Rethinking The Role Of Labels In The Music Industry

from the a-seat-at-the-table dept

It's pretty clear that the record labels' traditional business model is broken, and since there's no returning the past, the key question is what business model will replace it. Several promising answers have been bandied about, but at this point the question is far from settled, particularly since the record labels have yet to even give an inch. The Wall Street Journal looks at a relatively young company called TuneCore that helps independent bands and record labels connect to digital music stores, like iTunes and eMusic. To independent record labels, the service basically functions as a distributor would, so that the label doesn't have to bother dealing with iTunes directly. What's more interesting is that for bands, TuneCore can help cut the label out entirely, since one of the main reasons for signing on to a label is to get help with distribution. One of the other main reasons for signing on to a label is to get help recording an album, but, just as launching a startup company continues to get cheaper, so to does making a record. Where, then, can record labels add value to the process? One thing they can help with is promotion, although, again, the web has made it much easier for bands to do this on their own. Thinking about the same question, Julian Sanchez throws out the idea that record labels should vacate the business of coordinating production and promotion, and should instead act more like insurance companies that manage and hedge career risk for all of the artists on the roster. In other words, labels could use proceeds from the few successful bands to help provide a safety net for bands that aren't (yet) making it. The idea might need some fleshing out, but it's not a totally foreign concept to the entertainment industry. Hollywood is increasingly turning to hedge funds to fund films and absorb risk. Of course, even if there is a role for labels, there's no guarantee that today's record labels will be the ones to perform it. Unless they get busy trying to adapt instead of fighting change, they risk being left out.


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  1.  
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    Julian Sanchez, Apr 11th, 2007 @ 9:11pm

    Just to clarify, what I'd meant to suggest is that the "hedge" function is already, at least to some extent, one labels serve--and perhaps one that will become less relevant in the future.

     

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  2.  
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    Anonymous Coward, Apr 11th, 2007 @ 9:54pm

    the concept of a 'label' is going to mean something different as the idea of digital music/piracy continues to spiral and grow.

    the role of a label will ultimately transform into a marketing/sales venue, tied into managing apps for dealing with the various digital distribution networks.

    there's really no reason to only have your song on a single site, for a single price.... there will ultiamtely be the same content, on different networks/sites, for different price/sales points.

    one network might have a deal with a movie/theater site, purchase a ticket, get the song for 10% off for a certain time of the day...

    another network/site, might have a different kind of deal..

    i seriously doubt that anyone is going to provide 'song' insurance, although i can easily imagine that you could have a market where artists get to shop their song/album/package of songs for investors to provide up front cash to create the music, in exchange for a piece of the cash flow, and whatever rights are agreed to...

    peace...

     

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  3.  
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    Elad, Apr 12th, 2007 @ 1:04am

    The "insurance" idea seems bad

    If you claim (and I agree) that talented your artists can mostly handle recording, promotion and distribution themselves, through a host of new services, then why would they sign up with a label in the first place?
    With a dearth of new artists, who'll eventually become successful, how's a label-cum-insurance company make the kind of money needed to provide the so-called insurance to young artists?
    Or are you saying that labels would become some kind of VCs - giving money to entrepreneurs - young artists in this case, to fund their first steps, and not much else besides some good connections (though they keep claiming otherwise).

     

    reply to this | link to this | view in thread ]


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