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this industry needs a new revenue source. and its going to need it soon because the customer base is shrinking and artists are getting increasingly disheartened and despondent about how the industry treats them. if artists don’t solve this problem, there won’t be any artists.
fortunately, we have learned a lot about making artists a viable source of revenue. it will be challenging to figure out how to make them profitable, but maybe we can borrow a page from the other money-making industries that have figured out how to be profitable. one suggestion is to follow the lead of creators like gametera and kickstarter and crowdsource funding to help musicians, especially independent artists, build and maintain successful careers.
because a lack of good distribution strategies, or a robust industry infrastructure, has the major recording labels at a disadvantage. and by “major labels,” i mean the big ones. that lack of infrastructure includes everything from product manufacturing to point of sale (in this industry, distribution is more important than manufacturing), inventory, accounting and banking, and field marketing and communications. none of these are particular strengths of a major record label. in contrast, a diy label can provide all these services out of one central office; a major label has to contract with many different companies for many of these services.
but even if those services are provided by the bigger companies they don’t have strong incentives to help. the primary rationale for them is that they’re supposed to be “carriers.” but carriers don’t care how well a business does, because even if it does okay, it will always be just a small part of the business that the carrier is currently competing against, not a large part of the company’s overall business. when spotify was founded, one of the main motivations was that no one else was doing it. but they had to shut down their service in europe earlier this year because it wasn’t making enough money. and the same thing happened in the united states. so that’s the history of streaming; two services that weren’t enough to make it a sustainable business, and both of them are already shutting down their service in the united states . people are aware that streaming is a competitive business and that customers will walk away if they don’t provide a service consumers want. you can’t stop people from leaving the car service if your service isn’t providing the kind of service customers expect. you can’t stop people from leaving netflix if they aren’t getting their movies when they want them. and you can’t stop people from leaving spotify if it’s a lousy service.
another problem with drm was that it was a punitive response to piracy. the whole point of drm was to stop the public from copying music. and when the public found a way around it, it introduced chaos into the industry and killed off some of the best things that had happened to it. the music industry’s response to the napster scandal of 2001-2003 was to kick it so hard it went down for the count. cutting off people’s access to music in a way that would make people stop sharing files was the most effective way to kill off piracy. of course, it was a false victory; as soon as the fire was put out, it kept burning elsewhere. and when the industry was back up and running, it created new ways to share files that didn’t rely on electronics, which once again, made it even easier to copy files. the rise of cloud computing, and the transformation of the mobile space, also meant it was much easier to download files, so eventually people stopped buying albums at all.
it’s becoming increasingly difficult to sell physical music, or even to go into a store and buy music, thanks to all these digital options. but the industry is still a lot stronger than it was in 2003, and they are still making a lot more money. they still have more than half a billion monthly active users, but they no longer have anywhere near the same rate of growth. the number of monthly active users who pay for music has gone down every year since 2006.
more about the rise and fall of music downloads with all the music downloading growth, it’s hard to argue that the downloading era is over. but we can look at what it has produced, and what it might do in the future. as more people buy music from the internet, and more people become locked into subscribing to services that buy the music, the industry could find itself in an increasingly fragmented future. it won’t be completely ruled by the major labels, and it might be more likely to find that the first $10 you spend on music turns into music you really want to listen to, instead of going in circles. we might see more of the sort of experimentation that has produced some of the most beloved records ever sold.
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