The Slow Spark of Low Heeled Boys – recorded music industry slowly implodes

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!

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7 responses to “The Slow Spark of Low Heeled Boys – recorded music industry slowly implodes

  1. It is a cathartic time for the Record Industry. Just as punk turned the music on its head in 76, so now its technlogys turn to turn the business model on its head. I have to say, from my perspective, there is little love lost between the record buying publicv and the record companies. People were made to pay through the nose for so long for product that had already paid for itself many times over…and quite often in return for shoddy product. Early CD releases and re-issues were often not up to standard. For example, Toto’s Turn Back album on CBS, had levels half of what one would expect from a CD. Thats just shoddy mastering. All the initial Led Zep CD re-releases were recorded from 2nd or 3rd generation tapes, not the original masters, because the companies knew the majority of people were dumb enough to think the CD would just be intrinsically better. It led to Jimmy Page producing the definitive “Remasters”
    People are wising up now. In the UK particularly, we were charged spectacularly more for CDs than the US in the 80s, sometimes a 100% more. Who can blame people for taking every opportunity to fight back with the burgeoning download sector?
    Fat cats in business suits may lean back in their leather chairs sucking on their cigars, cocconed in their multinationals, but ultimately, the power is with the people. They just have to decide to use it. Oh, and churning out X Factor and American Idol nonentities will cripple music. How about promoting real bands again? Now there’s a thought.

  2. okay, so what about the radiohead experiment… I paid what I thought was a fair price, considering I was paying for a work of art and something I wanted. I’d like to know who paid and how much? be honest! I paid 7 quid. Considering I really wanted the Box set, but I’m not going to fork out 40 quid for it, I’m sure the design would have been cool but I’m buying music after all, I think it was a ploy by rh to push everyone to the download version.

    We all should pay something if we want to be entertained, how will the industry survive if there is no money passing hands. If it does implode Jeremy, I see the next generation of leaner and meaner musicians and music ind. people rising up from the ashes, and the power will be spread across many more than what it is currently.

  3. I agree the levelling of the playing field is underway. The salaries of the fatter cats will definitely be coming down and the overall margins for music will definitely reduce. But there will probably still be some major players who have global reach and a lot of media leverage. The industry’s techtonic plates are moving as well as shrinking – so I’m intrigued to see who the new major players will be – and whether the artists management companies can become professional enough to move into the centre stage…

  4. I paid £5 for it – and I am very happy with it. No shitty DRM, no need to sign up to Apple inc itunes, 192kbps quality, standard MP3 encoding. In fact this is the first digital download music I have bought because finally the product was right. From what I know of the music business £5 is far more than an artist could hope to get from sale of a CD through a major.

    This model is fine for the likes of Radiohead the question is how does a new band/artist make it. i.e. how are we going to get the Radioheads of the future? Without major promotion and backing even rock solid quality does not always come through the noise. Here a good example – Michael McDermott – I came across him by chance at a festival and his album is qulaity – for me he could be the next Springsteen but what chance without a major backing him?

  5. Pingback: In Rainbows « Round the world in 7 weeks

  6. Pingback: filepack » Blog Archive » Radiohead’s recent price promotion set lots of people talking …

  7. here’s a thought – the Radiohead album wasn’t a step into the brave new world but a publicity stunt.

    if you were to quantify the value of the “tip jar’ trick then it would be significant in terms of column inches and eyeballs. That’s probably less than they lost on the users who paid little or nothing for their album.

    what is smart is that they’ve managed to capture personal info on the users who would in any case have paid nothing for the album and stolen it off p2p. now the band own that, not the label who are more likely to use the mail addresses to spam customers for the release of acts they don’t care about.

    there is wisdom in this move but it isn’t the fact that they disintermediated their label.

    Oh, and the next person to do this will just look dull and probably fail. Radiohead fans are loyal and will forgive the fans the creaking, often non-functioning site because they would use the band’s defecations for dentifrice.

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