Recording Industry, Once Again, Stomps Out Optimism

from the it's-what-they-do-best dept

My initial summary of my trip to the Midem music industry event in January was that it was about turning "optimism into denial." There was a tremendous sense of optimism from all sorts of upstarts: musicians and companies who were really innovating and creating wonderful success stories over and over again. And then... the old school industry guys showed up. They spoke about the optimism and the success stories... and said a few things that made it sound like the got it. They talked about ending this "war" with consumers, and focusing on solutions that worked. But, then the clouds would descend, and they'd immediately start angrily saying that even with these great new business models and innovations, "we need to stomp out piracy." In doing so, they demonstrated how severely they missed the point -- and it's now showing in their actions. We've been seeing more braindead maneuvers over the last month with highly questionable lawsuits, and licensing decisions that only serve to piss off users.

It seems that my initial read is (unfortunately) the same conclusion others are coming to as well. Two of the "industry insiders" I got to meet at the event -- who both came down on the "optimistic" side at the event have each written up blog posts for the MidemNet blog, complaining about the very same thing. That initial sense of optimism that was seen at the event has pretty much gone away -- crushed by dumb moves within the industry. Ted Cohen, who helped moderate much of the event, diplomatically points out that for all the talk of collaboration at the event, the chaos isn't over, and he wonders when we'll actually get down to business. Meanwhile, Bruce Houghton (of the excellent Hypebot blog) more specifically fears that all the talk of a more collaborative approach was nothing more than talk -- and there is no intention to really collaborate.

This is a pretty big problem -- and I obviously won't speak for either Bruce or Ted, who I'm pretty sure would disagree with this assessment -- but, it won't change until the old system and the old structures and the "old guard" are finally pushed out. There are tons of success stories -- but those are in spite of the industry, not because of it. It's time to wipe out the house of cards that the industry has built in terms of Rube Goldbergian copyright licensing schemes, and start fresh. There are business models that work great for everyone -- but the current system is designed to allow bystanders and middlemen to profit at the expense of the musicians and the public. Get rid of the old system, and everyone but those middlemen will benefit.


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    Anonymous Coward, Mar 5th, 2009 @ 1:41pm

    Rube Goldberg

    I've never seen someone use Rube Goldberg as a way to describe the copyright licensing Machine.. But it makes total sense!

    I got a great chuckle out of that. You've made my day!

     

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    some old guy, Mar 5th, 2009 @ 1:43pm

    Not gonna happen soon

    Get rid of the old system, and everyone but those middlemen will benefit.

    You see, those middlemen made themselves filthy rich. They are the ones that stand to lose the most, so they are the ones with the deepest pockets that are going to fight the hardest to stop this revolution.

    They understand everything you say here Mike. They know its true. But it only makes them fight it even more. They don't want anything but the pure margin good ole days.

    They know they are going down. They speak as tho they are in denial, but that's only because they need to keep the facade up to get the "delay the inevitable" laws passed that let the wring out the last few billions before their models collapse.

     

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      Eadwacer, Mar 5th, 2009 @ 6:43pm

      Re: Not gonna happen soon

      I think it was Mark Twain who said that "it's hard to make a man understand something when his livelihood depends on him not understanding it."

       

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    Weird Harold fan, Mar 5th, 2009 @ 1:56pm

    *Obligatory post stating how Mike is wrong while providing examples of the contrary*

     

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    Anonymous Coward, Mar 5th, 2009 @ 2:22pm

    The recording industry is sort of like the tobacco industry in the late fifties. They had the information that tobacco was incredibly dangerous and that nicotine was an addictive drug. They knew they could be shut down at any point.

    By all rights the tobacco industry should have shut down or completely transformed itself in the 1960's. Instead they have used a combination of FUD, propaganda, and campaign contributions to get by for another 50+ years.

    The RIAA has a lot of money, although the income stream is decreasing. They may not be able to hang on another 50 years without innovating, but most of the current exec's can probably make it to retirement.

     

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      Rekrul, Mar 5th, 2009 @ 10:48pm

      Re:

      "By all rights the tobacco industry should have shut down or completely transformed itself in the 1960's."

