...and so the spell is ended

As I've said before, the point of a music label is to bear the up-front cost and risk of promoting and distributing a band's music. Four kids with guitars in their garage don't have the resources to fund a multi-million pound marketing campaign nor the facilities to produce CDs and ship them to Tower Records, so they let the label bear the risk of that up-front cost and accept in return merely a percentage of future sale proceeds.

This approach made sense for the band in the old world where attention was abundant and could be bought via mass marketing, and where music distribution was about the production and shipping of CDs. As music has moved online, all of the justifications for this model have evaporated. Music buyers' attention, especially online, is no longer sufficiently abundant that the inefficient economics of mass marketing can cost-effectively buy it. Tower Records is gone and the need to produce and ship anything as expensively physical as CDs is largely behind us. Start-up bands no longer face these costs, and therefore no longer need to mitigate their risk by selling a proportion of their future proceeds to a label that will bear the costs for them. That economic model is not quite over - there is clearly still money to be made selling CDs - but it is on its way out and from a strategic point of view bands choosing to go down that road close the door on a much larger, longer-term opportunity.

Moreover, the mechanisms that bands can use to achieve both promotion and distribution in the new digital economy - MySpace, iTunes, Last.fm - are inimical to the rights-exploitation model of the labels, and so bands signing with a label actually put themselves at a competitive disadvantage. 

Look at how well a band can do from owning their own IP - Barenaked Ladies, the Canadian band that has for years quietly applied the artist-owned-IP model that Radiohead has caused such a fuss by adopting, generated gross revenues of $978,127.99 in the first week of the release of their 2006 album Barenaked Ladies Are Men. 

So I regard is as only marginally news that last week Radiohead went label-free and offered their latest album at whatever price we wanted to pay. A few days ago Trent Reznor of Nine Inch Nails went jubilantly label-free too. Oasis, Jamiroquai, Madness and others are rumoured to be next. Yet Prince has been inclined to give away his music ever since he scrawled "Slave" on his face during the dispute with Warner fourteen years ago; Dick Dale told us last year that the labels' tenure was over; and the revolutionary model for music forecast by Grant McCraken in which fans buy and sell shares in promising artists has already been realised in the form of SellABand.

The music labels provided a service for bands that bands no longer need and deprive them of access to services that they very much do. The surprise is not that bands are abandoning them in droves, but that the latest string of defections is treated as big news.

Comments

[Paul Sweeney]

I know a few up and coming bands that make good intelligent music and are doing their own thing outside the record labels (http://www.marthadigs.com/headgear/index.html)
The thing that strikes me most about this endeavour is how hard it is to get any attention! (hey, market yourself on myspace, play free songs, etc.etc.) yeah, but every band is doing it. In a way you have to game the band space on myspace to even get any notice.

So what's the point in this comment? well, I think their is a role for an industry focused promotions company that helps bands manage this kind of internet marketing/ SEO/ placement game.

you can be really good for a while and cause some ripples, the problem is, the ripples don't carry across into the next pond.

[netvalar]

For SEO advice sellaband is great as many participants in thier forum are more than willing to answer questions free of charge to help you promote yourself. I also feel that artists starting on the social networking road need to learn to put some of their fans to work in the promotions game. One example with links to other articles I wrote can be found at http://netvalar.blogspot.com/2007/10/blogging-for-promotions.html

[Steven Kalifowitz]

I'm not so sure I buy the idea that bands don't need labels. They definitely don't need the old model of a label - but to be successful, bands definitely need some sort of financial support. The majority of most band's income is derrived from touring. Someone needs to give them money to tour. That's the advance a label gives them in exchange for points per song.

In addition, many artists make tons of money, not from CD sales, or downloads, but Film & TV placements (including commercials, sync licensing, etc...). That type of song-plugging can only happen when a label or publishing represents an artist - who was likely given a substantial advance.

Notice Madonna's new deal with Live Nation - even she still needs to sign with a company who will front the cost of her business.

My brother's company, Downtown Records is starting up a new venture (read: label), noahbrier.com, I proposed a solution for distributing every form of media where everyone gets paid, and users win.