I see the traditional record company being replaced by two sets of firms: 1) Online commission-based digital distribution firms and 2) Firms that handle tours, preferably also commission-based.
1) hasn't been done well yet. I know Amazon lets bands list and sell MP3s, and amiestreet.com offers music from indie artists with a funky pricing model. However, there's not really a "go-to" place right now with a large amount of traffic from people looking for independent music. Amazon is dominated by the majors, and no other site is very popular.
There are a number of popular places for a band to distribute their music for free, such as Myspace, but these places don't provide their bands with a revenue source. I can understand how bands would like to get paid if people love their music.
Some bands have resorted to selling their music themselves straight from their website (NIN, Radiohead, Girl Talk, etc.). However, it ought to be possible to automate this process to allow bands without technical skill to list and sell their own music (maybe make an embeddable music store?). Also, a central site off the band page could allow less popular bands to get some exposure.
Does 2) exist? I don't know. I have heard of some firms that manage tours for famous independent bands, the kind that have been around forever and have fulfilled their initial sodomizing major label deals. I don't know if any exists for mid-level bands.
One thing is for sure - the record companies are dinosaurs. They are glorified middle-men who connect bands with CD printing and distribution firms. Digital distribution means that they no longer serve a function, outside of marketing. That's the one downfall of online distribution - there are millions of bands on the internet and it is hard for fans to find new stuff they like.
There's been a number of startups that have tried to help people find new music, from the big guys like Pandora (dominated by majors), to new little guys like thefeelgood.com. I don't think anybody's gotten it right yet, and none of them mix the marketing with the monetizing well.
Honestly, if Myspace let bands sell MP3s on their profile page, it would probably be good enough and 10x better than anything currently out there.
So, what do you say Hacker News? Is anybody out there working on burying the record companies? What are your ideas, and how are you doing?
Anybody live in San Diego and want to do it with me?
Even if the major labels were only useful outside of marketing, that would make them a pretty big deal. The consumption of pop music hinges completely on how well your image and sound is sold to the general public. It's hard not to like "Umbrella" when it plays 10 times a day on top 40 radio. When Madonna's album is at eye level right when you walk into BestBuy, you can bet it's going to sell a lot more copies than similar (better?) ones that are just sitting alphabetized under "Pop / Rock."
If your aim as a musician is to earn enough money to make your full-time effort worthwhile, distributing music through MySpace alone might get you enough cash to survive. If you're shooting for worldwide fame or the type of money that lets you live like a rock star, you pretty much can't do without the connections and money the majors provide.
edit:
The point of all this being, no matter how cheap it gets to produce and distribute music, you'll never beat the majors (in pop music) if there's not a cultural shift away from consuming the music served out to the public by expensive marketing campaigns.
The article would suggest that most of the bands that "make it big" don't make a lot of money, unless they're like Madonna and have stayed popular past the initial sodomizing. So, making a living off of Myspace would be better for many bands than selling 500,000 albums one year.
Part of my argument, which I didn't explicitly state, is that most artists would rather their work be widely appreciated than it make a lot of money (any money?).
Regarding #1, there's definitely no complete winner out there yet so being on all of them is the best a band can do. Services like cdbaby.com propagate your tracks to dozens of such services (44 in all currently including iTunes, amiestreet.com, etc.) and also take care of other things for you like selling physical discs online and taking credit cards from sales at concerts, so that's probably the best thing going for a band right now. And once a clear winner in the online music sales appears, cdbaby.com will I'm sure also deal with them too on your behalf.
And as a comparison of profits from something like iTunes, I've heard major label artists make less than $1 on their digital album sales, and pennies on the song, whereas through the cdbaby.com submission to iTunes I get paid about $0.64 per song (up to $0.89 for a sale on iTunes UK after currency conversion!) or $6+/album.
For #2, I guess that's where booking and promo agencies come in, but they only tend to work with artists once they've built a following and can get people out to the gigs they set up.
In either case though, the only benefit added by major labels is advertising dollars (which also amounts to mainstream radio airplay, very hard to get without a major). This is basically VC for the music industry if you look at it that way. So maybe just getting some angel investors interested in your band might be a better approach too...
This is something I've thought a lot about since I've been in a pretty serious indie band.
A few bands have contracted me to develop download forms like the Girl Talk/Radiohead forms, and it would cost them $400 for a custom script. I thought that it would be cool to make a startup similar to Wufoo that would let indie bands customize their own forms for $20/mo and host everything for them. Then the bands could embed the form on their MySpace page and website. They could also allow blogs like Pitchfork, Stereogum, and Gorilla vs. Bear to embed it in their reviews/coverage.
You could get creative with revenue sharing and advertising, but that's the general idea.
However, there's not really a "go-to" place right now with a large amount of traffic from people looking for independent music.
I've been "going to" emusic for years for all of my music. And it's the third (was second before Amazon moved into the market) largest vendor of online music (in volume, I think).
That doesn't deflate your argument, at all, I just wanted to mention it...as I absolutely adore emusic. They also seem to have good relationships with very small labels and wholly independent artists (i.e. artists not even signed to an "indy" label--they just make it themselves and sell it through emusic and other online stores).
This article was apparently written in 1993 (http://en.wikipedia.org/wiki/Steve_Albini#References) and has made the rounds on Reddit more than once, but it's still a great insight into how record companies work and big companies take advantage of small producers of content.
