| If there is one thing that has been said too many times over the last dozen or so years, it’s that the Internet is changing the way we live. This is most likely being said over and over because it is undeniably true, but like most clichés, it is starting to lose its literal meaning. The result is people are saying that the Internet is changing their lives, but they aren’t actually changing the way they live. Nobody is more guilty of this than those in the music industry.
It’s no secret that CD sales have been dropping rapidly over the past few years and this trend is continuing in 2007. It is being widely reported that record sales between January 1 and March 18 dropped from 112 million in 2006 to 89 million this year. That’s about 20 per cent. One common misconception to explain away this drastic decrease is that people are buying the albums online through services like iTunes. While that’s true to an extent, the increase in legal downloads does not make up for the decrease in sales of CDs – CDs still account for 90 per cent of all music purchased, according to digitaltrends.com.
In other words, simply selling your music online is not the solution for increased public reliance on the Internet.
Unfortunately, major labels have been preposterously slow in responding to the crisis they face, and when they do respond, it’s in a rather confusing manner. Warner has been trying to purchase EMI for years, but the potential gain is dubious. Taking on a bigger roster as sales fall, and as other labels try desperately to cut acts in order to reduce costs, seems counter-intuitive.
Universal Music responded to innovative mediums like YouTube and MySpace by threatening to sue them when they should have embraced them. Both outlets are responsible for the success of bands like OK Go (who are on the EMI label) and Panic! At the Disco (Warner) that would otherwise likely have been lost in the shuffle of generic promotions.
If the Internet wasn’t enough for major labels to deal with, there is also the problem of having to contend with a new business model. Simply put, artists don’t need major labels to get major exposure any more. Of course, this is in part for the reasons listed above – it costs next to nothing to put your music on the web and instantly have it available to millions. But it doesn’t end there.
Independent artists and labels no longer necessarily seek the support of majors – all they need is distribution deals. The shining example of this is Clap Your Hands Say Yeah, who have sold over 200,000 copies of their debut album without having a record deal, thanks to Sonic Unyon Distribution. Of course, the band is more likely to cite the success of its MySpace page, where they claim over 91,000 friends.
This is not to say that the decrease in music sales hasn’t affected smaller labels – it has. Somehow though, while major labels teeter on the brink of demise, smaller labels like SubPop have been able to undergo a resurgence and breathe new life into their businesses. Perhaps it’s the result of years of being outmatched by huge corporations, which has forced them to become more innovative, or maybe it’s because there’s unlimited room for new music now.
Whichever explanation you prefer, if trends continue then the end of big labels is near. This could manifest itself in a few different ways. First, the labels could be stubborn enough to just go bankrupt, but that seems unlikely. More reasonably, major labels are going to start making major cuts to their rosters, resulting in more and more "free agent" artists. And how are these artists going to keep their careers going? By starting their own labels, of course. |
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