For years, many people have been pointing out that the real problem with the recording industry is that they didn't seem to understand their own market. Rather than selling the overall "experience" around music and everything associated, they've been way too focused on just selling the music itself, tied to whatever delivery mechanism is popular at the time (LP, 8-track, cassette, CD, internet). However, in being so focused on selling the music itself, the industry has a huge blindspot to plenty of different business models out there
, and that's part of what's made them so intent on trying to sue everyone
over unauthorized file sharing, rather than innovating on the business model side. However, that did allow more space for many musicians to successfully experiment
with alternative business models. Since most record label contracts are set up so the label gets almost all of the money from album sales, but the artists get money from most other things (concerts, merchandise, etc.) the artists who weren't brainwashed into believing that the labels were really looking out for their best interests had more of a free hand in innovating. Two recent stories, however, suggest that the recording industry is now trying to quietly revamp their business models behind the scenes. First, a story from last week that lots of folks are talking about, notes that the record labels are trying to shrink musician royalties
from album sales -- which should pretty much kill off whatever tiny lingering claim they may have had to representing the interests of musicians.
However, more interesting is that they're also signing new contracts with musicians that require a cut of other revenue streams
, including concerts and merchandise sales. While this might mean that the industry is finally realizing it's not about just selling the music, but selling the entire experience of a band, it's more likely to mean that bands have a lot less free reign to experiment with alternative business models. The labels have long shown that they have little to no creativity when it comes to business models, and will quickly focus in on locking down these new revenue streams and squeezing them dry. A few years ago, it may have made sense for the labels to offer such a complete package, promising to market the bands like crazy in exchange for a piece of all these different revenue streams -- but after all the labels have done over the past few years, it would seem that many musicians would be much better off running their business themselves
, and just teaming with labels where appropriate, rather than becoming entirely beholden to them.