Music 2.0 - Exploring Chaos in Digital Music

October 10, 2007

Breaking Free From Major Label Excess & Ignorance

Filed under: Music Industry — maths @ 5:10 am

Thom Yorke called it a “decaying business model” and Trent Reznor called them “greedy fucking assholes…who have fucked themselves out of a job essentially, that now take it out on ripping off the public”.
Harsh words that describe the major labels and the music industry but which closely echo the sentiment of many music consumers. But it carries greater authority when spoken by two of the biggest acts in the music industry and now, as a further endorsement of this viewpoint, Guy Hands, newly appointed chief of EMI has called a spade a spade in an internal memo sent on Friday in the wake of Radiohead’s wake-up call to labels via their innovative distribution method:

“Rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand.”

If these words were spoken in 2000 by a head of a major label, I would have applauded it, but 7-8 years after they crucified Napster, and bludgeoned all manner of digital developments, it recalls regret and lost opportunities expressed by a terminally ill patient during an administration of last rites.

Ian Rogers, the new head of Yahoo Music is to be applauded for making a strong stand on his blog

“How much opportunity have we lost in those 8 years?…..If the licensing labels offer their content to Yahoo! put more barriers in front of the users, I’m not interested. Do what you feel you need to do for your business, I’ll be polite, say thank you, and decline to sign. I won’t let Yahoo! invest any more money in consumer inconvenience. I will tell Yahoo! to give the money they were going to give me to build awesome media applications to Yahoo! Mail or Answers or some other deserving endeavor. I personally don’t have any more time to give and can’t bear to see any more money spent on pathetic attempts for control instead of building consumer value. Life’s too short. I want to delight consumers, not bum them out.”

Further expressing the view that unless there are major changes in the industry, more top bands will by-pass record labels and instead sell directly to their fans, Guy Hands’ sense of foreboding was further confirmed by this “Big News” as written by Trent Reznor on the NIN website yesterday:

NIN Break Free

After threatening to leave Universal after one more final album, it is probable that Universal/ Interscope hastened NIN’s departure to save themselves from the vitriolic and damaging attacks that Trent Reznor has unleashed on them this year. So there,.it’s finally happened, another A-list band has joined Radiohead in stepping out of the major label circus 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, Guy Hands has warned EMI off this well-trodden approach by asking,

“Why should they (A-list artists) subsidise their label’s new talent roster?”

And he has instead encouraged EMI to think like a VC in their approach, and do away with paying big advances and instead subsidise the cost of album production in return for a share of profits (or losses). The proof is in the pudding and the jury will certainly be out there to check if the labels concoct new accounting shenanigans to obfuscate the artist royalties on this new model too.

Even more damning is Hands’ questioning of current practices,

“Why should they subsidise their record company’s excessive expenditures and advances”.

According to a Telegraph report, he also expressed “surprised at the size of salaries paid to second-tier executives”. What is most despicable to all of us consumers as well as artists is the admission of excess that record company executives have been indulging in, which the further Telegraph notes as “bands complain that too much of their money is used to subsidise lavish lifestyles for label bosses”

Ignorance of all things digital is one thing, but to rip off consumers and artists is criminal, and unforgivable. Carrying on from Trent Reznor’s observation of high prices in Australia for NIN CDs, I myself noted that many dance CDs at HMVs in various countries in Asia are being sold at the exorbitant price of at least US$25 – do they really take us consumers for fools? The labels’ desperation to sustain their margins via a fading medium led Guy Hands to state that,

“The recorded music industry… has for too long been dependent on how many CDs can be sold”.

But in an almost universal act of retaliation, consumers simply ignore CDs and are no longer bothered by the accompanying high prices as they get their music fixes via free options. An average of 1 billion music files being traded monthly on P2P networks shows that music consumption is still very much alive but major labels are still clueless on how to get a piece of the action, and are slowly being led by the very artists whose interests they were supposed to look after.

In the week that Radiohead’s revolutionary new album distribution takes place, alongside indie-darlings Charlatans’ album giveaway, news of Madonna’s impending Warner defection and Trent Reznor’s final release from his major label shackles, the silence from one of rock’s other outspoken statesmen is deafening…Bono, stop fiddling with highfalutin aims and concepts outside of your natural area of expertise and fix your own backyard instead!

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