So, a question - why do bands need music labels? I'd have thought that the answer is to promote and distribute the band's music - the band does not itself have the resources to fund a multi-million pound marketing campaign nor the facilities to produce CDs and ship them to Tower Records, so it lets the label bear the risk of that up-front cost and accepts in return merely a percentage of sale proceeds. This made sense for the band in the old world where attention was abundant and could be bought via marketing, and where distribution was about the shipping of physical CDs. As music moves online, it makes less and less sense for the artist.
Now Universal Record's CEO Doug Morris blasts YouTube and MySpace (Mercury News), calling them copyright infringers and essentially demanding tens of millions of dollars in reparations. Terry Heaton calls his rant "more of the same"; Jeff says that "you can't teach an old moghul new tricks". Indeed. But there is the potential for something new to emerge out of this rant. Universal provides two economic benefits to its artists - marketing and distribution. Distribution is increasingly irrelevant - we buy tunes online, we do not buy CDs, so sooner or later the artists will be able to bear production and shipping cots (of zero) on their own. As for marketing - well, by fighting YouTube and MySpace Doug Morris is setting up Universal as a block on marketing the bands in Universal's stable. That's not delivering a positive benefit to his guys.
Scott Karp says that this is about control. Of course. Universal risks shovelling over its power to YouTube and MySpace and will fight that to the last breath. But the control here is really with the bands and the audiences, and the bands don't have to keep signing contracts with the music labels. Universal has fallen into the familiar trap of thinking the audience is its enemy. Not so. The new economics of music promotion and music distribution are its enemy, and these things are outside its control. The benefits that music labels provide to bands are simply evaporating in the face of technological and consumer change. As the gyre widens, the falconers panic. The steps music labels are taking to defend their intermediary position actually serve to worsen this problem. The next Arctic Monkeys simply won't sign on the dotted line because they'll get more attention, and make more money, on their own. That's the future the music labels are facing, and resisting - simply being cut out of the value chain because the benefits they used to provide no longer matter.
Update: Today Om points us to Greg Costikyan's Manifesto Games, the gaming version of this long-tail vision for creative engagement and distribution; and in comments, Matt Hanson of A Swarm of Angels shares his vision for a new, distributed model for creating films.