Apple #1 In Revenue
I’d say worst to first, but more accurately it’s nowhere to triumph. Could this happen in the record industry?
Not only can it, it will.
There’s an ecosystem of major labels and radio and physical distribution based on ripping off acts. Will this sustain when the cost of production is essentially zero and physical distribution is almost dead and radio is moribund?
Look at it this way. Could Simon Cowell leverage "X Factor" into a whole new label, a powerhouse he could build upon?
Of course. If he was smart.
In other words, Simon Cowell is leaving money on the table. But the twentysomethings who are going to take over this business will not.
Just like the iPhone looked nothing like a RAZR, the new record industry powerhouse will look nothing like Sony, where Doug Morris is wooing L.A. Reid to overspend like it’s still 1999.
The new powerhouse will be more like a manager, an agent on steroids, who takes twenty percent for maximizing revenue using new tools.
What are the new tools?
1. iTunes
Anybody can sell on an equal basis. Just pay a low flat fee price to Tunecore.
2. YouTube
It’s completely free. Not only that, if you can generate views, you can make money.
3. Bandcamp/Topspin
It’s fascinating that the major labels did not think of this and do not own this. Doug Morris and Universal build the money-losing Vevo that doesn’t generate enough cash to cover costs and pisses off consumers with advertisements and these two entities succeed based on fulfilling customers’ desires. Yes, consumers want product, a plethora of it, just not what the major labels think they do. They want t-shirts and vinyl and books and autographed merchandise, there are a zillion price points and a ton of revenue. You know how you know Topspin is good? The majors labels use it when they pooh-pooh almost all technological innovation. But Topspin and Bandcamp do not limit their infrastructure to those with big bucks and relationships, they’re open to everyone. The majors won on exclusivity, controlling distribution, those days are completely through and that’s why the major label ecosystem is dying.
Exhibition is still in flux. Is it Pandora or Spotify from the cloud or a new service? Rights holders have held back development by insisting on insane payments but at some point in the future a new service with new music might develop or the rights holders might become so desperate they make equitable deals…or an unknown with an unknown product akin to MTV may come by and sideswipe everybody.
Artists want two things. Exposure and money. Can you get them heard and seen and can they get paid. If you can deliver this, they sign up. And smarter younger artists will sign with someone new, their own age, as opposed to the forty and fiftysomethings tied in with the old system.
Want to make it in the new music management world? Be honest, be trustworthy and deliver. And acts will flock to you.
The iPhone was a better operating system. The app market didn’t flourish until down the line. There were stumbles along the way, like how to pay for the device, but people flocked to it. It was a hit. All we need is a hit act which doesn’t make a deal with the usual suspects and we’re off to the races. Just like Wal-Mart exclusive deals killed superstars signing with majors, a new hit act doing it for itself will kill the major labels.
Arcade Fire is a start.
But the breakthrough will be something more popular, something easily consumed, something with Top Forty appeal.
The labels should be very afraid. They’ve already lost fifty percent of their record sales in a decade and now they’re about to lose just about everything. This is what happens when you refuse to see the future. This is what happened to Nokia.
