Record companies are dead, long live the musician!

Record companies live under and like to perpetuate the mistaken impression that the music industry is in crisis. It is not the music industry, it is the record companies themselves really. An increasing number of older bands are preferring to play concerts rather than make albums, since they get to pocket the proceeds (not quite the Grateful Dead, but what is wrong with making money from your own music?).

Think about the last time you bought music on a CD. Did you care much for the record company label? I just bought Kill to Get Crimson, and except for an interesting new clasp on the side of the CD, I cannot tell you anything worthy about the packaging. Yes, I read the credits (I am nerdy that way) and sometimes the lyrics of a song I may have liked. But apart from that, nada.

I can however tell you a whole bunch of stuff about Mark Knopfler and his music, and how it has been evolving over the last few years, although I did not like his experimental album with Emmylou Harris. I have seen him in concert 5 or 6 times, with his fabulous guitars all lined up on stage. I cannot commit right now to his May’08 concert, but come the time, I am confident my Amex concierge will get me plum seats wherever I may be.

The bottom line is: as consumers of music, our relationship is with the musician, his story, the mystery of his song-writing, his musical abilities, not with his record company.

So we cheer when Prince changes his name to thumb his nose at a record company that owned his name, till he is free of the contract. We are pleased that he gives away his newest CD, Planet Earth, for free with a newspaper.

And after years of us shelling out £12.99 or £15.99 for a CD (yes, that is what we paid in the UK until the stores started to go out of business!), finally a band acclaimed as arguably the world’s hottest rock band asks its fans to name a price for their new album. Radiohead’s In Rainbows will be available for download on 10th October. Free market forces in music buying, anyone?

Five years ago (2002), in our Network Economics class, we were discussing what record companies could do to deal with illegal downloads. Admittedly it was the wrong question! We took record company contracts with musicians as given. However that was what it was, and within those limitations, I raised my hand in class and suggested that record companies should see the on-line communities as an asset, not a threat. With a product failure rate of 95% – which means 95% of artists really do not make any money for record companies, an otherwise unacceptable metric in any sane business in the world – they should consider ways of test-marketing artists with on-line communities to improve their product success rate. They should consider un-packing individual songs and experiment with new ways of bundling (my example was bundling Shakira’s Whenever, Wherever with its video and sell it for a greater price than other songs). They should choose platform agnosticism; after all, they are in the music distribution business, not in the business of increasing licensed installation sites for Real Audio or Microsoft’s Media Player. They should allow customers to be able to make collections of their own choices, rather than being forced to buy a crap album for one good song. And my class laughed! It ain’t gonna happen, they said.

Well, it may have taken an iTunes – and now some renegade record companies – to bring things to pass but they have indeed come to pass. Not that I am a fan of iTunes’s extortionate pricing in the UK!

However the musicians themselves are smarter and swifter than the record companies, my favourite example being Metallica who first held out and then gave in, in keeping with what the fans wanted.

Unless the record labels really change their, er, tune, they deserve to go out of existence. Meanwhile, the bands play on.

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