Online Traffic Executive at BSkyB
06 July 2005 14:26pm
I feel that the whole music industry will have to reinvent itself. There will be new models that take advantage of new technologies. Additionally, I feel that P2P has to be licensed, and the pay may not be what it used to be. Not as much of the money pie will go to corporate profits, as you will see some do-it-yourselfers and some artists owning their masters.
It is obvious that digital downloading is transforming the music business as we know it. The digital music revolution is altering the industry model in many ways. Among these changes are as follows:
• The digital downloading revolution is transforming the music business into a service business. No longer will we see the music industry as the selling of goods, but rather, as the provision of a distribution service.
• Artists are faced with "free agency" for the first time ‚ analogous to the movie studio systems. This sets the tone for new business models in the music industry. In essence, Artists are becoming clients of the online distributors, as opposed to employees of record labels.
• The collection of data is one of the most important functions of downloading sites and providing an incredibly valuable function in the future. It gives the bands a long-term connection to the fans. Also allowing for direct marketing and cross promotion. We might also see the artist's statistics becoming valuable in negotiation of a record deal ‚ perhaps record labels will want to see the artist's "stats" before they are signed.
All of this talk about the revolution of the industry may lead one to believe that record labels will become obsolete in the coming years. The consensus among industry experts is definitely that this will not be occurring. Rather, I see record, publishing and management labels will be performing an even more important function in the future - merging as one to become entertainment companies.
Very interesting and relevant interview!
Head of Commercial & Supplier Management at BBC
04 August 2005 18:24pm
I agree that the business is moving out of "box shifting". However, I think that the implication when you say it is becoming a service industry is that the concept of a product is no longer important. I think that from an artist perspective, I agree with you. The labels will have to provide a good quality service to the artist by connecting successfully with their fans. However, from a consumer perspective, I think that creating simple, easy to consume digital products will be key to success in the digital space.
I also think that the route to market is still very important in the digital space. Artists can connect directly with their fans online, but their websites are rarely going to be the route to major success. To reach mass market, they need really strong distribution channels. The analogy I would draw here is the difference between an album being sold at a gig vs. being sold in HMV, Virgin and (dare I say it) Tesco. The major labels now have strong influence in the online equivalents of these channels. That is part of the value that they can bring to an artist. The other part being cash.
I think that the transformation of the artist from "employee" to "outsourcer" is a suble one. I suspect that the two models will exist side by side for some time. However, the labels that are able to provide a quality service will get quality artists.
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