I think one could look at some of the VC industry in the same way, though most entrepreneurs I know are not quite as wide-eyed or ignorant about the industry as most musicians. And, of course, VCs don't ask for 85-90% of the companies they fund...which is roughly the deal record labels offer bands.
It just so happens, this is my playground. I'm working on a suite of business tools for independent musicians and small labels to manage their online presence, marketing efforts and digital distribution.
It will eventually be here: www.kinimat.com, but I'm in the early stages at the moment. Hope to launch a beta sometime in September, if all goes well. I'm working on this full-time so it should be do-able.
I'm a little rusty on the tech side of things (c/c++ ten years ago! yikes.) but Python and Django are now my friends.
Fortunately, I won't be short of beta testers; my entire extended family are independent musicians. I've already got a huge network of potential customers, hopefully that will give me a leg up.
I'm an electronic musician/dj myself, designer by education, and hacker by hobby. This project is tailor made for me. Now I just need to get'er done.
Interesting article, very thorough in its explanation of all the ways bands can get screwed financially. I'd be interested to see more hard data as to how common this case is, where it fits in on the spectrum (percentile-wise) of band signings.
Very common. Extremely common. Albini isn't even saying much about publishing, and the zillion ways for musicians to get screwed there (never sign away your publishing rights!). For a good introduction, try Donald Passman's "All You Need To Know About The Music Business".
I won't go into stuff on what's wrong with the industry, etc. But do want to share that there's a really good resource that has been embraced by the industry for many years called "All You Need to Know About the Music Business" by Donald Passman:
I hope that it's still possible to "make it" in today's music world.
It's more possible than ever, but the definition of "make it" has changed dramatically. 20 years ago, "making it" meant "millions of albums sold"--think David Bowie, Michael Jackson, Fleetwood Mac. A few others eked out a decent living, but the people getting rich had to sell a lot of records and fill a lot of stadiums. And there were only a handful of artists that got that chance.
Now, it's possible for someone to sell a few tens of thousands records, fill a few mid-size concert venues, and make an excellent living. One can entirely skip the music industry BS. You still need to book shows, and you still need to promote, and you still need to work hard...but it's now possible for a middle tier act, with recordings to sell, to come to the end of a tour and be in the black.
Superchunk are a great example of just this shift in the industry. They started indie, signed to a major, and went back to being indie because they made a lot more money that way (and now they own/run Merge, one of the more successful truly indie labels--Spoon, Arcade Fire, She & Him, Destroyer, etc. are all Merge bands). A lot of acts since then have followed their lead. The second and third generation of punk rock bands, as well as independent hip hop acts, kind of paved the way for this and there are now plenty of examples of acts that make a good living and don't have to answer to a major label. So far, it doesn't seem to work for pop (in all its forms...country pop, electronic pop, rock pop, etc.) and those genres still require a sales channel that can be stuffed and a hype machine in order for anyone to make any money. That'll probably die eventually, as the mainstream buyer strays into more widely varied territory due to ease of access on the web, and good riddance to bad rubbish.
Girl Talk is an artist from Pittsburgh that has "made it" by the new definition. He doesn't sell very many records, because they are kind of illegal so he intentionally stays under the radar, but he can sell out 2000 person venues. His new record came out -- it's a meticulously edited pop/hip-hop mashup album. It is as mainstream sounding as something solidly outside of the mainstream can get.
I can see all the hangers-on trying to skin bands, since they can vanish in an instant, but you'd think that companies would want to cultivate groups. Give them a free-and-clear 75 cents per album or whatever. How hard is that? And then if they become big, they won't jump ship out of hatred.
1) hasn't been done well yet. I know Amazon lets bands list and sell MP3s, and amiestreet.com offers music from indie artists with a funky pricing model. However, there's not really a "go-to" place right now with a large amount of traffic from people looking for independent music. Amazon is dominated by the majors, and no other site is very popular.
There are a number of popular places for a band to distribute their music for free, such as Myspace, but these places don't provide their bands with a revenue source. I can understand how bands would like to get paid if people love their music.
Some bands have resorted to selling their music themselves straight from their website (NIN, Radiohead, Girl Talk, etc.). However, it ought to be possible to automate this process to allow bands without technical skill to list and sell their own music (maybe make an embeddable music store?). Also, a central site off the band page could allow less popular bands to get some exposure.
Does 2) exist? I don't know. I have heard of some firms that manage tours for famous independent bands, the kind that have been around forever and have fulfilled their initial sodomizing major label deals. I don't know if any exists for mid-level bands.
One thing is for sure - the record companies are dinosaurs. They are glorified middle-men who connect bands with CD printing and distribution firms. Digital distribution means that they no longer serve a function, outside of marketing. That's the one downfall of online distribution - there are millions of bands on the internet and it is hard for fans to find new stuff they like.
There's been a number of startups that have tried to help people find new music, from the big guys like Pandora (dominated by majors), to new little guys like thefeelgood.com. I don't think anybody's gotten it right yet, and none of them mix the marketing with the monetizing well.
Honestly, if Myspace let bands sell MP3s on their profile page, it would probably be good enough and 10x better than anything currently out there.
So, what do you say Hacker News? Is anybody out there working on burying the record companies? What are your ideas, and how are you doing?
Anybody live in San Diego and want to do it with me?