      As much as I dislike the tobacco industry, shutting it down would have just created an underground market for it, like it did with drugs. Look what happened when they tried to ban liquor in the US.

       

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    Crosbie Fitch (profile), Mar 5th, 2009 @ 2:51pm

    You're almost there...

    Mike, it sounds like you're almost ready to say "I am a copyright abolitionist".

     

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    another mike, Mar 5th, 2009 @ 3:15pm

    I found step 2

    step 1: host "new media" conference; invite pirates, torrent hosts, and anyone with a better business model than you.

    step 2: sue the guest list.

    step 3: profit!!

     

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    Weird Harold, Mar 5th, 2009 @ 3:55pm

    I have to ask the obvious question:

    What do you replace the current music industry with, exactly?

    How would song writers, producers, session musicians, and all the people required to make the current industry go actually make a living?

    How would you handle the large catalog of existing material under existing copyright and licensing agreements?

    How would you see a band getting from "best band in Buzzkill nebraska" to being an international hit?

    In the end, would you not be replacing one cumbersome system of corrupt gate keepers with another one?

     

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      Anonymous Coward, Mar 5th, 2009 @ 4:08pm

      Re:

      Great questions, Harold.

      But mind telling us why you're running around using the moniker attributed to Chicago's porn king? It's difficult to believe you seriously want answers.

       

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      Mike (profile), Mar 5th, 2009 @ 4:41pm

      Re:

      What do you replace the current music industry with, exactly?

      If you actually bothered to read what we write (which so far you have proven you don't do), you wouldn't be asking that question. For nearly a decade we have shown model after model that works to allow everyone to make MORE money using this system. Costs go down, fan bases go up. To think that this somehow shrinks the market is simply wrong. But... not too surprising coming from you.

       

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        Weird Harold, Mar 5th, 2009 @ 5:13pm

        Re: Re:

        Mike, sorry, I think you miss the point. How are bands going to get from (a) local heros to (b) regional top act, to (c) international stars?

        Imagine for a minute there is no universal top hits style radio, no MTV (not that they play videos anymore). Everyone is regional. How do they bust out?

        What I am seeing is you are showing models that occasionally work for selected artist (like your buddy Corey). Can you name me 10 bands right now getting national airplay without a record contract? Selling out 20k stadiums without a record contract? Getting on Late Night with Whoever It Is this Week?

        Success isn't just making a living. The question is stardom... how do you say it is happening?

         

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          Mike (profile), Mar 5th, 2009 @ 6:51pm

          Re: Re: Re:

          Mike, sorry, I think you miss the point. How are bands going to get from (a) local heros to (b) regional top act, to (c) international stars?

          Imagine for a minute there is no universal top hits style radio, no MTV (not that they play videos anymore). Everyone is regional. How do they bust out?


          There's this thing called the internet. Maybe you've heard of it.

          What I am seeing is you are showing models that occasionally work for selected artist (like your buddy Corey). Can you name me 10 bands right now getting national airplay without a record contract? Selling out 20k stadiums without a record contract? Getting on Late Night with Whoever It Is this Week?

          Success isn't just making a living. The question is stardom... how do you say it is happening?


          Then we disagree wholeheartedly. Success is making a living. While there will absolutely still be superstars (people gravitate to such things), why should that be the necessary definition?

           

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          Rekrul, Mar 5th, 2009 @ 10:56pm

          Re: Re: Re:

          "What I am seeing is you are showing models that occasionally work for selected artist (like your buddy Corey). Can you name me 10 bands right now getting national airplay without a record contract? Selling out 20k stadiums without a record contract? Getting on Late Night with Whoever It Is this Week?

          Success isn't just making a living. The question is stardom... how do you say it is happening?"


          So what you're really asking is, how does a band go from being popular for their music to overpaid "superstars" living in penthouses or multi-million dollar mansions, and having nightly parties with bricks of cocaine and $10K a night hookers?

          Maybe they shouldn't. And maybe there shouldn't be Miley Cyrus toothpaste or Miley Cyrus hair clips or Miley Cyrus underwear.

