Are we witnessing the death of the giant recording companies
The ‘Arctic Monkeys’ are an internet phenomenon. They played their first gig in June 2003; soon after they started burning demo recordings onto CDs to give away at gigs. Then fans began to rip the music onto computers and share it amongst friends.
The band later admitted that they did not know how to get their songs onto the Internet. When questioned about the popularity of their MySpace site, they said that they did not even know what MySpace was and that the site had originally been created by fans.
They grew in popularity, receiving attention from British media. A photographer filmed the band’s performances and published a music video on his web-site, alongside with some of the band’s songs.
In 2005, they released their first EP, a limited run of 500 CDs and 1000 7" records; however, it was also made available for downloading from iTunes.
The band resisted signing to a record label and the success of this strategy was demonstrated by a series of sell-out gigs across the UK.
Will the music industry survive? This is is one of the critical questions that faces the big players in the industry.
It seems that the corporate organisations who have controlled the distribution of music are in decline. Ten years ago, six companies held 77 percent of recorded music sales globally. Now, those six are down to four – Universal (31%), Sony-BMG (25%), Warner (15%) and EMI (9.5%). It looks like they have not got a handle on internet revolution’s impact on their an industry they have dominanated for most of the last century.
In the first half of 2007 the US (the world’s biggest marketplace) saw CD sales slump by 19% and Warner Music has lost 72% of its peak share value. After years of being screwed by the industry high-profile artists are starting to jump ship. Music consumers are going to the internet and pop idols emerge from TV games shows rather than from the music establishment. EMI’s best assets are its publishing and past copyrights and Radiohead has a pay-what-you-like website.
In the last decade it all went pear shaped in a way that can be best descibed by two events.
In 1997 the first internet tsunami was felt and record companies tried to play Moses; the waters did not roll back. A marketing man asked the heads of all major labels what they were doing about the internet and the response was: ‘we’ve put the lawyers onto it.’ There was no other strategy to address loss of profits and the industry prophets did not see the download culture coming.
With good lawyers runnig legal actions through the courts the companies closed down or seized swap sites like Napster, ultimately, doing more harm than good. The main players in the recording industry decided to criminalize their customers; they prosecuted thousands of users and as a result public opinion turned against the industry.
Some US universities have refused to pass on threatening letters from the Recording Industry Association of America (RIAA) to students in their care and the RIAA is talking of suing the universities. Altogether 4,400 students at 158 US campuses are facing demands to pay $3,000 to $5,000 for alleged piracy. No industry has ever devised a more conclusive way of destroying its fan base.
Then in 2001 Apple launched the i-Pod and made a legal way of downloading music on i-Tunes. Over 120 million I-Pods have been sold. In the process, music lost its ‘object’ status.
Now major labels have changed their tune, dropping anti-copying DRM chips and building their own sites to claw back custom from I-Tunes. But at the same time countless websites spring up overnight to offer music direct from the artist, and, often for free.
Consumers can soon expect to receive music free with our phone contract and be able to get downloads at Starbucks as part of the price of a coffee. Facebook and MySpace are being targeted by artists as ways to launch new talent and get albums to fans for free. Music will come free with advertisements attached anhd a bloke in Melbourne has patented a way of delivering commercials with free music tracks.
Live music will continue to thrive and nobody doubts that there will always be a demand for music. All that will change is the way we receive it, and whether we have to pay for it at the point of delivery. On the business models that are presently being tested, the likelihood is that we won’t have to pay.
The Arctic Monkeys signed to Domino records mid 2005.
Stay tuned….
