Indie profitable

I read this article in the New York Times about the changing face of the music industry.

Whenever we think of the internet and the music industry, we think about illegal downloads. In fact, the internet has been the bane of the establishment since its inception. Metallica and Napster anyone?

But now, as CD sales drop and digital music sales increase through stores like I tunes etc, artistes have long realized the significance of this distribution channel. They have moved from selling physical CDs, to touring to finally realizing that the internet could be the next big stopping point for revenue.

But what’s taking place now is the emergence of a whole new business model based on the ease and connectivity of the internet. Bands will essentially become companies of their own. They will raise funds as funds are raised for a business, mostly through venture capital.

They will consult with consultants and outsource operations like tour organizing, publicity etc. and they will have a bigger share in the profits, with increased rights on musical inventory and intellectual property of their own work. Maybe the-Artist-formerly-known-as-Prince picked the wrong decade to get famous in.

If this trend takes hold we will see the emergence of more and more indie bands. They will receive more exposure and the music industry will become more competitive as a result and the influence of big record labels will reduce, bringing on a whole new market and industry through creative destruction.

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5 comments
  1. PseudoRandom said:

    It's a great time for music! The record companies are probably unhappy, but the artists by and large are finding ways to get their music out to fans that don't wanna get ripped off. I'm not just talking about unsigned bands…quite a few popular bands (in the UK at least, not sure about elsewhere) have experimented with various release options (Radiohead, Keane and McFly come to mind).

    That said, I still do buy CDs, but only those by artists that I really like and follow. The rest, I just get DRM-free mp3s.

    I think the internet has changed the way we experience music, and a new economic model is long overdue.

  2. The Puppeteer said:

    Well the sooner they latch onto that the better- for them that is.

    For us cheapskates who've copied CDs and now download entire albums off the net, even of those by our favourite artistes- it's going to be drag.

    Selling their albums and merchandise over the net, would make the middle man more of a parasite. Which means they'd be cast aside or even rubbed out of the picture, resulting in the business being entirely over the internet. So websites that allow for free downloading will have to close down due to tighter legal restrictions.

    Of course, I'm sure new ways will be found to keep illegal distribution of music going…

    But if the entire music industry does shift onto the internet, you might want to consider career as a web developer…

  3. maf said:

    good post. have you read this article on GigaOM http://gigaom.com/2009/07/21/can-rock-band-network-transform-music/

    The music industry is not really an industry per se – more a distribution model that is falling apart. The content creators such as musicians and other artists (even bloggers) have been given an incredible opportunity to reach out straight to the consumer without the mediation of a person in the middle trying to make a buck (ie the music industry). The opportunity now exists for those to clarify and search out new talent and voice their trusted opinion on the new content.

    imho there are just going to be even more channels for distribution and more american idol like shows and songs/albums will be distributable at prices close to their marginal cost

  4. TheWhacksteR said:

    Pseudorandom – yeah, Radiohead was iconic in initiating the pro-download trend. Mainly because of Brian Message, their managers, influence I think. Most bands are successful in the long term because of their understanding of the music business itself and because they are smoothly run organizations. Metallica and U2 are great examples.

    the Puppeteer – yeah there will always be some illegal mode of acquiring free music. intellectual property remains extremely hard to protect and all the more so because of the internet.

    a web developer eh, hmmm. That may be a good choice seeing as music may not bethe only major industry to start relying heavily on the net

    Maf – thanks for that read. pretty good insight into the games market and the different ways music is being used.

    as for the industry, you're right in saying that the industry in itself has been dominated by the distributors because the largest determinant of success is fame and bands needed big infrastructure to ensure they got that exposure. That’s changing cos of the net.

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