          I'm sure you'll say that without the chance to become coke-addled burnouts living in penthouses, nobody will ever make music again. Maybe not the over-produced crap that we have today, but people will still make music. People were creating long before the idea of copyright was even invented, and they'll still create, even without the support of corporate vampires taking 99% of what they make.

           

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        Anonymous Coward, Mar 5th, 2009 @ 6:23pm

        Re: Re:

        So for 10 years you have misstating infinite goods. Congratulations.

         

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      Thom, Mar 5th, 2009 @ 5:12pm

      Re:

      >What do you replace the current music industry with, exactly?

      If the music industry would wise up and embrace the changes in technology you wouldn't have to replace it. If they don't you'd replace it with exactly what's supplanting it now, the Internet, MySpace, YouTube, Band web sites, the growing web distribution channels.

      > How would song writers, producers, session musicians, and all the people required to make the current industry go actually make a living?

      They exact same way they do now, they're still needed. In fact they could find more work because there'd be more artists and groups making money and therefore more demand for these talenteed people. Really, only the middlemen would lose their jobs.

      > How would you handle the large catalog of existing material under existing copyright and licensing agreements?

      If you'd listen to mike you'd realize that existing copyright and licensing agreements don't conflict with new technology or methods of distribution, only with an industry that wants to maintain the status quo and keep a lock on it.

      > How would you see a band getting from "best band in Buzzkill nebraska" to being an international hit?

      Go ahead and try answering that one yourself Harold. Exactly how do you see a band getting there with the industry that exists today? If you can't see that the opportunities for bands like that are 1000 fold more with the Internet than through the current system then everyone's going to view you as a fool. The Internet allows that small band to gain exposure, to be seen by people all over the world, to move beyond the boundaries of buzzkill. Then, if they are good, their following will grow to the point that "big media" will take notice and push them over the top.

      >In the end, would you not be replacing one cumbersome system of corrupt gate keepers with another one?

      Because, in the end, you wouldn't have that select small group of gatekeepers with middlemen. We, the fans, can buy our music and memorabilia directly from they, the artists, and there will be little or no need for middlemen.

       

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    Weird Harold, Mar 5th, 2009 @ 5:41pm

    Thom, what you are asking the music industry to do is to release all the music they currently have into a virtual free space, where they make no income from it, no residuals, no nothing, and HOPE LIKE HECK that someone buys the music anyway. Let's not forget that radio stations and video channels would then also cue up to have their residual payments removed, effectively killing the music business, by removing the income.

    There is some magic concept at play here that when the money stops flowing, the music industry would suddenly get huge and everyone would make money.

    The result of this? New technology and new distribution methods, particularly ones that don't pay fees on par with existing media, would kill all existing licensing agreements in place. It's the one thing that has been proven over and over again, it's very hard to compete against free.

    "Go ahead and try answering that one yourself Harold. Exactly how do you see a band getting there with the industry that exists today? If you can't see that the opportunities for bands like that are 1000 fold more with the Internet than through the current system then everyone's going to view you as a fool."

    Thom, there are only so many minutes of radio time in a day. Only so many places on the playlist at a radio station. Only so many spots on late night TV, and only so many "star" positions that come up each year. While you suggest the internet would increase the potential for bands a thousand fold and we would suddenly have thousands of new stars, that is an unlikely proposition. There is only so much space available to make critical mass. Instead of 10 bands selling 50,000 records a week, you are looking at 1000 bands selling 500 records a week (and really, they aren't selling them, they are giving them away "FREE!" to sell concert tickets). At that speed, it would take most bands a lifetime to raise enough of a fan base to even merit touring.

    Without record labels and an organized A&R system, who would get these bands on the radio all over the world? Who would get them out of the muck and the mire of being the 1 billionth shaky handheld home movie cam video on YouTube? Who would help them get past being the 1 millionth selling artist on Itunes? Word of mouth is powerful, but when thousands of mouths are saying thousands of contradictory things, it's all just noise. The true genius of the music industry has been to get their hands (and sticky fingers) into all of the nooks and crannies of all of the moving parts of the music system (radio, tv, video, magazines, etc) and pull those levers and use those systems so that instead of thousands of voices with different messages, you have thousands of voices with a smaller list of similar messages, which equates to critical mass.

