I just returned from the Atlantic Music Conference in Atlanta, geared to the independent side of the music business. I found it one of the more interesting conferences that I have been involved with in quite some time.
I was fortunate enough to listen to Fred Davis’s (music/new media attorney) keynote - which was one of the better perspectives I have heard in the last number of years. Fred’s perspective hit the mark, focusing on the problems of the industry and how independents have a chance to make a change and push for success (he said it better and in far greater detail). I also spoke on two panels on which I am not really sure what the titles or ‘topics’ were, but both were quite effective in trying to educate this burgeoning community. With that brief intro I actually learned a couple things over the 24 hours that may not be new to others, but hit me pretty strongly.
Though the independent music market is 28+% of the worldwide music market - there is a fundamental flaw - MOST, not all, independent artists want to be signed to a major and MOST independent labels are trying to mimic the major label mindset and focus. The environment is set up as minor league baseball is to major league baseball - a farm system if you will. If a label gets big enough they want to be bought and if an artist gets significant enough they want to sign with a major. Of course this makes some sense in a vacuum but I think this is a terrible mistake in the current music economy.
When I speak, I make sure to know my audience and try to reach them with aspects of the business that resonates with them. For example, during one of the panels we discussed DRM. My perspective to the Indie is to be grateful that people want to steal your music. What’s worse, that someone stole it or they do not even care enough to steal it? I tried to position their music world into the land of business. Look at all your assets and figure out a business plan/model that makes sense for your marketplace. For some bands a CD or MP3 might ONLY be a marketing tool and will NEVER be a revenue driver. And for others their core business might end up being t-shirt sales, concert tickets, etc… The concept of a company having one product and not a product line or at least product extensions reeks of the pet rock. In my opinion, labels have a power that the majors do not - they can be partners with their artists as a rule and not the exception (a la Robbie Williams).
So this is my first conclusion - Indies need to think and act like indies. Their goal SHOULD NOT be to be a major - their goal should be to make money, acquire fame, notoriety, etc.. Whatever their goal is is irrelevant as long as it is NOT to be on a major. I am not knocking the majors (in this blog) but a major is not for everyone.
Now this begs the question - what does a label do going forward? There is a great example that I like to use that likens a label to a VC. Both fund an entrepreneur. And both focus on the business and not the passion (mostly). A labels job is to assist an artist with resources (money, time, expertise, etc..) just like a VC (hopefully). The major difference however is that a VC owns a piece of the Company and a label owns the master recordings. An example of this would be if the VC of my Company owned a piece of our software business but not our mStore business. This obviously would never happen. This inherently builds a relationship where the objectives and goals are not necessarily in line. Imagine if Xingtone’s VC only had an interest in Xingtone software but the Company focused 90% of its attention on our mStore platform? Obviously the company would be very dysfunctional and an overall vision would not be shared. Take it a step further; what if I, as the CEO, decided to give away our software to drive advertising revenue (which our VC did not participate in)? Would our VC support or allow this? Of course not. This is the inherent problem in the business today. I could spend a week, literally, explaining umpteen different ways to deal with this, but that is not the point of this blog.
Think about it - if AOL - who now is involved in a reality show with Lyor Cohen (my old boss and head of Warner Music Group), decides to sign a band - could they not do everything a label does AND MORE? They have distribution through their communities. They have money and marketing clout. They can almost own an artist in the same way that Hollywood studios were built upon. If you are an artist why would you not be willing to get signed by AOL? Because they do not know the music business? Because you sold out? Bullshit on both. AOL/iTunes/Yahoo etc.. know more then anyone right now in building relationships with music fans. Labels made a critical mistake a number of years ago to stay in the wholesale business and have a middle-man owning their customer relationships (see pressplay being sold to Napster).
If an artist is promoted exclusively on iTunes - could iTunes not drive tremendous traction. Downloads, merchandise, concert sales - all of it under the concept of a product line and not a one trick pony could be tremendous.
In terms of selling out I always say (and I am not the first to say this) this is the music business not the music art form. As soon as an artist signs to a label, as soon as an artist is looking to make a living from their art, it is no longer an art but rather a business (let’s leave aside the quality of the art for this conversation). At the end of the day bad content with good marketing will sell better then great content with no marketing (I am not suggesting you need to spend millions of dollars to market, rather that people need to know who you are). Once an artist signs on - the fundamental conversation is either how to make music that will sell or how to sell music that was made.
My prediction, and this goes back to my blog suggesting one of these tech companies should buy WMG is that one of these tech companies will begin to compete within the music industry and at that time, re-create the record/music industry.
