ to this decaying business model.”

It might be a bit over the top but one cant deny the mob instincts that give rise to such sentiments - and such is the hatred that the RIAA has aroused in the blogosphere that it would be advisable for all to exercise restrain and take a rational look at the implications in the cold light of day.

Though indie artists are sometimes loath to admit it, there are many that aspire to be major label stars, but now the stars themselves aspire to go indie with a major difference – they already have the fame and cash to stand on their own, and are in all senses of the word, truly independent. And ironically, these A-list artists - including Radiohead, Prince, Paul McCartney, Garth Brooks and soon, probably Madonna too - who are all weaning themselves off their labels got a huge leg-up from their labels to get to where they are. And this is exactly the kind of position that lesser artists have to aspire to, and one of the fastest ways to get there would probably be by landing a plum major label deal.

However, it has to be realized that as more A-list artists go independent, the major labels are going to find it hard to keep up their investments and take risks with new artists without the supposed buffers previously granted by the mega-revenues pulled in by these A-list artists. It is believed that these revenues offset the labels’ losses with money losing artists in their stable.
Mile Copeland, former manager of The Police famously claimed in 2000

“So where does the public get the idea CDs are overpriced? Don’t they realize 19 out of 20 CDs released fail to make their investment back?”

So if this is really the case, the whole equilibrium in the existing ecosystem is going to be further messed up.

Though many customers and involved artists have the nagging doubt that some of the profits from the successful artist(s) are also used to enrich the label too, this greed factor has clouded the fact that there could possibly be some truth in this subsidy principle. Successful artist Trent Reznor himself expressed disgust at the practice,

“That money’s not going into my pocket, I can promise you that. It’s just these guys who have f—ed themselves out of a job essentially, that now take it out on ripping off the public”

Andrew Orlowski of The Register had a more damning view of the economics at play here,

“But successful artists have always been able to subsidise more interesting but less popular artists on the roster. …When the rich keep more for themselves, there’s less for everyone else.
How ironic that these impeccable liberals should be endorsing trickle down economics and contributing to a wider disparity in wealth.”

Martin Talbot, editor of industry paper Music Week re-emphasised the point in Time

“And without the income generated by big name acts, how will record labels support and promote lesser-known artists? If we keep moving down this particular route, companies will only release records that are sure home runs. That means either stuff by established artists or unknown artists doing cover versions. There is the danger that it will no longer be worth it for companies to invest in new, up-and-coming artists. And if record companies don’t invest in them, who will?”

This is not to suggest that a Marxist approach of equality and subsidies has to be implemented – mind you, the music industry was at its peak during the excess and hubris of the Ahmet Ertegun, Clive Davis and David Geffen era which also coincided with the advent of digital technology via the CD and with it, massive profits from superstar acts.
Now with the second act of the digital technology era proving to be the sharp end of the double edged sword by which the major labels seem intent on performing harakiri, profits have eroded with even the golden geese fleeing the nest in protest at the fleecing. The question remains on whether the major labels are going to the hang on to the vestiges of a bygone era and business model or can they adapt and mould newer artists with better and fairer reallocation of funds – failure to adapt might necessitate a total collapse of the industry in order to allow the proverbial phoenix to rise from the ashes.
Until a clearer vision is obtained, artists would do well to be slaves to the tour bus and possibly day jobs too to sustain their art while keeping alive the oft unspoken dream of being an obscenely rich and famous artist who can afford to give away their music for free one day!

Update: 12 Oct 2007
A week ago, Guy Hands, newly installed chief of EMI sent out an internal memo in the wake of Radiohead’s new distribution model where he also addressed how the new artist cross subsidy will be affected and exhorted the recorded music side to review business models that work in this new environment:

“In this note, I want to address what Radiohead’s decision means for EMI and what it means for artists generally. For EMI, this is a welcome reminder of the new digital world in which we operate and the need to focus on the services we provide to our artists. Those artists break down into three categories:
• Those who are already established and in whom we have invested heavily;
• Those with whom we are working to make really successful; and
• New, start–up bands.
EMI needs business models which work for all three categories, the reality being that the vast majority of the third category will fail to achieve commercial success and have historically been cross-subsidised by the first category………
We will need to give artists at all levels a deal that is fair to both sides, perhaps one that moves away from the large advances model of old and provides a true alignment of interests and transparency.”

Full memo here.

3 Comments »

  1. I think that the fewer “HUGE” artists there are the better for everyone. Music would be about music again. The quality would go up because the people left would have a true passion for what they’re doing. There wouldn’t be anybody out there trying to tell me what to listen to. I could only wish that the current events were the beginning of the end of the Major Label Era and the Huge Pop Band Era that went right along with it.

    Comment by Steve — October 3, 2007 @ 5:56 am

  2. […] and the repercussions will be felt strongly, not just by labels, but as I had expressed in an earlier post, it might probably affect other artists too if the existing model is not changed. And as if on cue, […]

    Pingback by Music 2.0 - Exploring Chaos in Digital Music » Breaking Free From Major Label Excess & Ignorance — October 10, 2007 @ 5:28 am

  3. […] all heard the recent misgivings of Trent Reznor, Prince and Thom Yorke in their rants against their erstwhile labels but Josh Homme is remarkably even beyond that, […]

    Pingback by Music 2.0 - Exploring Chaos in Digital Music » Time for Luddite & Wanton Label Chiefs to go — December 13, 2007 @ 8:08 pm

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