    Rolling Stone isn't going to want to be answering the phone (or email) for 25,000 local bands from the Buzzkills of the world trying to get on the cover, trying to get their record reviewed, etc. Radio stations aren't going to want to hear from 25,000 unknown local bands all trying to get airplay.

    SO I still have to ask, how do you get from buzzkill to MSG (besides taking a greyhound)?

     

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      some old guy, Mar 5th, 2009 @ 6:00pm

      Re:

      So Harold, you're a big fan of being told what you like?

      Fascinating. No, I mean it this time. Really.

       

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      Thom, Mar 5th, 2009 @ 6:23pm

      Re:

      The how is through the people. Rolling Stone will put anyone on the cover that will sell magazines. As the better artists rise to the top and gain followings magazines like Rolling Stone will notice. Radio and TV will too. Sure, there's a lot of money buying the playlists now, but good songs from out of nowhere still get on them, and that will increase in frequency as the labels kill themselves off.

      Ever watch American Idol? You know the winners, and the near winners, weren't made by the labels but through exposure to the public, through their efforts, and through their ability. Once they won their way into the hearts of the people they were signed, they got advertising contracts, they do concerts, and so on. Yeah, it was a TV show, but it wasn't a record company transforming a local singer into a star. Hint, it's a new twist on the old business model. Check and see how much money that twist has made in the past few years.

      Know who Tila Tequila is? Think what you want of her, and I bet I'd probably agree with you, but she's an excellent example of someone who's gained quite a bit of fame and fortune through the very means you claim isn't possible. If she actually had any talent imagine how much further she could have gone.

      A few years ago web sites were putting television news reports and show clips on their pages, now television and news shows are using Internet video clips. Backwoods nobodies are getting exposure and having their moments of fame every day, but you don't think that talented musicians from across the country can't do the same and, even better, work to keep it? You're blinded by your own ignorance.

       

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        Weird Harold, Mar 5th, 2009 @ 6:38pm

        Re: Re:

        American Idol is a scam, pure and simple: The contestants are all signed up to Simon's management company before they even start. Just as importantly, there is proof that American Idol doesn't work, most of the winners and near winners can't do anything except get arrested, most of them no longer have record deals. They are flash in the pan, gone, over with - and AI only had space for a very few new faces each year. Just as importantly, without the potential for a big payoff in record sales and concert tickets, there is no business model for AI anyway. As an example, you are showing exactly why the current record business is needed to develop artists.

        They are making money pushing a TV program, but they aren't making money selling records. So yes, they are giving away the music to make money on advertising, but again, that is the OLD TV model since the start of broadcasting. Nothing "digital web 2.0" going on here.

        A very few people have managed to use the internet to gain large scale fame. Most of them don't even get 15 minutes, the internet gives them 1.5 minutes if they are lucky. I cannot think of a single band out there that got famous ENTIRELY on the internet / digital universe without a major record label behind them. Most of the net "successes" have come from existing popular artists using the net, long after they have critical mass. Who is actually getting musical critical mass right now?

        As for news shows, pay attention closely: All of the ones I am seeing are advertising supported, often by forcing you to watch a commercial before you see their video. It is the same old TV model again, back to haunt you. It ain't "free digital information flow" just another version of broadcasting. They only do it because the costs to create the content is already sunk (by their normal broadcast material) and they are able to cover the web costs with advertising. Without income, most of them won't do it (and were not doing it).

        Some Old Guy: I don't like being told what to like. That isn't the point. The point is that offered too many choices, no group of acts would likely get enough critical mass in any market to justify touring in those markets, which would defeat this "music free as advertising" concept entirely. Record Labels in the end help to narrow down the field so I am get to look at a few hundred of the best acts around, rather than listening to the deafening static of tens of thousands of untalented wannabes. If I want to like something outside of the more mainstream choices, that is all good - but I can also expect never to see that band in my town, because I may be the only guy in my burg that happens to like them.

