Radiohead’s recent price promotion set lots of people talking about the new model but, behind it, really becoming visible are the sharp edges of the old recorded music industry factions – sizing each other up for the power-play. Major bands and their management companies (like Radiohead’s Courtyard) are exploring on a daily basis the opportunity that their established bands’ brands have to take control of the business model in an unprecedented fashion. For Radiohead, the In Rainbows promotion was just that – a great vehicle for publicity for their new album. The web has played this role very well for over ten years now and there are plenty of great little online promotions businesses set up to help artists achieve exactly the kind of mass outcry and coverage that Radiohead achieved. But in fact while everyone was busy talking about how much money they may or may not have made from this, the management company and the band were undoubtedly exploring their longer term position and what kinds of partnerships are going to make the most sense to them.
With which of the warring factions hoping to become the Man in the Industry will they plight their troth – or will they themselves seek, in some metrosexual kind of way of course, the Man status?
Will they go the Live route as Madonna has done with Live Nation and throw their lot in with that side of the business or will they find a finance house like Ingenious and have them fund future recording/performance/A&R/merchandising/creative fantasy activities?
This is all part of the breakdown of the business into increasingly acrimonious factions – each of whom hopes and needs to gain more control. On the one hand the majors are trying to find ways of endearing themselves to artists who they have historically had a power-hold over. And increasingly, they’re wondering how to create a relationship with the fans themselves – even while they task their “trade associations” with suing the same consumers to teach them a lesson the majors themselves are finding it hard to learn.
On the other hand, collecting societies and agencies – the encrusted old institutions of the industry are watching the developing debate over the need to license (and thereby monetise) the massive amount of p2p filesharing activities that continue on ISPs and other providers’ data networks. The notion is pretty widely held now amongst the brains in the industry (and the others too) that a new business model will be born out of full blown and automatic licensing of access to new content (and catalogue) across digital networks. Millions of transactions daily are not returning a penny to the artists or the labels or the publishers who own the rights – and the only people profiting are the network operators. Clearly there is a deal to be done – and once that happens – it’s the current collecting societies – the BMIs, ASCAPs, MCPS/PRS’s and PPL’s of this world who believe that they will be the new gatekeepers, the controllers of the switch at the heart of the industry. Unless of course someone new enters the game to do that whole thing more efficiently and economically.
On top of the flat rate revenues that may accrue from such a licensing scenario, new business opportunities are emerging and it is here that the start-ups, the new technology companies are now looking as much as to the old chestnuts of DRM and Digital distribution.
In fact, the irony is that while the warring factions shoulder-barge each other around the rights issues and control of digital distribution, the consumer reality has moved on. The flat fee will come to be in some shape or form and the place where the real focus should be is now on how to make money when distribution has been commoditised. Where are the real value adds that consumers will pay for and which yield the kind of returns the recording companies are used to?
The time for experimentation and shrewd bet placing is now upon us again. Only trouble is – that volatile community of investors, less risk-averse than the recording companies for so long – the Venture Capital community – are now looking at the huge levels of decline and flux in the music industry and preferring to place their bets elsewhere.
So the few folk who have made some very big bets, have got some really interesting opportunities to re-architect the business. But trying to build the new while hanging on to the still, significant revenues from the old model is a tough call on anyone’s business acumen.
Watch this space – the implosion is in slow motion – and if you can bear to look that closely you can see each of the individual sparks flying – quite spectacular!