The Five Pillars of the Record Industry

Published in Business. Auhor: drew

The Five Pillars of The Record Industry

I was reading a short novel called "Tribes" by Seth Godin, searching for wisdom, and pondering the future of the record industry as we know it. I came across a small section describing the fall of the giant industry, and why nothing was done to save it. When describing what the old business model was, the author used the metaphor of five pillars. I liked the idea, and rather than elaborate on what he already covered, I would like to take a snapshot of the record industry as I know it, and describe what the five pillar's are today.

Free Radio Promotion?

I am assuming that in the good old days of major labels, all releases were promoted to the radio stations for free because the label had it's own in-house staff to handle such matters. Pluggers, trackers, envelope stuffers, or whatever..... they had them. Perhaps it is because the radio stations only played the top 40 or only had a handful of contacts to reach. Well, now there are millions of tracks, and thousands of stations covering every genre and sub-genre imaginable. Satellite and internet have contributed largely to this diversification of musical taste, however, the listening population, after the baby boomer generation, has contributed to this as well.

The diversification of taste has led to another important area of the industry called digital distribution. Now anyone can reach the radio stations through an authorized service provider such as DMDS. It is, of course, not free. It is way cheaper than mailing CD's though... So, radio promotion is not free anymore.

A Limited number of competing music labels?

There are now hundreds of successful Indie Labels. Within a niche genre like Drum'N'Bass, there is V Records, Metalheadz, Goodlooking, Moving Shadow and hundreds of "up - and - comers", and "new - starts". From what I gather, the big 4 ruled the planet, helping, discovering, developing, and exploiting the musical ability of only the most elite musicians. They have a catalogue of thousands and are notorious for signing a band, dropping them, or refusing to release anything they write past the first album. Anything I have heard about the major labels business practice has been contrary to what an artist has in mind as an ideal candidate for the handling of there recording affairs. Can't get signed to a major? Just start your own label, take yourself out for lunch, and put a little bit of money away for a vacation.

The high cost of production requiring musicians to get financing from labels?

Production is now relatively inexpensive due to advances in technology. Death of the CD mail-out means it is no longer necessary to produce even a small amount of physical copies for promotion. Also, due to digital technology, a recording can be made with a laptop, mic, some basic software, and an interface. Multi - million dollar studios are still very nice to work in, however, the bulk of it can be done in ones apartment without the high overhead. Some may argue that the preamps, acoustics, expensive circuitry, the fact that 75% of all hit records were made on this or that console, or that the quality of this piece of gear is so advanced that in 20 years time it will still be competitive with new products. Digital is digital, therefore, a signal on a virtual mixing desk will always be 1's and 0's no matter how many places it is routed, bussed, patched, or sent. It is now possible to record ultra clean, high resolution, noise free music. For less than a small car, you can set yourself up with a home recording studio.  From what I hear, this was absolutely impossible to do 20 years ago.

A high - margin, non-reproducible medium?

Digital technology has made everything re-produceable and lossless. Vinyl LP's are non re-produceable without the master, and very expensive. Now, anything can be copied onto a computer and distributed anywhere in the world for free. No more shipping expenses, manufacturing costs, or mastering onto vinyl. Depending on how much work you want to put into the business of making an album, it does not have to cost anything apart from the equipment. People will always argue that vinyl is sexy or far superior to any other medium, but they are clearly the elite and untouchable of the DJ world, or oblivious to the fact that the population of earth  reaches far beyond the outskirts of London. Yes, vinyl is cool but where was it the last time you wanted it? What about the towns without record stores? Are they supposed to buy only the limited selection  at gas stations, or can they now find the music they are looking for without paying shipping costs? 

From what I have described, the five pillars do not sound like they are holding up anything anymore. So what is holding up the modern record industry? The pocketbook of the labels, aggregators, online stores, musicians, service providers, and fans. The idea now is that a whole bunch of people investing a little bit of money and making or losing it is better than a select few investing allot or losing it all. We are the pillars with nothing to hold up.