The big record companies are the walking dead. All of the legal shenanigans we’re seeing today are the death throes. They may manage to litigate their survival for some time yet, but the ultimate issue facing the record labels is their own irrelevance.
Think about what record companies provide, and what they take in return. Back in the old days, record companies provided a valuable service. The average musician couldn’t afford a single hour in a recording studio. They cost millions, and had huge amounts of complex, cantankerous equipment that required numerous expensive recording engineers, technicians, and producers to operate. Recording Studio time ran in the hundreds or even thousands of dollars per hour.
Producing the music that was created involved making master tapes, then taking those tapes to a multi-million dollar production facility that burned master vinyl and pumped out the pressed albums. In the meantime, professional artists were required to do the extensive album art required.
When the CD revolution started, CD pressing facilities were hideously expensive. For the first few years, there were only a handful of them in the entire world. If you needed a CD pressed, you had to have access to one of these facilities. The record companies had that access.
Then there was distribution. The only way to get the music out was to press 45’s and get them played on radio. And record companies through intermediaries (and payola) had access to radio distribution.
And albums had to be produced in large numbers to cover anticipated demand. If the demand wasn’t there, those albums would wind up in remainder bins for 99 cents, at a big loss to the company.
Then there was touring support. Sending bands on the road was very expensive, and the money for that would be fronted to the band by the record company. Advertising a tour meant mass media penetration, which was very expensive.
For all of these services, the record industry was handsomely rewarded. The artists themselves, not so much. Unlike the book industry, where artists retain the copyright to their own work, musicians often signed their rights away as works for hire. Unlike the movie industry today (and more like the old ‘contract’ system of the 40’s and 50’s), artists were signed to long-term exclusive contracts to record companies, giving the label a monopoly on that artist’s work. This made sense back in the day when the record companies saw an artist as a major, multi-album investment that would cost them millions and might take several albums before a profitable ‘breakthrough’.
Now fast forward to today.
Studio time? You can now build a home studio for $10,000 that will outperform the old multi-million-dollar studios.
Production? There are local production houses that will stamp out as many CD’s as you want for pennies per copy. Or, you can burn your own.
Distribution? You can put your music on the internet at almost zero cost, and have instant access to more fans than the record labels could ever reach.
Radio? Well, the labels have lost their monopoly there too, or are in the process of losing it. Internet radio, Satellite radio, low-power FM, and internet file sharing all threaten to take the distribution model away from the record companies.
And record labels are still holding artists to long contracts, but they are no longer willing to invest in the artist’s development. The Grateful Dead went 20 years before having a top ten hit (“A Touch of Grey”). But the record company supported them and allowed them to build a fan base. Wilco turned in one album their label didn’t like (“Yankee Hotel Foxtrot”), and they were dropped like a hot rock. Mariah Carey was given a 28 million dollar multi-record contract, and when one album flopped, the record company bought her out and turned her loose.
This lack of commitment has created a new model for record companies - the production of packaged singers tied to the label. Thus you get artists like Avril Levigne, Britney, etc. Talented singers who are given an ‘image’, who are listed as ‘co-writers’ on their songs but are really just sat in a room with professional studio songwriters who do most of the creating, etc. This is a throwback to the old studio days when artists like Fabian were created to suppress the threat from black musicians and ‘dangerous’ artists like Jerry Lee Lewis and Chuck Berry.
But packaged artists and songwriting-by-committee do not create lasting art. Just as no one listens to Fabian any more, no one will listen to Britney Spears in 30 years. The record companies are mortgaging their future. Maybe they realize they don’t have one.
Record labels still offer some benefit. They can still get songs on the radio (if the song happens to fit the increasingly narrow niches radio serves), they can still do better production than most artists in a home studio, and they can still fund tours. It’s just that the size of the cut they take for these increasingly irrelevant services is getting way out of whack.