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 @ 11:01am

    Re: This is why we have Copyright

    Wilton,

    This really is an amazing statement:

    If the public does not compensate them for their labor in creating the product, it makes the profession much less attractive and causes fewer and fewer members of the public to choose this profession.

    Because the whole freaking post above is about how these musicians STILL are being compensated (and compensated better than before) by NOT relying on copyright.

    I can't believe that it's so hard for any of you to get past the basic concept that the FREE part is only part of a larger business model that does involve making money. The bands are being compensated.

    So, you're wrong. There's more music being created today than ever before. The profession is more attractive because it's more attainable than ever before.

    But by doing so the artist gives a very large revenue stream that made the profession attractive in the first place

    Ask most musicians how much they make from actual music sales. The answer is almost nothing.

    If an artist must do that, the artist must then make every other service he provides (assuming he has one, like performance) much more expensive to compensate for that lost income.

    You ignore the fact that by making the music free, you now have a great (free!) promotional tool that increases the size of your market quite a bit.

    As for the things being necessary to make money being "more expensive" up front, boo hoo hoo. That's like the buggy whip maker again. It's a lot more expensive to make a car than a horse carriage, so I'm not going to make cars.

    That doesn't generate much sympathy does it? The market has moved on. Insisting on making buggy whips doesn't change that, and having the federal gov't artificially boost the buggy market with monopoly rights doesn't help either.

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