David Byrne has published a very interesting piece for Wired Magazine about the music industry. David discusses the traditional roles of a record label and why many of these roles are no longer needed. There are some very interesting charts in the article as well. One includes the breakdown of how each penny of a $15.99 disc is distributed. Artists on major labels bring home about $1.60 for every $15.99 disc they sell in a retail outlet. Over 50% of the $15.99 goes to marketing, label overhead, and retail overhead. An album sold through iTunes for $9.99 will bring in even less money for the artists on major labels. The breakdown is 14% artist, 30% Apple / iTunes, and 56% major record label. The major focus of the article is what David calls the six possible music distribution models. My take on the article is that the only constant right now is change. Nobody knows what is going to work in the long run or even what is working now, if anything. One thought put forth in the piece is that major labels may end up like banks, only there to advance money to artists, who outsource everything else to smaller operations. To me this leads nowhere, except back to where we are now. Smaller operations will want to grow and expand their business. The struggling labels/businesses will be gobbled up by the medium sized labels and so on, until we have another Sony Music. An electronics conglomerate that happens to own a music label. Certainly there is no silver bullet that will satisfy all artists and labels. But, I am certain that producing and selling automobiles you want to sell rather than automobiles the customer wants to buy has been a losing strategy for the American auto industry. Major labels should take a hint from this example. Good products sell themselves. Produce quality music and sell it to the customer however the customer wants to buy it and they will be in business.
Here is a small piece and a link to the article from wired.com:
What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.
Where are things going? Well, some people's charts look like this:
Link to full article