Thursday 21 April 2011

What is the music business for?

Just recently I was at the Guardian's Changing Media Summit, listening to Feargal Sharkey talking about the music business.  Sharkey made his name as the lead vocalist of the 70s punk band The Undertones.  He noted how he had lived through 3-4 disruptive technologies (the move from vinyl to CD, the growth of the digital, the evolution of downloadable music, etc.), and is known as the man who crossed over from music to management (he now heads up UK Music, an umbrella body representing the interests of musicians, writers and other creatives in the music business).  Sharkey made the point that, regardless of the disruption, irrespective of the doom-mongering of the record labels, young people would continue to write, record and perform new and original music.  It really wasn't about the money.

The Undertones were signed to Sire Records, a label that was bought by Warner in the 1980s, and which in turn is in difficulties and is up for sale.  The question is, what does a record label do?  What is it for?  A useful term to consider at this point in 21st century is disintermediation.  This is a word that is used by experts commenting on what has happened to retailing in the internet era: airlines, car insurance, investments and many other sectors have disintermediated, that is to say, agencies and brokerages have ceased to become useful when consumers can buy directly from the provider online.

Originally a travel agent or insurance broker on the high street would have the subject knowledge to match our needs and wants with what was available on the market.  The intermediary would complete the paperwork, issue documentation, take payment and generally complete the transaction.  Now all of this is done online, direct between consumer and provider.

In the music business, from the middle part of the 20th century, record labels set up to exploit the new technological phenomenon that was the grammophone (EMI started business in 1931, for example).  As intermediaries, record labels provided the recording and production facilities for musical acts, financed the pressing and distribution of costly vinyl recordings, and managed the entire promotional effort of the acts they signed.

This particular branch of the creative industries did particularly well in the post-war years, riding the wave of pop music, rock, punk and later genres.  It was particularly good in developing relationships with the mass media, and as both sectors started to be undermined by the growth of the world wide web in the 1990s the mainstream media have been happy to champion the business in the face of what they see as unprecedented levels of piracy of the industry's intellectual property (see for example a recent example from Britain's Daily Mail).

But what we are witnessing is another example of disintermediation.  Recording studio time is no longer the preserve of the few: a band can book a fully-fledged digital studio from around £150 per day ($250), and is able to have a say in how the final tracks sound.  It is no longer necessary to get together complete albums of music (10-15 tracks) and have these pressed and distributed: instead a band can issue individual tracks as they are made, and 'monetize' these right away on iTunes or Amazon.  A band can build its own following on MySpace and Facebook, linking to gigs, social interaction and merchandising  - all functions originally handled by the record label.  The band and its fans can build its brand through co-opting fans in social media to spread the 'authentic' message.

Now the band can design and produce its own CDs and EPs for less than 75p each ($1.65) and distribute these via gigs and mail order.  Amazon and other online retailers will also distribute these.  Tour venues are bookable online.  Bands can handle their own publicity - often much better than a record label.  The Arctic Monkeys are a good example of a band whose debut album became the fastest selling album in British music history on the back of the band's own web-based promotional activity.  The Arctics were famous for their early hostility towards the music industry establishment.

What does a record label do nowadays?  They used to secure airtime on popular radio stations, but now these have fragmented into hyper-local media and online channels, and the mass audiences have gone.  Bands, if they put their minds to it, can handle the whole disintermediated package.   Both Warner Music and EMI are up for sale: but while the music industry bleats about technology and the insidious effect of online piracy, they need instead to ask themselves the fundamental question, 'What are we for?'

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