         

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          Rekrul, Mar 6th, 2009 @ 12:03am

          Re: Re: Re:

          "A very few people have managed to use the internet to gain large scale fame. Most of them don't even get 15 minutes, the internet gives them 1.5 minutes if they are lucky. I cannot think of a single band out there that got famous ENTIRELY on the internet / digital universe without a major record label behind them. Most of the net "successes" have come from existing popular artists using the net, long after they have critical mass. Who is actually getting musical critical mass right now?"

          Naturally, if you're comparing a band with a few thousand dollars to promote themselves against the multi-million dollar advertising campaigns staged by the record companies, the big-name stars are going to come out ahead. It's called "hype". You think Miley Cyrus would be anywhere near as famous as she is if Disney and the music industry hadn't promoted the hell out of her? I know you think this proves your point, but it actually proves mine; The music industry today isn't really about music, it's about promoting a "product". Most stars don't succeed based on the quality of their music, they succeed based on the quality of the record company's promotional campaign.

          "The point is that offered too many choices, no group of acts would likely get enough critical mass in any market to justify touring in those markets, which would defeat this "music free as advertising" concept entirely. Record Labels in the end help to narrow down the field so I am get to look at a few hundred of the best acts around, rather than listening to the deafening static of tens of thousands of untalented wannabes."

          I don't download music. I've never been into it that much. However I do download movies. In fact, I download a lot of movies. Often I'll download something just because the description sounds interesting. It's true, I've downloaded a lot of crap. Many movies that had reviewers raving over them, turned out to be complete garbage in my opinion. However I've also downloaded some obscure films that I really enjoyed. The kind of stuff that you won't find at Blockbuster or Walmart.

          Now, I know you'll ask "Did you buy the DVDs of the films you liked?" and the answer is no. Why? Because I can't afford to spend $15-20 on a movie that I'll probably only watch once or twice. I don't even watch half the stuff I download. However, if I saw a DVD copy for $2-5, I'd consider buying it just to have a legit copy. I own one Hollywood DVD, one TV show on DVD and about 2 dozen DVDs bought at the dollar store. You do the math...

           

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          chris (profile), Mar 6th, 2009 @ 1:45am

          Re: Re: Re:

          Record Labels in the end help to narrow down the field so I am get to look at a few hundred of the best acts around, rather than listening to the deafening static of tens of thousands of untalented wannabes.

          you can't have it both ways. either you spend millions to force the world to listen to your chosen few bands and their music gets pirated en masse, or you cut your spending on creating universally desired music and profit.

          if there is such a broad selection of music that no one knows what to listen to, maybe you could provide a service to connect a person with music they like? you could probably charge for that service as well. this is how amazon and netflix are able to compete with other outlets: their recommendation services make people happy.

          the setup that you describe is focused on what you want to sell, not on what the public wants to buy. if you sell something that people want to buy, you are more likely to see a profit and you have to spend less on promotions to trick people into buying.

           

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      this old fart, Mar 5th, 2009 @ 6:25pm

      Re:

      rolling stone don't have to deal with 25000 local bands you fool rolling stone will only have to deal with the ones good enough to become popular outside their local area

      god you are stupid

       

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      Rekrul, Mar 5th, 2009 @ 11:36pm

      Re:

      "Thom, what you are asking the music industry to do is to release all the music they currently have into a virtual free space, where they make no income from it, no residuals, no nothing, and HOPE LIKE HECK that someone buys the music anyway."

      Why does the alternative to what we have now always have to be 100% free? Why not a compromise that gives people what they want?

      The first thing you have to realize is that piracy will never go away. No matter what you do, some people will still pirate. Trying to stop all piracy is futile. What they need to do is to lure away the people who pirate for reasons other than just getting something for nothing.

      People have shown that they want media in digital form. Not only is such media lossless when making copies (which means that "purchases" will never wear out, unlike physical media) it's more convenient. You can buy MP3 players that fit in your pocket and hold more music than an entire bag full of CDs. What people don't want is to pay the same price for digital copies that they would pay for an actual CD. At $0.99 a song, buying 12 songs would come to $11.88, which is what a CD costs. The problem is that digital downloads carry none of the costs associated with manufacturing CDs, so why does the music still cost the same?

