While social networks like MySpace Music and file-sharing programs like Napster may have contributed to the decline in record sales in recent years, there is overwhelming evidence that these sites may be more effective marketing outlets for artists than their record labels.
Rather, the websites, networks, and programs being sued for illegal file sharing will carry record companies in tow through the gates of the music industry’s future marketing.
The economics of digitally recorded music aren’t complex. The costs associated with producing digital copies and matching the quality of the original are minimal and nearly non-existent.
Anyone with any sort of computer know-how can create those copies. Digital editing and musical production technology, once only available to the record companies, is now readily and widely purchased at the consumer level. This substantially lowers the barriers of producing and marketing artists.
Remember when Metallica discovered its entire back catalogue of studio material was leaked prior to most of the music’s commercial release? In turn, Metallica retaliated against Napster and created the spark that ignited the Great File Sharing Fire of 2000.
Fast-forward to 2010 in a market where CD sales are dropping nearly 20 percent each year and digital downloads outnumber file sharing. It makes little sense for record companies to sign new artists.
Think of it as an investment. The record company pours large sums of money into promoting a band with the hopes of gaining a hefty return from record sales.
If nobody is buying records, the labels must recoup their losses from other artist-generated revenue.
Edgar Bronfman, CEO of Warner Music Group, spoke at the Web 2.0 Summit two year ago and said it doesn’t make sense for record companies to spend money on promoting bands or artists when their main source of revenue is drastically declining.
This is why labels are now only signing new artists under “360 deals.”
The 360 deal is an idea that only a year ago was considered overly experimental or controversial.
Now it’s the norm under which one-third of all artists signed to Warner Music Group conduct business. These new terms give the record companies the usual cuts in album and digital sales, but also cut them in on merchandise, ticket sales, endorsement deals and other revenue.
Recorded music has lost its value, and in today’s market it makes more sense for artists to just give away their music for free and still hold some sort of control over it than to sign away their lives to the record companies.
Bands like Radiohead have embraced this new era of promotions. Their 2007 independent release “In Rainbows” was sold to fans in a fashion that allowed them to set their own price.
With social networks proving to be useful marketing and advertising outlets, bands can and have used them as a means of self-promotion. Bands like The Devil Wears Prada would be nowhere without the free promotion received on MySpace. Hell, most people don’t even realize that Tila Tequila owes all of her fame and success as a model, actress and singer, or whatever she wants to call her self that day, to the popularity of her MySpace page (I’m talking pre-Tila reality show).
She is living proof that it isn’t what you know, but how many digital friends you have. I digress — do you think the guys over at A&M records were steppin’ to the beat when Will I. Am signed her to his music group, a sub-label of A&M? I think not.
It’s almost like signing with a record company may hinder the growth of an artist more than help promote his or her career.
Ever heard the phrase “cutting out the middleman?” If we’ve learned anything from the stats and numbers of digital sales, it’s that the future is online and the success of an artist no longer lies within the hands of the record companies.
If you can make it on the Internet, you can make it anywhere.
Share some new underground artists or call Ben out at Ben.Karris@asu.edu
