What you’re really seeing is the democratization of art. Technology is eliminating central control of the product of art.
The result could be the end of the mega-artist, but the revitalization of local, regional, and niche artists.
Think of the effect of cable on television. Rather than having a ‘big three’ of networks, you have hundreds of channels.
If you want to listen to radio, you’re no longer stuck with the handful of 50,000 watt monster stations in your region. Internet radio, XM radio, and now low-power radio is opening the airwaves and communications channels to everyone.
In music, sales of the mega-stars are down, but there is a mini renaissance of independent music. Small-label musicianss are seeing their fan bases grow like crazy. Bands that not long ago would have been playing 300 seat bars are now selling out 2,000 seat venues.
Card is exactly right. Record companies as they are structured today are dinosaurs. When an artist can produce a record in a home studio, market it on the internet, and produce CD’s on demand, huge monolithic record companies are way overkill, and the amount they want to skim off the entire transaction is completely out of line.
Not long ago, internet radio stations tried to cut a deal with the record companies whereby they would pay the same royalties per song played as regular radio stations. The record companies refused, and forced most of them out of business with outrageous fees. The reason: because internet radio threatens their marketing structure and their control over what does and doesn’t get heard. As long as record companies control the distribution channels, they can force artists to deal with them. Want to go independent? Fine. Now go try to get your record on the local Clearchannel affiliate.
In the future, I see a record industry fragmented like publishing is - a mix of medium-sized labels, small labels, independent studios, artists agents, producers, etc. Large web retailers will accept MP3’s from anyone (by offering server space and marketing for a fee, perhaps), and songs will climb up the charts strictly on their merits. Artists will put out an album, have a blog on their album site, a discussion board, sell merchandise, etc. A critical part of the new distribution chain will be web housses that will sell you server space, design your web site, host streaming feeds, etc. Perhaps they’ll also offer management help, book tours, etc. We don’t know the exact structure of the new music industry, because its structure will grow from the needs of the market.
Somewhere in there will be some of the old record labels - those that could adapt to the new reality, restructure themselves, and stay innovative. Just like some carriage builders made the successful leap to manufacturing car bodies and other structures, and some vaudeville companies managed to move into movies.
In the meantime, the old dinosaurs are going to try to use the heavy hand of government to protect them from the opening of Pandora’s box.