BizThoughts

Ths music industry has been on my mind this week. First, it was NIN and Radiohead going independent, then it was how free songs were going to effect musicians.

Now I’m wondering: What will the role of record labels be if songs become freely available to the public, as opposed to within paid CDs or digital files?

And to that, I also wonder: Are there any helpful comparisons to make with the fields of writing, painting, photography, acting, or filmmaking? Perhaps, in these comparisons, there will be a demonstrated example of needing, or not needing, a record label.

All are creative fields with professionals seeking to make a living. So I’m sure there are some similarities, which I’m going to simplify into the need for marketing and distribution. And in all of these fields, the way to get the proper marketing and distribution (as well as other connections) is through representation by some kind of agent or manager.

(Disclaimer: I’m not a professional in any of these fields, so please let me know if anything I write here is incorrect.)

Writers

Representation

This is handled by literary agents. They are generally considered to be crucial, since they hold the key to the marketing and distribution channels. Blogging and online publishing is rapidly becoming an alternative means of self-publishing, diminishing the need for representation.

Marketing

This is handled by publishers. They have access to large budgets, teams of graphic designers, and marketing channels such as book tours and merchandising. Some business-savvy bloggers are beginning to learn how to market themselves, diminishing the need for publishers.

Distribution

This is handled by publishers. They have access to economies of scale, book production, and distribution channels such as bookseller chains. Blogging and online publishing provides a natural distribution alternative: the Web, diminishing the need for publishers.

Painters/Illustrators

Representation

This is handled by artist agents. They aren’t commonly used, since some artists aren’t aware they exist, don’t know how to find them, or prefer to go it alone.

Marketing

This is handled by art galleries. Larger galleries are able to offer some advertising, though the gallery itself is the main marketing vehicle. Some web-savvy artists also use the Web as a supplementary marketing channel, but still rely heavily on art galleries.

Distribution

This is handled by art galleries and, if the photographer chooses this means of income, stock illustration services. They provide an aggregation point for artwork, making it easier for buyers to find and purchase the art. Some web-savvy artists also set up online stores as a supplementary distribution channel, but still rely heavily on art galleries or stock illustration services.

Photographers

Representation

This is handled by photo agents. They aren’t commonly used, since some photographers aren’t aware they exist, don’t know how to find them, or prefer to go it alone.

Marketing

This is handled by art galleries and photography magazines. Larger galleries are able to offer some advertising, though the gallery itself is the main marketing vehicle. Many web-savvy photographers are increasingly using the Web as their primary marketing channel, especially with the rise of sites like Flickr.

Distribution

This is handled by art galleries and, if the photographer chooses this means of income, stock photography houses. They provide an aggregation point for photographs, making it easier for buyers to find and purchase them. Many web-savvy photographers are increasingly using the Web as their primary distribution channel, though there are difficulties in digital rights, since it’s easy to make digital copies of photographs.

Actors/Actresses

Representation

This is handled by talent agents. They are generally considered to be crucial, since they hold the key to the marketing and distribution channels. There have been no viable alternatives to talent agents in this field.

Marketing

This is also handled by talent agents. They are the ones who promote and sell their clients to various “customers” such as casting directors and production companies. There have been no viable marketing alternatives to talent agents in this field.

Distribution

Since the “product” is the person him/herself, there is no need for a distribution channel, per se.

Filmmakers

Representation

This is handled by talent agents. Independent filmmakers generally don’t use them, preferring instead to go it alone. Online publishing is rapidly becoming an alternative means of self-publishing, diminishing the need for representation.

Marketing

This is handled by movie studios. They have access to large budgets, marketing departments, and marketing channels such as television and billboards. Some web-savvy filmmakers are increasingly using the Web as their primary marketing channel, such as sites like YouTube, diminishing the need for movie studios.

Distribution

This is handled by movie studios. They have access to economies of scale, production facilities, and distribution channels such as movie theater and DVD rental chains. The Web provides a natural distribution alternative, diminishing the need for movie studios. There are difficulties in digital rights, however, since it’s easy to make digital copies of movies.

Musicians

Representation

This is handled by music managers. They are considered crucial by some, though a few are beginning to publish music on their own, diminishing the need for representation.

Marketing

This is handled by record labels. They have access to large budgets, marketing and design departments, and marketing channels such as television and magazines. Some web-savvy musicians are increasingly using the Web as their primary marketing channel, such as MySpace, diminishing the need for record labels.

Distribution

This is handled by record labels. They have access to economies of scale, recording studios, and distribution channels such as online and offline music store chains. Some web-savvy musicians are increasingly using the Web as their primary distribution channel, though there are difficulties in digital rights, since it’s easy to make digital copies of music.

My Prediction for the Music Industry

So what does this mean? A lot of creative professions are experimenting with the Web as a new marketing and distribution channel. For some, it makes sense; for others, it doesn’t—at least, not with the current state of their industry.

I don’t believe the marketing and distribution providers will ever go away completely. Not all creative professionals are business- or web-savvy, nor do they want to be. Some want to concentrate on creating their art, and nothing else. For those professionals, there will always bee a need for someone handling their marketing and distribution needs.

The current entities handling the marketing and distribution will need to evolve, however, if they want to survive. Going back to the music business, record labels have realized that they need new revenue vehicles as CD sales continue to drop. So they’ve been cutting into the musicians’ pockets, as stated in Jeff Leeds’s New York Times article “Squeezing Money From the Music“:

Lately, the major labels have in effect tried to move into the talent management business by demanding that new artists seeking record contracts give their label a cut of concert earnings or T-shirt and merchandise revenue – areas that had once been outside the labels’ bailiwick.

No wonder musicians hate record labels. As much as musicians need marketing and distribution services, record labels that do this are going to chase away more and more musicians. They’re killing the golden geese that lay the golden eggs, so to speak.

What this means is an opportunity for smart competition—i.e. independent record labels who are willing to take on experimental business models. Although the largest record labels still dominate mainstream marketing and distribution channels, as they lose artists (and consequently, revenue), they’ll lose market share in favor of new and evolved players.

Digital rights will also be a concern, though if digital songs become a marketing tool, then digital rights are moot.

New Potential Business Ideas

Here’s a new business idea: You the musician can hire me for a percentage of sales (or a flat reoccurring fee), while I help you market and distribute your music. This could be as simple as operating a web site to getting your songs onto P2P networks. I’d have to have a lot of clients in order to turn a profit however, since margins will be slim. Or a business like iTunes could offer such services.

Another new business idea: Not every musician will have the expertise to create polished, well-edited music. So you can hire me to help you handle the recording and editing of it. Come to my recording studio, or hire me to teach you how to do this on your own. Maybe I can sell you some of the equipment and software too. The margins here are a little better. This isn’t quite an alternative for record labels, but aspiring entrepreneurs could sure consider it. People who can do this well will be in high demand, just as current music producers are.

Another evolved-business idea: You’ll still need someone to manage your gigs, merchandise, commercial licensing, and other revenue streams. I’m basically still your music manager, though with a slightly revised set of responsibilities. Or I could write some software, like Quickbooks, to help you manage your finances. Such software exists already, but none dominate the market or are widely-known.

Evolving industries always means new opportunities. Exciting times, indeed!