Independent Music Labels and Their impact on theMusic Industry - Essay Example

It’s All About “Music” Order no: 155226 6530 Pages- 8 “If Music be the food of love play on, give me excess of it, so that surfeiting all,I may sicken and so die” Shakespeare Almost everyone is a music lover and at least half of the people are crazy about music and there is yet another special niche of people who are fanatics of music. Yes, though music has no language, it has become part and parcel of our lives. The ability of the music industry to keep up with Technology is becoming a far cry considering the rapid changes taking place each and every day. Overview of the industry segment: The Music Industry is exhaustive and therefore cannot be contained. It is neither stagnant because it is always progressing. Changes keep taking place considering the present trends and the need of the hour in our society. In days gone by, major record labels monopolized the music scene and it was very difficult for newcomers to gain a foothold there. But, in recent times – fortunately or unfortunately we don’t know whether to call it a boon or a bane, there has been a sudden splurge of new private music companies which have given the existing scenario a total make-over by branding themselves on a different plane altogether. Besides the four major recording companies –i.e. Warner, Universal, Sony BMG and EMI, there are what are called “Indie” labels. The most common or widely used description of “independent” labels is that they are not connected with any major or corporate label. Such labels give more freedom and control, than what is allowed by major labels. They also extend support on the business aspect of music, though not on a very large scale Independent labels face a downside in the fact that they lack the finance needed to make an artist or album popular. They are not capable of good advertisements or promotions for artists or albums. Most of these small labels are run by musicians from their home or garage. If it becomes a success, eventually it is taken over by a major label. For example, a small label that was started by Alan McGee called “Creation Records” was taken over by Sony BMG when Oasis became a huge success. Current Trends: The current scenario is pretty clear, both consumers and artists have spectacular opportunities from digital download technologies, as long as the artists are fairly compensated and major labels don’t interfere with it. Obviously, technology is changing the face of the Music industry. Michael Bracy is the Executive Director of the Low Power Radio Coalition and a partner in the Independent record label Misra, who now wears a new hat as he steps into the position of Legislative Director of the Future of Music Coalition. Michael has this to say of the current trends taking place in the Music scene – “The context emerges from weaving together the perspectives of artists, distributors, retailers, technology professionals, consumers and other stakeholders into a single narrative that clearly illustrates the impact of policy in human terms. This is one reason Future of Music stresses terms like collaboration.” Right now, the Indie Music labels feel sandwiched between two issues- On one side by technological companies who want regulatory freedom. On the other side by major labels who want total control over digital rights. People in general feel that we should not allow the major labels to continue “ruling the roost” hence giving a fair chance to others in the Music industry. This collaboration will help both the Music and technological communities to move forward beyond the highly competitive world of policies and litigation into an arena where “issues can be proactively addressed in an open and productive manner that will benefit all”. Some of the sites that encourage Independent Labels are – Garage Band.com CD Baby Just Plain Folks Digital Rights Agency Taxi Indie Centre Indie Music(Read only).com Star Polish Dominant Economic Characteristics: The digital technological impact will have relevance on both the Administration agencies as well as on every Congressional Committee. It will also become exceedingly relevant to local economies throughout the country including Music retailers and performance venues. Many artists and bands prefer not to go through a major label because it does not always guarantee their success. They feel their economies work out better when they go through an Independent label. If an artist goes through a major label, they are given a good advance of around $150,000 to $300,000. This cannot be done in the case of a small label. They offer the artist about $5000 to $125,000. Both major labels and Independent labels provide a 10% to 15% royalty to the artist, but in recent times, Independent labels are offering a profit sharing deal to the artist which gives them a 40% to 75% of the net profits after all the expenditure has been deducted. In this kind of deal it takes very long for an artist to get any profit. At present the debate by INDUCE Act is taking place between the technological industry and the content providers who are trying their best to support the protection of their copyrights. They want to stop the corporations who are intentionally structuring their businesses to avoid secondary liability for copyright infringement. Major Companies and their Competitors: Giant