      Then there's the issue of DRM. I've lost count of how many DRM-infected music services have shut down, making it impossible for people to move the music that they "bought" to a new computer. Music is headed in the right direction with legal, DRM-free downloads, but the same can't be said for video. I know a guy who likes to put movies and TV shows on his PSP to watch on the commute to work and on his lunch break. Of course he has to use "illegal" copies to do this because you can't buy DRM-free copies of any video content. Why can't I pay $0.50 and buy a DRM-free AVI copy of the latest episode of Heroes? Because the DRM-free copy would get pirated? News flash: DRM free copies are already being craeted and distributed, they don't need the company to do it for them! Look at how many people put up with all the hoops they have to jump through to "buy" content from iTunes. Now think how many people would be willing to buy from a service that sold DRM-free files that could be played on any device, or backed up forever.

      Finally, there's the issue of selection. Can you name a single service that lets you pick and choose from the music of all the major record labels, including obscure stuff from 50+ years ago? Oops, sorry, I meant a LEGAL service. Sure, if you want the latest Britney Spears song or the latest bit of (c)rap, you can find it on Amazon or iTunes, but what about more obscure stuff?

      "The result of this? New technology and new distribution methods, particularly ones that don't pay fees on par with existing media, would kill all existing licensing agreements in place. It's the one thing that has been proven over and over again, it's very hard to compete against free."

      The entire licensing system needs a major overhaul. It took 15 years for the film Heavy Metal to be released on home video because nobody could agree on the licensing for all the music in the movie. The DVD release of the show WKRP in Cincinatti has been butchered due to the fact that it would have been much too expensive to license all the music used under the current system.

      "Without record labels and an organized A&R system, who would get these bands on the radio all over the world?"

      Here's a wacky thought; Without the complex licensing system that exists today, radio stations would be free to play the music that they wanted. Groups that are popular would get noticed and radio stations would play them. Bands would send promo CDs (which can be produced for next to nothing these days) to the radio stations directly and the stations would play them. Unpopular songs wouldn't get played much while popular ones would get requested and played more. Or are you arguing that music can't become popular unless it has a multi-billion dollar marketing campaign behind it?

      "Who would help them get past being the 1 millionth selling artist on Itunes? Word of mouth is powerful, but when thousands of mouths are saying thousands of contradictory things, it's all just noise."

      Is the iPhone app store in danger of collapsing because there's no system in place to create "superstars" and developers basically have to rely on word of mouth to sell their programs?

       

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    JMG, Mar 5th, 2009 @ 8:47pm

    Rags to Riches

    Regarding going from "local" heroes to "international stars, one may consider the Arcade Fire, out of Montreal. I found out about them from a file send to me by a friend through IM. They've also been referred to as the first band to be made big through the Internet. Take a look at their history of gigs and you'll see a trend, from smaller venues in and around Montreal to larger (and international) venues. Did they have a big recording label behind them? No. Did they have huge radio support? No. They're just a really great band, and the music spoke for itself.

     

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    Rekrul, Mar 5th, 2009 @ 10:46pm

    "Meanwhile, Bruce Houghton (of the excellent Hypebot blog) more specifically fears that all the talk of a more collaborative approach was nothing more than talk -- and there is no intention to really collaborate."

    In the immortal words of Buffy the Vampire Slayer;

    "Does the word "duh" mean anything to you?"

    The only "collaboration" the content industry is interested in, is where everyone else does what they tell them to.

     

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    nzgeek, Mar 8th, 2009 @ 9:25pm

    @Weird Harold

    If you properly read what Mike is saying, it's not that the record labels need to go away completely. It's that they need to stop trying to control the market and start moving with it.

    At the moment, they're trying to control EVERY possible way that music can be distributed. They want their cut of every play of every song in their catalogs. Never mind that your average artist will only see pennies out of every dollar collected in this way.

    The only way forward is if the labels embrace the internet and digital distribution as a tool. Make it cheaper, easier and more convenient for people to buy songs online. Give people reasons to buy physical media, such as bonus print or video content. Get bands out on the road, selling merchandise and signing autographs.

    Unless the music companies start to see the bigger picture, they will crumble and fall and be replaced by smaller companies who actually "get it".

     

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