Bands Rushing To Ditch Labels And Embrace Free; Are The Floodgates Opening?

from the tipping-point dept

We've only been predicting that music would eventually go free for about a dozen years, but it feels like we may be nearing a tipping point among musicians recognizing this simple truth as well, kicked off by last week's Radiohead announcement. Suddenly, similar announcements seem to be coming fast and furious. Apparently both Oasis and Jamiroquai are interested in following Radiohead's lead and the Charlatan's (managed by a member of Oasis) is already doing the same. On top of that, Trent Reznor proudly announced today that Nine Inch Nails is now free from its record label contract. Will.i.am, from the band The Black Eyed Peas, announced "the new distributor is your niece" in discussing how he plans to promote his new solo album.

There are two key things to note in all of this. First, all these bands feel the need to ditch big record labels to do this (and, no, that doesn't mean that small bands without recording contracts can't succeed this way too). This is a sad state of affairs for the record labels -- because there still should be a place for them in helping to promote and market a band, even if they're giving away the music for free. It's just that they're not venture capitalists any more and bands don't need help in distributing content -- two businesses the record labels insist they're in. What's really sad here is how clueless the record labels remain to this reality. In a Reuters article about the Radiohead move, a record industry insider mistakenly claims that this trend is going to hurt the music business because bands will rush out singles instead of albums. Apparently that insider only read the first half of the details of what Radiohead is doing (as well as what others are doing). They're doing exactly the opposite. They've put together a whole "discbox" with lots of extras to make it more compelling to buy. Will.i.am specifically made his latest album a "cohesive story" to encourage people to buy the whole album. Reznor purposely tried to make his CD as cool as possible (it changes colors when you play it in a CD player) to encourage people to buy it -- even as he tells people at concerts to download his songs.

That brings up the second key point. For all the whining about "free" music, the complainers keep missing the fact that free is only a part of the business model. This seems to be the thing that people get most confused about when we discuss business models around free music. They get stuck on free and assume that if something's free, there's no way to make money. But, all of these bands are showing exactly the opposite is true. The Times Online has a story incorrectly headlined "The day the music industry died" discussing these exact changes, but as you read the details, the music industry is doing just fine -- it's just the folks in the recording industry who are in trouble. Musicians are raking in record revenue from concerts -- and the artists are realizing that the free music only helps generate more interest in those concerts. Listen to Alan McGee from Oasis and the Charlatans, saying that giving away the music for free was a can't miss proposition: "We increase our fan base, we sell more merchandise, more fans talk about the band and we get more advertising and more films (soundtracks). More people will get into the the Charlatans and will probably pay the money to see the show. I presume it will double the gig traffic, maybe even treble it."

In other words, more bands are recognizing exactly what a bunch of folks knew was inevitable at least a decade ago. Unshackle the music, give it away free, and use it to make a lot of other stuff a lot more valuable, and there's plenty of money to be made. The only sad part in all of this is that the record labels have been not just blind to the idea -- they've actively tried to discredit anyone who pointed it out to them.

Filed Under: business models, economics, music, oasis, radiohead, trent reznor


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  1. icon
    Mike (profile), 10 Oct 2007 @ 10:56am

    Re:

    but fail to respect the cold hard reality that in order to produce music you burn time, effort and money

    Do you even read what I wrote? I guess not. Because one of the very points I made was that creating music costs money -- and therefore it's something that you could charge for.

    So to you that has no value. To me that is a slap in the face. All of this is worthless

    NO! Not at all. I never said it's worthless. I never said it has no value. I just explained the basic economics. I'm not sure how many times I need to repeat myself, but go learn some economics. Price DOES NOT equal value. You value the air around you quite a bit, but you don't pay a dime for it. Why? Because it's abundant. Price is determined by the intersection of supply and demand. Value is a part of the demand curve, but if the supply is at infinite, the price will still be zero. It's a simple fact of economics. It doesn't mean the music doesn't have value.

    In fact, if you stopped crying for yourself long enough to read what I wrote, you'll note that I pointed out the music has TREMENDOUS value... but that value is manifest in *making lots of other things more valuable*. The music makes a little piece of plastic called a CD valuable. The music makes *YOU* more valuable so that people come to see you play. The music makes a t-shirt with your name on it more valuable so people will buy that. The music makes *YOUR TIME* more valuable so people will pay you to appear somewhere. The music makes *YOUR SKILLS* more valuable so people will pay you to write music for them.

    Seriously, if you want to trash us, at LEAST take the time to understand what we've said. And, at the very least, learn a little economics.

    You sound like the buggy whip maker. "Oh, poor me, it costs a lot of money to make a buggy whip, but why won't anyone pay for them now that automobiles are here!" Learn to understand the market around you and you'll see there are LOTS and LOTS of opportunities to make money.


    what I really need to do is sell t-shirts?

    Man. You really just hate yourself don't you? First you say I only say you can make money from concerts. Then I give you many different ideas and you say "I can only sell t-shirts." Maybe if you stopped complaining and started doing the things necessary to make money you wouldn't be in such a sorry state.

    Telling the bands they have to find other ways to get paid for their work - when everyone really was screwed by the labels (including the artists) - is a case of decapitation for dandruff.

    Yeah, how dare I tell them they can make more money by understanding the basic economics at play... when they got screwed by some company that didn't. I don't quite get your logic here. The labels screwed you, so now you have to screw yourself? Bizarre.

    can someone succinctly and intelligently justify that you are entitled to enjoy those efforts without needing to pay for it?

    Ah, here's your problem again. You think that I said people are entitled to your music. I NEVER said that. I NEVER said that people should take music unauthorized. Did you even READ one thing that I wrote? I said that the bands themselves can be BETTER OFF if THEY decide to give their music away for free and make it up elsewhere. So, don't say I said others are entitled to your music. I never said that.

    I'm not demanding anything for free.

    Nor am I. I'm simply telling you where the market is going and explaining how you can take advantage of it. If you think that's "demanding anything for free" then you've got big problems ahead.

    I'm not telling people their time, effort and investment is worthless

    Nor am I. I'm saying the exact opposite. I'm saying that their time, effort and investment is extremely valuable, and there are much better ways to realize that value than selling music.

    I've spent thousands of hours of my time over the past years giving away for free, volunteering my time to help others, and making a difference in this world - and not expecting anything in return but the occasional hand shake or pat on the back.

    And that's part of your problem. Why not set up a business model that *DOES* enable you to make money, even as you are giving away your work for free? Why do you think the world now owes you because you were unable to sit back and have the business model come to you?

    How about you? Does having an MP3 player somehow entitle you to a lifetime supply of free music from people that put significant effort into creating it for you?

    Nope and I never said I did. It amazes me how often people like you can't seem to get past the simple fact that this is what IS happening. The economics pretty much require this to happen. And yet, you CAN still make money (assuming you're any good), but it means actually understanding the business you're in and the economics at play.

    I do NOT download unauthorized music. I do NOT feel entitled to free music. I'm simply trying to help musicians understand the market realities and how they can use them to their advantage, and the thanks I get are folks like you who can't even bother to read and then attack me for feeling "entitled" to free stuff when that's not what I've ever said.

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