EMI and its other major competitors Vivendi’s Universal Music group, Sony BMG Music and Warner Music group have somehow maintained a united front in order to preserve usage restrictions on music downloads to fight piracy. At a conference, Warner’s Chief Executive Edgar Bronfman Jr. had this to say – “"Let me be clear: We advocate the continued use of DRM in the protection of our--and our artists--intellectual property, The Recording Industry Association of America (RIAA) which represents all the four major labels, in its response felt that instead of major labels dropping usage restrictions, argued that Apple should license its iPod technology, in order that iTunes downloads would be compatible with other digital music players. Major labels are contemplating whether or not to drop DRM restrictions on downloads especially to non-Apple vendors. Such a move will help these vendors to be able to sell their music that consumers can play on their iPods, which currently they are unable to do. It is therefore unclear what impact keeping or losing DRM restrictions will ultimately have on the existing ailing music industry. At present Apple has a great position of strength because it is the only portable digital music player that plays iTunes downloads from its market dominating I Pod. Strategic Moves of Music Companies: Mr. Bronfman of Warner’s had this to say--- “By far, the larger issue for consumers and the music industry is interoperability, As a content company, we of course want consumers to seamlessly access our music and to use the music they have purchased on any platform and with any service, physical or digital." Now Universal has come up with a new trend of - “DualDisc” “Now one Disc has it all” It features a two sided disc made up of a CD one side and a DVD on the other. It gives music lovers a multi-dimensional experience of their favorite artists. The DualDisc has a very simple concept – the two most popular formats i.e. CD and DVD are put together on one double sided Disc which can be played anywhere you play a CD or a DVD- such as in car stereos, home stereos, DVD and CD players, PC’s and game consoles. Moreover, it doesn’t need any special equipment to be used. It can be played on the existing equipment. The DVD side of the disc has a wide range of interesting content like – short films, artist’s interviews, behind the scenes content, making of the video, documentaries, live performances, photo galleries, lyrics of songs and the like. To sum the DualDisc in one line would be to say that it has something in it for everyone. Another strategic move was by Ted Cohen of EMI Music who decided to leave to form his own company called TAG strategic. He was an evangelist and in house strategist of EMI who helped the company move into the digital era. EMI made yet another strategic move when it joined hands with China’s Baidu which is China’s largest Internet Portal and the fourth largest in the world. This is a pioneering approach to introducing digital music in China. While the music lovers get to listen to music for free, they are exposed to advertisements and also EMI. The revenue generated would be shared by both the companies. This kind of arrangement is the first of its kind in the history of music. Industry out look: Everything doesn’t seem rosy even for the biggest of record labels. There is always a big element of risk involved because no one is sure how a particular album would take off. If the album is a good one well and good, but if not the loss incurred by the record label would be phenomenal. When a company invests huge sums of money and does not get the required returns, it takes them a very long time to pull themselves out of their loss. Looking at the current situation, with piracy running rampant and internet downloads being carried on in full swing, it seems a tough job for the record labels to keep their heads above water. They have to act fast and make strategic changes if they want to make good profits from their music. The risk is pretty high for a Record Label, because not all albums become a success with either gold or platinum. If an album is a hit in several countries then it is considered as an economic success. Today, the new Global Digital Music Economy has put power into the hands of the consumer, in that, he is capable of choosing the music he likes best and at a very reasonable rate taking into consideration the Mp3 format. Considering the trouble taken by the artists, musicians and the record companies, it is but fair that they receive an honest share in the profits. This kind of business should be made legitimate and anyone found doing otherwise should be taken to task. Only then the music business could thrive well. Though pirated music may or may not reflect in the gross sales, yet adequate protection of copyrights should be given in order to protect both artists as well as music companies. Any legislation that does not take the interests of all concerned into consideration will definitely suffer the long term effects. References: www.futureofmusic.org/articles/bracyinterview.cfm www.forbes.com/digitalentertainment/2007/02/08/emi-drm-music-tech-media-cx_lh_pk_0207drm.h www.tagstrategic.com/pdfs/TAG_PRESS_PAIDCONTENT.PDF.pdf www.universalmusic.com/News/aspx?Newsld=63 www.music.industry.BusinessCord.com www.en.wikipedia.org/WIKI/independent_record_label Read More