The Future Of The Music Industry & How It Might Affect The Music We Listen To…

Standard · Posted by skindeepjd on January 18, 2012 · 2 Comments 

Late last year, famous major record label EMI was sold to both Universal and Sony, with Universal taking over the recorded music division and Sony taking over the publishing.

So what does this mean for the music industry?

In my opinion, this means record companies will create new types of business models, these divisions will emerge: Artist Management, Publishing, Marketing Consultation, Agency & Events.
The typical or rather traditional record label model will seize to exist because of the change in the industry. This in return will enhance the state of independent labels; Indies unlike majors make their music easily available for consumers, from the digital space on their own websites to physical albums.
The major concern would obviously be distribution, most Indies don’t have the resources for warehousing and direct links to music retailers, it’s mostly Majors who have such advantages because they have enough money to do so.
If there were to be more independent music retailers, unlike your typical Musica, Look&Listen, etc then that would work to an Indies’ advantage.
Majority of retailers only sell chart albums and other stock is ordered through a controlled system, your album can be in demand at a certain store in your area, but unfortunately it has to be distributed to main stores first before it can reach out to a larger scale.
Consumers then easily lose interest in buying your album because of it’s unavailability.

Record labels are now forced to rethink their entire business model in order to maintain relevance, technology is also a major factor. It has now become easier for people to acquire music freely on the net, there are thousands of free download websites that are taking a huge chunk of musicians and record label’s profits.
There has since been a rapid decline in sales, which is a major factor in the trimming down of major record labels. Other major sales factors are: the audience is now spoiled for choice in terms of avenues for entertainment, quality of mainstream music has declined, album contents are mediocre.

Artists themselves have now become a threat to record labels; what normally happens is that once artists become popular (cash cows) and their contracts come to an end, because they have built a sizable fan base (usually thanks to the label), they now open up their own labels, which in return becomes their former label’s competitor.

Labels make money from selling records and that has taken the biggest decline, so they now need to look at other ways to make money:

* Publishing
* Merchandise
* Booking Agency
* Artist Management
* Studio Hire
* Retail
* Digital Stores
* Mobile Downloads
* etc

The music industry is now at a stage where independent record labels go to majors just for distribution, because majors already have resources for warehousing and direct links with retailers.
Artist have become more skeptical about signing direct deals with majors.

To conclude this:

*It is evident that the traditional model no longer works
* Certain functions will always be required but new revenue streams have to be used.
*The best solutions is for labels to move with the times and think way ahead and change their business model.

I wish I could elaborate more on this topic, but I’m afraid that it would be information overload.

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